<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Matrix Service Company
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
RR Donnelley Financial
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
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[_] 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.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
MATRIX SERVICE COMPANY
10701 East Ute Street
Tulsa, Oklahoma 74116
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the Annual Meeting of the Stockholders of
Matrix Service Company, a Delaware corporation (the "Company"), will be held at
Bank One, First National Tower, 15 East Fifth St., 41st Floor, Tulsa, Oklahoma,
on the 27th day of October, 1999, at 10:00 a.m., Central Standard time, for the
following purposes:
1. To elect five directors to serve until the annual stockholders'
meeting in 2000 or until their successors have been elected and
qualified;
2. To consider and vote upon a proposal to amend the Company's 1990
and 1991 Stock Option Plans;
3. To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for fiscal 2000; and
4. To act upon such other business as may properly come before the
meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on September
14, 1999, as the record date for determining stockholders entitled to notice of
and to vote at the meeting and any adjournment thereof. Only stockholders of
record at the close of business on September 14, 1999 are entitled to notice of
and to vote at the meeting and any adjournment thereof.
By Order of the Board of Directors
Michael J. Hall
Secretary
September 17, 1999
Tulsa, Oklahoma
================================================================================
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING REGARDLESS
OF WHETHER YOU PLAN TO ATTEND. THEREFORE PLEASE MARK, SIGN, DATE AND RETURN THE
ENCLOSED PROXY PROMPTLY. IF YOU ARE PRESENT AT THE MEETING AND WISH TO DO SO YOU
MAY REVOKE THE PROXY AND VOTE IN PERSON.
================================================================================
<PAGE>
MATRIX SERVICE COMPANY
10701 East Ute Street
Tulsa, Oklahoma 74116
PROXY STATEMENT
The accompanying proxy is solicited by the Board of Directors of Matrix
Service Company (the "Company") for use at the Annual Meeting of Stockholders to
be held on October 27, 1999, and at any adjournments thereof. The Annual
Meeting will be held at 10:00 a.m., Central Standard time, at Bank One, First
National Tower, 15 East Fifth St., 41st Floor, Tulsa, Oklahoma. If the
accompanying proxy is properly executed and returned, the shares it represents
will be voted at the meeting in accordance with the directions noted thereon or,
if no direction is indicated, it will be voted in favor of the proposals
described in this proxy statement. In addition, the proxy confers authority in
the persons named in the proxy to vote, in their discretion, on any other
matters properly presented at the Annual Meeting. The Board of Directors is not
currently aware of any other such matters. Any stockholder giving a proxy has
the power to revoke it at any time before it is voted by written notice or by
execution of a subsequent proxy sent to Michael J. Hall, Secretary, Matrix
Service Company, 10701 East Ute Street, Tulsa, Oklahoma 74116. The proxy also
may be revoked if the stockholder is present at the meeting and elects to vote
in person.
The approximate date on which this Proxy Statement and the accompanying
proxy will first be sent to stockholders is September 24, 1999.
VOTING SECURITIES
At the close of business on September 14, 1999, the record date for the
determination of stockholders of the Company entitled to receive notice of and
to vote at the Annual Meeting or any adjournments thereof, 8,950,438 shares of
the Company's common stock, par value $0.01 per share (the "Common Stock"), were
outstanding. Each of the outstanding shares of Common Stock is entitled to one
vote upon each of the matters to be voted on at the meeting. The presence, in
person or by proxy, of at least a majority of the outstanding shares of Common
Stock is required for a quorum.
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of September 14, 1999, certain
information with respect to the shares of Common Stock beneficially owned by (i)
each person known by the Company to own beneficially five percent or more of its
outstanding shares of Common Stock, (ii) each director and director nominee of
the Company, (iii) each executive officer of the Company named in the Summary
Compensation Table herein and (iv) all directors, director nominees and
executive officers of the Company as a group. Except as described below, each
of the persons listed below has sole voting and investment power with respect to
the shares listed.
