<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 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
SERV-TECH, 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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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 (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
LOGO
5200 CEDAR CREST BOULEVARD
HOUSTON, TEXAS 77087
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 23, 1996
To the Shareholders of
Serv-Tech, Inc.:
The Annual Meeting of the Shareholders (the "Annual Meeting") of Serv-Tech,
Inc., a Texas corporation (the "Company"), will be held on May 23, 1996, at the
Texas Commerce Center Auditorium, 601 Travis, Houston, Texas at 10:00 a.m.,
Houston Time, for the purpose of considering and voting on the following
matters:
1. The election of eight (8) directors to serve until the next Annual
Meeting and until their successors are elected and qualify.
2. The approval of an amendment to the 1989 Director Stock Option Plan
to increase the number of shares of Common Stock available for option
grants thereunder from the 50,000 shares presently authorized to a total of
100,000 shares.
3. Such other business as may properly come before the meeting and any
adjournment thereof.
The Board of Directors has established the close of business on March 29,
1996, as the record date for determining the shareholders entitled to notice and
to vote at the Annual Meeting and any adjournment thereof.
Shareholders are cordially invited to attend the Annual Meeting in person.
Those who will not attend and who wish their stock voted are requested to
promptly sign, date and mail the enclosed Proxy, for which a stamped return
envelope is provided.
By Order of the Board of Directors,
Frank A. Perrone
Secretary
Houston, Texas
April 10, 1996
TO ASSURE YOUR REPRESENTATION, PLEASE SIGN, DATE AND RETURN THE ENCLOSED
PROXY AS PROMPTLY AS POSSIBLE, REGARDLESS OF WHETHER YOU INTEND TO BE PRESENT AT
THE MEETING.
<PAGE> 3
SERV-TECH, INC.
5200 CEDAR CREST BOULEVARD
HOUSTON, TEXAS 77087
(713) 644-9974
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 23, 1996
SHAREHOLDERS ENTITLED TO VOTE
Holders of record of the common stock, par value $.50 per share (the
"Common Stock"), of the Company, at the close of business on March 29, 1996,
will be entitled to vote at the Annual Meeting to be held at 10:00 a.m., Houston
Time, on May 23, 1996, and any adjournments thereof.
SOLICITATION AND VOTING OF PROXIES
The accompanying Proxy is solicited on behalf of the Board of Directors of
the Company in connection with the Annual Meeting. The principal executive
office of the Company is 5200 Cedar Crest Boulevard, Houston, Texas 77087.
Properly executed proxies will be voted as directed. If no direction is
indicated therein, proxies will be voted in favor of the following proposals:
1. the election of the nominees for director;
2. the approval of an amendment to the 1989 Director Stock Option Plan
to increase the authorized shares for issuance from 50,000 to
100,000; and
3. as recommended by the Board of Directors with regard to any other
matters or, if no recommendation is given, in the proxy holders'
discretion.
The Proxy may be revoked by the shareholder at any time before it is voted
by filing with the Secretary of the Company a written revocation, by voting in
person at the meeting, or by delivering a Proxy bearing a later date. Attendance
at the Annual Meeting will not, in itself, constitute revocation of the Proxy.
All costs of this Proxy Statement and the Proxy and the cost of soliciting
proxies relating to the Annual Meeting will be borne by the Company. It is
anticipated that the solicitation of proxies for the Annual Meeting will be made
only by use of the mails. However, the Company may use the services of its
directors, officers and employees to solicit proxies personally or by telephone,
without additional salary or compensation to them. The Company will request that
brokerage houses, custodians, nominees, and fiduciaries forward the proxy
soliciting materials to the beneficial owners of the Company's shares held of
record for such persons, and the Company will reimburse such persons for their
related reasonable out-of-pocket expenses. Proxy solicitation will begin with
the mailing of this Proxy Statement on or about April 10, 1996.
A shareholder entitled to vote for the election of directors may vote in
favor of all nominees, withhold authority to vote for all nominees or withhold
authority to vote for certain nominees for directors. With respect to the
approval of an amendment to the 1989 Director Stock Option Plan, a shareholder
may vote in favor of the proposal, against the proposal or may abstain from
voting. If a signed proxy is returned and a shareholder has made no direction
with respect to voting matters, the shares will be voted for the nominees for
director and for the approval of the amendment to the 1989 Director Stock Option
Plan.
The presence of the holders of a majority of the issued and outstanding
shares of Common Stock entitled to vote at the Annual Meeting, either in person
or by proxy, is necessary to constitute a quorum for the transaction of business
at the Annual Meeting. Assuming such a majority is present, the election of
directors
<PAGE> 4
will require the affirmative vote of a plurality of the votes cast; the approval
of the amendment to the 1989 Director Stock Option Plan will require the
affirmative vote of a majority of the votes cast. Abstentions from the proposals
to elect directors or approval of the amendment to the 1989 Director Stock
Option Plan and broker non-votes on the foregoing proposals are counted only for
purposes of determining whether a quorum is present at the Annual Meeting. Thus,
abstentions and broker non-votes will not be included in vote totals and will
have no effect on the outcome of the voting. A broker non-vote occurs if a
broker or other nominee does not have discretionary authority to vote shares and
has not received instructions from the beneficial owner with respect to a
particular item.
VOTING SECURITIES
The number of shares issued and outstanding at the close of business on
March 29, 1996, was shares, excluding shares held in treasury. The
voting securities of the Company consist of shares of Common Stock and each
share entitles its owner to one vote on each matter to be voted upon at the
Annual Meeting. The close of business on March 29, 1996, has been fixed by the
Board of Directors as the record date for the determination of shareholders
entitled to notice of and to vote at the Annual Meeting.
PRINCIPAL HOLDERS OF SECURITIES
AND SECURITY OWNERSHIP OF MANAGEMENT
Principal Holders of Securities. The following table sets forth certain
information as of March 29, 1996, with respect to: (i) each person known by the
Company to own beneficially more than 5% of the Company's shares of outstanding
Common Stock; and (ii) all directors and executive officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT
NAME OF BENEFICIAL BENEFICIAL OF
OWNER AND ADDRESS OWNERSHIP CLASS
-------------------------------------------------------- ------------ ------
<S> <C> <C>
Heartland Advisors, Inc................................. 875,700(1) %
790 North Milwaukee Street
Milwaukee, WI 53202
Richard W. Krajicek..................................... 555,618(2) %
1111 Hermann Drive
Houston, TX 77004
Dimensional Fund Advisors Inc........................... 328,000(3) 5.01%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
All directors and executive officers as a group (12
persons).............................................. 320,300(4) %
</TABLE>
- ---------------
(1) The shares of common stock are held in investment advisory accounts of
Heartland Advisors, Inc. As a result, various persons have the right to
receive or the power to direct the receipt of dividends from, or the
proceeds from the sale of, the securities. The interests of one such
account, Heartland Group, Inc., a registered investment company, relates to
more than five percent (5%) of the class.
(2) Includes 25,313 shares owned by Mr. Krajicek's spouse and 102,850 shares
held by Merit Systems, Inc., a Louisiana corporation, of which Mr. Krajicek
is a principal shareholder, an officer and a director, and also includes
shares that represent options currently exercisable or exercisable within
60 days to purchase 4,000 shares of Common Stock.
(3) Officers of Dimensional Fund Advisors Inc. also serve as officers of DFA
Investment Dimensions Group Inc. (the "Fund") and The DFA Investment Trust
Company (the "Trust"), both of which are registered open-end management
investment companies. In their positions as officers of the Fund and the
Trust, those persons vote an aggregate of 40,100 additional shares owned by
the Fund and 43,600 shares owned
(Notes continued on following page)
2
<PAGE> 5
by the Trust. The number of Company shares shown owned was as of December
31, 1995, as Dimensional Fund Advisors Inc. has not provided more current
data.
