<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
TEAM 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)(l) 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 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
TEAM, INC.
200 HERMANN DRIVE
ALVIN, TEXAS 77511
(281) 331-6154
NOTICE OF 1999 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 7, 1999
To the Shareholders of Team, Inc.:
The 1999 Annual Meeting of Shareholders of Team, Inc. (the "Company") will
be held on Friday, October 7, 1999 at 3:00 p.m. Central Standard Time, at the
Company's offices, 200 Hermann Drive, Alvin, Texas 77511 for the following
purposes:
1. To elect two persons to serve as Class I Directors for a term of
three years on the Company's Board of Directors consisting of three classes
of directors with staggered terms.
2. To consider and vote on a proposal to approve an amendment to the
1998 Incentive Stock Option Plan.
3. To consider and vote on a proposal to approve the appointment of
Deloitte & Touche, LLP as the independent certified public accountants to
audit the Company's accounts for the fiscal year ending May 31, 2000.
4. To transact such other business as may properly come before the
meeting and all adjournments thereof.
The Board of Directors has fixed the close of business on August 20, 1999
as the record date for determination of shareholders who are entitled to notice
of and to vote either in person or by proxy at the 1999 Annual Meeting of
Shareholders and any adjournment thereof.
All shareholders are cordially invited to attend the meeting in person.
Even if you plan to attend the meeting, YOU ARE REQUESTED TO SIGN, DATE AND
RETURN THE ACCOMPANYING PROXY AS SOON AS POSSIBLE.
By Order of the Board of Directors
/s/ Philip J. Hawk
Philip J. Hawk
Chairman of the Board of Directors
and Chief Executive Officer
September 2, 1999
YOUR VOTE IS IMPORTANT.
PLEASE SIGN, DATE AND RETURN THE ACCOMPANYING PROXY CARD PROMPTLY.
<PAGE> 3
TEAM, INC.
200 HERMANN DRIVE
ALVIN, TEXAS 77511
(281) 331-6154
PROXY STATEMENT
GENERAL
This Proxy Statement and the accompanying proxy card are furnished in
connection with the solicitation of proxies by the Board of Directors of Team,
Inc., a Texas corporation (the "Company"), to be voted at the 1999 Annual
Meeting of Shareholders (the "1999 Annual Meeting"), and at any adjournment
thereof, to be held at the time and place and for the purposes set forth in the
accompanying Notice. This Proxy Statement and enclosed form of proxy is being
mailed to shareholders beginning on or about September 2, 1999.
The Company will bear the costs of soliciting proxies in the accompanying
form. In addition to the solicitation made hereby, proxies may also be solicited
by telephone, telegram or personal interview by officers and employees of the
Company. The Company will reimburse brokers or other persons holding stock in
their names or in the names of their nominees for their reasonable expenses in
forwarding proxy material to beneficial owners of stock.
All duly executed proxies received prior to the 1999 Annual Meeting will be
voted in accordance with the choices specified thereon, unless revoked as
described below. As to any matter for which no choice has been specified in a
proxy, the shares represented thereby will be voted by the persons named in the
proxy: (1) FOR the election of the two nominees listed herein as Class I
Directors for a term of three years; (2) FOR the proposal to approve the
amendment to the 1998 Incentive Stock Option Plan; (3) FOR the proposal to
approve the appointment of Deloitte & Touche, LLP as independent certified
public accountants of the Company for the fiscal year ending May 31, 2000; and
(4) in the discretion of such person in connection with any other business that
may properly come before the meeting. Shareholders may revoke their proxy at any
time prior to the exercise thereof by written notice to Mr. Ted W. Owen of the
Company at the above address of the Company, by the execution and delivery of a
later dated proxy or by attendance at the meeting and voting their shares in
person. Proxy cards that are not signed or that are not returned are treated as
not voted for any purposes.
VOTING SECURITIES
As of the close of business on August 20, 1999, the record date for
determining shareholders entitled to vote at the 1999 Annual Meeting, the
Company had 8,234,954 shares of common stock, $0.30 par value per share ("Common
Stock"), outstanding and entitled to vote. Each share of Common Stock is
entitled to one vote with respect to each matter to be acted upon at the
meeting. The holders of a majority of the total shares of Common Stock of the
Company issued and outstanding as of August 20, 1999, whether present in person
or represented by proxy, will constitute a quorum for the transaction of
business at the meeting. Abstentions, or with respect to the election of
directors withholds, are counted for purposes of determining the presence or
absence of a quorum for the transaction of business while broker non-votes are
not so counted. Additionally, abstentions and/or withholds are counted in
tabulations of the votes cast on proposals presented to shareholders whereas
broker non-votes are not counted for purposes of determining whether a proposal
has been approved.
<PAGE> 4
PROPOSAL ONE -- ELECTION OF DIRECTORS
GENERAL
The Company's Restated Articles of Incorporation and Bylaws provide that
the Company's Board of Directors will consist of not less than six nor more than
nine persons, the exact number to be fixed from time-to-time by the Board of
Directors. The Board of Directors has fixed the number of directors constituting
the Board of Directors at six, divided into three classes with staggered
three-year terms.
The Board of Directors has nominated two Class I Directors to be elected to
serve a three-year term expiring on the date of the Annual Meeting of
Shareholders of the Company to be held in 2002, and to hold office until their
successors are duly elected and qualified. Mr. Louis A. Waters has been
nominated by the Board of Directors to stand for reelection as a Class I
Director for a three-year term and Mr. Philip J. Hawk has been nominated to
stand for election as a Class I Director for a three-year term for the first
time.
In November 1998, the Board of Directors, in accordance with the Company's
Bylaws, appointed Philip J. Hawk to the Board of Directors. At the time of Mr.
Hawk's appointment, the Board consisted of two Class I Directors, two Class II
Directors and two Class III Directors. Therefore, in accordance with the
Company's Bylaws, Mr. Hawk was appointed to the position of Class I Director,
the term of which expires on the date of the 1999 Annual Meeting.
Directors are elected by a plurality of votes cast at the Annual Meeting.
Unless contrary instructions are set forth in the proxies, the persons with full
power of attorney to act as proxies at the 1999 Annual Meeting will vote all
shares represented by such proxies for the election of the nominees named
therein as directors. Should any of the nominees become unable or unwilling to
accept nomination or election, it is intended that the persons acting under the
proxy will vote for the election, in the nominee's stead, of such other persons
as the Board of Directors of the Company may recommend. The management has no
reason to believe that any of the nominees will be unable or unwilling to stand
for election or to serve if elected.