<TABLE>
<CAPTION>
Identity of Beneficial Owner Number of Shares Percent of Class
- --------------------------- ---------------- ----------------
<S> <C> <C>
David L. Babson & Co. /(1)/ 1,107,600 12.37
One Memorial Drive
Cambridge, MA 02142-1300
Century Management /(2)/ 637,350 7.12
1301 Capitol of Texas Highway, Suite B228
Austin, TX 78746
Heartland Advisors, Inc. /(3)/ 600,000 6.70
790 North Milwaukee Street
Milwaukee, WI 53202
Franklin Resources, Inc. /(4)/ 589,600 6.59
777 Mariners Island Boulevard
San Mateo, CA 94404
Dimensional Fund Advisors, Inc. /(5)/ 570,800 6.38
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Hugh E. Bradley /(6)/ 32,500 *
Michael J. Hall /(6)/ 28,334 *
Robert A. Peterson /(6)/ 15,000 *
Bradley S. Vetal /(6)/ 48,104 *
John S. Zink /(6)/ 62,500 *
David L. Buset /(6)/ 1,600 *
Vance R. Davis /(6)/ 10,400 *
Bradley J. Rinehart /(6)/ 14,750 *
Martin L. Rinehart /(6)//(7)/ 248,852 2.78
Glen W. Rogers /(6)//(7)/ 22,474 *
All directors and executive officers as a group 501,757 5.61
(13 persons) /(6)/
</TABLE>
3
<PAGE>
* Indicates ownership of less than one percent of the outstanding shares of
common stock.
(1) According to Schedule 13G/A dated January 26, 1999.
(2) According to Schedule 13G dated January 29, 1999.
Includes shares held in managed portfolio accounts as to which beneficial
ownership is disclaimed.
(3) According to Schedule 13G dated February 2, 1999.
(4) According to Schedule 13G dated February 1, 1999.
(5) According to Schedule 13G dated February 11, 1999.
Includes shares held in managed portfolio accounts as to which beneficial
ownership is disclaimed.
(6) Includes the following shares of common stock that are issuable upon the
exercise of stock options that are exercisable within 60 days after
September 14, 1999: Mr. Bradley - 32,500 shares; Mr. Hall -23,334 shares;
Mr. Peterson - 5,000 shares; Mr. Vetal - 27,001 shares; Mr. Zink - 32,500
shares; Mr. Buset - 1,600 shares; Mr. Davis - 10,400 shares; Mr. Bradley
Rinehart - 14,750 shares; Mr. Martin Rinehart - 79,286 shares; Mr. Rogers -
17,429 shares; 13 Directors and Executive Officers as a group -260,943
shares.
(7) Mr. Martin Rinehart is deemed to beneficially own 169,566 shares as a
trustee of the Martin L. Rinehart 1991 Revocable Trust which owns 10,566
shares and the Bonnie J. Rinehart 1991 Revocable Trust which owns 159,000
shares. Mr. Rogers is deemed to beneficially own 360 shares held by his
spouse.
PROPOSAL NUMBER 1: Election of Directors
The Board of Directors has nominated and urges you to vote "For" the
election of the five nominees identified below who have been nominated to serve
as directors until the next Annual Meeting of Stockholders or until their
successors are duly elected and qualified. All of the nominees are members of
the Company's present Board of Directors. William P. Wood resigned from the
Board of Directors effective April 29, 1999. Mr. Wood will not be replaced at
this time. Proxies solicited hereby will be voted "For" all five nominees unless
stockholders specify otherwise in their proxies. The affirmative vote of the
holders of a plurality of the Common Stock present in person or by proxy at the
meeting is required for election of the nominees.
If, at the time of the 1999 Annual Meeting of Stockholders, any of the
nominees should be unable or decline to serve, the discretionary authority
provided in the proxy may be used to vote for a substitute or substitutes
designated by the Board of Directors. The Board of Directors has no reason to
believe that any substitute nominee or nominees will be required.
Nominees
The nominees for director, and certain additional information with
respect to each of them, are as follows:
Hugh E. Bradley, age 70, was elected as a Director of the Company
effective on April 20, 1993. Mr. Bradley retired in October 1993. Previously
he had served as the Division Manager for Texaco Trading & Transportation, Inc.,
Mid-Continent Region from 1988 to 1993. Mr. Bradley is a graduate Petroleum
Engineer from the Colorado School of Mines.