(4) Includes shares that represent options currently exercisable or exercisable
within 60 days to purchase 148,200 shares of Common Stock granted to all
directors and executive officers as a group.
Security Ownership of Management. The following table sets forth certain
information as of March 29, 1996, with respect to: (i) each executive officer
named in the Summary Compensation Table set forth below under the heading
"Executive Compensation"; (ii) each director; and (iii) all directors and
executive officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP(1) OF CLASS
----------------------------------------------------------- ------------ --------
<S> <C> <C>
Richard L. Daerr........................................... 82,000(2) %
Larry A. Talbert........................................... 234,883(2) %
Richard W. Krajicek........................................ 555,618(2)(3) %
David P. Tusa.............................................. 29,000(2) %
Frank A. Perrone........................................... 19,000(2) %
Charles M. Balch, M.D...................................... 0 --
Robert J. Cresci........................................... 157,000(2) %
D. D. Hock................................................. 1,000 %
Mike M. Mustafoglu......................................... 1,000(2) %
John B. O'Brien............................................ 5,000(2) %
James M. Piette............................................ 4,000(2) %
Michael T. Willis.......................................... 6,000(2) %
All directors and executive officers as a group (12
persons)................................................. 320,300(2) %
</TABLE>
- ---------------
(1) Except as otherwise indicated below, all shares are owned directly and the
owner has sole voting and dispositive authority with respect to such
shares.
(2) Includes shares that represent options currently exercisable or exercisable
within 60 days to purchase 206,200 shares of Common Stock. The foregoing
includes the following specific individuals: Mr. Daerr 72,000 shares; Mr.
Talbert 54,000 shares; Mr. Krajicek 4,000 shares; Mr. Tusa 22,000 shares;
Mr. Perrone 14,000 shares; Mr. Cresci 18,000 shares; Mr. Mustafoglu 1,000
shares; Mr. O'Brien 4,000 shares; Mr. Piette 2,000 shares; and Mr. Willis
4,000 shares.
(3) Includes 25,313 shares owned by Mr. Krajicek's spouse and 102,850 shares
held by Merit Systems, Inc., a Louisiana corporation, of which Mr. Krajicek
is a principal shareholder, an officer and a director.
ELECTION OF DIRECTORS
Eight (8) directors will be elected at the Annual Meeting. Shares or
proxies may not be voted for more than eight (8) nominees for directors. Each
director so elected will hold office until the next Annual Meeting and until his
successor is elected and qualified. The Board of Directors currently consists of
eight (8) members. All director nominees are currently directors of the Company.
Except for Dr. Balch and Mr. Hock, each was elected at the last Annual Meeting
of Shareholders. Dr. Balch was appointed by the Board in November, 1995 to serve
the remaining term of Richard W. Krajicek, who resigned as Chairman of the
Company in August, 1994. Mr. Hock was appointed by the Board in January, 1996.
The persons named as proxy holders in the Proxy have been designated by the
Board of Directors and intend to vote such Proxy for the persons named below in
the election of the Board of Directors, except to the extent authority to vote
is withheld from one or more nominees. If any such nominee is unable to serve as
a
3
<PAGE> 6
director, it is intended that the shares represented by proxies will be voted in
the absence of a contrary indication for any substitute nominee that the Board
of Directors designates.
Nominees for Director. Set forth below is certain information as of March
29, 1996, with respect to each nominee of the Board of Directors, including the
business experience of each during at least the past five years and the age of
each on March 29, 1996.
Richard L. Daerr, 51, has been a director of the Company since August,
1994, and has served as President and Chief Executive Officer since October,
1994. Mr. Daerr was the Founder and President of RK Enterprises, a firm that
assisted companies and investor groups in developing and implementing strategic
plans and initiatives, from 1992 to 1994. He was President and Chief Operating
Officer of CRSS Inc., one of the largest engineering, construction and
independent power companies in the United States, from 1991 to 1992, Executive
Vice President (Finance and Administration) from 1985 to 1990 and Vice
President/General Counsel/Corporate Secretary from 1979 to 1985. He served as
Associate Counsel for Dresser Industries, Inc. from 1976 to 1979 and as a Trial
Attorney for the U.S. Department of Justice in Washington, DC from 1972 to 1976.
Robert J. Cresci, 52, has been a director of the Company since November,
1984 and Chairman of the Board since August, 1995. Mr. Cresci has been a
Managing Director of Pecks Management Partners Ltd., an investment management
firm, since September, 1990. Mr. Cresci currently serves on the Boards of
Bridgeport Machines, Inc., EIS International, Inc., Sepracor, Inc., Vestro
Natural Foods, Inc., Olympic Financial, Ltd., GeoWaste, Inc., Hitox, Inc.,
Natures Elements, Inc., Garnet Resources Corporation, HarCor Energy, Inc., Meris
Laboratories, Inc. and several private companies.
Charles M. Balch, M.D., 53, was appointed a director of the Company by the
Board of Directors in November, 1995. Dr. Balch presently serves as Executive
Vice President for Health Affairs for M. D. Anderson Cancer Center, in addition
to serving as Professor of Surgery and Professor Immunology. He is also
Associate Chairman of the Department of Surgery at the University of Texas
Medical School at Houston. From 1980 to the present, Dr. Balch has been involved
in research projects for the National Institutes of Health, the Veterans
Administration and the American Cancer Society. He has served on local, state,
national and international medical committees, including chairing the NIH
National Intergroup Melanoma Committee, a Director of and Diplomat of the
American Board of Surgery, Past President of the American Association of
Academic Surgery, Past President of the Society of Surgical Oncology, as well as
Chairman of SSO Five-year plan Ad Hoc Committee, and member of the American
Cancer Society, Houston Division (Bay Area Chapter). Dr. Balch has authored over
300 articles published in peer-review journals. He has authored four books and
is currently working on the 3rd edition of Cutaneous Melanoma book to be
published in 1996. He is Editor-in-Chief of Annals of Surgical Oncology journal,
and Editor-in-Chief of Breast Diseases journal.
D. D. (Del) Hock, 61, was appointed a director of the Company by the Board
of Directors in January, 1996. Mr. Hock serves as Chairman of Public Service
Company of Colorado, an investor-owned electric, natural gas, and thermal energy
utility. He began his career with Public Service Company in 1962 and has held
numerous positions in the company, including vice president of accounting,
senior vice president of utility services, president, chief operating officer,
and chief executive officer. Mr. Hock serves on the board of numerous charitable
and power industry organizations, including Edison Electric Institute, Electric
Power Research Institute, The Western Energy Supply and Transmission (WEST)
Associates, and the Association of Edison Illuminating Companies.
Mike M. Mustafoglu, 45, has been a director of the Company since May, 1995.
Since 1991, he has served as President of Transglobal Financial Corporation, a
merchant banking and financial advisory firm. Also, since 1984, he has served in
executive capacities with the Oxbow Group of companies as President of Oxbow
Energy, Oxbow Hydrocarbons and Oxbow Petroleum, and, between 1992 and 1995, has
served as a Director and co-founder of ECO(2), Inc., a NASDAQ listed recycling
company. From 1977 to 1984, Mr. Mustafoglu was Vice President Finance of Getty
Oil Canada, owned by Getty Oil Company, an integrated natural resources company,
and from 1974 to 1977, he was an Exploration Geophysicist for Shell Oil Company,
an integrated petroleum company. In addition, he is a former member of the Board
of Directors of National
4
<PAGE> 7
Petroleum Refiners Association; Independent Petroleum Association of America and
the Economic Council of Palm Beach County.
John B. O'Brien, 53, was elected a director of the Company in May, 1993. He
has served as President of Baker & O'Brien, Inc., a Dallas, Texas-based
engineering consulting firm serving the oil, gas and related industries, since
January, 1993. From 1987 through 1992, Mr. O'Brien was Vice President and a
director of Muse, Stancil & Co., an energy consulting firm. He has been involved
in the domestic and international petroleum refining industry for more than 25
years, first as a chemical engineer with Caltex Petroleum Corporation and later
as a consultant.
