<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14a)
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:
<TABLE>
<S> <C>
[ ] 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
</TABLE>
TEAM AMERICA CORPORATION
(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)(1) 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 AMERICA CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
MAY 5, 1998
AND
PROXY STATEMENT
================================================================================
IMPORTANT
PLEASE MARK, SIGN AND DATE YOUR PROXY
AND PROMPTLY RETURN IT IN THE ENCLOSED ENVELOPE
<PAGE> 3
TEAM AMERICA CORPORATION
110 East Wilson Bridge Road
Columbus, Ohio 43085
(614) 848-3995
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 6, 1998
To Our Shareholders:
Notice is hereby given that the Annual Meeting of Shareholders of TEAM
America Corporation will be held at the Heritage Golf Club, located at 3525
Heritage Club Drive, Hilliard, Ohio, on Tuesday, May 5, 1998, at 10:00 a.m.
(local time), for the following purposes:
1. To elect four Class II Directors, each to serve for a two-year
term expiring at the 2000 Annual Meeting and until their
successors are duly elected and qualified.
2. To approve an amendment increasing the number of shares of
common stock available for issuance under the Corporation's
1996 Incentive Stock Plan from 350,000 to 800,000 shares.
3. To transact such other business as may properly come before
the meeting or any adjournment or adjournments thereof.
Only shareholders of record at the close of business on March 27, 1998
will be entitled to notice of and to vote at the meeting or any adjournment
thereof.
You will be most welcome at the meeting, and we hope you can attend.
Directors and officers of the Corporation and representatives of its independent
public accountants will be present to answer your questions and to discuss its
business.
We urge you to execute and return the enclosed proxy as soon as
possible so that your shares may be voted in accordance with your wishes. If you
attend the meeting, you may vote in person and your proxy will not be used.
By Order of the Board of Directors,
Richard C. Schilg
Chairman of the Board of Directors,
President and Chief Executive Officer
-----------------------------------------------------
PLEASE SIGN AND MAIL THE ENCLOSED PROXY
IN THE ACCOMPANYING ENVELOPE
NO POSTAGE NECESSARY IF MAILED IN THE UNITED STATES
-----------------------------------------------------
<PAGE> 4
TEAM AMERICA CORPORATION
110 East Wilson Bridge Road
Columbus, Ohio 43085
(614) 848-3995
-----------------------------
PROXY STATEMENT
-----------------------------
ANNUAL MEETING OF SHAREHOLDERS
MAY 5, 1998
-----------------------------
This Proxy Statement is furnished to the shareholders of TEAM America
Corporation (the "Corporation") in connection with the solicitation of proxies
to be used in voting at the Annual Meeting of Shareholders to be held on May 5,
1998, and at any adjournment thereof (the "Annual Meeting"). The enclosed proxy
is solicited by the Board of Directors of the Corporation. This Proxy Statement,
together with the Corporation's Annual Report to Shareholders for the fiscal
year ended December 31, 1997 ("fiscal 1997"), will be first sent or given to the
Corporation's shareholders on or about April 6, 1998.
The close of business on March 27, 1998 has been fixed as the date of
record for those shareholders entitled to vote at the Annual Meeting. The stock
transfer books of the Corporation will not be closed. As of March 26, 1998, the
Corporation had outstanding and entitled to vote 4,781,650 shares of common
stock, without par value ("Common Stock"), each of which is entitled to one
vote. The Corporation has no other class of capital stock outstanding.
The presence, in person or by proxy, of a majority of the outstanding
shares of Common Stock of the Corporation is necessary to constitute a quorum
for the transaction of business at the Annual Meeting. Abstentions and broker
non-votes are counted for purposes of determining the presence or absence of a
quorum. Broker non-votes occur when brokers, who hold their customers' shares in
street name, sign and submit proxies for such shares and vote such shares on
some matters, but not others. Typically, this would occur when brokers have not
received any instructions from their customers, in which case the brokers, as
the holders of record, are permitted to vote on "routine" matters, which
typically include the election of directors.
Under Ohio law, the nominees for election as Directors at the Annual
Meeting receiving the greatest number of votes shall be elected. Each other
matter to be submitted to the shareholders for approval or ratification at the
Annual Meeting requires the affirmative vote of the holders of a majority of the
Common Stock present and entitled to vote on the matter.
Any shareholder giving the enclosed proxy has the power to revoke it at
any time before it is voted if notice of revocation is given to the Secretary of
the Corporation in writing or at the Annual Meeting. The shares represented by
the enclosed proxy will be voted as specified by the shareholders. If no choice
is specified, the proxy will be voted FOR the election as Directors of the
nominees named herein; and FOR the amendment to the Corporations 1996 Incentive
Stock Plan.
-1-
<PAGE> 5
The cost of soliciting proxies and preparing the proxy materials will
be borne by the Corporation. In addition, the Corporation will request
securities brokers, custodians, nominees, and fiduciaries to forward
solicitation material to the beneficial owners of Common Stock held of record
and will reimburse them for their reasonable out-of-pocket expenses in
forwarding such solicitation material. Proxies may be solicited personally or by
telephone or telegram by Directors, officers and employees of the Corporation
without additional compensation to them. The Corporation may engage an outside
firm to distribute proxy solicitation materials to brokers, banks and other
nominees.
NOMINATION AND ELECTION OF DIRECTORS
The number of Directors has been fixed by the Board of Directors of the
Corporation at eight. The Board of Directors currently is divided into two
classes of four and four members each. The members of the two classes are
elected to serve for staggered terms of two years.
At the Annual Meeting, four Class II Directors will be elected, each to
hold office for a term of two years and until a successor is elected and
qualified. Richard C. Schilg, Kevin T. Costello, Charles F. Dugan II, and
Crystal Faulkner are nominees (collectively, the "Nominees") for election as
Directors at the Annual Meeting, each to hold office for a term of two years
until the 2000 Annual Meeting of Shareholders . The terms of Paul M. Cash,
William W. Johnston, M.R. Swartz, and S. Cash Nickerson (collectively, the
"Continuing Directors") expire in 1999.
All the Nominees have indicated a willingness to stand for election and
to serve if elected. It is intended that the shares represented by the enclosed
proxy will be voted for the election of the Nominees. Although it is anticipated
that each Nominee will be available to serve as a Director, should any Nominee
be unavailable to serve, the proxies will be voted by the proxy holders in their
discretion for another person designated by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
ELECTION OF THE NOMINEES FOR DIRECTOR.
Listed below are the names of each Nominee and Continuing Director,
their ages, the year in which each first became a Director, their principal
occupations during the past five years and other directorships, if any, held by
them in companies with a class of equity securities registered pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise
subject to its periodic reporting requirements. See "Security Ownership of
Certain Beneficial Owners and Management" for information regarding such
persons' holdings of equity securities of the Corporation.
-2-
<PAGE> 6
CLASS II DIRECTORS
(NOMINEES FOR TERMS EXPIRING IN 2000)
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE PRINCIPAL OCCUPATION FOR THE PAST FIVE YEARS
- ---------------------------- ---------- ------------- ---------------------------------------------------------
<S> <C> <C> <C>
Richard C. Schilg 40 1986 CHAIRMAN OF THE BOARD OF DIRECTORS, PRESIDENT AND CHIEF
EXECUTIVE OFFICER OF THE CORPORATION SINCE ITS FOUNDING
IN 1986.
KEVIN T. COSTELLO 48 1992 SENIOR VICE PRESIDENT OF OPERATIONS AND CHIEF OPERATING
OFFICER OF THE CORPORATION SINCE 1993; VICE PRESIDENT OF
SALES AND MARKETING OF THE CORPORATION FROM 1991 TO
1993.
CHARLES F. DUGAN II 58 1994 ASSISTANT SECRETARY OF THE CORPORATION SINCE 1992;
OUTSIDE COUNSEL TO THE CORPORATION SINCE 1987; PARTNER
IN THE LAW FIRM OF VORYS, SATER, SEYMOUR AND PEASE FROM
1970 TO 1990.
CRYSTAL FAULKNER 38 1997 PARTNER IN THE ACCOUNTING FIRM OF RIPPE & KINGSTON,
CINCINNATI, OHIO.
</TABLE>
CLASS I DIRECTORS
(TERMS EXPIRE IN 1999)
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE PRINCIPAL OCCUPATION FOR THE PAST FIVE YEARS
- ---------------------------- ---------- ------------- ---------------------------------------------------------
<S> <C> <C> <C>
Paul M. Cash 51 1990 Senior Vice President of Administration of the
Corporation since 1997; human resource consultant to
the Corporation since 1989.
William W. Johnston 52 1990 Secretary of the Corporation since 1990; outside general
counsel to the Corporation since 1989.
M. R. Swartz 58 1991 Owner, operator of the Dairy Depot restaurant located in
Delaware, Ohio.
S. Cash Nickerson 38 1998 Executive Vice President of the Corporation since 1997;
President of TEAM America of California, Inc., a wholly
owned subsidiary of the Corporation, since 1997;
President of Workforce Strategies, Inc., a PEO, from
1995 to 1997.
</TABLE>
-3-
<PAGE> 7
INFORMATION CONCERNING THE BOARD OF DIRECTORS, EXECUTIVE OFFICERS,
AND PRINCIPAL SHAREHOLDERS
MEETINGS, COMMITTEES, AND COMPENSATION OF THE BOARD OF DIRECTORS
A total of 5 meetings of the Directors of the Corporation were held
during fiscal 1997. Each of the Directors attended 75% or more of the meetings
of the Directors, except Ms. Faulkner who attended all meetings held subsequent
to her appointment in May 1997, and Mr. Swartz who attended three of the five
meetings.
The Corporation has an Audit Committee and a Compensation Committee.
Both such committees were formed by the Board of Directors at its first meeting
following the completion of the Corporation's initial public offering in
December 1996.
Audit Committee. The Audit Committee, which consists of Messrs. Schilg,
Cash and Swartz, is charged with the responsibility of reviewing such financial
information (both external and internal) about the Corporation and its
subsidiaries, so as to assure (i) that the overall audit coverage of the
Corporation and its subsidiaries is satisfactory and appropriate to protect the
shareholders from undue risks and (ii) that an adequate system of internal
financial control has been implemented throughout the Corporation and is being
effectively followed. The Audit Committee met once in fiscal 1997.
Compensation Committee. The Compensation Committee, which consisted of
Messrs. Cash, Dugan and Johnston, considers and formulates recommendations to
the Board with respect to all aspects of compensation to be paid to the
executive officers of the Corporation subject to the provisions of the
applicable employment agreements, undertakes such evaluations and makes such
reports as are required by then applicable rules of the Securities and Exchange
Commission and performs and exercises such other duties and powers as shall from
time to time be designated by action of the Board of Directors. Effective
January 1, 1998, Ms. Faulkner became a member of the Compensation Committee
replacing Mr. Cash. The Compensation Committee met twice during fiscal 1997. See
"Report of Compensation Committee."
In connection with the initial public offering of the Corporation's
Common Stock in December 1996, the Corporation granted to each non-employee
Director an option to purchase 5,000 shares of Common Stock at $12.00 per share,
subject to vesting on December 9, 1997. These options are subject to the terms
and conditions of the Corporation's 1996 Incentive Stock Plan. On September 3,
1997 the options issued in December, 1996 were cancelled and replaced with
options to purchase 5,000 shares of Common Stock at $8.50 per share. In
addition, Ms. Faulkner was granted an option to acquire 5,000 shares of Common
Stock at $8.50 per share. These options expire September 2, 2007.
Non-employee Directors receive $500 for each Board of Directors meeting
attended, plus out-of-pocket expenses incurred in connection with attending
meetings. Beginning in 1998, non-employee Directors will receive $1,000 for each
meeting attended. Directors who are employees do not receive any separate
compensation for their services as Directors.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of Common Stock as of March 16, 1998, by each person known by the
Corporation to own beneficially more than five percent of the Corporation's
outstanding Common Stock, by each Nominee and Continuing Director, by each
executive officer named in the Summary Compensation table contained in
"Executive Compensation," and by all directors and executive officers as a
group. Except as otherwise noted, each person named in the table has sole voting
and investment power with respect to all shares shown as beneficially owned by
him or her.