NOMINEES
Set forth below is certain information as of August 20, 1999 concerning the
nominees for election at the 1999 Annual Meeting, including the business
experience of each for at least the past five years:
<TABLE>
<CAPTION>
PRESENT POSITION DIRECTOR
NAME AGE WITH THE COMPANY SINCE
- ---- --- ---------------- --------
<S> <C> <C> <C>
Mr. Philip J. Hawk...................... 45 Chairman of the Board of 1998
Directors and Chief Executive
Officer
Mr. Louis A. Waters..................... 61 Director 1998
</TABLE>
Mr. Hawk was appointed Chairman of the Board and Chief Executive Officer of
the Company in November 1998. From 1993 to 1998, Mr. Hawk held the position of
President and Chief Executive Officer of EEOT Energy Partners, L.P., an energy
marketing and service company. Mr. Hawk is also a director of Highland Insurance
Group, Inc., a New York Stock Exchange listed company. See also "Certain
Relationships and Related Transactions."
Mr. Waters is currently the Chairman of the Board of Tyler Technologies,
Inc. ("Tyler"), a New York Stock Exchange listed company. Tyler's principal
business is providing information management services to local governments. Mr.
Waters was elected to Tyler's Board of Directors in August 1997 and elected
Chairman of the Board in October 1997. In addition, Mr. Waters is one of the
founders and was the first Chairman of the Board of Browning-Ferris Industries,
Inc. ("BFI"). He served as Chairman and Chief Executive Officer from 1969
through 1980, Chairman of BFI's Executive Committee from 1980 through 1988, and
Chairman of the Finance Committee from 1988 to March 1997. Mr. Waters also
directed BFI's international activities, serving as Chairman and Chief Executive
Officer of BFI International, Inc. from 1991
2
<PAGE> 5
to March 1997, when he retired from full-time duty with BFI. See also "Certain
Relationships and Related Transactions."
DIRECTORS CONTINUING IN OFFICE
Set forth below is certain information concerning the four directors
continuing in office until the expiration of their respective terms, including
the business experience of each for at least the past five years:
<TABLE>
<CAPTION>
EXPIRATION OF
PRESENT POSITION DIRECTOR PRESENT
NAME AGE WITH THE COMPANY SINCE TERM
- ---- --- ---------------- -------- -------------
<S> <C> <C> <C> <C>
George W. Harrison......................... 71 Director 1995 2001
Sidney B. Williams......................... 66 Director 1973 2001
Jack M. Johnson, Jr. ...................... 61 Director 1992 2000
E. Theodore Laborde........................ 61 Director 1991 2000
</TABLE>
Mr. Harrison served as Senior Vice President of the Company from 1987 until
his retirement in 1997. During his tenure with the Company, Mr. Harrison was
involved in most aspects of the Company including operations, engineering,
manufacturing, marketing and research and development.
Mr. Williams is the sole shareholder of a professional corporation which is
a partner in the law firm of Chamberlain, Hrdlicka, White, Williams & Martin in
Houston, Texas and has been a partner in that firm for more than the past five
years.
Mr. Johnson has been Managing General Partner of Wintermann & Company, a
general partnership that owns approximately 25,000 acres of real estate in Texas
which is used in farming, ranching and oil and gas exploration activities, for
more than the past five years. Mr. Johnson is also President of Winco
Agriproducts, an agricultural products company that primarily processes rice for
seed and commercial sale. Mr. Johnson is also a director of Security State Bank
in Anahuac, Texas and a director of Allstar Systems in Houston, Texas.
Mr. Laborde served in various capacities with J & H Marsh & McLennan, Inc.,
an insurance brokerage firm, in New Orleans, Louisiana, for approximately 35
years before retiring in December 1997. From 1982 until his retirement, Mr.
Laborde acted as Managing Director of the New Orleans operation. J & H Marsh &
McLennan, Inc. is a subsidiary of Marsh & McLennan Companies.
Mr. Williams and Mr. Laborde are brothers-in-law.
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors held five regular meetings during the fiscal year
ended May 31, 1999. No director attended fewer than 75% of the meetings held
during the period for which he served as a member of the Board and the
Committees on which he served.
The Board of Directors has an Executive Committee, an Audit Committee and a
Compensation Committee but does not have a Nominating Committee. The Executive
Committee is composed of Messrs. Hawk, Williams and Waters. The Executive
Committee is responsible for assisting with the general management of the
business and affairs of the Company during intervals between meetings of the
Board of Directors. The Executive Committee met two times during fiscal 1999.
3
<PAGE> 6
The Audit Committee is composed of Messrs. Laborde, Harrison and Waters.
The Audit Committee is charged with the duties of recommending the appointment
of the independent certified public accountants; reviewing their fees; ensuring
that proper guidelines are established for the dissemination of financial
information to the Company's shareholders; meeting periodically with the
independent certified public accountants, the Board of Directors and certain
officers of the Company and its subsidiaries to ensure the adequacy of internal
controls and reporting; reviewing consolidated financial statements; and
performing any other duties or functions deemed appropriate by the Board. The
Audit Committee met one time during fiscal 1999.
The Compensation Committee, composed of Messrs. Johnson and Williams,
reviews management performance and makes recommendations to the Board of
Directors concerning management compensation and other corporate benefits. The
Compensation Committee met three times during fiscal 1999 regarding specific
employee matters.
COMPENSATION OF DIRECTORS
All non-employee directors currently receive an annual fee of $20,000 of
which one-half ($10,000) is paid in cash on a quarterly basis. The remaining
$10,000 is paid in the form of Common Stock. The stock payments are made July 1
of each year with the number of shares calculated by dividing $10,000 by the
closing price per share on the preceding business day.
In December 1991, the Company adopted the Non-Employee Directors' Stock
Option Plan (the "Non-Employee Director Plan"). As amended through January 29,
1998, the Non-Employee Director Plan authorizes options to purchase 310,000
shares of Common Stock for directors of the Company who are not employees of the
Company. The purpose of the Non-Employee Director Plan is to attract and to
retain the services of experienced and knowledgeable independent individuals as
directors, to extend to them the opportunity to acquire a proprietary interest
in the Company so that they will apply their best efforts for the benefit of the
Company, and to provide such individuals with an additional incentive to
continue in their position.