James M. Piette, 71, was appointed a director of the Company by the Board
of Directors in January, 1995. Vice-Chairman, retired, of Union Camp Corp., a
paper, chemical, and wood products company, from 1951 to 1991. For more than
five years, Mr. Piette has served as a director, Senior Executive Vice President
and Vice Chairman of Union Camp Corp. Mr. Piette also serves on the Boards of
Union Mission and Savannah Electric and Power Company, and is a Fellow and
member of the Technical Association of the Pulp and Paper Industry (TAPPI). In
addition, Mr. Piette is a member of several vocational, community and charitable
organizations.
Michael T. Willis, 51, was elected a director of the Company in May, 1993.
He is the founder of Talent Tree Personnel Services, Inc., a national temporary
and permanent placement support staffing firm. He served as its President and
Chief Executive Officer from June, 1976 through March, 1993. Since July, 1993,
Mr. Willis has served as President and Chief Executive Officer of CORESTAFF,
Inc., a company engaged in the placement and support staffing business.
MEETINGS AND COMMITTEES OF THE BOARD
During the fiscal year ended December 31, 1995, the Board of Directors of
the Company held five (5) meetings. The Board of Directors has four standing
committees: the Executive Committee, the Audit Committee, the Compensation
Committee and the Administrative Committee of the Long Term Incentive Plan.
Executive Committee. The Executive Committee, which is comprised of
Messrs. Cresci (Chairman), Daerr, O'Brien and Willis held seven (7) meetings
during 1995. Its function is to exercise the authority of the Board of Directors
in the management of the business of the Company between regular meetings of the
Board.
Audit Committee. The Audit Committee, which is comprised of Messrs. Piette
(Chairman), Cresci and Mustafoglu held one (1) meeting during 1995. Its
functions are to: (1) recommend the appointment of independent public
accountants; (2) review the arrangements for and scope of the audit by the
independent public accountants; (3) review the independence of the independent
public accountants; (4) consider the adequacy of the system of internal controls
and review any proposed corrective actions; (5) review and monitor the Company's
policies regarding business ethics and conflicts of interest; and (6) discuss
with management and the independent public accountants the Company's draft of
annual financial statement and key accounting and reporting matters.
Compensation Committee. The Compensation Committee is composed of Messrs.
O'Brien (Chairman), Cresci, and Willis. The Compensation Committee's functions
are to: (1) review the Company's general compensation strategy, and (2)
establish the salaries of the Company's executive officers. The Compensation
Committee held two (2) meetings during 1995.
Administrative Committee of the Long Term Incentive Plan. The
Administrative Committee of the Long Term Incentive Plan is composed of Messrs.
O'Brien and Willis. The Committee's function is to review, approve and
administer the Company's 1986 and 1989 Incentive Stock Option Plans and the 1995
Long Term Incentive Plan. The Administrative Committee of the Long Term
Incentive Plan held two (2) meetings during 1995.
During the fiscal year ended December 31, 1995, no incumbent director
attended less than 75% of the aggregate number of meetings of the Board of
Directors and Committees on which he served.
5
<PAGE> 8
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth all
compensation paid by the Company in 1995 to the Chief Executive Officer and to
each of the four most highly compensated executive officers of the Company whose
compensation exceeded $100,000 ("Named Executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-----------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------------- ----------------------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OTHER
NAME AND ANNUAL RESTRICTED SECURITIES ALL OTHER
PRINCIPAL COMPEN- STOCK UNDERLYING LTIP COMPENSA-
POSITION YEAR SALARY BONUS SATION(1) AWARDS(2) OPTIONS PAYOUTS TION(3)
- -------------------------------- ---- -------- -------- --------- ---------- ---------- -------- ---------
Richard L. Daerr(4),............ 1995 $200,000 0 $11,856 0 0 0 $ 2,058
President and Chief 1994 $ 63,030 $ 40,000 $13,000 0 180,000 0 --
Executive Officer 1993 -- -- -- -- -- -- --
Larry A. Talbert(4),............ 1995 $138,145 $ 40,000 $15,772 0 0 0 $20,749
President, Serv-Tech EPC, Inc. 1994 $125,525 $ 25,000 $ 1,044 0 75,000 0 $ 3,238
1993 $128,093 0 0 0 0 0 $ 8,203
Richard W. Krajicek(4),......... 1995 $107,386 0 $87,890 0 20,000 0 $ 3,474
Consultant and former 1994 $175,000 0 $ 3,000 0 0 0 $ 3,285
Chairman of the Board 1993 $123,000 $125,000 0 0 0 0 $ 6,442
David P. Tusa(4),............... 1995 $132,000 $ 25,000 $11,736 0 10,000 0 $ 1,193
Senior Vice President, 1994 $ 40,392 $ 25,000 $ 3,274 0 50,000 0 $ 132
Finance & Administration 1993 -- -- -- -- -- -- --
Frank A. Perrone(4),............ 1995 $115,000 $ 15,000 $10,056 0 0 0 $ 320
Vice President, General 1994 $ 16,668 $ 7,500 $ 1,119 0 35,000 0 $ 29
Counsel and Corporate 1993 -- -- -- -- -- -- --
Secretary
</TABLE>
- ---------------
(1) "Other Annual Compensation" includes amounts paid as auto allowances and
company paid insurance which includes $11,856 for Mr. Daerr; $15,772 for
Mr. Talbert; $8,856 for Mr. Krajicek; $11,736 for Mr. Tusa and $10,056 for
Mr. Perrone, and also includes $79,034 in consulting payments to Mr.
Krajicek after his resignation on August 9, 1995.
(2) The number and value of restricted shares held by the Named Executives as of
December 31, 1995 is as follows: Mr. Talbert 166,667 shares and $1,000,002
and Mr. Krajicek 501,618 shares and $3,009,708, respectively. Under the
Securities and Exchange Commission rules on executive compensation
disclosure, all restricted stock was valued using the average of the high
and low prices of the Company's unrestricted Common Stock on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") as
of December 31, 1995, which was $6.00.
(3) "All Other Compensation" includes Company matching contributions to the
Consolidated Retirement Savings 401(k) Plan and the premiums paid on life
insurance policies in excess of $50,000 under the Group Life Insurance
Plan. Under the Company's 401(k) Plan, each eligible employee may elect to
contribute up to 20% of his or her salary and to have such deferred amounts
invested in the plan. The Company contributes $.50 (in Company common
stock) for every $1.00 contributed by a participant, limited to 6% of the
salary of such participating employee.
(4) Messrs. Daerr and Tusa joined the Company in August, 1994 and became
executive officers of the Company in October, 1994. Mr. Talbert served as
Executive Vice President, Operations from August 9, 1995 until January 29,
1996. Mr. Krajicek resigned as Chairman of the Board on August 9, 1995. Mr.
Perrone joined and became an executive officer of the Company in November,
1994.
Employment Agreements. Effective May 11, 1992, Talbert & Associates, Inc.
entered into an employment agreement with Mr. Talbert providing for his
employment by Talbert & Associates through May 10, 1999, subject to earlier
termination upon the occurrence of certain stated events. The employment
agreement provides that Talbert & Associates will pay to Mr. Talbert an annual
salary of $125,000, subject to
6
<PAGE> 9
adjustment. Under the terms of the employment agreement, Mr. Talbert is
prohibited from providing services to, or contacting or soliciting in an effort
to provide services to, any competitor of Talbert & Associates, during the term
of the agreement.