4
<PAGE>
Michael J. Hall, age 55, has served as Vice President Finance, Chief
Financial Officer of the Company since November 1998. Prior to working for
Matrix, Mr. Hall was Vice President and Chief Financial Officer for Pexco
Holdings, Inc. from 1994 to 1997 and Vice President Finance and Chief Financial
Officer for Worldwide Sports & Recreation, Inc., an affiliated company, from
1996 to 1997. From 1984 to 1994, Mr. Hall worked for T.D. Williamson, Inc., as
Senior Vice President, Chief Financial and Administrative Officer, and Director
of Operations, Europe, Africa and Middle East Region. Mr. Hall graduated Summa
Cum Laude from Boston College with a degree in Accounting and earned his MBA
with honors from Stanford Graduate School of Business.
Robert A. Peterson, age 47, has served as Director of the Company since
October 1998. Mr. Peterson has served as President of Melton Truck Lines, Inc.
since July 1991 when he acquired the company. Prior to that, he served as
President of GlasTran, Inc., a company he founded in July 1989. Mr. Peterson
holds a Bachelor of Arts Degree in Economics and a Masters of Business
Administration from the University of Southern California. He is a Certified
Public Accountant. Mr. Peterson is on the Board of Directors of the Metropolitan
Tulsa Chamber of Commerce, an active supporter of the Boy Scouts of America, the
United Way, and various other professional organizations.
Bradley S. Vetal, age 43, has served as President, Chief Executive
Officer and Director of the Company since March 1999. Mr. Vetal has been with
the Company since January 1987 and has served as President of Matrix Service,
Inc. since June 1, 1992. From June 1996 to March 1999 Mr. Vetal was Vice
President-Tank Division of Matrix Service Company and responsible for all AST
operations. From June 1991 through May 1992, Mr. Vetal served as Vice President
of Eastern Operations of Matrix Service Mid-Continent, Inc. Mr. Vetal graduated
Cum Laude from the University of Michigan with a degree in Mechanical
Engineering.
John S. Zink, age 70, was elected as a director of the Company effective
on April 20, 1993. He is Founder and past President of Zeeco, Inc., Chairman of
the John Zink Foundation and past President and Chairman of the John Zink
Company. Mr. Zink graduated from Oklahoma State University with a degree in
Mechanical Engineering. Mr. Zink belongs to the Mechanical Engineering
Scholastic Fraternity, Pi Tau Sigma, and has been inducted into the O.S.U.
Engineering Hall of Fame. He is a registered Professional Engineer. Mr. Zink is
also a director of Unit Corporation, a drilling and energy company.
The Board recommends that the stockholders vote "For" the election of
each of the above named nominees.
The Board of Directors and its Committees
The Company's Certificate of Incorporation and Bylaws provide that the
number of directors on the Board shall be fixed from time to time by the Board
of Directors but shall not be less than three nor more than 15 persons. The
Board has fixed its size at five members. Directors hold office until the next
annual meeting of the stockholders of the Company or until their successors have
been elected and qualified. Vacancies may be filled by recommendations from the
Corporate Governance Committee and a majority vote by the remaining directors.
The Company's Board of Directors met 11 times during fiscal year 1999. During
fiscal year 1999, each member of the Board of Directors attended 100% of the
meetings of the Board of Directors and the committees of which he was a member
with the exception of Mr. Zink who attended 87.5% of the meetings of the Board
of Directors and the committees of which he was a member.
5
<PAGE>
The Board has three standing committees:
Corporate
Audit Compensation Governance
--------- ---------------- ------------
Members: Bradley Bradley Bradley
Hall Peterson Vetal
Peterson Zink Zink
The Audit Committee's functions include making recommendations
concerning the engagement of independent auditors, reviewing with the
independent auditors the plan and results of the auditing engagement, reviewing
professional services provided by the independent auditors, reviewing the
independence of the independent auditors, considering the range of audit and
nonaudit fees and reviewing the adequacy of the Company's internal accounting
controls. The Audit Committee held 4 meetings during fiscal 1999.
The Compensation Committee's functions include reviewing executive
salary and bonus structure and approving salary and bonus awards to key
executives, and administering the Company's stock option plans and making grants
thereunder. The Compensation Committee held 5 meetings during fiscal 1999 and
took certain actions by unanimous written consent in lieu of meetings.