-4-
<PAGE> 8
<TABLE>
<CAPTION>
PERCENT OF
SHARES
NAME AND ADDRESS OF SHARES BENEFICIALLY BENEFICIALLY
BENEFICIAL OWNER (1) OWNED AT MARCH 16 , 1998 OWNED(2)
-------------------------------------- ------------------------ ---------
<S> <C> <C>
Richard C. Schilg 1,142,464 (3) 23.9%
Kevin T. Costello 416,300 (4) 8.7%
Anne M. Costello 373,200 (5) 7.8%
Paul M. Cash 9,936 *
Charles F. Dugan II 32,200 *
Crystal Faulkner 500 *
William W. Johnston 0 *
M. R. Swartz 11,960 *
S. Cash Nickerson 349,612 (6) 7.2%
Byron G. McCurdy 371,409 (7) 7.8%
Terry C. McCurdy 356,364 7.5%
All Directors and Executive
Officers as a group (11 Persons) 2,720,745 (8) 55.3%
<FN>
- ----------
* Represents less than 1% of the Corporation's outstanding shares of
Common Stock.
(1) The address of each of the Directors and Officers listed in the table
is 110 East Wilson Bridge Road, Worthington, Ohio 43085.
(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission which generally attribute ownership
of securities to persons who possess sole or shared voting power and/or
investment power with respect to those shares.
(3) Includes 919,021 shares owned of record by Mr. Schilg over which he has
sole voting and investment power and 223,443 shares owned of record by
Mr. Schilg and his wife, Judith Schilg, as joint tenants, of which Mr.
Schilg shares with his wife voting and investment power.
(4) Includes 43,100 shares owned of record by Mr. Costello of which he has
the sole voting and investment power and 373,200 shares owned of record
by Mr. Costello and his wife, Anne M. Costello, as joint tenants, of
which Mr. Costello shares with his wife voting and investment power.
(5) Includes 373,200 shares owned of record by Mrs. Costello and her
husband, Kevin T. Costello, as joint tenants, of which Mrs. Costello
shares with her husband voting and investment power. Mrs. Costello
disclaims beneficial ownership of the 43,100 shares owned of record by
her husband.
</TABLE>
-5-
<PAGE> 9
(6) Includes 102,000 shares as to which Mr. Nickerson has the right to
acquire beneficial ownership upon the exercise of stock options
exercisable within 60 days of March 16, 1998 and 8,200 shares held by
Los Lobos, Inc., an investment company of which Mr. Nickerson is a
majority owner.
(7) Includes 500 shares owned by Mr. McCurdy's minor children as to which
Mr. McCurdy retains sole investment and dispositive control.
(8) Includes 107,000 shares available from the exercise of stock options
exercisable within 60 days of March 16, 1998.
EXECUTIVE OFFICERS
The following table and biographies set forth information concerning
the executive officers of the Corporation, who are elected by the Board of
Directors:
NAME AGE POSITION
- ---- --- --------
Richard C. Schilg 40 Chairman of the Board of Directors,
President and Chief Executive
Officer
Kevin T. Costello 48 Senior Vice President, Chief
Operating Officer and Director
Paul M. Cash 51 Senior Vice President of
Administration and Director
Charles F. Dugan II 58 Assistant Secretary and Director
Michael R. Goodrich 45 Chief Financial Officer, Vice
President of Finance, and Treasurer
William W. Johnston 52 Secretary and Director
S. Cash Nickerson 38 Executive Vice President of
Corporate Development, President of
TEAM America of California, Inc. and
Director
Byron G. McCurdy 41 Executive Vice President of
Government Affairs; President of
TEAM America West, Inc.
- ----------
Richard C. Schilg has served as Chairman of the Board of Directors,
President and Chief Executive officer of the Corporation since founding the
Corporation in 1986. From 1982 to 1986, Mr. Schilg served as a Career Agent,
Sales Manager and Director of Development of Mutual Security Life Insurance
Company located in Ft. Wayne, Indiana. Mr. Schilg served as President of the
Ohio Association of Professional Employer Organizations, a state chapter of the
National Association of Professional Organizations, from March 1995 to September
1996. Mr. Schilg is a Certified Professional Employer Specialist.
Kevin T. Costello has been a Director of the Corporation since 1992 and
has served as Senior Vice President of Operations and Chief Operating Officer of
the Corporation since 1993. From 1991 to 1993, Mr. Costello served as Vice
President of Sales and Marketing of the Corporation.
Paul M. Cash has been a Director of the Corporation since 1990 and
Senior Vice President of Administration since May 1, 1997. Mr. Cash operated a
human resources consulting business from 1988 until 1997.
-6-
<PAGE> 10
Charles F. Dugan II has been a Director of the Corporation since 1994
and has served as Assistant Secretary of the Corporation since 1992. Mr. Dugan
has served as counsel to the Corporation since 1987. From 1970 to 1990, Mr.
Dugan was a partner in the law firm of Vorys, Sater, Seymour and Pease located
in Columbus Ohio. Mr. Dugan currently practices law in his own firm located in
Columbus, Ohio.
Michael R. Goodrich was appointed Vice President of Finance, Treasurer
and Chief Financial Officer of the Corporation on March 31, 1997. Mr. Goodrich
was Chief Financial Officer and Secretary of Barefoot Inc. located in
Worthington, Ohio from 1991 to March 31, 1997 and was Vice President Finance of
Barefoot Grass Lawn Service, Inc. from 1986 to March 31, 1997. From 1974 to
1986, Mr. Goodrich was a Certified Public Accountant in the Columbus, Ohio
office of Arthur Andersen & Co.
William W. Johnston has been a Director of the Corporation since 1990
and has served as Secretary of the Corporation since 1990 and as general counsel
to the Corporation since 1989. From 1982 to 1990, Mr. Johnston was a partner in
the law firm of Crabbe, Brown, Jones, Potts and Schmidt located in Columbus,
Ohio. Mr. Johnston currently practices law in his own firm located in
Worthington, Ohio. From 1976 to 1982, Mr. Johnston was the Chairman of the Ohio
Industrial Commission.
S. Cash Nickerson has been Executive Vice President of Corporate
Development of the Corporation and President of TEAM America of California,
Inc., a wholly owned subsidiary of the Corporation, since September 8, 1997. Mr.
Nickerson was the President and founder of Workforce Strategies, Inc. from May
1995 until September 7, 1997. Mr. Nickerson was CEO of Hazar, Inc. from August
1994 until February 1995. He was President of Heatherton, Ltd., a PEO, from
October 1993 until July 1994 and he was an associate and then partner with the
law firm of Jenner & Block, in Chicago, Illinois from January 1990 until October
1993.
Byron G. McCurdy has been Executive Vice President of Government
Affairs of the Corporation and President of TEAM America West, Inc., a wholly
owned subsidiary of the Corporation, since November 1, 1997. Mr. McCurdy was the
President and founder of Aspen Consulting Group, Inc. from March 17, 1984 until
November 1, 1997.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning the
annual and long-term compensation of the chief executive officer of the
Corporation and the other executive officers (together, the "Named Executives"),
whose total salary and bonus for the last completed fiscal year exceeded
$100,000.
-7-
<PAGE> 11
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION(1) COMPENSATION
--------------------------- ------------
STOCK OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS # GRANTED COMPENSATION(4)
- --------------------------- ---- ---------- ------- --------- ---------------
<S> <C> <C> <C> <C> <C>
Richard C. Schilg, Chairman 1997 $282,431(1) $ 95,000 150,000(3) $8,247
of the Board, President and 1996 $241,561(1) $206,637(2) 50,000 $4,553
Chief Executive Officer 1995 $180,010(1) $158,790 0 $4,529
Kevin T. Costello, Senior 1997 $266,686(1) $ 60,000 125,000(3) $8,222
Vice President, Chief 1996 $232,210(1) $138,930(2) 50,000 $4,558
Operating Officer 1995 $178,316(1) $ 98,285 0 $4,529
Paul M. Cash, Senior 1997 $ 96,346 $ 40,000 80,000(3) $3,511
Vice President, Chief 1996 -- -- -- --
Administrative Officer 1995 -- -- -- --
- ----------
(1) Includes commissions in the amounts of $90,553 and $90,553 in 1997,
$100,061 and $144,480 in 1996 and $51,010 and $97,716 in 1995 paid to Mr.
Schilg and Mr. Costello, respectively.
(2) Includes payments of $70,000 and $63,000 in February 1997 to Messrs. Schilg
and Costello respectively, based in part on the financial performance of
the Corporation in 1996. In accordance with generally accepted accounting
principles, these amounts were required to be recognized as expenses in
fiscal 1996. See "Report of Compensation Committee" for a further
discussion of executive bonuses. Also included are payments of $136,637 and
$75,930 in June 1996 of discretionary bonuses to Messrs. Schilg and
Costello, respectively. These discretionary bonuses were not related to
specific performance criteria for the Corporation in 1995 and accordingly
were not required to be expensed until paid in 1996.
(3) Includes the replacement of 50,000 options each for Mr. Schilg and Mr.
Costello and 5,000 shares granted to Mr. Cash as a Director which were
granted in 1996 at $12.00 per share and cancelled on September 3, 1997.
(4) Represents health care insurance premiums paid by the Corporation for the
benefit of the indicated Named Executive Officer and the compensatory value
of a company provided car.
</TABLE>
STOCK OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning options
granted during fiscal 1997 to the Named Executives.
-8-
<PAGE> 12
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------------------------------------------
PERCENTAGE
OF TOTAL POTENTIAL
OPTIONS REALIZABLE VALUE AT
NUMBER GRANTED TO EXERCISE ASSUMED ANNUAL RATES
OF EMPLOYEES PRICE OF STOCK PRICE
OPTIONS IN FISCAL PER EXPIRATION APPRECIATION
NAME GRANTED 1997 SHARE DATE FOR OPTION TERM(1)(2)
- ---- ------- ------------ ---------- --------------- -------------------------
5%($) 10%($)
----- ------
<S> <C> <C> <C> <C> <C> <C>
Richard C. Schilg 53,475(3) 4.99% $9.35 9/2/07 $293,043 $796,778
41,979 3.91% $8.50 9/2/07 $224,588 $568,815
54,546 5.08% $8.50 9/2/07 $291,821 $739,098
Kevin T. Costello 53,475(3) 4.99% $9.35 9/2/07 $293,043 $796,778
30,615 2.85% $8.50 9/2/07 $163,790 $414,833
40,910 3.81% $8.50 9/2/07 $218,869 $554,330
Paul M. Cash 25,000 2.33% $6.75 4/30/07 $106,250 $268,750
27,728(3) 2.58% $8.50 9/2/07 $148,345 $375,714
27,272 2.54% $8.50 9/2/07 $145,905 $396,536
<FN>
- ----------
(1) The dollar amounts in these columns are the product of (a) the
difference between (1) the product of the per share market price at the
date of the grant and the sum of 1 plus the assumed rate of
appreciation (5% and 10%) compounded over the term of the option (ten
years) and (2) the per share exercise price and (b) the number of
shares underlying the grant.
(2) The appreciation rates stated are arbitrarily assumed, and may or may
not reflect actual appreciation in the stock price over the life of the
option. Regardless of any theoretical value which may be placed on a
stock option, no increase in its value will occur without an increase
in the value of the underlying shares. Whether such an increase will be
realized will depend not only on the efforts of the recipient of the
option, but also upon conditions in the Corporation's industry and
market area, competition, and economic conditions, over which the
optionee may have little or no control.
(3) Includes cancelled and reissued options of 50,000 for Mr. Schilg,
50,000 for Mr. Costello, and 5,000 for Mr. Cash. See "Ten- Year Option
Repricing."
</TABLE>
In September 1997, the Corporation granted options to purchase a total
of 218,050 shares of Common Stock at $8.50 per share and 106,950 shares of
Common Stock at $9.35 per share, all subject to the terms and conditions of the
1996 Incentive Stock Plan. Of these options, 180,000 were to replace options
granted in December 1996 at $12.00 per share which were cancelled. Another
140,000 of these options were new grants to key officers of the Corporation and
5,000 options were granted to the newly appointed director, Ms. Crystal
Faulkner.
Also on September 3, 1997, 168,400 non-statutory options were granted
to the key officers of the Corporation at a price of $8.50 per share. These
options vest 20% per year over a five year period and expire ten years from the
date of grant.
In connection with the acquisition completed on September 8, 1997,
non-statutory options to acquire 167,037 unregistered shares of Common Stock at
$8.50 per share were granted to the shareholders of the acquired corporation.