Effective August 9, 1994, August 29, 1994 and November 10, 1994, the
Company entered into employment agreements with Messrs. Richard L. Daerr,
President and Chief Executive Officer, David P. Tusa, Senior Vice President,
Finance & Administration and Frank A. Perrone, Vice President, General Counsel
and Corporate Secretary, respectively, at salaries of $160,000, $117,500 and
$115,000, respectively, subject to adjustments. These agreements are for rolling
two year terms and provide that in the event of termination of employment, the
executive will receive as a lump sum his annual base salary plus employee
benefits up to one year after such termination, except that in the event of a
termination within three years of a Change in Control of the Company, as defined
in the agreement, Mr. Daerr would receive as a lump sum two times the sum of his
annual base salary plus any bonus for the previous twelve month period and
Messrs. Tusa and Perrone would receive up to an additional six months base
salary if not employed by another firm at the end of one year from the date of
such termination. The agreements further require that the executive not engage
as an officer, employee or otherwise in any business providing turnaround
services for one year after termination by the executive of his employment with
the Company and for two years in the case of Mr. Daerr's termination within
three years of a Change in Control.
Directors' Fees and Options. The Company pays directors who are not
employees of the Company an annual rate of $75,000 for the Chairman of the Board
and $12,000 for other non-Chairman directors, plus $1,000 for each Board meeting
attended, and $800 for each Committee meeting attended and reimburses their
expenses incurred in attending Board and Committee meetings. Additionally, each
newly elected Board member receives an Incentive Stock Option for 5,000 shares
vesting over five (5) years, while each re-elected Board member receives an
Incentive Stock Option for 1,000 fully vested shares.
Option Grants. The following table sets forth the individual grants of
stock options made by the Company during 1994 to the Named Executives:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------
% OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO
UNDERLYING EMPLOYEES EXERCISE
OPTIONS IN 1995 OR BASE EXPIRATION GRANT DATE
NAME GRANTED FISCAL YEAR PRICE DATE PRESENT VALUE
- --------------------------------- ---------- ----------- --------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Richard L. Daerr................. 0 0 0 -- 0
Larry A. Talbert................. 0 0 0 -- 0
Richard W. Krajicek.............. 20,000 8.83% $6.75 Aug. 9, 2000 $73,400(1)
David P. Tusa.................... 10,000 4.41% $6.75 Jan. 17, 2005 $42,500(2)
Frank A. Perrone................. 0 0 0 -- 0
</TABLE>
- ---------------
(1) Grant date present value is based upon the Black-Scholes option pricing
model. The Black-Scholes option value was based upon the following
assumptions: (i) no annualized dividend yield, (ii) an annualized stock
price volatility factor of .4543, (iii) a risk free interest rate of 6.15%,
(iv) options exercised 5 years from vesting date, and (v) a discount rate of
3% per year during the 4 year vesting period to reflect the risk of
forfeiture on unvested stock options. These assumptions were based upon 3
years of historical monthly trading data and typical executive turnover
rates in the market.
(2) Grant date present value is based upon the Black-Scholes option pricing
model. The Black-Scholes option value was based upon the following
assumptions: (i) no annualized dividend yield, (ii) an annualized stock
price volatility factor of .4477, (iii) a risk free interest rate of 7.77%,
(iv) options exercised 10 years from vesting date, and (v) a discount rate
of 3% per year during the 4 year vesting
7
<PAGE> 10
period to reflect the risk of forfeiture on unvested stock options. These
assumptions were based upon 3 years of historical monthly trading data and
typical executive turnover rates in the market.
Option Exercises and Year-End Option Values. The following table sets
forth the year-end values of unexercised options held by the Named Executives at
December 31, 1995 where the value of the underlying stock exceeds the exercise
price. The Company has not granted any stock appreciation rights.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
DECEMBER 31, 1995 OPTION VALUES
None of the Named Executives exercised any stock options in the 1995 fiscal
year.
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING OPTIONS OPTIONS
AT AT DECEMBER 31,
DECEMBER 31, 1995 1995(1)
-------------------- ------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------------- ------ ------- ------ ------
<S> <C> <C> <C> <C>
Richard L. Daerr.............................. 72,000 108,000 0 0
Larry A. Talbert.............................. 48,000 57,000 0 0
Richard W. Krajicek........................... 0 20,000 0 0
David P. Tusa................................. 20,000 40,000 0 0
Frank A. Perrone.............................. 14,000 21,000 0 0
</TABLE>
- ---------------
(1) The value of options was calculated using the average of the high and low
prices of the Company's Common Stock on the NASDAQ as of December 31, 1995
which was $6.00.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933 as amended, or the Securities
Exchange Act of 1934, as amended, that may incorporate future filings, including
this Proxy Statement, in whole or in part, the following report of the
Compensation Committee of the Company on Executive Compensation and the
Performance Graph shall not be incorporated by reference into any such filings.
SERV-TECH, INC. COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
In fiscal year 1995, the Compensation Committee (the "Committee") was
comprised of two (2) non-salaried directors, Messrs. O'Brien (Chairman) and
Willis, and Mr. Cresci, who as Chairman of the Board, receives a salary from the
Company. Messrs. O'Brien and Willis comprise the Administrative Committee of the
Company's Long Term Incentive Plan. For the remainder of this report, the
Administrative Committee is considered a part of the Compensation Committee
except as otherwise indicated.
The Compensation Committee makes recommendations to the Board regarding
executive officer salaries and bonuses, and the Administrative Committee of the
Long Term Incentive Plan makes decisions regarding stock option grants and stock
awards. All recommendations of the Compensation Committee are reviewed and
approved by the entire Board of Directors (except that directors who are also
executive officers or serve as Chairman of the Board abstain from voting with
respect to their own compensation) except as otherwise indicated.
COMPENSATION POLICY
The compensation policy of the Company, which is endorsed by the Committee,
is that a substantial portion of the annual compensation for each executive
officer should relate to and be dependent upon the performance of the Company as
well as the individual contribution of each officer. Consequently, the
compensation program is designed to motivate senior management and to align the
interests of executive officers with the long-term interest of shareholders.
8
<PAGE> 11
COMPENSATION PROGRAM COMPONENTS
The executive compensation program is comprised of salary, annual cash
bonus awards, and long-term incentive opportunities primarily in the form of
stock options.
Base Salary -- At senior executive levels, base salaries are modest by
industry standards. Actual salaries are based on individual performance,
comparative levels of responsibility, and competitive marketplace relationships.
Annual Bonus Awards -- Except for relatively modest bonus amounts awarded
on the basis of meritorious achievement, the Company awards annual bonuses based
on the attainment of certain operating objectives. Executive officer bonuses are
derived from a specific quantitative formula approved by the Compensation
Committee based on ultimate financial performance of the Company and its
operating subsidiaries as measured against Board approved financial goals.
Stock Option Plans -- The Committee strongly believes that it is in the
best interest of the shareholders for the Company managements' compensation to
be tied directly to shareholder return by the participation of key executives in
long-term incentive stock awards. Therefore, key executives and management are
eligible to receive, from time to time, stock options which give them the right
to purchase stock, in the future at a specified price. The number of stock
options granted to executive officers is based on individual performance,
performance of the Company's subsidiaries and competitive practices.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Mr. Daerr's salary is determined by the members of the Compensation
Committee based on the performance of the Company and the efforts of Mr. Daerr.
The following elements were considered in determining Mr. Daerr's compensation
for 1995:
1. Mr. Daerr's base salary is low in comparison with other companies
of comparable size and performance in the industry.
2. While the Company did not achieve its net income performance goals
for the year, it implemented a significant reorganization that is expected
to result in improved performance over the foreseeable future. Accordingly,
Mr. Daerr's annual salary was raised to $220,000 for 1996.