The Corporate Governance Committee was established to make nominations
and recommendations to the Board of Directors for individuals to be presented to
the stockholders for election to the Board of Directors. The Corporate
Governance Committee held 2 meeting during fiscal 1999. Holders of Common Stock
wishing to recommend a person for consideration as nominee for election to the
Board can do so in accordance with the Company's Bylaws by giving timely written
notice to the Secretary of the Company at 10701 East Ute Street, Tulsa, Oklahoma
74116, giving each such nominee's name, address, appropriate biographical
information, a description of all arrangements or understandings between the
stockholder and each nominee and any other person or persons (naming such person
or person), and any other information that would be required in a proxy
statement. Any such recommendation should be accompanied by a written statement
from the person recommended, giving his or her consent to be named as a nominee
and, if nominated and elected, to serve as a director. A notice must be
delivered to the Secretary not later than 80 days prior to the date of any
annual or special meeting; provided, however, that in the event that the date of
such annual or special meeting was not publicly announced by the Company more
than 90 days prior to the meeting, notice by the stockholder must be delivered
to the Secretary of the Company not later than the close of business on the
tenth day following the day on which public announcement of the date of such
meeting is communicated to the stockholders. Such notice to the Secretary must
set forth the name and address of the stockholder who intends to make the
nomination and a representation that the stockholder is a holder of record of
stock of the Company entitled to vote at such meeting and intends to appear in
person or by proxy at the meeting to nominate the person or persons specified in
the notice.
Director Compensation
Directors of the Company are reimbursed for out-of-pocket expenses
incurred in attending the Board of Directors and committee meetings. In
addition, each of the Directors who are not employees of the Company receive
$7,000 plus $1,000 for each meeting they attend in person and $500 for each
teleconference Board of Directors meeting attended and $500 for each committee
meeting attended either in person or by telephone. In addition, each outside
Director is annually granted options to purchase 5,000 shares of the Company's
stock under the Matrix Service Company 1995 Nonemployee Directors' Stock Option
Plan.
6
<PAGE>
Executive Officers of the Company
George L. Austin, age 33, has served as Vice President Financing
Planning & Reporting since April 1999. Mr. Austin previously served as Vice
President of Finance for Flint Energy Construction Company from February 1994 to
March 1999. Mr. Austin was an Audit Manager with Ernst & Young LLP. Mr. Austin
has a Bachelor of Science Degree from Oklahoma State University. Mr. Austin is a
Certified Public Accountant, a member of the American Institute of Certified
Public Accountants and the Financial Executives Institute.
Rick W. Cherf, age 42, has served as Vice President of Construction
Services since March 1999. Mr. Cherf is responsible for the overall performance
of the Construction Services group and is part of the executive management team
of the Company. During his eight year tenure at Colt Construction Company he has
served as Project Manager to Vice President. He has been involved with major
capital projects and plant maintenance turnarounds internationally. His past
employers include Dillingham Corporation, Enserch Corporation and Ebasco. Mr.
Cherf has a Bachelor of Science Degree in Construction Technology and a Bachelor
of Arts Degree in Business Administration, Labor Relations from the University
of Washington. Mr. Cherf serves as a board member of the ABC Industrial
Contractor's Council.
Vance R. Davis, age 39, has served as Vice President of Eastern
Operations for the Company since June 1997. Mr. Davis served as Regional Manager
from June 1994 to June 1997. Mr. Davis has served as a Project Manager and
Operations Manager for the Houston Region from April 1988 to June 1994. Prior to
joining the Company, Mr. Davis worked in various capacities for Pasadena
Erectors, Advance Tank & Construction Company, Kamyr Installations, Graver Tank
& Manufacturing and Tank Service, Inc.
John S. Newmeister, age, 51, has served as Vice President of Tank
Construction for the Company since November 1998 and previously as Vice
President of Marketing and of Operations. Prior to working for the Company, Mr.
Newmeister worked for Pitt-Des Moines, Inc. for 24 years holding numerous
positions, including President of Hydrostorage, Inc. Mr. Newmeister holds a
Bachelor of Science Degree in Civil Engineering from University of Iowa.