Pursuant to the Non-Employee Director Plan, each non-employee director
receives an automatic grant of options upon such director's appointment,
reappointment, election or reelection to the Board of Directors equal to the
product obtained by multiplying five thousand (5,000) by the number of years, or
any part of any year, that such director is appointed or elected to serve on the
Board of Directors. The exercise price of the options is equal to the fair
market value of the Company's Common Stock on the date of grant, and the options
expire ten years after the date of grant. Options to purchase 5,000 shares vest
on the date of grant and each anniversary thereafter until all of the options
granted are fully vested. During fiscal 1999, Messrs. Harrison and Williams were
each granted options to purchase 15,000 shares and Mr. Waters was granted an
option to purchase 5,000 shares, all with an exercise price of $3.5625 per
share, pursuant to their election to the Board of Directors at the 1998 Annual
Meeting of Shareholders.
4
<PAGE> 7
CURRENT DIRECTORS AND EXECUTIVE AND OTHER OFFICERS
The following table sets forth information regarding the current directors
and executive and other officers of the Company:
<TABLE>
<CAPTION>
YEAR YEAR
ELECTED ELECTED
AS AS
NAME OF DIRECTOR OR OFFICER AGE DIRECTOR OFFICER POSITION WITH COMPANY
- --------------------------- --- -------- ------- ---------------------
<S> <C> <C> <C> <C>
Philip J. Hawk(1).......... 45 1998 1998 Chairman of the Board of Directors
and Chief Executive Officer
Kenneth M. Tholan.......... 60 -- 1996 President and Chief Operating Officer
Ted W. Owen................ 47 -- 1998 Vice President, Chief Financial
Officer, Secretary and Treasurer
John P. Kearns............. 43 -- 1996 Senior Vice President
Clark A. Ingram............ 43 -- 1996 Vice President
William H. Nelson.......... 33 -- 1996 Controller and Assistant Secretary
Sidney B. Williams(1)(3)... 66 1973 -- Director
George W. Harrison(2)...... 71 1995 1974 Director
E. Theodore Laborde(2)..... 61 1991 -- Director
Jack M. Johnson, Jr.(3).... 61 1992 -- Director
Louis A. Waters(1)(2)...... 61 1998 -- Director
William A. Ryan(4)......... 72 1987 1995 Director
</TABLE>
- ---------------
(1) Member of the Executive Committee.
(2) Member of the Audit Committee.
(3) Member of the Compensation Committee.
(4) Mr. Ryan is retiring from the Board of Directors effective on the date of
the 1999 Annual Meeting.
Mr. Tholan joined the Company in June 1996 as General Manager of the
Company and shortly thereafter was elected as Vice President. In 1997, he was
named Executive Vice President and Chief Operating Officer and in January 1998
was promoted to President of the Company. From 1993 to 1996, Mr. Tholan held the
position of Vice President and General Manager for Furmanite America, Inc. (a
Kaneb company) with responsibility for the Southwest Division, as well as
engineering and manufacturing of onsite mechanical services for the refining,
chemical and other related industries.
Mr. Owen joined the Company in February 1998 in anticipation of the
retirement of Margie E. Rogers, who previously held the offices of Chief
Financial Officer, Secretary and Treasurer. Upon Ms. Rogers' retirement, Mr.
Owen was elected as Vice President, Chief Financial Officer, Secretary and
Treasurer. From 1994 to 1997, Mr. Owen held the position of Business Practices
Officer for Alyeska Pipeline Service Co.
Mr. Kearns joined the Company in 1980 as a design engineer and assumed the
position of Vice President of Engineering and Manufacturing in 1996. Mr. Kearns
has been involved with the Company's engineering, manufacturing and research and
development functions for more than the last five years.
Mr. Ingram joined the Company in 1988 as Risk and Human Resource Manager
and assumed his position as Vice President of Human Resources in 1996. Mr.
Ingram has been involved with the Company's human resources, insurance and
employee benefits for more than the last five years.
Mr. Nelson joined the Company in 1993 as Assistant Controller and assumed
the position of Assistant Secretary in 1996 and Controller in 1997. Mr. Nelson
has been involved with the Company's accounting and financial planning functions
for more than the last five years.
5
<PAGE> 8
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers, directors and persons who beneficially own more than ten
percent (10%) of a registered class of the Company's equity securities to file
reports of ownership and changes of ownership with the Securities and Exchange
Commission. Officers, directors and greater than 10% beneficial owners are
required to furnish the Company with copies of all Section 16(a) reports they
file.
Based solely on its review of the forms received by the Company, or written
representations from certain reporting persons that no Section 16(a) reports
were required for those persons, the Company believes that during the year ended
May 31, 1999, all filing requirements applicable to the Company's officers,
directors and greater than 10% beneficial owners were satisfied, with the
following exceptions. Mr. Hawk, who became an officer and director on November
2, 1998, was required to file a Form 3 report on or before November 12, 1998.
Mr. Hawk filed such report on December 9, 1998. Mr. Kearns failed to timely
report the November 1998 sale of 3,000 shares of Common Stock. Mr. Kearns
subsequently filed the appropriate report on August 15, 1999.
EMPLOYMENT AND OTHER AGREEMENTS
Mr. Hawk is a party to an employment agreement with the Company in which he
is to serve as the Company's Chief Executive Officer until the earlier of (i)
January 31, 2002, (ii) his voluntary resignation or (iii) his termination with
or without cause by the Company. Mr. Hawk has agreed not to compete with the
Company during the term of the agreement and for a period of two years following
termination of the agreement. Also, Mr. Hawk has agreed not to disclose any
confidential information regarding the Company without the prior written consent
of the Company.
EXECUTIVE COMPENSATION AND OTHER MATTERS
The following table sets forth compensation information for the fiscal
years ended May 31, 1999, 1998 and 1997 for the Chief Executive Officer and the
other executive officers of the Company earning in excess of $100,000 during the
Company's 1999 fiscal year (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL -----------------------
COMPENSATION RESTRICTED SECURITIES
YEAR ---------------- STOCK UNDERLYING ALL OTHER
ENDING SALARY BONUS AWARDS OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION MAY 31 ($) ($) ($)(1) (#) ($)
- --------------------------- ------ ------- ------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Philip J. Hawk................... 1999 121,154 -- -- 350,000 --
Chairman of the Board and 1998 (2) (2) (2) (2) --
Chief Executive Officer 1997 (2) (2) (2) (2) --
Kenneth M. Tholan................ 1999 150,000 31,875 20,250 -- --
President and Chief Operating 1998 131,077 20,000 -- 40,000 --
Officer 1997 118,808 20,000 -- 15,000 --
Ted W. Owen...................... 1999 125,000 5,000 10,125 -- --
Vice President, Chief Financial 1998 31,250 -- -- 15,000 --
Officer, Secretary and
Treasurer 1997 (3) (3) (3) (3) --
William A. Ryan(4)............... 1999 138,462 50,000 -- -- 56,250(5)
1998 100,000 50,000 -- 50,000 --
1997 212,692 50,000 -- -- --
</TABLE>
- ---------------
(1) Represents the number of restricted shares awarded multiplied by the market
price of Team Common Stock on the date of grant. As of May 31, 1999, the
total number and value of restricted shares held by
6
<PAGE> 9
Mr. Tholan was 6,000 shares ($20,250) and by Mr. Owen 3,000 shares
($10,125). The values given do not reflect the fact that the shares are
restricted. The executives are entitled to the same cash dividends on the
restricted shares as holders of regular Common Stock, but cannot sell the
shares during the restricted period. The restricted shares become vested in
increments of one-third ( 1/3) each July 30 of the years 1999, 2000 and
2001.