COMPENSATION COMMITTEE
John B. O'Brien, Chairman
Robert J. Cresci
Michael T. Willis
9
<PAGE> 12
PERFORMANCE GRAPH
The following graph compares the performance of the Company's Common Stock
to the NASDAQ Total Return Index and to an index of peer companies selected by
the Company since December 31, 1990.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG SERV-TECH, INC., S&P 500 INDEX &
PEER GROUP
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) SERV-TECH S&P 500 PEER GROUP
<S> <C> <C> <C>
1989 100.00 100.00 100.00
1990 89.50 96.80 50.90
1991 78.90 126.50 72.80
1992 73.70 136.20 54.70
1993 64.90 149.20 46.90
1994 45.60 151.20 42.50
</TABLE>
The lines in the graph assume that the value of an investment in the
Company's Common Stock on each index was $100 on December 31, 1990 and that any
dividends were reinvested. The companies in the peer group are Allwaste, Inc.,
Chempower, Inc., Gundle Environmental Systems, Inc., GZA Geoenvironmental
Technology, Inc., C.H. Heist Corp. and Matrix Service Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1995, the Company purchased certain machinery, equipment and an
aircraft from Mr. Krajicek, the former Chairman of the Board, for a total price
of $235,000. The Company believes that these transactions were on terms no less
favorable to the Company than would have been available in similar transactions
with unaffiliated third parties.
PROPOSAL TO APPROVE AMENDMENT TO THE
1989 DIRECTOR STOCK OPTION PLAN
Amendment to Increase Number of Shares Available for Option. Subject to
the approval of the shareholders of the Company at the Annual Meeting, the Board
of Directors has adopted an amendment (the "Amendment") to the 1989 Director
Stock Option Plan (the "Plan"). The proposed Amendment is set forth in Exhibit A
attached to this Proxy Statement.
SUMMARY OF PLAN
The following summary of the Plan does not purport to be complete and is
qualified in its entirety by reference to the Plan attached hereto as Appendix
A.
10
<PAGE> 13
Currently, the total number of shares of Common Stock with respect to which
options may be granted under the Plan is 50,000 shares. Stock option grants have
been used by management as a means to attract and retain non-employee Directors
of exceptional ability and to solidify the common interests of directors and
shareholders in enhancing the value of the Company. Management and the Board of
Directors of the Company believe that it is desirable to continue to grant stock
options for this purpose. In order to continue this practice, it is necessary
that the shareholders of the Company approve an increase in the total number of
shares with respect to which options may be granted under the Plan.
The Board of Directors proposes to amend the Plan to increase the aggregate
number of shares of Common Stock available for option grants thereunder to
100,000 as of May 23, 1996.
General. The Plan was adopted by the Board of Directors on December 15,
1989. The purpose of the Plan is to attract and retain non-employee Directors of
exceptional ability and to solidify the common interests of directors and
shareholders in enhancing the value of the Company. The Plan provides for the
issuance of incentive stock options, within the meaning of Section 422A of the
Internal Revenue Code of 1986, as amended, to non-employee Directors of the
Company.
A total of 50,000 shares of Common Stock has been reserved for issuance
under the Plan. If an option terminates or expires without having been exercised
in full, the stock not purchased under such option is again available for
purposes of the Plan. If there is an increase or decrease in the number of
outstanding shares of Common Stock as a result of a recapitalization,
reclassification, stock split-up, combination of shares or dividend or other
distribution payable in capital stock, the Plan provides for an adjustment in
the number and kind of shares obtained upon exercise in order to avoid dilution
in the value of the option to the optionee.
Eligibility. All directors of the Company who are not employees of the
Company are eligible to participate in the Plan. Options are granted on the
following basis: (i.) 5,000 share options on the date of the initial appointment
or election to the Board vesting 20% at the time of appointment or election with
20% vesting each anniversary thereafter that the individual remains on the Board
and at an exercise price equal to the Fair Market Value of the Company Stock as
of the initial appointment or election to the Board, and (ii.) 1,000 share
options granted and immediately vested as of the date of the annual re-election
by the Company's shareholders of such director (but pro-rated for any director
that has received share options pursuant to (i.) above due to his/her initial
appointment or election occurring within twelve (12) months of such re-election)
at an exercise price equal to the Fair Market Value of the Company Stock as of
such director's re-election by the Company's shareholders.
Exercisability. Options are exercisable from time to time over a period
beginning one year after the date of grant; provided, however, that the option
agreement pursuant to which options are granted may establish a vesting schedule
which limits the number of shares purchasable in any period or periods of time
during which the options are exercisable.
Price. No consideration is payable to the Company on the grant of any
option. Options are exercisable at an option price per share determined by the
Committee but shall not be less than 100% of Fair Market Value of a share of the
Common Stock on the date of grant. Options may be exercised by delivery of cash,
a certified or cashier's check or already-owned shares of Common Stock having a
fair market value equal to all or part of the option price and a certified or
cashier's check for the difference, if any.
Term. Options granted under the Plan generally expire not more than 10
years after the date of grant. If a director ceases to be a director during the
exercise period of the option, such director will have the right to exercise the
vested portion of an outstanding option within 90 days after such cessation;
provided, however, that options may generally be exercised within the one-year
period following disability.
Assignment. Options granted under the Plan are non-transferable other than
by will or by the laws of descent and distribution upon the death of the
director and, during the lifetime of the director are exercisable only by him.
Amendment and Termination. The Plan may generally be amended, suspended or
terminated by the Administrative Committee; however, no such amendment,
suspension or termination may change or impair
11
<PAGE> 14
any option previously granted thereunder without the consent of the option
holder. In addition, the approval of the shareholders of the Company
representing a majority of the voting power is required to increase the number
of shares of Common stock for which options may be granted, materially modify
eligibility requirements or extend the terms of the Plan. Unless earlier
terminated by the Board, the Plan will terminate on December 15, 1999.
Estimate of Benefits. It is not possible at this time to determine the
amount that will be awarded to directors under the Plan as proposed to be
amended. In addition, no benefits or amounts have been received by allocated to
or set aside for any director under the Plan as proposed to be amended.
Federal Income Tax Consequences. There is no taxable income to an optionee
when an incentive stock option is granted to him or when that option is
exercised. However, the amount by which the fair market value of the shares at
the time of exercise exceeds the option price must be included in a director's
alternative minimum taxable income. Any minimum tax paid will be available as a
credit against any income arising from a disposition of the shares in future
years. Options will not be treated as incentive stock options to the extent that
the aggregate fair market value of the shares with respect to which options
granted under the Plan are exercisable for the first time by any director during
any calendar year (under all plans of the Company) exceeds $100,000. Thus, for
example, if a single option for $150,000 becomes exercisable in a single year,
$100,000 of the stock will be treated as an incentive stock option and $50,000
of the stock will be treated as a non-qualified stock option.
If an optionee disposes of shares acquired pursuant to the exercise of an
incentive stock option more than two years after the date of grant of such
option and more than one year after such shares are transferred to the optionee,
any gain generally will be treated as capital gain. If an optionee sells shares
acquired pursuant to the exercise of an incentive stock option within either of
the two-year or one-year holding periods described above, gain up to the
difference between the value of the shares on the date of exercise and the
option price generally will be treated as compensation income in the year of the
sale, taxable at ordinary income rates. Any additional gain generally will be
long-term or short-term capital gain, depending upon whether the holding period
for the shares is more than one year. However, if the amount realized is less
than the fair market value of the shares at the date of exercise, the optionee's
ordinary income is limited to the amount realized less the option exercise price
paid. The Company will be entitled to a tax deduction only to the extent the
optionee has ordinary income upon the sale or other disposition of the shares
received when the option was exercised.