Bradley J. Rinehart, age 35, has served as Vice President of Operations
Tank Maintenance & Repair Division for the Company since May 1997; Regional
Manager - Michigan Region from April 1991 to April 1997; Operations Manager -
Michigan Region from January 1990 to March 1991; Project Manager - Michigan
Region from January 1988 to December 1989. Mr. Rinehart holds a Bachelor of
Science Degree in Construction Science from the University of Oklahoma.
Martin L. Rinehart, age 62, is a founder of the Company and currently
serves as Marketing/Alliance Coordinator for the Company. Mr. Rinehart has
served as President and Chief Executive Officer of the Company from February
1998 to March 1999 and Vice President of Operations of the Company from its
inception to June 1992. Mr. Rinehart served as Assistant to the President of a
subsidiary, Matrix Service, Inc. from June 1992 until February 1998. Prior to
working for the Company, Mr. Rinehart served as Executive Vice President of Tank
Service, Inc. from 1980 to 1984. Mr. Rinehart holds a Bachelor of Science Degree
in Civil Engineering from the University of Colorado as well as a Bachelor of
Science Degree in Business Administration.
7
<PAGE>
Glen W. Rogers, age 49, has served as Vice President of Products,
Technical & Support Services for the Company since June 1997. Mr. Rogers served
as Vice President of Operations for the Company from October 1993 to May 1997.
From March 1992 to October 1993, Mr. Rogers served as Vice President of
Construction managing a $23 million dollar grass roots terminal project in
Cushing, Oklahoma for Matrix Service, Inc. Previous to working for the
Company, Mr. Rogers was an Engineering Manager for Williams Pipeline Company
from October 1984 to March 1992. Mr. Rogers worked for Edeco, Inc. from March
1979 to October 1984 serving as Senior Project Engineer. Mr. Rogers holds a
Bachelor of Science Degree in Civil Engineering from Kansas State University.
Mr. Rogers is a member of the American Society of Civil Engineering and the
National Society of Professional Engineers.
8
<PAGE>
EXECUTIVE COMPENSATION
The following table summarizes certain information regarding
compensation paid or accrued during each of the Company's last three fiscal
years to the Chief Executive Officers and each of the Company's four other most
highly compensated executive officers (the "Named Officers"):
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
--------------------------------------------------------------------------------------
Awards Payouts
---------------------------------------
Other Long-Term
Annual Restricted Securities Incentive All other
Name and Fiscal Compensation Stock Underlying Payout Compensation
Principal Position Year Salary ($) Bonus ($) ($) (1) Award(s) Options/SARs ($) ($)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bradley S. Vetal (2) (4) 1999 181,651 89,000 185,000
Chairman of Board, 1998 169,610 - N/A N/A 10,000 N/A N/A
President and 1997 169,753 25,000 -
Chief Executive Officer
Martin L. Rinehart (2) 1999 124,813 - 60,000
Interim President and 1998 90,291 - N/A N/A 60,000 N/A N/A
Chief Executive Officer 1997 116,155 7,000 -
Glen W. Rogers 1999 122,651 47,096 10,000
Vice President Technical 1998 117,513 - N/A N/A - N/A N/A
Support & Product Services 1997 117,399 8,500 10,000
Bradley J. Rinehart 1999 113,143 52,683 10,000
Vice President Tank 1998 105,450 - N/A N/A - N/A N/A
Maintenance & Repair - 1997 78,887 8,000 10,000
Non Union
David L. Buset (3) 1999 126,969 36,300 25,000
Vice President Plant 1998 - - N/A N/A - N/A N/A
Maintenance 1997 - - -
Vance R. Davis 1999 107,965 43,298 10,000
Vice President Tank 1998 105,110 - N/A N/A 10,000 N/A N/A
Maintenance & Repair - 1997 94,887 4,500 -
Union
</TABLE>
(1) During each of the three years ended May 31, 1997, 1998 and 1999,
perquisites for each individual named in the Summary Compensation Table
aggregated less than 10% of the total annual salary and bonus reported
for such individual in the Summary Compensation Table, or $50,000, if
lower. Accordingly, no such amounts are included in the Summary
Compensation Table.