(2) Mr. Hawk was named Chairman of the Board of Directors and Chief Executive
Officer effective November 2, 1998.
(3) Mr. Owen joined the Company in February 1998.
(4) Mr. Ryan was Chairman of the Board of Directors and Chief Executive Officer
until November 1, 1998.
(5) Represents the market value on the date of grant of 15,000 shares of Common
Stock issued to Mr. Ryan on December 3, 1998 in connection with his
termination as Chairman of the Board of Directors and Chief Executive
Officer.
OPTION GRANTS IN FISCAL 1999
The following table sets forth additional information with respect to stock
options granted in fiscal 1999 to the Named Executive Officers:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
PERCENTAGE OF ANNUAL RATES OF STOCK
NUMBER OF TOTAL OPTIONS PRICE APPRECIATION
SECURITIES GRANTED TO FOR OPTION TERM(4)
UNDERLYING EMPLOYEES IN EXERCISE EXPIRATION ----------------------
NAME OPTIONS FISCAL 1998 PRICE DATE 5% 10%
- ---- ---------- ------------- -------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Philip J. Hawk........ 105,666(1) 18.4% $3.750 11/02/2008 $249,372 $630,826
44,334(2) 7.7% $3.625 11/02/2008 $100,860 $256,029
200,000(3) 34.8% $3.625 11/02/2008 $ 0(5) $385,002(5)
Kenneth M. Tholan..... -- -- -- -- -- --
Ted W. Owen........... -- -- -- -- -- --
William A. Ryan....... -- -- -- -- -- --
</TABLE>
- ---------------
(1) These options were granted on November 2, 1998 at the closing price of the
Company's Common Stock on the date of grant. Pursuant to the vesting
schedule in Mr. Hawk's Option Agreement, 25% of the shares are currently
exercisable and 25% of the shares become exercisable on each November 2 of
the years 1999, 2000 and 2001.
(2) These options were granted on November 2, 1998 at the mean of the opening
and closing price of the Company's Common Stock on the date of grant.
Pursuant to the vesting schedule in Mr. Hawk's Option Agreement, 14,778
shares become exercisable on each November 2 of the years 1999, 2000 and
2001.
(3) These options were granted on November 2, 1998 at the mean of the opening
and closing price of the Company's Common Stock on the date of grant.
Pursuant to the vesting schedule in Mr. Hawk's Option Agreement, one-third
( 1/3) of the shares become exercisable at the end of any consecutive six
month period during which the average closing price of the Common Stock is
$7.00 per share, an additional one-third ( 1/3) of the shares become
exercisable at the end of any consecutive six month period during which the
average closing price of the Common Stock is $10.50 per share, and the
remaining one-third ( 1/3) of the shares become exercisable at the end of
any consecutive six month period during which the average closing price of
the Common Stock is $14.00 per share.
(4) Potential realizable value is based on the assumption that the Common Stock
price appreciates at the annual rate shown (compounded annually) from the
date of grant until the end of the option term. The stock prices at the end
of the option term for the options described in footnote (1) are $6.11 and
$9.73, assuming 5% and 10% appreciation rates, respectively. The stock
prices at the end of the option term for the option described in footnotes
(2) and (3) are $5.90 and $9.40, respectively. The amounts of hypothetical
appreciation reflect required calculations at rates set by the Securities
and Exchange
7
<PAGE> 10
Commission and, therefore, are not intended to represent either historical
appreciation or anticipated future appreciation in the price of Common
Stock.
(5) At a stock price of $5.90 per share at the end of the option term, none of
the shares would be exercisable. At a stock price of $9.40 per share, 66,667
shares would be exercisable.
OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
The following table provides certain information with respect to options
exercised during fiscal 1999 by each of the Named Executive Officers:
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES END OF FISCAL 1999 END OF FISCAL 1999(1)
ACQUIRED VALUE --------------------------- ---------------------------
ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) (#) ($) ($)
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Philip J. Hawk.......... -- -- 26,417 323,583 -- --
Kenneth M. Tholan....... -- -- 42,500 12,500 33,750 --
Ted W. Owen............. -- -- 7,500 7,500 -- --
William A. Ryan......... -- -- 110,000 -- 118,750 --
</TABLE>
- ---------------
(1) The value of unexercised in-the-money options is the difference between (i)
the closing price of the Company's Common Stock on the last trading day of
fiscal 1999 ($3.375) and (ii) the exercise price of the in-the-money
options, multiplied by the number of underlying shares subject to the
options.
COMPENSATION COMMITTEE REPORT
Pursuant to rules adopted by the Securities and Exchange Commission, the
Compensation Committee of the Board of Directors (the "Committee"), which is
composed entirely of independent outside directors, has furnished the following
report on executive compensation:
The Committee's major responsibilities include, but are not limited to, the
following:
1. Reviewing the Company's major compensation and benefit practices,
policies and programs with respect to executive officers;
2. Reviewing executive officers' salaries and bonuses; and
3. Administering the Company's stock option plans.
Following review and approval by the Committee, all issues pertaining to
the compensation of, and the grant of options to, the executive officers are
submitted to the full Board of Directors for approval.
COMPENSATION PHILOSOPHY
The Committee's compensation philosophy operates on several different
levels. First, the Committee must ensure that the compensation is competitive in
order to attract and retain highly qualified executives. In order to facilitate
the first objective, the Committee as a rule considers various compensation
surveys and proxy statements for companies in the industry of comparable size
and complexity to the Company. Second, in order to motivate its executives, the
Committee links executive pay levels to the performance of the Company through
the grant of options pursuant to the Company's stock option programs. Third, the
Committee endeavors to reward outstanding individual contributions to the
Company and to set compensation at levels that reflect each executive officer's
individual contribution towards the Company's goals through its bonus and stock
option programs. The Committee endeavors to support the Company's commitment to
providing superior shareholder value. The compensation and related programs are
designed to reward and motivate executives for the accomplishment of the
Company's commitment to its shareholders.