These options were vested upon issuance. In connection with the acquisition of
another corporation on November 1, 1997, 1,465 immediately vested non-statutory
options to acquire unregistered shares of Common Stock at $10.50 per share were
granted to non-employee shareholders of the acquired corporation. These options
will expire ten years from the date of grant.
-9-
<PAGE> 13
In connection with employment agreements and other employment
arrangements entered into with the employees and key employees of the companies
acquired on September 8, 1997 and November 1, 1997, non-statutory options to
acquire 223,000 shares of Common Stock at $8.50 per share were granted on
September 8, 1997 and to acquire 331,735 shares of Common Stock at $10.50 per
share were granted on November 1, 1997. These employment-related options vest
ratably over a five-year period and expire ten years from the date of grant.
All shares of Common Stock issuable upon the exercise of non-statutory
options will be unregistered shares which can only be sold pursuant to the
requirements of Rule 144.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE
The following table sets forth certain information concerning the value
of unexercised stock options held as of December 31, 1997 by the Named
Executives. No options were exercised by such executive officers during fiscal
1997.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
YEAR-END(#) AT FISCAL YEAR-END($)(1)
--------------------------------- ---------------------------
SHARES
ACQUIRED ON VALUE
EXERCISE (#) REALIZED ($) (2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------ ---------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Richard C. Schilg, 0 0 0 150,000 -- $254,546
President and Chief
Executive Officer
Kevin T. Costello, 0 0 0 125,000 -- $204,546
Senior Vice President,
Chief Operating Officer
Paul M. Cash 0 0 0 80,000 -- $203,750
Senior Vice President,
Chief Administrative Officer
<FN>
- ----------
(1) Represents the total gain which would be realized if all in-the-money
options held at year end were exercised, determined by multiplying the
number of shares underlying the options by the difference between the
per share option exercise price and per share fair market value at year
end. An option is in-the-money if the fair market value of the
underlying shares exceeds the exercise price of the option.
(2) Represents the difference between the per share fair market value on
the date of exercise and the per share option exercise price,
multiplied by the number of shares to which the exercise relates.
</TABLE>
-10-
<PAGE> 14
TEN-YEAR OPTION REPRICING
The following table provides certain information on the repricing of
options during the past ten fiscal years:
<TABLE>
<CAPTION>
NUMBER OF LENGTH OF ORIGINAL
SECURITIES MARKET PRICE OPTION TERM
UNDERLYING OPTIONS OF STOCK AT EXERCISE NEW REMAINING AT DATE
NAME AND REPRICED TIME OF PRICE OF TIME EXERCISE OF
TITLE DATE OR AMENDED REPRICING OF REPRICING PRICE REPRICING
------- ------ ------------ ----------- -------------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard C. Schilg, 9/3/97 50,000 $8.50 $12.00 $9.35 12/09/06
President and Chief
Executive Officer
Kevin T. Costello, 9/3/97 50,000 $8.50 $12.00 $9.35 12/09/06
Senior Vice President,
Chief Operating Officer
Paul M. Cash, 9/3/97 5,000 $8.50 $12.00 $8.50 12/09/06
Senior Vice President,
Chief Administrative
Officer
Michael R. Goodrich, 9/3/97 5,000 $8.50 $9.75 $8.50 3/31/07
Chief Financial
Officer
</TABLE>
During the third and fourth quarters of fiscal 1997, the Corporation
experienced a decline in the price of its shares of Common Stock. In the belief
that the decline in the Corporation's stock price was attributable to external
factors and not in connection with the performance of the Corporation, the
Compensation Committee repriced outstanding "under-water options." It is the
Compensation Committee's belief that, given the results achieved by the
Corporation and the executive officers' contribution to those results, they
should not, any more than any other employee of the Corporation, be penalized by
a decline in the market price of the Corporation's Common Stock due to factors
over which they had no control.
THE COMPENSATION COMMITTEE
William W. Johnston
Charles F. Dugan II
Paul M. Cash
EMPLOYMENT AGREEMENTS
Richard C. Schilg. Mr. Schilg has executed an employment agreement with
the Corporation pursuant to which he has agreed to serve as Chairman of the
Board, President and Chief Executive Officer of the Corporation for a period of
three years and, unless terminated in accordance with the provisions therein, on
the first day of each month that the agreement is in effect, the remaining term
thereof will be automatically extended for one additional month. Under the terms
of the agreement, Mr. Schilg receives an annual base salary of $195,000, plus
incentive compensation in an amount determined by the Corporation's Compensation
Committee based upon various factors including the Corporation's results of
operations and financial condition and Mr. Schilg's performance during the
relevant period. In addition to such base salary and incentive compensation, Mr.
Schilg may receive commissions on sales to clients for which he is responsible
pursuant to terms and conditions determined by the Corporation's Compensation
Committee. In the event Mr. Schilg's employment is terminated for cause, the
Corporation will pay Mr. Schilg the compensation and benefits due under his
employment agreement through the date of such termination. Mr. Schilg's
employment agreement contains certain non-competition and non-solicitation
provisions which prohibit him from competing with the Corporation during his
employment by the Corporation and for a period of one year after termination of
his employment.
-11-
<PAGE> 15
The Corporation has agreed to maintain one or more life insurance
policies on the life of Mr. Schilg in an aggregate amount sufficient to pay Mr.
Schilg's widow approximately $48,000 per year for 15 years in the event that he
dies prior to his retirement. No such benefit will be paid in the event that Mr.
Schilg dies after his retirement. In addition, upon Mr. Schilg's retirement on
or after his sixty-fifth birthday, the Corporation will pay him an amount
calculated to be equal to the maximum loan available from such insurance policy
which will not cause the insurance policy to lapse prior to his life expectancy.
Thereafter, such amount shall be recalculated on an annual basis and the
Corporation will pay Mr. Schilg any increase in such amount. The Corporation
maintains a Key Man life insurance policy on Mr. Schilg in the amount of
$1,000,000 for the benefit of the Corporation.
See "Executive Compensation--Stock Option Grants in Last Fiscal Year"
for a discussion of options granted to Mr. Schilg in 1997.
Kevin T. Costello. Mr. Costello has executed an employment agreement
with the Corporation pursuant to which he has agreed to serve as Senior Vice
President of Operations and Chief Operating Officer of the Corporation for a
period of three years and, unless terminated in accordance with the provisions
therein, on the first day of each month that the agreement is in effect, the
remaining term thereof will be automatically extended for one additional month.
Under the terms of the agreement, Mr. Costello receives an annual base salary of
$175,000, plus incentive compensation in an amount determined by the
Corporation's Compensation Committee based upon various factors including the
Corporation's results of operations and financial condition and Mr. Costello's
performance during the relevant period. In addition to such base salary and
incentive compensation, Mr. Costello may receive commissions on sales to clients
for which he is responsible pursuant to terms and conditions determined by the
Corporation's Compensation Committee. In the event Mr. Costello's employment is
terminated for cause, the Corporation will pay Mr. Costello the compensation and
benefits due under his employment agreement through the date of such
termination. Mr. Costello's employment agreement contains certain noncompetition
and non-solicitation provisions which prohibit him from competing with the
Corporation during his employment by the Corporation and for a period of one
year after termination of his employment.
The Corporation has agreed to maintain one or more life insurance
policies on the life of Mr. Costello in an aggregate amount sufficient to pay
Mr. Costello's widow approximately $43,000 per year for 15 years in the event
that he dies prior to his retirement. No such benefit will be paid in the event
that Mr. Costello dies after his retirement. In addition, upon Mr. Costello's
retirement on or after his sixty-fifth birthday, the Corporation will pay him an
amount calculated to be equal to the maximum loan available from such insurance
policy which will not cause the insurance policy to lapse prior to his life
expectancy. Thereafter, such amount shall be recalculated on an annual basis and
the Corporation will pay Mr. Costello any increase in such amount. Additionally,
the Corporation maintains a Key Man life insurance policy on Mr. Costello in the
amount of $750,000 for the benefit of the Corporation.
See "Executive Compensation--Stock Option Grants in Last Fiscal Year"
for a discussion of options granted to Mr. Costello in 1997.
Paul M. Cash. Mr. Cash has executed an employment agreement with the
Corporation pursuant to which he has agreed to serve as Senior Vice President of
Administration of the Corporation for a period of three years and, unless
terminated in accordance with the provisions therein, on the first day of each
month that the agreement is in effect, the remaining term thereof will be
automatically extended for one additional month. Under the terms of the
agreement, Mr. Cash receives an annual base salary of $150,000, plus incentive
compensation in an amount determined by the Corporation's Compensation Committee
based upon various factors including the Corporation's results of operations and
financial condition and Mr. Costello's performance during the relevant period.
In the event Mr. Cash's employment is terminated for cause, the Corporation will
pay Mr. Cash the compensation and benefits due under his employment agreement
through the date of such termination. Mr. Cash's employment agreement contains
certain noncompetition and non-solicitation provisions which prohibit him from
competing with the Corporation during his employment by the Corporation and for
a period of one year after termination of his employment.
The Corporation has agreed to maintain one or more life insurance
policies on the life of Mr. Cash in an aggregate amount sufficient to pay Mr.
Cash's widow approximately $59,000 per year for 15 years in the event that he
dies prior to his retirement. No such benefit will be paid in the event that Mr.
Cash dies after his retirement. In addition, upon Mr. Cash's retirement on or
after his sixty-fifth birthday, the Corporation will pay him an amount
calculated to be equal to the maximum loan available from such insurance policy
which will not cause the insurance policy to lapse prior to his life expectancy.
Thereafter, such amount shall be recalculated on an annual basis and the
Corporation will pay Mr. Cash any increase in such amount.
-12-
<PAGE> 16
The following Compensation Committee Report and Performance Graph shall
not be deemed incorporated by reference by any general statement incorporating
by reference this Proxy Statement into any of the Corporation's filings under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended, except to the extent that the Corporation specifically incorporates
this information by reference, and shall not otherwise be deemed filed under
such Acts.
REPORT OF COMPENSATION COMMITTEE
THE COMPENSATION COMMITTEE
The Compensation Committee consisted of Messrs. Cash, Dugan and
Johnston in 1997. Mr. Cash became Senior Vice President of Administration of the
Corporation on May 1, 1997. Effective January 1, 1998, Ms. Faulkner replaced Mr.
Cash as a member of the Compensation Committee.
COMPENSATION POLICIES
The Corporation's compensation program is designed to attract and
retain highly qualified executive officers and managers and to motivate them to
maximize the Corporation's earnings and shareholder returns. The Corporation's
executive and key personnel compensation consists of two principal components:
(i) cash compensation, consisting of a base salary and, in certain cases,
commissions on sales to clients and/or a bonus which is based upon the
Corporation's operating performance, and (ii) stock options. Stock options are
intended to encourage key employees to remain employed by the Corporation by
providing them with a long-term interest in the Corporation's overall
performance as reflected by the performance of the market for the Corporation's
Common Stock.
The compensation of executive officers of the Corporation, other than
the chief executive officer ("CEO"), is established annually by the CEO in
consultation with the Compensation Committee, subject to the provisions of any
applicable employment agreements. See "Executive Compensation--Employment
Agreements." In establishing the compensation of executive officers, various
factors are considered, including the executive officer's individual scope of
responsibilities, the quality of his or her performance in discharging those
responsibilities and the financial performance of the Corporation as a whole.
CEO COMPENSATION
The CEO's minimum annual base salary has been established pursuant to
an employment agreement which was executed on December 13, 1996. In fiscal 1997,
the CEOs compensation included base salary, a bonus and stock option awards
which were determined by the Board of Directors based upon its perception of the
individual performance of the CEO and the performance of the Corporation as a
whole. No particular weight was given by the Board of Directors to any
particular factor in its evaluation of each component of the CEO's compensation
for fiscal 1997. In 1998, the CEO's base salary will be as set forth in his
employment agreement (see "Executive Officers--Employment Agreements") and his
bonus and commissions, if any, will be determined by the Compensation Committee
based upon the foregoing factors.
The Budget Reconciliation Act of 1993 amended the Internal Revenue Code
to add Section 162(m) ("Section 162(m)") which bars a deduction to any publicly
held corporation for compensation paid to a "covered employee" in excess of
$1,000,000 per year. Generally, the Corporation intends that compensation paid
to covered employees shall be deductible to the fullest extent permitted by law.