(2) Mr. Martin Rinehart retired in February 1999, at which time Mr. Vetal
was appointed by the Board of Directors to replace him.
(3) Mr. Buset was hired in May 1998. Mr. Buset has subsequently resigned his
position as Vice President of Plant Services in July 1999 and presently
serves as a consultant to the Company.
(4) The bonus paid to Mr. Vetal in fiscal year 1999 was the result of his
performance as Vice President-Tank Division. No bonus was awarded to Mr.
Vetal for his role as President and Chief Executive Officer, a position
he assumed in March 1999.
9
<PAGE>
Stock Option Grants During Fiscal 1999
The following table sets forth information with respect to grants of
stock options to purchase Common Stock pursuant to the Company's 1990 and 1991
Stock Option Plans to the Named Officers identified in the Summary Compensation
Table above. No stock appreciation rights ("SARs)" were granted during fiscal
1999 or were outstanding at May 31, 1999.
OPTION GRANTS IN FISCAL 1999
<TABLE>
<CAPTION>
Individual Grants (1)
- -------------------------------------------------------------------------------------
% of
Number of Total Options Potential/Realizable Value at
Shares Underlying Granted Exercise Assumed Annual Rates of Stock
Stock Options to Employees Price Expiration Price Appreciation of Option Term (5)
Name Granted (#) In Fiscal 1999 ($/Share) Date 5% ($) 10% ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Bradley S. Vetal 185,000 20.93 (3) (3) 435,000 1,120,000
Martin L. Rinehart 60,000 (2) 6.79 4.38 10-15-2008 135,000 370,000
Glen W. Rogers 10,000 1.13 4.38 10-15-2008 22,000 62,000
Bradley J. Rinehart 10,000 1.13 4.38 10-15-2008 22,000 62,000
David L. Buset 25,000 2.83 (4) (4) 61,000 158,000
Vance R. Davis 10,000 1.13 4.38 10-15-2008 22,000 62,000
</TABLE>
(1) Options granted during the year ended May 31, 1999 vest equally over
five years of service and expire ten years from date of grant. The
exercise price gives effect to the repricing discussed below under
"Option Repricing".
(2) Options will vest quarterly over 1 year of service and expire 10 years
from date of grant.
(3) Options for Mr. Vetal in fiscal 1999 were granted at exercise prices of
$3.78 (as to 150,000 shares) and $4.38 (as to 35,000 shares) with
expiration dates of March 16, 2009 and October 15, 2008, respectively.
(4) Options for Mr. Buset were granted at exercise prices of $4.00 (as to
17,000 shares) and $4.38 (as to 8,000 shares) with expiration dates of
January 15, 2009 and October 15, 2008, respectively. Upon Mr. Buset's
resignation in July 1999, 17,000 shares at an exercise price of $4.00
were cancelled.
(5) An appreciation in stock price is required for optionees to receive any
gain. A stock price appreciation of zero percent would render the
options without value to the optionees. The Securities and Exchange
Commission requires disclosures of the potential realizable value or
present value of each grant. The disclosure assumes the options will be
held for the full ten-year term prior to exercise. Such options may be
exercised prior to the end of such ten-year term. The actual value, if
any, an executive officer may realize will depend upon the excess of the
stock price over the exercise price on the date the option is exercised.
There is no assurance that appreciation, if any, in the stock price will
occur at the rates shown in the table.
Option Repricing
On October 15, 1998, the Board of Directors of the Company cancelled
certain outstanding options at the election of the optionees under the 1990 and
1991 Stock Option Plans and granted new options to all such optionees. The new
options were for the same number of shares and upon the same terms of expiration
and vesting as the cancelled options, except that the exercise price for the new
options was $4.38 per share, the market value of the Common Stock on October 15,
1998 and the vesting and expiration terms started over on October 15, 1998. In
effect, therefore, the Board of Directors reduced the
10
<PAGE>
exercise prices at the time of cancellation ranging from $6.25 per share to
$7.00 per share. A total of 571,700 options granted to over 71 employees under
the 1990 and 1991 Stock Option Plans were repriced by the October 15, 1998
action.