8
<PAGE> 11
COMPENSATION PROGRAM COMPONENTS
To achieve its compensation goals, the compensation program consists of
four components -- base salary, bonuses, various employee benefits (including
medical and life insurance and 401(k) plan benefits generally available to the
employees of the Company) and the Company's stock option plans. The total
program is structured to deliver a significant percentage of pay through at-risk
pay programs which reward executives if the performance of the Company warrants.
Maximizing shareholder value is a basic principle underlying the Company's pay
programs.
Annually, the Committee seeks to review the base salary of each executive
officer to determine its fairness. During its annual consideration of the base
salaries of the executive officers, the Committee considers the level of
responsibility, experience and performance of each executive officer. The
Committee also takes into account the competitive conditions of the marketplace,
the Company's profitability and the cost of living index. When reviewing
competitive conditions of the marketplace, the Committee considers the Company's
pay levels with those of companies of similar size and complexity. As the
Company believes there is no survey data relating to the Company's service
industries, the Company studies compensation surveys for companies of a similar
size and complexity and various other data and information brought to its
attention, including proxy statements of companies in the Company's service
industry. Based on such information, the Committee endeavors to ensure that the
pay levels fall in the median range of the amounts paid by the comparable
companies. In certain circumstances, bonuses may be awarded to those executive
officers who have made outstanding individual contributions during the current
fiscal year. Subsequent to the end of fiscal 1999, each officer of the Company
received an increase in base salary and a bonus commensurate with levels of
responsibility and individual performance.
Additionally, all executive officers are eligible to receive stock options
and bonuses in the form of stock at the Committee's discretion. By increasing
senior management's equity position in the Company, the interests of the
shareholders and the executives will be more closely aligned. To that end, in
October 1998, Mr. Tholan was awarded 6,000 shares of restricted stock, while
Messrs. Owen, Kearns, Ingram and Nelson were each awarded 3,000 shares of
restricted stock. The restricted stock may not be sold until it becomes vested,
which occurs in increments of one-third ( 1/3) of the shares awarded each July
30 of the years 1999, 2000 and 2001. In addition, the following stock options
were granted in June 1999 under the 1998 Incentive Stock Option Plan: Mr.
Tholan, 60,000 shares; Mr. Owen, 20,000 shares; Mr. Kearns, 25,000 shares; and
Messrs. Ingram and Nelson, 10,000 shares each. All of the foregoing options have
an exercise price of $3.50 per share. Since the options were granted subsequent
to the end of fiscal 1999, they are not reflected in the option grants table
above.
PERFORMANCE MEASURES
When evaluating annual executive compensation, the Committee considers the
Company's earnings, adjusted for certain unusual or nonrecurring items, return
on net investment and cash flows. These factors are compared to the Company's
prior year's performance, its annual business plan and the performance of other
companies which operate in the same industry segments as the Company. These
performance measures assist the Committee in ensuring that the interests of its
shareholders, as well as its executives, are represented in a fair and equitable
manner. No specific fixed weighting or formula is applied to such performance
measures. Rather, the Committee exercises its judgment in evaluating financial
and non-financial factors and in determining appropriate compensation.
OTHER
The Omnibus Budget Reconciliation Act of 1993 (the "Act") restricts the
ability of a publicly-held corporation to deduct compensation in excess of
$1,000,000 paid to its Chief Executive Officer and the four most highly
compensated officers. During fiscal 1999, the threshold was not met for any of
the executive officers. However, the Committee continually reviews all aspects
of the Act in order to determine future compliance issues regarding same.
9
<PAGE> 12
This Compensation Committee Report was for the most part prepared by
management at the direction of the Committee, and approved by the Committee.
Jack M. Johnson, Jr., Chairman
Sidney B. Williams
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Williams served on the Committee and Board of Directors during fiscal
1999. Mr. Williams is also the sole shareholder of a professional corporation
which is a partner in the law firm of Chamberlain, Hrdlicka, White, Williams and
Martin in Houston, Texas, which rendered services to the Company during fiscal
1999. Fees to the law firm did not exceed five percent (5%) of that law firm's
gross revenue for its last full fiscal year.
COMPARISON OF TOTAL SHAREHOLDER RETURN
The following graph compares the Company's cumulative total shareholder
return on its Common Stock for a five-year period (May 31, 1994 to May 31,
1999), with the cumulative total return of the American Stock Exchange Market
Value Index ("ASEMVI"), and a peer group of companies selected by the Company.
The "Peer Group" is described in more detail below. The graph assumes that the
value of the investment in the Company's Common Stock and each index was $100 at
May 31, 1994 and that all dividends were reinvested.
COMPARISON OF CUMULATIVE TOTAL RETURN*
[GRAPH]
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) TEAM, INC. ASEMVI PEER GROUP
<S> <C> <C> <C>
1994 100.00 100.00 100.00
1995 45.16 111.73 69.65
1996 64.52 138.71 109.73
1997 48.39 140.80 123.84
1998 127.42 168.34 158.06
1999 87.10 186.23 101.29
</TABLE>
- ---------------
Assumes Initial Investment of $100
* Total return assumes reinvestment of dividends
Note: Total returns based on market capitalization
The peer group is composed of five companies which provide industrial
and/or leak repair services. The returns of each company have been weighted
according to their respective market capitalization for purposes of arriving at
a peer group average. The members of the peer group are C.H. Heist Corp.,
Industrial Holdings, Inc., Kaneb Services, Inc., Matrix Service Company and
Versar, Inc.
The foregoing graph is based on historical data and is not necessarily
indicative of future performance.
10
<PAGE> 13
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock (the only class of voting securities of
the Company) as of August 20, 1999 of (a) each person known by the Company to be
the beneficial owner of more than 5% of the outstanding Common Stock, (b) each
director or nominee for director of the Company, (c) the Named Executive
Officers and (d) all executive and other officers and directors of the Company
as a group. The information shown assumes the exercise by each person (or all
directors and officers as a group) of the stock options owned by such person
that are currently exercisable or exercisable within 60 days of August 20, 1999.
Unless otherwise indicated, the address of each person named below is the
address of the Company at 200 Hermann Drive, Alvin, Texas 77511.