The 1996 Incentive Stock Plan, as defined and described in this Proxy Statement,
is intended to qualify under Section 162(m).
THE COMPENSATION COMMITTEE
William W. Johnston
Charles F. Dugan II
Paul M. Cash
-13-
<PAGE> 17
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on
the Corporation's Common Stock from December 10, 1996 (the date the Corporation
became a public company), until December 31, 1997, with the cumulative total
return of (a) the Nasdaq Stock Market-US Index and (b) the S&P MidCap Commercial
Services Composite Index. The graph assumes the investment of $100 in the
Corporation's Common Stock, the Nasdaq Stock Market-US Index and the S&P MidCap
Commercial Services Composite Index. The initial public offering price of the
Corporation's Common Stock was $12.00 per share and the closing price of the
shares on the first day of trading was $12.25.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG THE CORPORATION, THE NASDAQ STOCK MARKET - US INDEX
AND THE S&P MIDCAP COMMERCIAL SERVICES COMPOSITE INDEX
<TABLE>
<CAPTION>
DECEMBER 10, 1996 DECEMBER 31, 1996 DECEMBER 31, 1997
<S> <C> <C> <C>
TEAM AMERICA 100 94.79 87.5
CORPORATION
NASDAQ STOCK MARKET U.S. 100 98.36 120.7
INDEX
S&P MIDCAP COMMERCIAL 100 98.34 129.01
SERVICES COMPOSITE INDEX
</TABLE>
-14-
<PAGE> 18
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Schilg is Chairman of the Board of Directors, President and Chief
Executive Officer of the Corporation. Mr. Costello is Senior Vice President of
Operations and Chief Operating Officer of the Corporation. Messrs. Johnston and
Dugan are Secretary and Assistant Secretary, respectfully, of the Corporation.
Mr. Cash has been Senior Vice President of Administration since May 1, 1997. Mr.
Swartz and Ms. Faulkner are not corporate employees of the Corporation. During
fiscal 1997, Messrs. Johnston and Dugan received fees for legal services
provided to the Corporation in the amounts of $102,460 and $7,536, respectively,
and Mr. Cash received fees for consulting services provided to the Corporation
in the amount of $22,754. Ms. Faulkner's firm received fees of $34,450 for tax
accounting and consulting services in 1997.
Each of Messrs. Johnston and Dugan have entered into a standard client
agreement with the Corporation pursuant to which each of them is both a client
and a worksite employee of the Corporation. The Corporation has provided, and
expects to continue to provide, professional employer organization services to
such individuals upon terms and conditions no more favorable to such individuals
than those generally provided to the Corporation's other clients.
Mr. Schilg is the sole owner of Rustproof Records, Inc. which is a
client of the Corporation and which the Corporation had billings of $60,623. The
Corporation expects to continue to provide professional employer organization
services to Rustproof Records, Inc. upon terms and conditions no more favorable
than those generally provided to the Corporation's other clients.
TRANSACTIONS BETWEEN EXECUTIVE OFFICERS AND THE CORPORATION
Effective November 1, 1997, the Corporation acquired Aspen Consulting
Group, Inc. which was owned by Messrs. Byron and Terry McCurdy. The Corporation
entered into a lease for office space in Twin Falls, Idaho with an entity
controlled by the McCurdy's. Rent paid for the office space was $12,000 in 1997.
AMENDMENT TO THE CORPORATION'S 1996 INCENTIVE STOCK PLAN
The Board of Directors has approved an amendment to the Corporation's
1996 Incentive Stock Plan (the "Plan"), subject to approval of the amendment by
the shareholders at the Annual Meeting, to increase the number of shares
available for issuance under the Plan from 350,000 to 800,000. Approval of this
amendment requires the affirmative vote of the holders of a majority of the
shares of the Corporation's common stock represented at the Annual Meeting. The
following summary does not purport to be complete and is qualified in its
entirety by the terms of the 1996 Incentive Stock Plan which is attached hereto
as Appendix A.
PURPOSE OF THE 1996 INCENTIVE STOCK PLAN
The Corporation's Board of Directors believes that providing selected
persons with an opportunity to invest in the Corporation will give them
additional incentive to increase their efforts on behalf of the Corporation and
will enable the Corporation to attract and retain the best available associates,
officers, directors, consultants and advisors. The Corporation's Board of
Directors has approved an amendment to the Plan to increase the number of shares
of the Corporation's Common Stock reserved for issuance upon the exercise of
options granted under the Plan from 350,000 shares to 800,000 shares.
The Plan was adopted by the Board of Directors on October 24, 1996, and
approved by shareholders on October 24, 1996. The amendment increasing the
number of shares of the Corporation's common stock issuable under the Plan was
adopted by the Corporation's Board of Directors on March 20, 1998. The options
may either meet the requirements of Section 422 ("Incentive Options") of the
Internal Revenue Code of 1986, as amended (the "Code") or not meet such
requirements ("Nonqualified Options"). Key employees, officers, and directors
of, and consultants and advisors who render services to, the Corporation are
eligible to receive options under the Plan.
-15-
<PAGE> 19
ADMINISTRATION OF THE 1996 INCENTIVE STOCK PLAN
The Plan is administered by the Board of Directors or a Committee
which, under the Plan, must consist of not less than three members of the Board
of Directors appointed by the Board who are "non-employee directors" as defined
by Rule 16b-3(b)(2)(i) under the Securities Exchange Act of 1934, as amended.
With respect to all eligible persons, the Committee is authorized to
determine to whom and at what time options may be granted. The Committee
determines the number of shares subject to option, the duration of the option,
the per share exercise price, the rate and manner of exercise, and whether the
option is intended to be a Nonqualified Option or an Incentive Option. An
Incentive Option may not have an exercise price less than fair market value of
the common stock on the date of grant or an exercise period that exceeds ten
years from the date of grant and is subject to certain other limitations which
allow the option holder to qualify for favorable tax treatment. None of these
restrictions apply to the grant of Nonqualified Options, which may have an
exercise price less than the fair market value of the underlying common stock on
the date of grant and may be exercisable for an indeterminate period of time.
The Committee also has the discretion under the Plan to make cash grants to
option holders that are intended to offset a portion of the taxes payable upon
exercise of Nonqualified Options or on certain dispositions of shares acquired
under Incentive Options.
The exercise price of the option may be paid (i) in cash, (ii) shares
of Common Stock, or (iii) a combination of cash and share of Common Stock, or
(iv) in the sole discretion of the Committee, through a cashless exercise
procedure involving a broker, or (v) such other consideration as the Committee
may deem appropriate.
TERMINATION OF OPTIONS
Options lapse upon the earliest of (i) one full year after termination
of the participant's relationship with the Corporation if the termination is due
to death or disability or if the participant dies within 90 days of termination,
or (B) 90 days after termination if the termination is for any reason other than
death or disability. Options not exercisable as of the date of a change in
control of the Corporation will become exercisable immediately as of such date.
TERM OF THE 1996 INCENTIVE STOCK PLAN
The Plan terminates on December 31, 2006, unless earlier terminated by
the Board of Directors.
AMENDMENT
The Board of Directors may terminate, amend or modify the Plan at any
time provided that (a) no amendment may be made to the Plan which would cause
the Incentive Options granted thereunder to fail to qualify as incentive stock
options under the Code; and (b) any amendment which requires the approval of the
shareholders of the Corporation under the Code or Section 16 of the Securities
Exchange Act of 1934, as amended, or the regulations promulgated thereunder,
will be subject to such approval in accordance with the applicable law or
regulations. No amendment, modification or termination of the Plan may in any
manner adversely affect any option previously granted under the Plan without the
consent of the option holder or a permitted transferee of such option holder.
1996 INCENTIVE STOCK PLAN TABLE
As of February 27, 1998, options to purchase an aggregate of 348,000
shares of the Corporation's Common Stock (net of options canceled) had been
granted pursuant to the Plan, no options had been exercised, options to purchase
348,000 shares remained outstanding, and only 2,000 shares remained available
for future grant. As of February 27, 1998, the market value of all shares of the
Corporation's Common Stock subject to outstanding options under the Plan and all
of the Corporation's stock option plans were approximately $4,872,000 and
$4,900,000, respectively (based upon the closing sale price per share of the
Corporation's Common Stock as reported on the Nasdaq National Market on February
27, 1998). During the 1997 fiscal year, options covering 350,000 shares of the
Corporation's Common Stock were granted to employees of the Corporation under
the Plan. Shares underlying presently exercisable, but unexercised, options will
constitute outstanding shares of the Corporation's Common Stock for purposes of
calculating the Corporation's net income per share. The market value of the
800,000 shares of the Corporation's Common Stock to be subject to the Plan was
approximately $11,200,000 as of February 27, 1998.
-16-
<PAGE> 20
As of February 27, 1998, the following current directors and executive
officers named in the this Proxy Statement had been granted options under the
Plan as follows:
<TABLE>
<CAPTION>
NUMBER OF OPTIONS AVERAGE EXERCISE PRICE PER
NAME GRANTED SHARE
---- ------- -----
<S> <C> <C>
Richard C. Schilg 95,454 $8.98
Kevin T. Costello 84,090 $9.04
Paul M. Cash 52,728 $7.67
Charles F. Dugan 5,000 $8.50
William W. Johnston 5,000 $8.50
M.R. Swartz 5,000 $8.50
Crystal Faulkner 5,000 $8.50
Michael R. Goodrich 27,728 $8.50
</TABLE>
Since adoption of the Plan: (i) all current executive officers, as a
group, have been granted options under the Plan covering 260,000 shares of the
Corporation's Common Stock which represents approximately 74.7% of the total
number of options granted pursuant to the Plan; (ii) all current directors who
are not executive officers, as a group, have been granted options under the Plan
covering 20,000 shares of the Corporation's Common Stock which represents
approximately 5.7% of the total number of options granted pursuant to the Plan;
and (iii) all current employees, excluding executive officers, as a group, have
been granted options under the Plan covering 68,000 shares of the Corporation's
Common Stock which represents approximately 19.6% of the total number of options
granted pursuant to the Plan.
FEDERAL INCOME TAX CONSEQUENCES
The Plan permits the granting of Incentive Stock Options as well as
Nonqualified Stock Options. Generally, no income is recognized when either type
of option is granted to the optionholder, but the subsequent tax treatment
differs widely.
Nonqualified Stock Options. Generally, upon the exercise of a
Nonqualified Stock Option, the excess of the fair market value of the shares on
the date of exercise over the option price is ordinary income to the
optionholder at the time of the exercise. The tax basis for the shares purchased
is their fair market value on the date of exercise. Any gain or loss realized
upon a later sale of the shares for an amount in excess of or less than their
tax basis will be taxed as capital gain or loss, with the character of the gain
or loss (short-term or long-term) depending upon how long the shares were held
since exercise.
Incentive Stock Options. Generally, no regular taxable income is
recognized upon the exercise of an Incentive Stock Option. The tax basis of the
shares acquired will be the exercise price. In order to receive this favorable
treatment, shares acquired pursuant to the exercise of an Incentive Stock Option
may not be disposed of within two years after the date the option was granted,
nor within one year after the exercise date (the "Holding Periods"). If the
shares are sold before the end of the Holding Periods, the amount of that gain
which equals the lesser of the difference between the fair market value on the
exercise date and the option price or the difference between the sale price and
the option price is taxed as ordinary income and the balance, if any, as
short-term or long-term capital gain, depending upon how long the shares were
held. If the Holding Periods are met, all gain or loss realized upon a later
sale of the shares for an amount in excess of or less than their tax basis will
be taxed as a capital gain or loss.
Alternative Minimum Tax. For purposes of determining the optionholder's
alternative minimum taxable income subject to the alternative minimum tax, the
exercise of an Incentive Stock Option by an optionholder will result in the
recognition of taxable income at the time of the exercise of the option in an
amount equal to the excess of the fair market value of the shares on the
exercise
-17-
<PAGE> 21
date over the option price. The alternative minimum tax is paid only if it
exceeds an individual's regular tax. It is imposed at a rate of 26% on the first
$175,000 of alternative minimum taxable income in excess of the applicable
exemption amount and at a rate of 28% for any additional alternative minimum
taxable income. The exemption amount is phased out for higher income taxpayers.