The Board of Directors took such action in the belief that it was
appropriate in order to attract and retain the qualified personnel desired to
operate the Company. The Company had been transitioning through a restructuring
which included the shut down of Midwest in the 3rd quarter of 1998, as well as
the poor performance of the municipal water division in 1998 and 1999 which
ultimately led to the sale of Brown and the shutdown of SLT. These actions,
along with the overall softness in the petroleum industry over this same time
frame had resulted in a precipitous decline in the market price of the Company's
Common Stock so that all of the repriced options were significantly
"underwater." Since the Board of Directors believes that the incentives offered
by stock options are important to employee morale and retention, after careful
consideration of the challenges and opportunities facing the Company, the Board
of Directors made the good faith judgement that it was in the best interests of
the Company and its stockholders to lower the exercise price of outstanding
options, thus restoring the opportunity for employees to receive value in the
near term.
REPRICING TABLE
<TABLE>
<CAPTION>
Number of Shares New Exercise Option Term
Underlying Exercise Price of Price of Remaining at
Name Repriced Options Terminated Options Repriced Options Repricing Date
---- ---------------- ------------------ ---------------- --------------
<S> <C> <C> <C> <C>
Brad S. Vetal 35,000 (1) 4.38 (1)
Martin L. Rinehart 60,000 7.00 4.38 9.5 years
Glen W. Rogers 10,000 6.88 4.38 8.2 years
Bradley J. Rinehart 10,000 6.88 4.38 8.2 years
David L. Buset 8,000 7.00 4.38 9.5 years
Vance R. Davis 10,000 7.00 4.38 9.5 years
</TABLE>
(1) The exercise prices of terminated options for Mr. Vetal were $7.00 for
10,000 shares and $6.25 for 25,000 shares. The option terms remaining at
reprice date for Mr. Vetal were 9.5 years for 10,000 shares and 7.5 years
for 25,000 shares.
Option Exercises and Holdings
The following table sets forth information with respect to the Named
Officers identified in the Summary Compensation Table concerning the exercise of
stock options and the value of unexercised options held as of the end of fiscal
year 1999.
<TABLE>
<CAPTION>
AGGREGATED STOCK OPTION EXERCISES IN YEAR ENDING MAY 31, 1999
AND OPTION VALUES AT MAY 31, 1999
Number of Shares Value of Unexercised
Underlying Unexercised Options at In-the-Money Stock Options
May 31, 1999 (#) at May 31, 1999 (1) ($)
--------------------------------------------------------------------------------
Value
Shares Acquired Realized
Name On Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Bradley S. Vetal - - 20,001 190,714 18,581 (2) 32,850 (2)
Martin L. Rinehart - - 49,286 33,214 - (3) - (3)
Glen W. Rogers - - 15,429 12,571 - (4) - (4)
Bradley J. Rinehart - - 12,750 12,000 18,200 (5) 750 (5)
David L. Buset - - - 25,000 - (6) - (6)
Vance R. Davis - - 8,400 1,200 900 (7) - (7)
</TABLE>
11
<PAGE>
(1) Value was calculated by subtracting the applicable exercise price from the
fair market value of the Company's Common Stock on May 28, 1999, which was
$4.00 (last trading day of fiscal year) based on the average of the high and
low sales price of the Common Stock on May 28, 1999 on the Nasdaq National
Market, multiplied by the number of shares underlying the unexercised
options.
(2) Mr. Vetal holds options to purchase 2,250 shares at an exercise price of
$0.67, 3,465 shares at an exercise price of $0.80, and 14,286 shares at an
exercise price of $5.63 that were exercisable in fiscal 1999. Mr. Vetal also
holds options to purchase 150,000 shares at an exercise price of $3.78,
35,000 shares at an exercise price of $4.38, and 5,714 shares at an exercise
price of $5.63 at May 31, 1999.
(3) Mr. Martin Rinehart holds options to purchase 30,000 shares at an exercise
price of $4.38 and 19,286 shares at an exercise price of $5.63 that were
exercisable in fiscal 1999. Mr. Martin Rinehart also holds options to
purchase 30,000 shares at an exercise price of $4.38 and 3,214 shares at an
exercise price of $5.63 at May 31, 1999.