<TABLE>
<CAPTION>
PERCENTAGE
OF
OUTSTANDING
NUMBER OF SHARES COMMON
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) STOCK
- ------------------------------------ --------------------- -----------
<S> <C> <C>
Philip J. Hawk.............................................. 91,417(2) 1.1%
Kenneth M. Tholan........................................... 63,511(3) *
Ted W. Owen................................................. 15,855(4) *
Sidney B. Williams.......................................... 140,735(5) 1.6%
1200 Smith Street, Suite 1400
Houston, Texas 77002
E. Theodore Laborde......................................... 50,715(6) *
601 Poydras Street, Suite 2075
New Orleans, Louisiana 70130
Jack M. Johnson, Jr. ....................................... 48,829(7) *
P.O. Box 337
Eagle Lake, Texas 77434
George W. Harrison.......................................... 191,892(8) 2.2%
2119 Sieber Drive
Houston, Texas 77017
Louis A. Waters............................................. 1,209,829(9) 14.0%
520 Post Oak Blvd., Suite 850
Houston, Texas 77027
William A. Ryan............................................. 150,329(10) 1.7%
1410 Sheridan Road
Wilmette, Illinois 60091
All directors and executive and other officers as a group
(12 persons).............................................. 2,012,608(11)(12) 23.2%
Houston Post Oak Partners, Ltd.............................. 1,200,000 13.9%
520 Post Oak Blvd., Suite 850
Houston, Texas 77027
Armstrong International, Inc. .............................. 691,000(13) 8.0%
2081 East Ocean Blvd, 4th Floor
Stuart, Florida 34996-3376
E. Patrick Manuel........................................... 535,500(14) 6.2%
1206 Hwy 190 West
Eunice, Louisiana 70535
</TABLE>
- ---------------
* Less than 1% of outstanding Common Stock.
(1) The information as to beneficial ownership of Common Stock has been
furnished, respectively, by the persons and entities listed, except as
indicated below. Each individual or entity has sole power to vote and
dispose of all shares listed opposite his or its name except as indicated
below.
11
<PAGE> 14
(2) Includes 26,417 shares which may be acquired pursuant to the exercise of
stock options currently exercisable or exercisable within 60 days of August
20, 1999.
(3) Includes 42,500 shares which may be acquired pursuant to the exercise of
stock options currently exercisable or exercisable within 60 days of August
20, 1999.
(4) Includes 12,500 shares which may be acquired pursuant to the exercise of
stock options currently exercisable or exercisable within 60 days of August
20, 1999.
(5) Includes 2,685 shares owned by Nancy Williams, Mr. William's wife, and
1,000 shares held as custodian under the Uniform Gift to Minors Act for Mr.
William's nephews. Mr. Williams disclaims any economic interest in these
shares. Also includes 90,000 shares which may be acquired pursuant to the
exercise of stock options currently exercisable or exercisable within 60
days of August 20, 1999.
(6) Includes 1,886 shares owned by Mr. Laborde and his wife, Mary Laborde, as
joint tenants. Also includes 40,000 shares which may be acquired pursuant
to the exercise of stock options currently exercisable or exercisable
within 60 days of August 20, 1999.
(7) Includes 35,000 shares which may be acquired pursuant to the exercise of
stock options currently exercisable or exercisable within 60 days of August
20, 1999.
(8) Includes 25,000 shares which may be acquired pursuant to the exercise of
stock options currently exercisable or exercisable within 60 days of August
20, 1999.
(9) Includes 5,000 shares which may be acquired pursuant to the exercise of
stock options currently exercisable or exercisable within 60 days of August
20, 1999. Also includes 1,200,000 shares owned by Houston Post Oak
Partners, Ltd., a Texas limited partnership of which Mr. Waters is the sole
general partner. See also "Certain Relationships and Related Transactions."
(10) Includes 15,500 shares owned by Joan Ryan, Mr. Ryan's wife, and 110,000
shares which may be acquired pursuant to the exercise of stock options
currently exercisable or exercisable within 60 days of August 20, 1999.
(11) Includes 411,667 shares which may be acquired pursuant to the exercise of
stock options currently exercisable or exercisable within 60 days of August
20, 1999.
(12) Includes shares allocated to employees through participation in the
Company's Employee Stock Ownership Plan and the Salary Deferral Plan and
Trust. As of May 31, 1999, 3,779 shares are allocated to officers in the
Salary Deferral Plan and Trust and 833 shares in the Employee Stock
Ownership Plan.
(13) The Company has relied upon information contained in Amendment No. 1 to
Schedule 13D filed with the SEC on August 4, 1997. According to the amended
Schedule 13D, 650,000 shares are owned by Armstrong International, Inc. and
41,000 shares are owned by Merrill H. Armstrong and Barbara I. Armstrong,
both of whom are officers of Armstrong International, Inc.
(14) Based upon the stock records of the Company.
The Company does not know of any arrangement that may at a subsequent date
result in a change of control of the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Louis A. Waters. In June 1998, the Company entered into a Stock Purchase
Agreement with Houston Post Oak Partners, Ltd., a Texas limited partnership of
which Mr. Waters is the sole general partner ("Post Oak"). Pursuant to the Stock
Purchase Agreement, the Company issued 1,200,000 shares of Common Stock to Post
Oak in exchange for $3.3 million. The shares have not been registered with the
Securities and Exchange Commission but were issued in a private transaction
exempt from registration under the Securities Act of 1933, pursuant to Section
4(2) thereof as a "transaction by an issuer not involving any public offering."
The purchase price of $2.75 per share represents a discount of approximately
eight percent (8%) from the market price of $3.00 per share at the time of the
transaction. The Company's independent investment bankers have delivered a
written opinion to the Company confirming that the purchase price was fair to
the
12
<PAGE> 15
Company after taking into account, among other things, the large number of
shares and the lack of immediate marketability for the shares.
Philip J. Hawk. In November 1998, the Company entered into a Stock Purchase
Agreement with Mr. Hawk, pursuant to which Mr. Hawk purchased 45,000 shares of
Common Stock in exchange for $163,125. Pursuant to the Stock Purchase Agreement,
the purchase price of $3.625 per share was determined by taking the average of
the high and low trading prices for the Common Stock on the American Stock
Exchange for November 2, 1998. The shares have not been registered with the
Securities and Exchange Commission but were issued in a private transaction
exempt from registration under the Securities Act of 1933, pursuant to Section
4(2) thereof as a "transaction by an issuer not involving any public offering."
E. Patrick Manuel. In April 1999, the Company entered into a Stock Purchase
Agreement with the shareholders of X-Ray Inspection, Inc., a Louisiana
corporation ("X-Ray"), to purchase 100% of the capital stock of X-Ray in
exchange for $7.7 million and 595,000 shares of newly issued Common Stock.
Pursuant to the Stock Purchase Agreement, Mr. Manuel received $6.75 million and
535,000 shares of Common Stock in exchange for his shares in X-Ray. The shares
have not been registered with the Securities and Exchange Commission but were
issued in a private transaction exempt from registration under the Securities
Act of 1933, pursuant to Section 4(2) thereof as a "transaction by an issuer not
involving any public offering."