Exercise with Previously-Owned Shares. All options granted under the
Plan may be exercised with payment either in cash or, if authorized in its sole
discretion by the Corporation's Board of Directors, in previously-owned shares
of the Corporation Common Stock at their then fair market value, or in a
combination of both. When previously-owned shares ("Old Shares") are used to
purchase shares ("New Shares") upon the exercise of an Incentive Stock Option or
a Non-Statutory Stock Option, no gain or loss is recognized by the optionholder
to the extent that the total value of the Old Shares surrendered does not exceed
the total value of all of the New Shares received. If, as would almost always be
the case, the value of the New Shares exceeds the value of the Old Shares, the
excess amount is not regular taxable income to the optionholder, if the option
exercised is an Incentive Stock Option and the Holding Periods discussed above
are met for the Old Shares at the time of exercise. The New Shares would also be
subject to the Holding Periods discussed above. On the other hand, if the option
exercised is a Non-Statutory Stock Option, the excess amount is taxable as
ordinary income.
The Corporation Deduction. No deduction is available to the Corporation
in connection with the exercise of an Incentive Stock Option if the Holding
Periods discussed above are met. The Corporation, however, is entitled to a
deduction in connection with the exercise of an Incentive Stock Option if the
Holding Periods discussed above are not met, in an amount equal to the ordinary
income recognized by the optionholder (conditioned upon proper reporting and tax
withholding and subject to possible deduction limitations). The Corporation is
entitled to a tax deduction in connection with the exercise of a Non-Statutory
Stock Option equal to the ordinary income recognized by the optionholder
(conditioned upon proper reporting and tax withholding and subject to possible
deduction limitations).
1997 Tax Act. Under recently enacted legislation, capital gains
recognized by optionholders generally will be subject to a maximum federal
income tax rate of 20%, provided the shares sold or exchanged are held for more
than eighteen (18) months. If the shares are held for more than one year but
less than eighteen months, then the capital gains recognized by optionholders
will be taxed at a maximum federal income tax rate of 28%.
Section 162(m). Section 162(m) of the Internal Revenue Code does not
permit the Corporation to deduct non-performance based compensation in excess of
$1,000,000 per year paid to certain covered officers. The Corporation believes
that compensation paid pursuant to the Plan should qualify as performance-based
compensation and, therefore, Section 162(m) should not cause the Corporation to
be denied a deduction for compensation paid to certain covered officers pursuant
to the Plan.
The affirmative vote of a majority of the votes entitled to be cast by
the holders of the Corporation's Common Stock present in person or represented
by proxy at the Annual Meeting is required to adopt the amendment to the Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR
APPROVAL OF THE AMENDMENT TO THE 1996 INCENTIVE STOCK PLAN. UNLESS A CONTRARY
CHOICE IS SPECIFIED, PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED
FOR APPROVAL OF THE PLAN.
CERTAIN TRANSACTIONS
For a discussion of certain business relationships and transactions
between the Corporation and each of Messrs. Johnston, Dugan and Cash and Ms.
Faulkner, see "Compensation Committee Interlocks and Insider Participation."
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Corporation's Directors
and executive officers, and persons who own more than ten percent of a
registered class of the Corporation's equity securities, to file initial
statements of beneficial ownership (Form 3), and statements of changes in
beneficial ownership (Forms 4 and 5), of shares of Common Stock of the
Corporation with the Securities
-18-
<PAGE> 22
and Exchange Commission. Executive officers, Directors and greater than
ten-percent shareholders are required to furnish the Corporation with copies of
all such forms they file.
To the Corporation's knowledge, based solely on its review of the
copies of such forms received by it, and written representations from certain
reporting persons that no additional forms were required, all filing
requirements applicable to its executive officers, Directors and greater than
ten-percent shareholders were complied with in fiscal 1997, except for a late
Form 3 filing for Crystal Faulkner and a late Form 4 filing for Michael
Goodrich.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP has acted as independent certified public
accountants of the Corporation for fiscal 1997. Arthur Andersen LLP is expected
to have a representative present at the Annual Meeting who may make a statement,
if desired, and will be available to answer appropriate questions.
SHAREHOLDER PROPOSALS
In order for shareholder proposals to be considered for presentation at
the 1999 Annual Meeting of Shareholders, such proposals must be received by the
Corporation at its principal executive offices not later than December 31, 1998.
The Corporation's Amended and Restated Regulations (the "Regulations")
provide that shareholder nominations for election as Directors may be made in
compliance with certain advance notice, informational and other applicable
requirements. In order to be considered, a shareholder's notice of Director
nomination must be delivered to or mailed and received by the Secretary of the
Corporation at 110 East Wilson Bridge Road, Worthington, Ohio 43085 not less
than 60 or more than 90 days prior to the Corporation's Annual Meeting;
provided, however, that in the event that less than 75 days notice or prior
public disclosure of the date of the meeting is given or made to shareholders,
notice by the shareholder to be timely must be so received not later than the
close of business on the 15th day following the earlier of the day on which such
notice of the date of the meeting was mailed or such public disclosure was made.
The Corporation's Annual Meeting will generally be held in May of each year. A
shareholder's notice of Director nominations must contain certain information
required by the Regulations and must be accompanied by the written consent of
each proposed nominee to serve as a Director of the Corporation, if elected.
Copies of the Regulations are available upon request made to the Secretary of
the Corporation at the above address. The requirements described above do not
supersede the requirements or conditions established by the Securities and
Exchange Commission for shareholder proposals to be included in the
Corporation's proxy materials for a meeting of shareholders.
OTHER MATTERS
As of the date of this statement, the Board of Directors knows of no
other business that will come before the Annual Meeting. Should any other matter
requiring the vote of the shareholders arise, the enclosed proxy confers upon
the proxy holders discretionary authority to vote the same in respect to the
resolution of such other matters as they, in their best judgment, believe to be
in the best interest of the Corporation.
Shareholders are urged to forward their proxies without delay. A prompt
response will be greatly appreciated.
By Order of the Board of Directors
Richard C. Schilg
Chairman of the Board of Directors,
President and Chief Executive Officer
April 6, 1998
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ANNEX A
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TEAM AMERICA CORPORATION
1996 INCENTIVE STOCK PLAN
Adopted by Board of Directors: October 24, 1996
Approved by Shareholders: October 24, 1996
<PAGE> 24
TABLE OF CONTENTS
Section 1. Purpose....................................................1
Section 2. Definitions................................................1
Section 3. Administration.............................................3
Section 4. Eligibility................................................4
Section 5. Shares Available...........................................4
Section 6. Term.......................................................5
Section 7. Participation..............................................5
Section 8. Stock Options..............................................6
Section 9. Stock Appreciation Rights..................................7
Section 10. Restricted Stock Awards....................................8
Section 11. Phantom Stock..............................................8
Section 12. Performance Shares.........................................9
Section 13. Directors' Stock Options...................................9
Section 14. Payment of Awards.........................................10
Section 15. Dividends and Dividend Equivalents........................11
Section 16. Termination of Employment.................................11
Section 17. Assignment and Transfer; Holding Period...................11
Section 18. Adjustments Upon Changes in Capitalization................12
Section 19. Extraordinary Distributions and Pro Rata Repurchases......12
Section 20. Withholding Taxes.........................................13
Section 21. Regulatory Approvals and Listings.........................13
Section 22. No Right to Continued Employment or Grants................13
Section 23. Rights as Shareholder.....................................13
Section 24. Responsibility and Indemnification........................14
Section 25. Substitution, Extension, Renewal and Regrant of Awards....14
Section 26. Amendment.................................................14
Section 27. Corporate Changes; Use of Funds...........................15
Section 28. Change in Control.........................................15
Section 29. Governing Law.............................................17
Section 30. Interpretation............................................17
2
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TEAM AMERICA CORPORATION
1996 INCENTIVE STOCK PLAN
SECTION 1. PURPOSE
The purpose of this Plan is to advance the long-term interests of TEAM
America Corporation by (i) motivating executive and other personnel by means of
long-term incentive compensation, (ii) furthering the identity of interests of
participants with those of the shareholders of the Company through the ownership
and performance of the Common Stock of the Company and (iii) permitting the
Company to attract and retain directors and executive personnel upon whose
judgment the successful conduct of the business of the Company largely depends.
Toward this objective, the Committee may grant stock options, stock appreciation
rights, restricted stock awards, phantom stock and/or performance shares to Key
Employees of the Company and its Subsidiaries, and shall grant stock options to
non-employee directors of the Company, on the terms and subject to the
conditions set forth in the Plan.
SECTION 2. DEFINITIONS
2.1. "Administrative Policies" means the administrative policies and
procedures adopted and amended from time to time by the Committee to administer
the Plan.
2.2. "Applicable Market" means the Nasdaq National Market ("NNM") or,
if the Common Stock is no longer traded in the NNM, then the principal national
securities exchange, if any, on which the Common Stock is traded as determined
by the Committee, or if the Common Stock is no longer traded in the NNM or on
any national securities exchange, then such other market price reporting system
pursuant to which the Common Stock is traded or quoted as designated by the
Committee.
2.3. "Award" means any form of stock option, stock appreciation right,
restricted stock award, phantom stock or performance share granted under the
Plan, whether singly, in combination, or in tandem, granted, made or awarded to
a Participant by the Committee pursuant to such terms, conditions, restrictions
and limitations, if any, as the Committee may establish by the Award Agreement
or otherwise.
2.4. "Award Agreement" means a written agreement with respect to an
Award between the Company and a Participant establishing the terms, conditions,
restrictions and limitations applicable to an Award. To the extent an Award
Agreement is inconsistent with the terms of the Plan, the Plan shall govern the
rights of the Participant thereunder.
2.5. "Board of Directors" or "Board" means the directors of the
Company, as a group, serving as such from time to time.
2.6. "Change in Control" means (a) the acquisition after the effective
date of this Plan by any "Person" (defined for the purposes of this Section to
mean any person within the meaning of Section 13(d) of the Exchange Act, other
than the Company or an employee benefit plan created by the Board of
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Directors of the Company), either directly or indirectly, of the beneficial
ownership (determined under Rule 13d-3 of the Regulations promulgated by the
Securities and Exchange Commission ("SEC") under Section 13(d) of the Exchange
Act) of any securities issued by the Company if, after such acquisition, such
Person is the beneficial owner of securities issued by the Company having 20% or
more of the voting power in the election of Directors at the next meeting of the
holders of voting securities to be held for such purpose of all of the voting
securities issued by the Company, if such person acquired such beneficial
ownership without the prior consent of the Board of Directors; (b) the
commencement (determined under Rule 14d-2 of the Regulations promulgated by the
SEC under Section 14(d) of the Exchange Act) after the effective date of this
Plan by any Person of a tender offer subject to the provisions of Section 14(d)
of the Exchange Act if, after consummation of such tender offer, such Person
would, directly or indirectly, be the beneficial owner of securities issued by
the Company having 20% or more of the voting power in the election of Directors
at the next meeting of the holders of voting securities to be held for such
purpose of all of the voting securities issued by the Company, if such Person
commenced such tender offer without the prior written consent of the Directors;
(c) the election of a majority of the Directors, elected at any meeting of the
holders of voting securities of the Company, who were not nominated for such
election by the Board of Directors or a duly constituted committee of the Board
of Directors; or (d) the merger or consolidation with or transfer of
substantially all of the assets of the Company to another person if the Board of
Directors does not adopt a resolution, before the Company enters into any
agreement for such merger, consolidation or transfer, determining that it is not
a Change in Control.
2.7. "Change in Control Price" means the higher of (i) the mean of the
high and low closing prices for the Company's Common Stock on the Applicable
Market on the date of determination of the Change in Control, or (ii) the
highest price per share actually paid for the Common Stock in connection with
the Change in Control.
2.8. "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
2.9. "Committee" means the Compensation Committee of the Board of
Directors or such other committee designated by the Board to administer the Plan
under Section 3 hereof.
2.10. "Common Stock" means the Common Shares, without par value, of the
Company.
2.11. "Company" means TEAM America Corporation, an Ohio corporation.
2.12. "Derivative Security" means any of the "derivative securities" as
defined in Rule 16a-1 under the Exchange Act as such rule may be amended or
superseded from time to time.
2.13. "Director" means a member of the Board of Directors.
2.14. "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2.15. "IPO" means the initial underwritten public offering of the
Common Stock.
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2.16. "IPO Price" means the price at which the Common Stock is offered
by the Company in the IPO.
2.17. "Key Employee" means an employee of the Company or a Subsidiary
who holds a position of responsibility in an executive, managerial,
administrative or professional capacity, and whose performance, as determined by
the Committee in the exercise of its sole and absolute discretion, can have an
effect on the growth, profitability and success of the Company.