The Plan allows optionees to pay for shares of Common Stock being acquired
with already-owned shares. The tax consequences resulting from the exercise of
an incentive stock option through delivery of already-owned shares of Common
Stock are not completely certain. In published rulings and proposed regulations,
the Internal Revenue Service has taken the position (a) that generally the
optionee will recognize no income upon such stock-for-stock exercise, (b) that,
to the extent an equivalent number of shares is acquired, the optionee's basis
in the shares acquired upon such exercise will equal the optionee's basis in the
surrendered shares increased by any compensation income recognized by the
optionee, (c) that the optionee's basis is any additional shares acquired upon
such exercise will equal zero, and (d) that any sale or other disposition of the
acquired shares within the one-year or two-year periods described above will be
viewed first as a disposition of the shares with the lowest basis.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THIS PROPOSAL. THE AFFIRMATIVE VOTE OF A MAJORITY OF THE HOLDERS OF COMMON STOCK
VOTING AT THE ANNUAL MEETING IS REQUIRED TO APPROVE THE PLAN.
INDEPENDENT PUBLIC ACCOUNTANTS
During the past fiscal year, the Audit Committee recommended and the Board
of Directors selected the firm of KPMG Peat Marwick to serve as independent
auditors of the Company for the year ended December 31, 1995.
It is the intention of the Board to select independent auditors during
fiscal year 1996. Since ratification of the appointment of auditors is not
required as a matter of state or federal law or by the rules of NASDAQ, the
12
<PAGE> 15
Board will not request at this time, or subsequently during fiscal year 1996,
ratification by the Company's Shareholders of such selection.
So far as is known to Management of the Company, neither the firm of KPMG
Peat Marwick nor any of its members has any direct or material indirect
financial interest in the securities of the Company. Representatives of KPMG
Peat Marwick will be present at the annual meeting, with the opportunity to make
a statement if they so desire and also to be available to respond to appropriate
questions.
ANNUAL REPORT
An Annual Report of the Company setting forth the Company's activities and
containing audited financial statements of the Company's financial position as
of the close of the fiscal year ended December 31, 1995, accompanies this Proxy
Statement. Except for the financial statements included in the Annual Report
that are specifically incorporated by reference herein, the Annual Report is not
incorporated in this Proxy Statement and is not to be deemed part of this proxy
soliciting material. Additional copies of the Annual Report are available upon
request.
FORM 10-K
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH PERSON WHOSE PROXY IS BEING
SOLICITED, UPON THE REQUEST OF ANY SUCH PERSON, A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995, AS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE FINANCIAL STATEMENTS AND
SCHEDULES THERETO. REQUESTS FOR COPIES OF SUCH REPORT SHOULD BE DIRECTED TO THE
SECRETARY, SERV-TECH, INC., 5200 CEDAR CREST BOULEVARD, HOUSTON, TEXAS 77087.
OTHER MATTERS
Compliance With Section 16(a) of the Exchange Act. Section 16(a) of the
Exchange Act requires the Company directors and executive officers, and persons
who own more than 10% of a registered class of the Company's equity securities
("Reporting Persons") to file reports of ownership and changes in ownership with
the Securities and Exchange Commission and NASDAQ. Reporting Persons are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file.
Based solely upon a review of such forms and any amendments thereto
furnished to the Company during the period January 1, 1995 to December 31, 1995,
and on written representations of certain Reporting Persons that no Forms 5 were
required for those persons, the Company believes there were no known failures to
file or unreported transactions by Reporting Persons.
Other Matters. At the date hereof, the Board of Directors does not know of
any other business to be presented at the Annual Meeting of Shareholders. If any
other matter properly comes before the meeting, however, it is intended that the
proxy holders named in the accompanying Proxy will vote such Proxy in accordance
with the discretion and instructions of the Board of Directors.
13
<PAGE> 16
SUBMISSION OF SHAREHOLDER PROPOSALS
Shareholders wishing to submit proposals for consideration by the Company's
Board of Directors at the Company's 1997 Annual Meeting of Shareholders should
submit them in writing to the attention of the Secretary of the Company not
later than December 17, 1996, so that it may be considered by the Company for
inclusion in its proxy statement and form of proxy for that meeting.
By Order of the Board of Directors,
Frank A. Perrone
Secretary
Houston, Texas
April 10, 1996
14
<PAGE> 17
EXHIBIT A
PROPOSED AMENDMENT TO THE SERV-TECH, INC.
1989 DIRECTOR STOCK OPTION PLAN
Set forth below is the text of Section 4 proposed to be amended (bracketed
information has been deleted and underlined information has been added):
4. 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 [50,000] 100,000, subject to
adjustment under the provisions of Section 8. The shares of Common Stock to
be issued upon the exercise of Options shall be authorized but unissued
shares, shares issued and reacquired by the Company, or shares bought on
the market for the purposes of the Plan. In the event any Option shall, for
any reason, terminate or expire or be surrendered without having been
exercised in full, the shares subject to such Option but not purchased
thereunder shall again be available for Options to be granted under the
Plan.
A-1
<PAGE> 18
APPENDIX A
SERV-TECH, INC.
AMENDED AND RESTATED
1989 DIRECTOR STOCK OPTION PLAN
1. Purpose. The purpose of this 1989 Director Stock Option Plan (the
"Plan") is to attract and retain Non-employee Directors (as hereinafter defined)
of exceptional ability and to solidify the common interests of directors and
shareholders in enhancing the value of the Company.
2. Definitions.
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as now or
hereafter amended.
(c) "Common Stock" means the Company's $.50 par value common stock.
(d) "Date of Grant" means the date on which an Option is granted under
the Plan.
(e) "Fair Market Value" means the fair market value of the Common
Stock as determined by the Committee and shall be binding upon the Company
and upon the Optionee. The Committee may make such determination of the
fair market value (i) in case the Common Stock shall not then be listed and
traded upon a recognized securities exchange, upon the basis of the mean
between the bid and asked quotations for the Common Stock on the Date of
Grant (as reported by a recognized stock quotation service) or, in the
event that there shall be no bid or asked quotations on the Date of Grant,
then upon the basis of the mean between the bid and asked quotations on the
date nearest preceding the Date of Grant if within ten days of the Date of
Grant, (ii) in case the Common Stock shall then be listed and traded upon a
recognized securities exchange, upon the basis of the mean between the
highest and lowest selling prices at which shares of the Common Stock were
traded on such recognized securities exchange on the Date of Grant or, if
the Common Stock was not traded on the Date of Grant, upon the basis of the
mean of such prices on the date nearest preceding the Date of Grant if
within ten days of the Date of Grant, and (iii) in case the Fair Market
Value may not be determined in accordance with the provisions of Article
2(e)(i) or (ii), above, upon any factors which the Committee shall deem
appropriate.
(f) "Option" means an option to purchase Common Stock granted under
the Plan.
(g) "Optionee" means a person to whom an Option, which has not been
fully exercised or expired, has been granted under the Plan.
Other terms defined herein shall have the meaning given them in the text of
the Plan.
3. Administration of the Plan.
(a) The Plan shall be administered by Committee of the Board, which
shall consist of not less than two disinterested directors of the Company
(the "Committee"). For purposes of this Section, a disinterested director
is a member of the Board who (a) is not at the time he or she exercises
discretion in administering this Plan and has not at any time within one
year prior thereto been awarded equity securities of the Company under any
plan of the Company or (b) otherwise meets the definition of "disinterested
person" as set forth in the rules and regulations promulgated under Section
16(b) of the Securities Exchange Act of 1934, as amended. The members of
the Committee shall be appointed by, and may be changed from time to time
in the discretion of, the Board.
(b) The Committee shall have the authority (i) to exercise all of the
powers granted to it under the Plan, (ii) to construe, interpret, and
implement the Plan and any Option Agreements executed pursuant to Section
6, (iii) to prescribe, amend, and rescind rules and regulations relating to
the Plan, (iv) to make all determinations necessary or advisable in
administering the Plan, and (v) to correct any defect, supply any omission,
and reconcile any inconsistency in the Plan.
A-2
<PAGE> 19
(c) The determination of the Committee on all matters relating to the
Plan or any Option Agreement shall be conclusive.