PROPOSAL TWO -- APPROVAL OF AMENDMENT TO
THE 1998 INCENTIVE STOCK OPTION PLAN
Effective November 3, 1998, the Board of Directors of the Company approved
resolutions declaring it advisable to amend Section 4 of the Company's 1998
Incentive Stock Option Plan (the "Plan") to increase the number of shares of
Common Stock which are to be made available for distribution under the Plan. The
proposed amendment would provide for a total of 1,000,000 shares to be issuable,
an increase of 500,000 shares from the previously approved 500,000 shares
initially reserved for issuance. This increase will enable the Company to
proceed with the purpose of the Plan which is to retain experienced and
well-trained employees, to encourage the sense of proprietorship of such
employees and to stimulate the active interests of such employees in the
development and financial success of the Company. The Plan was originally
adopted and approved by the Company's shareholders in 1998.
If approved by the shareholders at the 1999 Annual Meeting, the first
sentence of Section 4 of the Plan will be amended to provide as follows:
"Common Stock Subject to Options. The aggregate number of shares of
the Company's Common Stock which may be issued upon the exercise of Options
granted under the Plan shall not exceed 1,000,000, subject to adjustment
under the provisions of Paragraph 7."
The remaining language of Section 4 and the remainder of the Plan will not
be changed and the only effect of the proposed amendment will be to increase the
number of shares reserved for option grants under the Plan.
Section 422(b)(1) of the Internal Revenue Code of 1986, as amended (the
"Code"), requires shareholder approval in order to obtain favorable tax
treatment to the employee-optionee as an incentive stock option. Therefore, the
adoption of the proposed amendment to the Plan was made expressly contingent on
shareholder approval. A summary of the material features of the Plan is set
forth below.
ADMINISTRATION
The Compensation Committee of the Board of Directors (the "Committee") acts
as manager for and otherwise administers the Plan. Committee members are elected
by a majority vote of the Board for an indefinite term and may be removed only
by a majority vote of the Board. All members of the Committee shall qualify as
both "non-employee directors" as defined in Rule 16b-3(b)(3) promulgated under
the Exchange Act and "outside directors" within the meaning of Section 162(m) of
the Code. The Committee has the general authority to determine which key
employees receive options under the Plan, the date of grant,
13
<PAGE> 16
the date on which the options become exercisable, the number of shares of Common
Stock to be offered to each optionee, the duration of the options and other
terms and conditions applicable to each option subject to the terms of the Plan.
ELIGIBILITY
Officers and other key employees of the Company or any of its (at least 50
percent owned) subsidiaries are eligible to receive options under the Plan;
however, the Committee, in its discretion, determines the specific individuals
who will be granted options under the Plan. As of May 31, 1999, the Company has
six officers and approximately eighty other key employees participating in the
Plan.
The number of shares which may be purchased pursuant to each option is
established by the Committee and is set forth in the related stock option
agreements. There is no established maximum or minimum limitation on the number
of shares of Common Stock to be allocated to any particular group or subgroup of
officers or other key employees pursuant to the Plan. No monetary consideration
is paid by any person for the issuance of the options.
SHARES SUBJECT TO OPTION
Under the terms of the Plan as originally adopted and approved by the
shareholders in 1998, the maximum number of shares of Common Stock that may be
offered under the Plan is 500,000 shares. Adjustments will be made under the
Plan in the number of shares of Common Stock which are issuable upon exercise of
options and in the price per share thereof to protect the holders of options
against dilution in the event of a stock split, recapitalization, combination of
shares or like event resulting in a change in the number of shares outstanding.
OPTION PRICE
The exercise price for options granted under the Plan will be equal to the
fair market value (as defined in the Plan) of the Common Stock on the last
trading day preceding the date of grant. Shares purchased pursuant to the
options must be paid for in cash or cashier's check, presented at the principal
offices of the Company following the date the optionee gives notice to the
Company of his or her desire to exercise the option. The Committee may in its
discretion, accept payment of the option price in whole or in part in shares of
Common Stock of the Company already owned by the participant. The Committee may
impose reasonable conditions on the delivery of stock certificates to the
optionee upon exercise of an option including the payment by the optionee of any
withholding or other tax liability resulting from such exercise.
DURATION OF OPTIONS
The expiration date of each option is determined by the Committee, but in
no event shall the exercise period of an option extend beyond a date which is
ten years from the date of grant. No option may be granted under the Plan after
January 28, 2008.
TRANSFERABILITY
Options granted under the Plan are transferable only by will or under the
laws of descent and distribution.
EXERCISE OF OPTIONS
An option granted under the Plan is generally exercisable over a period
commencing on the date of grant and ending upon the expiration or termination of
the option. The Committee may, in its discretion, postpone the vesting of the
option and limit the number of shares exercisable during the option period. In
the event of the death of an option holder before termination of the option
holder's employment with the Company, such option will become fully exercisable
and will remain exercisable for twelve (12) months following the date of death.
If an optionee's employment is terminated for reasons other than death, his then
outstanding vested options must be exercised prior to the earlier of the
expiration date of such options or three months (six
14
<PAGE> 17
months for certain longer term employees) following termination of employment in
order for the options to qualify as incentive stock options under the Code. If
exercised later than three months after termination, other than in cases of
death or disability, the option will no longer qualify as an incentive stock
option under the Code.
TERMINATION AND AMENDMENTS
The Plan terminates on January 28, 2008, unless terminated earlier by
appropriate action of the Board of Directors. Termination of the Plan will not
alter or impair any of the rights or obligations of any option which has been
granted under the Plan prior to the effective date of termination without the
express consent of the optionee.
The Board of Directors has the power to amend the Plan to cause the options
granted thereunder to conform to applicable law or in any other respect as the
Board determines to be in the best interests of the Company. However, any such
amendment may not, without the approval of the Company's shareholders, increase
the aggregate number of shares of Common Stock subject to the Plan (except for
increases due to certain adjustments). In addition, any such amendment may not,
without the approval of the Company's shareholders, change the class of
employees eligible to receive options or awards under the Plan in order for the
Plan to continue to comply with Rule 16b-3 or Sections 162(m), 422 and 423 of
the Code. Any amendment or termination of the Plan may not alter or impair any
of the rights or obligations which may have been granted to or been incurred by
any optionee under the Plan prior to amendment or termination, unless such
action is expressly consented to by the optionee whose rights are affected.