2.18. "Participant" means any individual to whom an Award has been
granted by the Committee under this Plan.
2.19. "Plan" means this TEAM America Corporation 1996 Incentive Stock
Plan, as the same may be amended from time to time.
2.20. "Section 16 Officer" means any Participant who is an "officer" of
the Company within the meaning of Rule 16a-1 under the Exchange Act as such rule
may be amended or superseded from time to time.
2.21. "Subsidiary" means a corporation or other business entity in
which the Company directly or indirectly has an ownership interest of fifty-one
percent or more.
2.22. "Termination" means the termination of the Participant's
relationship with the Company including termination of the Participant's
employment and status as a Director. A Participant who is absent from employment
or other relationship with the Company for a reason or purpose and for a period
of time approved by the Committee, in its sole discretion, shall not for the
period of such absence be deemed, solely because of such absence, to have
suffered a Termination, unless and until the Committee otherwise determines.
SECTION 3. ADMINISTRATION
The Plan shall be administered under the supervision of either (i) the
Board of Directors, or (ii) the Committee composed of not less than three
Directors each of whom shall be a "nonemployee director" as defined in Rule
16b-3 under the Exchange Act as such rule may be amended or superseded from time
to time and an "outside director" under Section 162(m) of the Code and the
regulations thereunder. References to the authority, duties and obligations of
the Committee hereinafter set forth shall apply to the Board of Directors at any
time the Board of Directors rather than the Committee is administering and
supervising the Plan.
Members of the Committee shall serve at the pleasure of the Board of
Directors, and may resign by written notice filed with the Chairman of the
Board, President or Secretary of the Company. A vacancy in the membership of the
Committee shall be filled by the appointment of a successor member by the Board
of Directors. Until such vacancy is filled, the remaining members shall
constitute a quorum and the action at any meeting of a majority of the entire
Committee, or an action unanimously approved in writing by all
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<PAGE> 28
Committee members, shall constitute action of the Committee. Subject to the
express provisions of this Plan, the Committee shall have exclusive and final
authority to: (i) construe and interpret the Plan and any Award Agreement
entered into hereunder; (ii) establish, amend and rescind Administrative
Policies for the administration of the Plan; and (iii) determine the "fair
market value" of the Common Stock of the Company (based on the Applicable
Market, if any, for the Common Stock). The Committee shall have such additional
authority as the Board of Directors may from time to time determine to be
necessary or desirable. Employees, agents and independent contractors of the
Company or the Committee may be assigned, or employed or retained to perform,
administrative, clerical and other duties of the Committee, subject to the
supervision and control of the Committee; provided, however, that only the
Committee may grant or award an Award under the Plan and make decisions
concerning the timing, pricing and amount of any Award, except for stock options
automatically granted to Directors who are not employees of the Company under
Section 13 hereof.
For so long as Directors and/or Section 16 Officers are or may be
Participants in the Plan, the Committee shall not knowingly take any action, or
decline to take any action, which shall cause the Plan not to meet the
requirements contained in Rule 16b-3 under the Exchange Act, as such rule is
amended or superseded from time to time, which permit the granting or making of
Awards under the Plan to be exempt from section 16(b) of the Exchange Act as
amended or superseded from time to time.
SECTION 4. ELIGIBILITY
Any Key Employee is eligible to become a Participant in the Plan.
Directors of the Company, other than Directors who are employees of the Company,
shall be eligible only to receive stock options pursuant to Section 13 hereof.
SECTION 5. SHARES AVAILABLE
(a) Shares of Common Stock available for issuance under the Plan may be
authorized and unissued shares or treasury shares. Subject to the adjustments
provided for in Sections 18 and 19 hereof, the maximum number of shares of
Common Stock available for grant of Awards under the Plan is 350,000 shares.
Notwithstanding the foregoing, at no time shall the number of shares of Common
Stock deemed to be available for grant in any calendar year exceed ten percent
of the total number of issued and outstanding shares of Common Stock of the
Company. The number of shares of Common Stock available for grant to any
individual Participant in any calendar year shall not exceed 50,000 shares.
(b) For purposes of calculating the number of shares of Common Stock
deemed to be granted hereunder during any fiscal year, each Award, whether
denominated in stock options, stock appreciation rights, restricted stock,
performance shares or phantom stock, shall be deemed to be a grant of a number
of shares of Common Stock equal to the number of shares represented by the stock
options, shares of restricted stock, performance shares, shares of phantom stock
or stock appreciation rights set forth in the Award; provided however
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(i) in the case of any Award as to which the exercise of one
right nullifies the exercisability of another (including, by way of
illustration the grant of a stock option with Tandem SARs (as
hereinafter defined)), the number of shares deemed to have been granted
shall be the maximum number of shares (and/or cash equivalents) that
could have been acquired upon the maximum exercise or settlement of the
Award; and
(ii) in the case of Performance Share Awards (as hereinafter
defined) providing for payments in excess of 100% of the number of
shares set forth in the Award Agreement, the number of shares granted
shall be deemed to be the maximum number of shares (and/or the cash
equivalent thereof) issuable under the Award at the highest level of
performance.
(c) Shares of Common Stock covered by lapsed, canceled, surrendered or
terminated Awards shall be shares available for regrant under the Plan;
provided, however, that the portion of any Award that has been settled by the
payment of cash or the issuance of shares of Common Stock, or a combination
thereof, shall not be available for re-grant under the Plan, irrespective of the
value of the settlement or the method of its payment. The settlement of an Award
shall not be deemed to be the grant of an Award hereunder.
SECTION 6. TERM
The Plan shall become effective as of October 24, 1996, subject to
approval of the Plan by the holders of a majority of the shares of Common Stock.
No Awards shall be exercisable or payable before approval of the Plan has been
obtained from the Company's shareholders and no Awards may be granted after
December 31, 2006.
SECTION 7. PARTICIPATION
The Committee shall select, from time to time, Participants from those
Key Employees who, in the opinion of the Committee can further the Plan's
purpose and the Committee shall determine the type or types of Awards, if any,
to be made to the Participant. Any selection by the Committee of an employee of
the Company or a Subsidiary to be a Participant in the Plan shall irrevocably
constitute the Committee's concurrent and conclusive determination that such
employee is a Key Employee. In addition, all non-employee Directors shall
participate in the Plan solely in the manner specified in Section 13 hereof. The
terms, conditions and restrictions of each Award shall be set forth in an Award
Agreement, and no Participant shall have any rights to or interest in an Award
unless and until such Participant has exercised and delivered an Award Agreement
with respect to such Award.
SECTION 8. STOCK OPTIONS
(a) Grants. Awards may be granted in the form of stock options. Stock
options may be incentive stock options within the meaning of section 422 of the
Code or nonqualified stock options (i.e., stock options which are not incentive
stock options), or a combination of both, or any particular type of tax
advantage option authorized by the Code from time to time.
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(b) Terms and Conditions of Options. An option shall be exercisable in
whole or in such installments and at such times as may be determined by the
Committee; provided, however, that no stock option shall be exercisable more
than ten years after the date of grant thereof. In the absence of any provision
in an option to the contrary (i) the option will become exercisable as to 20% of
the shares of Common Stock subject to the option upon completion of the first
full year of employment of the Participant after the date of grant thereof and
as to 20% of such shares upon the completion of each full year thereafter prior
to Termination, and (ii) the option will lapse upon the earliest of (A) one year
after Termination of the Participant's relationship with the Company if the
Termination is due to death or disability or if the Participant dies within 90
days of the Termination, or (B) 90 days after Termination if the Termination is
for any reason other than death or disability. The option exercise price shall
be established by the Committee, but such price shall not be less than the per
share fair market value of the Common Stock, as determined by the Committee, on
the date of the stock option's grant subject to adjustment as provided in
Sections 18 or 19 hereof; provided, however, that the option price of any
nonqualified stock option granted within 90 days following the closing of the
IPO may be the IPO Price.
(c) Restrictions Relating to Incentive Stock Options. Stock options
issued in the form of incentive stock options shall, in addition to being
subject to all applicable terms, conditions, restrictions and/or limitations
established by the Committee, comply with section 422 of the Code. Incentive
stock options shall be granted only to those Key Employees who are employees of
the Company and its "subsidiaries" within the meaning of section 424 of the
Code, and shall be granted within ten years after the date the Plan was adopted
by the Board of Directors. The aggregate fair market value (determined as of the
date the option is granted) of shares with respect to which incentive stock
options are exercisable for the first time by an individual during any calendar
year (under this Plan or any other plan of the Company or any Subsidiary which
provides for the granting of incentive stock options) may not exceed $100,000 or
such other number as may be applicable under the Code from time to time. Any
incentive stock option that is granted to any employee who is, at the time the
option is granted, deemed for purposes of section 422 of the Code, or any
successor provision, to own shares of the Company possessing more than ten
percent (10%) of the total combined voting power of all classes of shares of the
Company or of a parent or subsidiary of the Company shall have an option
exercise price that is at least 110 percent (110 %) of the fair market value of
the shares at the date of grant and shall not be exercisable after the
expiration of 5 years from the date it is granted.
(d) Additional Terms and Conditions. The Committee may, in any manner
not inconsistent with the Plan, by way of the Award Agreement or otherwise,
establish such other terms, conditions, restrictions and/ or limitations, if
any, on any stock option Award and the exercise thereof.
(e) Payment. Upon exercise, a Participant may pay the option exercise
price of a stock option (i) in cash, (ii) in shares of Common Stock, or (iii) a
combination thereof, or (iv) in the sole discretion of the Committee, through a
cashless exercise procedure involving a broker; provided, however, that such
method and time for payment shall be permitted by and be in compliance with
applicable law, or (v) such other consideration as the Committee may deem
appropriate. The Committee shall establish appropriate methods for accepting
Common Stock and may impose such conditions as it deems appropriate on the use
of such Common Stock to exercise a stock option.
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SECTION 9. STOCK APPRECIATION RIGHTS
(a) Grants. Awards may be granted in the form of stock appreciation
rights ("SARs"). SARs shall entitle the recipient to receive a payment equal to
the appreciation in market value of a stated number of shares of Common Stock
from the price stated in the Award Agreement to the market value of the Common
Stock on the date of exercise or surrender. A SAR may be granted in tandem with
all or a portion of a related stock option under the Plan ("Tandem SARs"), or
may be granted separately ("Freestanding SARs"): provided, however, that
Freestanding SARs may be granted only to Key Employees who are foreign nationals
or are employed outside of the United States, or both, and as to whom the
Committee determines the interests of the Company could not as conveniently be
served by the grant of other forms of Awards under the Plan. Tandem SARs shall
permit the optionee to surrender a stock option or portion thereof and to
receive the payment to which he is entitled under the SAR Award Agreement with
respect to the shares of Common Stock subject to the surrendered stock option or
portion thereof. A Tandem SAR may be granted either at the time of the grant of
the related stock option or at any time thereafter during the term of the stock
option. A Freestanding SAR granted to a Section 16 Officer may be exercised no
sooner than six months after it is granted.
(b) Terms and Conditions of Tandem SARs. A Tandem SAR shall be
exercisable to the extent, and only to the extent, that the related stock option
is exercisable. The appreciation in value of a Tandem SAR shall be the
appreciation in fair market value from an amount not less than the option
exercise price of the related stock option or portion thereof being surrendered
to the market value of the Common Stock on the date of exercise. Upon exercise
of a Tandem SAR as to some or all of the shares covered by an Award, the related
stock option shall be canceled automatically to the extent of the number of SARs
exercised, and such shares shall not thereafter be eligible for grant under
Section 5 hereof.
(c) Terms and Conditions of Freestanding SARs. Freestanding SARs shall
be exercisable in whole or in such installments and at such times as may be
determined by the Committee. The base price of a Freestanding SAR shall also be
determined by the Committee; provided, however, that such price shall not be
less that the fair market value of the Common Stock on the date of the award of
the Freestanding SAR.
(d) Deemed Exercise. The Committee may provide that an SAR shall be
deemed to be exercised at the close of business on the scheduled expiration date
of such SAR, if at such time the SAR by its terms is otherwise exercisable and,
if so exercised, would result in a payment to the Participant.
(e) Additional Terms and Conditions. The Committee may, in any manner
not inconsistent with the Plan, by way of the Award Agreement or otherwise,
determine such other terms, conditions, restrictions and/or limitations, if any,
on any SAR Award.