(d) No member of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any grant of
Options thereunder.
4. 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 50,000 [proposed: 100,000], subject to
adjustment under the provisions of Section 8. The shares of Common Stock to be
issued upon the exercise of Options shall be authorized but unissued shares,
shares issued and reacquired by the Company, or shares bought on the market for
the purposes of the Plan. In the event any Option shall, for any reason,
terminate or expire or be surrendered without having been exercised in full, the
shares subject to such Option but not purchased thereunder shall again be
available for Options to be granted under the Plan.
5. Participants. All directors of the Company who are not employees
("Non-employee Directors") shall be eligible to participate in the Plan. Grants
of Options under the Plan may be made to such Non-employee Directors as the
Committee shall in its sole discretion select. The Committee may from time to
time in its sole discretion determine that any Non-employee Director shall be
ineligible to receive grants of Options under the Plan.
6. Terms and Conditions of Options. Any Option granted under the Plan
shall be evidenced by an agreement ("Option Agreement") which shall be approved
as to form and substance by the Committee. Each such Option Agreement shall be
executed by an officer of the Company and the applicable Optionee, and shall be
subject to the following limitations and conditions:
(a) The Committee may grant options under the Plan to purchase Shares
to such Key Employees, and in such amounts and subject to such terms and
conditions, as the Committee shall from time to time determine in its sole
discretion, subject to the terms and provisions of this Plan.
(b) The option price per share with respect to each Option shall be
determined by the Committee but shall not be less than 100% of the Fair
Market Value of a share of the Common Stock on the Date of Grant.
(c) The expiration date of each Option shall be fixed by the
Committee, but, notwithstanding any provision of the Plan to the contrary,
such expiration date shall not be more than ten years from the Date of
Grant.
(d) Each Option shall be exercisable from time to time over a period
commencing one year subsequent to the Date of Grant and ending upon the
expiration or termination of the Option; provided, however, the Committee
may, by the provisions of any Option Agreement, limit the number of shares
purchasable thereunder in any period or periods of time during which the
Option is exercisable.
(e) An Option shall be exercisable by the filing of a written notice
of exercise with the Company, on such form and in such manner as the
Committee shall in its sole discretion prescribe. Any written notice of
exercise of an Option shall be accompanied by payment of the full purchase
price for the shares being purchased. Such payment shall be made (i) by
certified or official bank check payable to the Company (or the equivalent
thereof acceptable to the Company), or (ii) with the consent of the
Committee, by delivery of previously acquired shares of the Company's
common stock having a fair market value (determined as of the date such
Option is exercised) equal to all or part of the option price and, if
applicable, of a certified or official bank check (or the equivalent
thereof acceptable to the Company) for any remaining portion of the option
price. As soon as practicable after receipt of such payment, the Company
shall, subject to the provisions of Section 9, deliver to the Optionee a
certificate or certificates for such shares.
(f) No Option shall be transferable or assignable by an Optionee,
otherwise than by will or the laws of descent and distribution. During the
Optionee's lifetime, each option shall be exercisable only by him. No
Option shall be pledged or hypothecated in any way and no Option shall be
subject to execution, attachment, or similar process except with the
express consent of the Committee.
A-3
<PAGE> 20
7. Termination of Directorship; Death.
(a) If an Optionee ceases to be a director of the Company for any
reason, the Options granted to an Optionee (and not theretofore exercised)
shall terminate 90 days after such cessation. Such Optionee may, prior to
such termination, exercise any Option granted to him to the extent that he
is entitled to exercise such Option on the date he ceased to be a director
of the Company.
(b) In the event that an Optionee dies while he is a director of the
Company, or during the 90 day period after he ceased to be a director of
the Company, any Option granted to such Optionee which otherwise could be
exercised by such Optionee if living shall be exercisable only by such
Optionee's personal representative unless the Optionee's will specifically
disposes of such Option, in which case such exercise shall be made only by
the recipient of such specific disposition.
(c) Notwithstanding the provisions of Sections 7(a) and 7(b), in no
event shall any Option be exercisable more than the applicable period set
forth in Section 6(c).
8. Adjustment
(a) In the event that the outstanding shares of Common Stock of the
Company are hereafter increased or decreased or changed into or exchanged
for a different number or kind of shares or other securities of the Company
or of another corporation, by reason of a recapitalization,
reclassification, stock split-up, combination of shares or dividend or
other distribution payable in capital stock, appropriate adjustment (if any
is required) shall be made by the Committee in the number and kind of
shares for the purchase of which Options may be granted under the Plan. In
addition, the Committee shall make appropriate adjustments in the number
and kind of shares as to which outstanding Options, or portions thereof,
then unexercised, shall be exercisable, to the end that the proportionate
interest of the holder of the Option shall, to the extent practicable, be
maintained as before the occurrence of such event; provided, however, that
any Options to purchase fractional shares resulting from any such
adjustment shall be eliminated. Such adjustment in outstanding Options
shall be made without change in the total price applicable to the
unexercised portion of the Option with a corresponding adjustment in the
Option price per share.
(b) In the event of the dissolution or liquidation of the Company, any
Option shall terminate as of a date to be fixed by the Committee, provided
that not less than 30 days written notice of the date so fixed shall be
given to each Optionee and each such Optionee shall have the right during
such period to exercise his Option as to all or any part of the shares
covered thereby which he is otherwise eligible to purchase pursuant to the
terms of the Plan and any Option Agreement executed in connection with the
grant of the Option.
(c) In the event of a Reorganization (as hereinafter defined) in which
the Company is not the surviving or acquiring company, or in which the
Company is or becomes a wholly-owned subsidiary of another company after
the effective date of the Reorganization, then:
(i) If there is no plan or agreement respecting the Reorganization
("Reorganization Agreement") or if the Reorganization Agreement does not
specifically provide for the change, conversion, or exchange of the
shares under outstanding and unexercised Options for securities of
another corporation, then the Board shall take such action, and the
Options shall terminate as provided in Section 8(b); or
(ii) If there is a Reorganization Agreement and if the
Reorganization Agreement specifically provides for the change,
conversion, or exchange of the shares under outstanding and unexercised
Options for securities of another corporation, then the Committee shall
adjust the shares under such outstanding and unexercised Options (and
shall adjust the shares remaining under the Plan which are then
available to the Optionee under the Plan, if the Reorganization
Agreement makes specific provision thereof) in a manner not inconsistent
with the provisions of the Reorganization Agreement for the adjustment,
change, conversion, or exchange of such stock and such Options.
A-4
<PAGE> 21
The term "Reorganization" as used in this Section 8(c) shall mean any
statutory merger, statutory consolidation, sale of all or substantially
all of the assets of the Company, or sale, pursuant to an agreement with
the Company, of securities of the Company pursuant to which the Company
is or becomes a wholly-owned subsidiary of another company after the
effective date of the Reorganization.
(d) Adjustments and determinations under this Section 8 shall be made
by the Committee, whose decisions as to what adjustments or determinations
shall be made, and the extent thereof, shall be final, binding, and
conclusive.
9. Restrictions.
(a) If the Committee shall at any time determine that any Consent (as
hereinafter defined) is necessary or desirable as a condition of, or in
connection with, the granting of any Option, the issuance or purchase of
shares or other rights thereunder, or the taking of any other action
thereunder (each such action being hereinafter referred to as a "Plan
Action"), then such Plan Action shall not be taken, in whole or in part,
unless and until such Consent shall have been effected or obtained to the
full satisfaction of the Committee. Without limiting the generality of the
foregoing, in the event that the Committee shall determine that a Consent
is necessary or desirable as a condition of, or in connection with any
payment to be made under the Plan, then the Committee shall be entitled to
determine not to make any payment whatsoever until such Consent shall have
been obtained in the manner described.