CERTAIN FEDERAL TAX CONSEQUENCES
The following is a brief summary of the principal federal income tax
consequences under current federal income tax laws relating to options granted
under the Plan. This summary is not intended to be exhaustive and, among other
things, does not describe state, local or foreign income tax consequences or
federal employment tax consequences.
The options granted under the Plan will qualify as incentive stock options
("ISOs"). An employee receiving an ISO will not be in receipt of taxable income
upon the grant of the ISO or upon its timely exercise. Exercise of an ISO will
be timely if made during its term and if the optionee remains an employee of the
Company or its subsidiaries at all times during the period beginning on the date
of the grant of the ISO and ending on the date three months before the date of
exercise (or one year before the date of exercise in the case of a disabled
optionee). Exercise of an ISO will also be timely if made at any time (provided
it is exercisable by its terms) by the legal representative of an optionee who
dies (i) while in the employ of the Company or its subsidiaries or (ii) within
three months after termination of employment. The Plan, however, limits the
right of the legal representative of any optionee to exercise an option to the
one-year period following the death of such optionee, provided such optionee has
died prior to termination of employment. Upon ultimate sale of the stock
received upon such exercise, except as noted below, the optionee will recognize
capital gain or loss (if the stock is a capital asset of the optionee) equal to
the excess of the amount realized upon such sale over the option exercise price.
The Company, under these circumstances, will not be entitled to any federal
income tax deduction in connection with either the grant or exercise of the ISO
or the sale of such stock by the optionee.
The amount by which the fair market value of the stock on the exercise date
of an ISO exceeds the option exercise price will constitute an item of tax
preference to the employee-optionee for purposes of the "alternative minimum
tax" set forth in the Code.
If, however, the stock acquired pursuant to such exercise of an ISO is
disposed of by the optionee prior to the expiration of two years from the date
of grant of the option or one year from the date that such stock is transferred
to the optionee (a "disqualifying disposition"), gain realized by the optionee
generally will be taxable at the time of such disqualifying disposition as
follows: If the amount realized on such disqualifying disposition is less than
or equal to the fair market value of the stock on the exercise date, the
optionee would recognize ordinary compensation income equal to the excess of
such amount realized over the exercise price. If the amount realized on such
disqualifying disposition is greater than the fair market value of the stock on
15
<PAGE> 18
the exercise date, the optionee would recognize ordinary compensation income
equal to the excess of the fair market value of the stock on the exercise date
and capital gain equal to the excess of such amount realized over the fair
market value of the stock on the exercise date. In such case, the Company may
deduct for federal income tax purposes the amount taxable to the optionee as
ordinary compensation income.
VOTE REQUIRED FOR APPROVAL
The proposed amendment to the Plan will be submitted to the shareholders
for their approval at the 1999 Annual Meeting. The affirmative vote of the
holders of at least a majority of the outstanding shares represented and voted
at the meeting is required for the approval of the proposed amendment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE AMENDMENT TO
THE 1998 INCENTIVE STOCK OPTION PLAN AS DESCRIBED ABOVE.
PROPOSAL THREE -- APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Company's Audit Committee has recommended and the Board of Directors
has approved and now recommends the appointment of Deloitte & Touche, LLP as
independent certified public accountants to audit the Company's accounts for the
fiscal year ending May 31, 2000. The firm has audited the Company's accounts
since 1974. Approval of the appointment will require the affirmative vote of a
majority of the shares represented and voted at the meeting.
A representative of Deloitte & Touche, LLP will attend the 1999 Annual
Meeting with the opportunity to make a statement if such representative desires
to do so and to respond to appropriate questions presented at the meeting.
OTHER BUSINESS
Management does not intend to bring any business before the meeting other
than the matters referred to in the accompanying notice and at this date has not
been informed of any matters that may be presented at the meeting by others. If,
however, any other matters properly come before the meeting, it is intended that
the persons named in the accompanying proxy will vote, pursuant to the proxy, in
accordance with their best judgment on such matters.
SHAREHOLDER PROPOSALS
Any proposal by a shareholder to be presented at the Company's Annual
Meeting of Shareholders in 2000 must be received by the Company no later than
May 5, 2000 in order to be eligible for inclusion in the Company's Proxy
Statement and form of proxy used in connection with such meeting.
By Order of the Board of Directors
/s/ Philip J. Hawk
Philip J. Hawk
Chairman of the Board of Directors
and Chief Executive Officer
September 2, 1999
16
<PAGE> 19
(this page intentionally left blank)
<PAGE> 20
THIS MAP IS PROVIDED FOR THE CONVENIENCE OF SHAREHOLDERS ATTENDING THE 1999
ANNUAL MEETING. COMPLIMENTARY PARKING WILL BE PROVIDED. IN CASE OF ANY
DIFFICULTY, PLEASE TELEPHONE THE COMPANY AT (281) 331-6154.
TEAM, INC.
ANNUAL MEETING
(200 HERMANN DRIVE)
[MAP]
<PAGE> 21
PROXY PROXY
TEAM, INC.
Proxy Solicited on Behalf of the Board of Directors
For the Annual Meeting of Shareholders -- October 7, 1999
The undersigned hereby appoints KENNETH M. THOLAN AND TED W. OWEN, and each of
them, as proxies, with full power of substitution and revocation, to vote, as
designated on the reverse side hereof, all of the shares of voting stock of
Team, Inc. held of record by the undersigned on August 20, 1999, at the Annual
Meeting of Shareholders to be held at the Company's offices, 200 Hermann Drive,
Alvin, Texas 77511, at 3:00 p.m. (local time) on October 7, 1999, or any
adjournment(s) thereof.
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE
(Continued and to be signed on reverse side.)
- --------------------------------------------------------------------------------
<PAGE> 22
TEAM, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
<TABLE>
<S> <C> <C> <C> <C> <C>
[ ]
1. Election of Directors of the Company For Withheld For All 3. Ratification of the appoint-
Nominees: Philip J. Hawk and Louis A. Waters All All Except Nominee Exceptions: ment of Deloitte & Touche
[ ] [ ] [ ] as independent public
accountants of the company
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. Approval of Amendment to the 1998 Incentive FOR AGAINST ABSTAIN For all except nominees
Stock Option Plan [ ] [ ] [ ] written in below. The undersigned
acknowledges receipt of
----------------------- the Notice of Annual
Meeting of Shareholders
and of the Proxy
Statement.
Dated: , 1999
------------
Signature(s)
------------
------------------------
Please sign exactly as
your name appears.
SIGNATURE AND DATE AREA Joint Owners should each
sign personally. Where
applicable, indicate your
official position or
Representation capacity.
</TABLE>
- -------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
YOUR VOTE IS IMPORTANT!
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