SECTION 10. RESTRICTED STOCK AWARDS
(a) Grants. Awards may be granted in the form of Restricted Stock
Awards. Restricted Stock Awards consist of shares of Common Stock bearing
restrictions on their transfer or otherwise as authorized
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by Section 10(b), below, and may be awarded to a Key Employee with or without
payment of consideration by the Key Employee.
(b) Award Restrictions. Restricted Stock Awards shall be subject to
such terms, conditions, restrictions, or limitations as the Committee deems
appropriate including, by way of illustration but not by way of limitation,
restrictions on transferability, requirements of continued employment or
individual performance or the financial performance of the Company. The
Committee may modify, or accelerate the termination of, the restrictions
applicable to a Restricted Stock Award under such circumstances as it deems
appropriate.
(c) Rights as Shareholders. During the period in which any shares of
Common Stock are subject to the restrictions imposed under this Section 10, the
Committee may, in its discretion, grant to the Participant to whom such
restricted shares have been awarded, all or any of the rights of a shareholder
with respect to such shares, including, by way of illustration but not by way of
limitation, the right to vote such shares and to receive dividends.
(d) Evidence of Award. Any Restricted Stock Award granted under the
Plan may be evidenced in such manner as the Committee deems appropriate,
including, without limitation, book entry registration or issuance of a stock
certificate or certificates.
(e) Additional Terms and Conditions. The Committee may, in any manner
not inconsistent with the Plan, by way of Award Agreement or otherwise,
determine such other terms, conditions, restrictions or limitations, if any, on
any Award of Restricted Stock.
SECTION 11. PHANTOM STOCK
(a) Grants. Awards may be granted in the form of Phantom Stock Awards.
Phantom Stock Awards shall entitle the Participant to receive the market value
or the appreciation in value of a stated number of shares of Common Stock on a
settlement date determined by the Committee.
(b) Terms and Conditions. The Committee may, in any manner not
inconsistent with the Plan, by way of Award Agreement or otherwise, determine
such terms, conditions, restrictions or limitations, if any, on any Award of
Phantom Stock.
SECTION 12. PERFORMANCE SHARES
(a) Grants. Awards may be granted in the form of performance shares.
"Performance Shares" means interests the entitlement to which is based upon the
attainment of pre-determined Performance Targets as hereinafter defined during a
Performance Period as hereinafter defined. At the end of the Performance Period,
Performance Shares shall be converted into Common Stock (or Common Stock and
cash, as determined by the Award Agreement) and distributed to Participants
based upon such entitlement.
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<PAGE> 33
(b) Performance Criteria. The Committee may grant an Award of
Performance Shares to Participants as of the first day of each Performance
Period. As used herein, the term "Performance Period" means the period during
which a Performance Target is measured and the term "Performance Target" means
the predetermined goals established by the Committee. A Performance Target will
be established at the beginning of each Performance Period. If at the end of the
Performance Period, the Performance Target is fully met, the Performance Shares
will be converted 100% into shares of Common Stock (or the cash equivalent
thereof, as determined by the Award Agreement) and issued to the Participant.
Award payments in excess of 100% shall be permitted based upon an attainment in
excess of 100% of the Performance Target. If the Performance Target has not been
fully met, Performance Shares will be converted and delivered only to the
extent, if any, provided at the time of the grant of such Award for conversion
based upon partial attainment of the Performance Target and the balance of the
Performance Shares will be forfeited to the Company and available for reissuance
pursuant to Section 5 hereof.
(c) Additional Terms and Conditions. The Committee may, in any manner
not inconsistent with the terms of this Plan, by way of the Award Agreement or
otherwise, determine the manner of payment of Awards of Performance Shares and
other terms, conditions, restrictions or limitations, if any, on any Award of
Performance Shares.
SECTION 13. DIRECTORS' STOCK OPTIONS
(a) Grants. Awards may be granted to non-employee Directors only in the
form of stock options satisfying the requirements of this Section 13. All stock
options granted under this Section 13 shall be nonqualified stock options.
(b) Option Exercise Price. The option exercise price of all stock
options granted under this Section 13 shall be the per share fair market value
of the outstanding shares of the Common Stock on the date such options are
granted; provided, however, that the option price of any nonqualified stock
option granted within 90 days following the closing of the IPO may be the IPO
Price. Payment of the option exercise price may be made in cash or in shares of
Common Stock or a combination of cash and Common Stock to the extent provided in
the Award Agreement.
(c) Administration. Subject to the express provisions of this Section
13, the Committee shall have conclusive authority to construe and interpret any
Stock Option Award granted under this Section 13 and to adopt Administrative
Policies with respect thereto; provided, however, that no action shall be taken
which would prevent the options granted under this Section 13 or any Award
granted under the Plan from meeting the requirements for exemption from Section
16(b) of the Exchange Act, or subsequent comparable statute, as set forth in
Rule 16b-3 of the Exchange Act or any subsequent comparable rule.
(d) Option Agreement. The options granted hereunder shall be evidenced
by an option agreement, dated as of the date of the grant, which agreement shall
be in such form, consistent with the terms and requirements of this Section 13,
as shall be approved by the Committee from time to time and executed on behalf
of the Company by the President. The Option Agreement shall require the optionee
to
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refrain from selling or otherwise disposing of shares so acquired for at least
120 days following the exercise of such option.
(e) Option Period. Options granted under this Section 13 will become
exercisable at such times as the Committee shall approve.
(f) Limitations on Exercise. Directors' Stock Options shall become
exercisable at such times and to such extent as the Committee shall approve. To
the extent an option is not otherwise exercisable at the date of the Director's
retirement as a Director as required under any plan or policy of the Company, it
shall become fully exercisable upon such retirement; provided, however, that
Director Stock Options shall not become exercisable under this sentence prior to
the expiration of six months from the date of grant. Upon such retirement such
options shall be exercisable for a period of three years, subject to any shorter
original term thereof. Options not otherwise exercisable at the time of the
death of a Director during continued service with the Company shall become fully
exercisable upon his death. Upon the death of a Director while in service as a
Director, such options shall remain exercisable for a period of one year after
the date of death. To the extent an option is exercisable on the date a Director
ceases to be a Director (other than by reason of death or retirement as a
Director under any plan or policy of the Company), the option shall continue to
be exercisable (subject to the original term of the option) for a period of
ninety (90) days thereafter.
SECTION 14. PAYMENT OF AWARDS
Except as otherwise provided herein Award Agreements may provide that,
at the discretion of the Committee, payment of Awards may be made in cash,
Common Stock, a combination of cash and Common Stock, or any other form of
property as the Committee shall determine. The terms of Award Agreements may
provide for payment of Awards in the form of a lump sum or installments, as
determined by the Committee. In connection with transactions involving the
exercise and cancellation of an Award (under this Section 14 or Section 25, or
otherwise) held by or through a Director or a Section 16 Officer (whether or not
the transaction also involves the related surrender and cancellation of a stock
option) and the receipt of cash in complete or partial settlement of the Award,
or the cash settlement of an equity security to satisfy the tax withholding
consequences of a Derivative Security, the Committee may require that such
transaction be consummated in compliance with Rule 16b-3(e) under the Exchange
Act, as such rule may be amended or superseded from time to time, unless the
holder of such Award waives such compliance in a writing executed by such holder
and delivered to the Committee and the Committee consents to such waiver.
SECTION 15. DIVIDENDS AND DIVIDEND EQUIVALENTS
If an Award is granted in the form of a Restricted Stock Award, Phantom
Stock Award or a Freestanding SAR, the Committee may choose, at the time of the
grant of the Award, to include as part of such Award an entitlement to receive
dividends or dividend equivalents, subject to such terms, conditions,
restrictions or limitations, if any, as the Committee may establish. Dividends
and dividend equivalents shall be paid in such form and manner and at such time
as the Committee shall determine. All dividends or
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dividend equivalents which are not paid currently may, at the Committee's
discretion, accrue interest or be reinvested into additional shares of Common
Stock.
SECTION 16. TERMINATION OF EMPLOYMENT
The Committee may adopt Administrative Policies determining the
entitlement of Participants who cease to be employed by either the Company or a
Subsidiary whether because of death, disability, resignation, termination or
retirement pursuant to an established retirement plan or policy of the Company
or of its applicable Subsidiary.
SECTION 17. ASSIGNMENT AND TRANSFER; HOLDING PERIOD
An equity security of the Company granted or awarded to a Director or
Section 16 Officer as an Award under the Plan shall not be assigned, sold,
encumbered, transferred or otherwise disposed of prior to the elapse of six
months from the date of grant, and neither a Derivative Security granted or
awarded to a Director or Section 16 Officer as an Award under the Plan, nor the
underlying equity security with respect to such Derivative Security, shall be
assigned, sold, encumbered, transferred or otherwise disposed of prior to the
elapse of six months from the date of acquisition of the Derivative Security to
the date of disposition of the Derivative Security (other than upon exercise or
conversion) or such underlying equity security, unless, in either case, the
holder of such equity security or Derivative Security requests waiver of such
restrictions in a writing delivered to the Committee and the Committee consents
to such waiver.
SECTION 18. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
In the event of any change in the outstanding shares of Common Stock by
reason of any reorganization, recapitalization, stock split, stock dividend,
combination or exchange of shares, merger, consolidation or any change in the
corporate structure or shares of the Company, the maximum aggregate number and
class of shares as to which Awards may be or are required to be granted under
the Plan, and the shares issuable pursuant to and the exercise or purchase price
payable under then outstanding Awards, shall be appropriately adjusted by the
Committee whose determination shall be final. Any such adjustments may be
provided for in Award Agreements.
SECTION 19. EXTRAORDINARY DISTRIBUTIONS AND PRO RATA REPURCHASES
In the event the Company shall at any time when an Award is outstanding
make an Extraordinary Distribution (as hereinafter defined) in respect of Common
Stock or effect a Pro Rata Repurchase of Common Stock (as hereinafter defined),
the Committee may consider the economic impact of the Extraordinary Distribution
or Pro Rata Repurchase on Participants and make such adjustments as it deems
equitable under the circumstances. The determination of the Committee shall,
subject to revision by the Board of Directors, be final and binding upon all
Participants.
(a) As used herein, the term "Extraordinary Distribution" means any
dividend or other distribution by the Company of:
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(i) cash, where the aggregate amount of such cash dividend or
distribution together with the amount of all cash dividends and
distributions made during the twelve months preceding the date of
payment of such dividend or other distribution, when combined with the
aggregate amount of all Pro Rata Repurchases (for this purpose,
including only that portion of the aggregate purchase price of such Pro
Rata Repurchases which is in excess of the fair market value (as
determined by the Committee) of the Common Stock repurchased during
such twelve month period), exceeds ten percent (10%) of the aggregate
fair market value (as determined by the Committee) of all shares of
Common Stock outstanding on the record date for determining the
shareholders entitled to receive such Extraordinary Distribution; or
(ii) any shares of capital stock of the Company (other than
shares of Common Stock), other securities of the Company (including
evidences of indebtedness of the Company), or any other investments,
assets or property of the Company (including shares of any Subsidiary
of the Company), or any combination thereof.
(b) As used herein "Pro Rata Repurchase" means any purchase of shares
of Common Stock by the Company or any Subsidiary thereof, pursuant to any tender
offer or exchange offer subject to section 13(e) of the Exchange Act or any
successor provision of law, or pursuant to any other offer available to
substantially all holders of Common Stock; provided, however, that no purchase
of shares of the Company or any Subsidiary thereof made in open market
transactions shall be deemed a Pro Rata Repurchase.
SECTION 20. WITHHOLDING TAXES
The Company or the applicable Subsidiary shall be entitled to deduct
from any payment under the Plan, regardless of the form of such payment, the
amount of all applicable income and employment tax required by law to be
withheld with respect to such payment or may require the Participant to pay to
it such tax prior to and as a condition of the making of such payment. In
accordance with any applicable Administrative Policies it establishes, the
Committee may allow a Participant to pay the amount of taxes required by law to
be withheld from an Award by withholding from any payment of Common Stock due as
a result of such Award, or by permitting the Participant to deliver to the
Company shares of Common Stock having a fair market value, as determined by the
Committee, equal to the amount of such required withholding taxes.