(b) The term "Consent" as used herein with respect to any Plan Action
means (i) any and all listings, registrations, or qualifications in respect
thereof upon any securities exchange or under any federal, state, or local
law, rule, or regulation, (ii) any and all written agreements and
representations by the Optionee with respect to the disposition of shares,
or with respect to any other matter, which the Committee shall deem
necessary or desirable to comply with the terms of any such listing,
registration, or qualification or to obtain an exemption from the
requirement that any such listing, qualification, or registration be made,
and (iii) any and all consents, clearances, and approvals in respect of a
Plan Action by any governmental or other regulatory body.
10. Withholding Taxes. Whenever under the Plan shares are to be delivered
upon exercise of an Option, the Company shall be entitled to require as a
condition of delivery that the Optionee remit an amount sufficient to satisfy
all federal, state, and other governmental withholding tax requirements related
thereto.
11. Right of Discharge Reserved. Nothing in the Plan or in any Option
Agreement shall confer upon any officer, director, employee, or other person the
right to continue in the employment or service of the Company or any of its
Affiliates or affect any right which the Company or any of its Affiliates may
have to terminate the employment or service of such officer, director, employee,
or other person.
12. No Rights as a Stockholder. No Optionee or other person exercising an
Option shall have any of the rights of a stockholder of the Company with respect
to shares subject to an Option until the issuance of a stock certificate to him
for such shares. Except as otherwise provided in Section 8, no adjustment shall
be made for dividends, distributions, or other rights (whether ordinary or
extraordinary, and whether in cash, securities, or other property) for which the
record date is prior to the date such stock certificate is issued.
13. Restrictions on Transferability. Each Optionee or other person
exercising an Option may be required by the Committee to enter into a Buy-Sell
Agreement with the Company with respect to the shares issued to such person upon
the exercise of the Option.
14. Non-Uniform Determinations. The Committee's determinations under the
Plan need not be uniform and may be made by it selectively among persons who
receive, or are eligible to receive, Options under the Plan (whether or not such
persons are similarly situated). Without limiting the generality of the
foregoing, the Committee shall be entitled, among other things, to make
non-uniform and selective determinations, and to enter into non-uniform and
selective Option Agreements, as to (i) the persons to be granted Options under
the Plan and (ii) the terms and provisions of Option Agreements under the Plan.
A-5
<PAGE> 22
15. Use of Proceeds. The proceeds received by the Company from the sale
of Common Stock pursuant to the exercise of Options granted under the Plan shall
be added to the Company's general funds and used for general corporate purposes.
16. Amendment, Suspension, and Termination of Plan. The Committee may at
any time suspend or terminate the Plan or may amend it from time to time in such
respects as the Committee may deem advisable in order that the Options granted
thereunder may conform to any changes in the law or in any other respect which
the Committee may deem to be in the best interests of the Company; provided,
however, that without approval by the shareholders of the Company representing a
majority of the voting power, no such amendment shall (i) except as specified in
Paragraph 8, increase the maximum number of shares for which Options may be
granted under the Plan, (ii) change the provisions of Section 6(c) relating to
the establishment of the option price, (iii) change the provisions of Section
6(c) relating to the expiration date of each Option, (iv) materially modify the
requirements as to eligibility for participation in the Plan, or (v) extend the
term of the Plan beyond the period set forth in Section 17. No Option may be
granted during any suspension or after the termination of the Plan. No
amendment, suspension, or termination of the Plan shall, without an Optionee's
consent, alter or impair any of the rights or obligations under any Option
theretofore granted to such Optionee under the Plan.
17. Term of Plan.
(a) The Plan shall become effective upon the approval thereof by the
Board. The Plan shall terminate 10 years after the date on which it becomes
effective, and no awards shall thereafter be made under the Plan.
Notwithstanding the foregoing, all Options granted prior to such date shall
remain in effect until such Options have been satisfied or terminated in
accordance with the terms and provisions of the Plan.
18. Miscellaneous.
(a) The validity, construction, and enforcement of this Agreement
shall be governed by the laws of the State of Texas. In the event of a
dispute concerning this Agreement, the parties agree that venue lies in a
court of competent jurisdiction in Harris County, Texas.
(b) The headings contained in this Agreement are for reference
purposes only and shall not affect this Agreement in any manner whatsoever.
Wherever required by the context, any gender shall include any other
gender, the singular shall include the plural, and the plural shall include
the singular.
(c) In the event of a conflict between the provisions of the Plan and
the provisions of an Option Agreement, the provisions of the Plan shall
control.
19. Any other provision to the contrary notwithstanding:
(a) No option grants shall be issued after December 1, 1993, except as
follows:
(i) to new Non-employee Directors first appointed or elected to the
Board after January 1, 1995, in the amount of 5,000 share options
granted as of the date of the initial appointment or election to the
Board of the Non-employee Director but not for any subsequent
re-elections or re-appointments to the Board, and on the following
terms: vesting 20% at time of appointment with 20% vesting each
anniversary thereafter that the individual remains on the Board and at
an exercise price equal to the Fair Market Value of the Company Stock as
of the Non-employee Director's initial appointment or election to the
Board, and
(ii) in the amount of 1,000 share options granted and immediately
vested as of the date of the annual re-election by the Company's
shareholders of such Non-employee Board Member for Non-employee Board
Members that have previously been elected or appointed (but pro-rated
for any Director that has received 5,000 share options pursuant to (i)
above within twelve (12) months of such re-election) at an exercise
price equal to the Fair Market Value of the Company Stock as of the
Non-employee Director's re-election by the Company's shareholders.
(b) The foregoing does not affect grants issued prior to December 1,
1993.
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<PAGE> 23
(c) This Plan shall not be amended more than once every six (6)
months, other than to comply with changes to the Internal Revenue Code, the
Employee Retirement Income Security Act, the federal securities laws, or
rules promulgated thereunder.
A-7
<PAGE> 24
SERV-TECH, INC.
Proxy Solicited on Behalf of the Board of Directors
For the Annual Meeting to be Held May 23, 1996
The undersiged appoints Robert J. Cresci and Robert L. Daer, and each of them,
as attorneys and proxies of the undersigned, with power of substitution, to
represent the undersigned at the Annual Meeting of Shareholders of Serv-Tech,
Inc. (the "Company") to be held May 23, 1996, and at any adjournments thereof,
and to vote all shares of Common Stock of the Company which the undersigned is
entitled to vote on all matters coming before said meeting.
Nominees:
Richard L. Daerr
Robert K. Cresci
Charles M. Balch, M.D.
D. D. Hock
Mike M. Mustafoglu
John B. O'Brien
James M. Piette
Michael T. Willis
Please Sign, Date and Return The Proxy Card Promptly, Using the Enclosed
Envelope.
---------------
SEE REVERSE
SIDE
---------------
<PAGE> 25
/X/ Please mark your votes
as in this example.
1. Election of Directors FOR WITHHOLD
/ / / /
The proxies are directed to vote as specified and in their discretion on all
other matters coming before the meeting. If no direction is made, the proxies
will vote FOR all nominees listed and the approval of the amendment to the 1989
Director Stock Option Plan. This proxy is solicited by the Board of Directors.
Vote FOR all nominees listed above, except vote withheld from (to withhold
authority to vote for any individual nominee, write in the name on the line
below):
________________________________________________________________________
2. Approval of the amendment to the FOR AGAINST ABSTAIN
1989 Director Stock Option Plan / / / / / /
SIGNATURE ______________________________________ DATE ____________, 1996
SIGNATURE IF HELD JOINTLY ______________________ DATE ____________, 1996
THIS PROXY MUST BE SIGNED EXACTLY AS NAME APPEARS HEREON. Executors,
administrators, trustees, etc., should give full title as such. If the
signer is a corporation, please give full corporate name by duly
authorized officer. If signer is a partnership, please sign partnership name by
authorized person.