SECTION 21. REGULATORY APPROVALS AND LISTINGS
Notwithstanding anything contained in this Plan to the contrary, the
Company shall have no obligation to issue or deliver certificates of Common
Stock evidencing Restricted Stock Awards or any other Award payable in Common
Stock prior to (a) the obtaining of any approval from any governmental agency
which the Company shall, in its sole discretion, determine to be necessary or
advisable, (b) the admission of such shares to trading on the Applicable Market
and (c) the completion of any registration or other qualification of said shares
under any state or Federal law or ruling of any governmental body which the
Company shall, in its sole discretion, determine to be necessary or advisable.
The Company shall have the right to require that any certificate for Common
Stock issued pursuant. to the Plan or an Award bear
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<PAGE> 37
any restrictive legend required by law and/or to evidence restrictions on the
transfer of the shares under applicable law, the Award Agreement or the Plan.
SECTION 22. NO RIGHT TO CONTINUED EMPLOYMENT OR GRANTS
Participation in the Plan shall not give any Key Employee any right to
remain in the employ of the Company or any Subsidiary. The Company or, in the
case of employment with a Subsidiary, the Subsidiary, reserves the right to
terminate the employment of any Key Employee at any time, subject to the terms
of any employment agreement with such Key Employee. The adoption of this Plan
shall not be deemed to give any Key Employee or any other individual any right
to be selected as a Participant, to be granted any Awards hereunder or, if
granted an Award, to receive any additional Awards at any subsequent time.
SECTION 23. RIGHTS AS SHAREHOLDER
No Participant shall have any rights as a shareholder as a result of
participation in the Plan until the date of issuance of and only as the holder
of a stock certificate in his name except, in the case of Restricted Stock
Awards, to the extent such rights are granted to the Participant under Section
10(c) hereof. To the extent any person acquires a right to receive payments from
the Company under this Plan, such rights shall be no greater than the rights of
an unsecured creditor of the Company.
SECTION 24. RESPONSIBILITY AND INDEMNIFICATION
No member of the Board of Directors or the Committee shall be liable to
the Company, any Participant or any third party for any action or determination
made in good faith with respect to the Plan and Awards thereunder, or for any
matter as to which the Company's articles of incorporation or code of
regulations, or any valid contract between the Company and such member, limits
or negates the liability of Directors. Such members shall be entitled to
indemnification and reimbursement in the manner provided in the Company's
articles of incorporation and code of regulations, in any valid contract between
the Company and such member, and under any directors' and officers' liability
insurance coverage which may be in effect from time to time.
SECTION 25. SUBSTITUTION, EXTENSION, RENEWAL AND REGRANT OF AWARDS
Awards may be granted under the Plan from time to time in substitution
for stock options and other rights or awards held by employees of organizations
who become or are about to become Key Employees of the Company or a Subsidiary
as the result of a merger or consolidation of the employing organization with
the Company or a Subsidiary, or the acquisition by the Company or a Subsidiary
of the assets of the employing organization, or the acquisition by the Company
or a Subsidiary of equity interests in the employing organization as the result
of which it becomes a Subsidiary. The Committee may extend or renew outstanding
Awards granted under the Plan on terms not inconsistent with the Plan.
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The Committee may accept the surrender or cancellation of outstanding
Awards (to the extent not theretofore exercised, paid or settled) and grant or
award new Awards in substitution therefor, which new Awards may be different
types of Awards than the Awards so surrendered and/or canceled.
SECTION 26. AMENDMENT
The Committee may suspend, reinstate and terminate the Plan or any
portion thereof at any time. In addition, the Committee may, from time to time,
amend the Plan in any manner, but may not without shareholder approval adopt any
amendment (i) which would (a) materially increase the benefits accruing to
Participants under the Plan, (b) materially increase the number of shares of
Common Stock which may be issued under the Plan (except as specified in Section
18), or (c) materially modify the requirements as to eligibility for
participation in the Plan, or (ii) that requires shareholder approval in order
for the Plan to comply with Section 162(m) of the Code. Notwithstanding the
foregoing, the provisions of Section 13 relating to the eligibility for, and the
amount, price and timing of, Awards to Directors thereunder shall not be
amended, nor shall the operation of Section 13 be suspended or reinstated, more
than once every six months other than to comport with changes in the Code,
ERISA, or the rules thereunder.
SECTION 27. CORPORATE CHANGES; USE OF FUNDS
The grant of an Award pursuant to the Plan shall not affect the right
or power of the Company to make adjustments, reclassifications, reorganizations,
or changes of its stock, securities, capital or business structure, or to merge,
consolidate, dissolve, or liquidate, or to sell, lease or transfer all or any
part of its business or assets. The funds received by the Company upon any
exercise or settlement of an Award may be used by the Company for any corporate
purpose or purposes.
SECTION 28. CHANGE IN CONTROL
(a) Stock Options. In the event of a Change in Control, options not
otherwise exercisable at the time of a Change in Control shall become fully
exercisable upon such Change in Control; provided, however, that options shall
not become exercisable under this provision prior to the expiration of six
months from the date of grant.
(b) Stock Appreciation Rights. In the event of a Change in Control,
Tandem SARs not otherwise exercisable upon a Change in Control shall become
exercisable to the extent that the related Stock Option is exercisable.
Freestanding SARs not otherwise exercisable upon a Change in Control shall also
become fully exercisable upon such Change in Control.
(i) The Company shall make payment to Participants with
respect to SARs in cash in an amount equal to the appreciation in the
value of the SAR from the base price specified in the Award Agreement
to the Change in Control Price.
(ii) Such cash payments to Participants shall be due and
payable, and shall be paid by the Company, immediately upon the
occurrence of such Change in Control; and
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<PAGE> 39
(iii) After the payment provided for in (ii) above,
Participants shall have no further rights under SARs outstanding at the
time of such Change in Control.
(c) Restricted Stock Awards. In the event of a Change in Control, all
restrictions previously established with respect to Restricted Stock Awards will
conclusively be deemed to have been satisfied. Participants shall be entitled to
have issued to them the shares of Common Stock described in the applicable Award
Agreements, free and clear of any restriction or restrictive legend, except that
if upon the advice of counsel to the Company, shares of Common Stock cannot
lawfully be issued without restriction, then the Company shall make payment to
Participants in cash in an amount equal to the Change in Control Price of the
Common Stock that otherwise would have been issued:
(i) Such cash payments to Participants shall be due and
payable, and shall be paid by the Company, immediately upon the
occurrence of such Change in Control; and
(ii) After the payment provided for in (i) above, Participants
shall have no further rights under Restricted Stock Awards outstanding
at the time of such Change in Control of the Company.
(d) Phantom Stock. In the event of a Change in Control:
(i) all restrictions and conditions, if any, previously
established with respect to Phantom Stock Awards will conclusively be
deemed to have been satisfied and fulfilled. Participants shall be
entitled to receive Common Stock in satisfaction of their rights under
Phantom Stock Awards in accordance with the amounts otherwise payable
by the Company pursuant to the Award Agreement.
(ii) Such Common Stock shall be issued to Participants by the
Company immediately upon the occurrence of such Change in Control; and
(iii) After the payment provided for in (ii) above, the
Participants shall have no further rights under Phantom Stock Awards
outstanding at the time of such Change in Control of the Company.
(e) Performance Shares. In the event of a Change in Control:
(i) All previously established Performance Targets will be
conclusively deemed to have been met. Participants shall be entitled to
a pro rata proportion of the shares of Common Stock which would have
been issued to them upon conversion of any outstanding Performance
Shares at the end of the Performance Period (based upon the applicable
Performance Targets which are conclusively deemed to have been met by
reason of the Change in Control), payable in the manner specified in
subsection (ii) hereof. The pro rata proportion of the shares of Common
Stock to be issued shall be equal to a fraction, the numerator of which
is the duration of the
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<PAGE> 40
Performance Period prior to such Change in Control and the denominator
of which is the original length of the Performance Period;
(ii) In lieu of issuing shares of Common Stock upon such
conversion of Performance Shares, the Company shall make payment to
Participants in cash in an amount equal to the Change in Control Price
of the shares of Common Stock that would have been issued under
paragraph (i) above;
(iii) Such cash payments to Participants shall be due and
payable, and shall be paid by the Company, immediately upon the
occurrence of such Change in Control; and
(iv) After the payment provided for in (ii) above, the
Participants shall have no further rights under awards of Performance
Shares outstanding at the time of such Change in Control of the
Company.
(f) Directors' Stock Options. Directors' Stock Options not otherwise
exercisable at the time of a Change in Control shall become fully exercisable
upon such Change in Control; provided, however, that options shall not become
exercisable under this provision prior to the expiration of six months from the
date of grant.
(i) The Company shall make payment to Directors with respect
to Options in cash in an amount equal to the appreciation in the value
of the Option from the option exercise price specified in the Award
Agreement to the Change in Control Price.
(ii) Such cash payments to Directors shall be due and payable,
and shall be paid by the Company, immediately upon the occurrence of
such Change in Control; and
(iii) After the payment provided for in (i) above,
Participants shall have no further rights under Options outstanding at
the time of such Change in Control.
(g) Miscellaneous. Upon a Change in Control, no action shall be taken
which would adversely affect the rights of any Participant or the operation of
the Plan with respect to any Award to which the Participant may have become
entitled hereunder on or prior to the date of the Change in Control or to which
he may become entitled as a result of such Change in Control.
SECTION 29. GOVERNING LAW
The Plan shall be governed by and construed in accordance with the laws
of the State of Ohio, except as preempted by applicable Federal law.
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<PAGE> 41
SECTION 30. INTERPRETATION
The Plan is designed and intended to comply with Rule 16b-3 promulgated
under the Exchange Act and, to the extent applicable, with Section 162(m) of the
Code and all provisions hereof shall be construed in a manner to so comply.
[End of Plan]
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<PAGE> 42
TEAM AMERICA CORPORATION
110 EAST WILSON BRIDGE ROAD, WORTHINGTON, OHIO 43085
--------------------------------------------------------------
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS -- MAY 5, 1998
The undersigned shareholder of TEAM America Corporation (the "Company")
hereby appoints Richard C. Schilg, Kevin T. Costello and Michael R. Goodrich, or
any one of them, as attorneys and proxies with full power of substitution to
each, to vote all shares of Common Stock of the Company which the undersigned is
entitled to vote at the Annual Meeting of Shareholders of the Company to be held
at the Heritage Golf Club located at 3525 Heritage Club Drive, Hilliard, Ohio,
on Tuesday, May 5, 1998, at 10:00 a.m. local time, and at any adjournment or
adjournments thereof, with all of the powers such undersigned shareholder would
have if personally present, for the following purposes:
1. ELECTION OF RICHARD C. SCHILG, KEVIN T. COSTELLO, CHARLES F. DUGAN II
AND CRYSTAL FAULKNER AS CLASS II DIRECTORS.
[ ] FOR
[ ] WITHHOLD AUTHORITY FOR EACH NOMINEE
(INSTRUCTION: TO WITHHOLD AUTHORITY FOR A SPECIFIC NOMINEE, WRITE THAT
NOMINEE'S NAME
HERE: .
-------------------------------------------------------
2. APPROVE AND ADOPT THE AMENDMENT TO THE COMPANY'S 1996 INCENTIVE STOCK
PLAN, AS DESCRIBED IN THE COMPANY'S PROXY STATEMENT.
[ ] FOR
[ ] AGAINST
3. IN THEIR DISCRETION TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY
COME BEFORE THE MEETING.
(Continued and to be signed on other side.)
(Continued from other side.)
THIS PROXY, WHEN EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1, 2, AND 3.
The undersigned hereby acknowledges receipt of the Notice of the Annual
Meeting of Shareholders, dated April 6, 1998, the Proxy Statement and the Annual
Report of the Company furnished therewith. Any proxy heretofore given to vote
said shares is hereby revoked.
PLEASE SIGN AND DATE THIS PROXY BELOW AND RETURN IN THE ENCLOSED
ENVELOPE.
Dated: , 1998
----------------------
----------------------------
(Signature)
----------------------------
(Signature)
SIGNATURE(S) SHALL AGREE WITH THE
NAME(S) PRINTED ON THIS PROXY. IF
SHARES ARE REGISTERED IN TWO
NAMES, BOTH SHAREHOLDERS SHOULD
SIGN THIS PROXY. IF SIGNING AS
ATTORNEY, EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE GIVE
YOUR FULL TITLE AS SUCH.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