(4) Mr. Rogers holds options to purchase 15,429 shares at an exercise price of
$5.63 that were exercisable in fiscal 1999. Mr. Rogers also holds options to
purchase 10,000 shares at an exercise price of $4.38 and 2,571 shares at an
exercise price of $5.63 at May 31, 1999.
(5) Mr. Bradley Rinehart holds options to purchase 4,750 shares at an exercise
price of $0.80 and 8,000 shares at an exercise price of $3.63 that were
exercisable in fiscal 1999. Mr. Bradley Rinehart also holds options to
purchase 2,000 shares at an exercise price of $3.63 and 10,000 shares at an
exercise price of $4.38 at May 31, 1999.
(6) Mr. Buset holds options to purchase 17,000 shares at an exercise price of
$4.00 and 8,000 shares at an exercise price of $4.38 at May 31, 1999.
(7) Mr. Davis holds options to purchase 2,400 shares at an exercise price of
$3.63 and 6,000 shares at an exercise price of $5.63 that were exercisable
in fiscal 1999. Mr. Davis also holds options to purchase 1,200 shares at an
exercise price of $3.63 and 10,000 shares at an exercise price of $4.38 at
May 31, 1999.
12
<PAGE>
PERFORMANCE GRAPH
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG MATRIX SERVICE COMPANY,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE S & P ENGINEERING & CONSTRUCTION INDEX
<TABLE>
<CAPTION>
Cumulative Total Return
----------------------------------------
5/94 5/95 5/96 5/97 5/98 5/99
<S> <C> <C> <C> <C> <C> <C>
MATRIX SERVICE COMPANY 100 54 77 111 100 52
NASDAQ STOCK MARKET (U.S.) 100 119 173 195 247 347
S & P ENGINEERING & CONSTRUCTION 100 89 117 106 102 74
</TABLE>
.$100 INVESTED ON 6/31/94 STOCK OR INDEX*
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING MAY 31,
*$100 invested on May 31, 1994 in the Company's Common Stock. Includes
reinvesting of dividends, where applicable. The Company's fiscal year ends May
31.
The performance graph shall not be deemed incorporated by reference by
any general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933, as amended, or under the Securities
Exchange Act of 1934, as amended, except to the extent that the Company
specifically incorporates this graph by reference, and shall not otherwise be
deemed filed under such acts.
There can be no assurance that the Company's stock performance will
continue into the future with the same or similar trends depicted in the graph
above. The Company will not make or endorse any predictions as the future stock
performance.
13
<PAGE>
Report of the Compensation Committee of the Board of Directors
The Compensation Committee ("Committee") of the Board of Directors of
the Company currently consists of Hugh E. Bradley, Robert A. Peterson, and John
S. Zink, all of whom are independent directors who are not employees and who
qualify as disinterested persons for purposes of Rule 16b-3 adopted under the
Securities Exchange Act of 1934. The Committee is responsible for evaluating the
performance of the Chief Executive Officer and the Chief Financial Officer
("Named Executive Officers"), determining the compensation for these two Named
Executive Officers of the Company and administering the Company's stock option
plan under which grants may be made to employees of the Company. The Committee
has furnished the following report on executive compensation for the fiscal year
ending May 31, 1999.
The annual compensation package of the Named Executive Officers
primarily consists of (i) a cash salary which reflects the responsibilities
relating to the position and individual performance, (ii) variable performance
awards payable in cash and tied to the individual's and the Company's
performance against pre-established financial measures and (iii) long-term
stock-based incentive awards which strengthen the relationship between the
interests of the Named Executive Officers and the interests of the Company's
stockholders.
In determining the level and composition of compensation for each of
the Company's Named Executive Officers, the Committee takes into account various
qualitative and quantitative indicators of each officer's performance. The
Committee's objectives in determining compensation are to allow the Company to
attract, motivate and retain the executive personnel necessary for the Company's
success and to provide an executive compensation program comparable to that
offered by the companies with which the Company competes for such management
personnel. Although no specific target has been established, the Committee
generally seeks to set salaries at the medium of the range in comparison to peer
group companies. In setting such salaries, the Compensation Committee considers
its peer group to be certain companies with market capitalizations similar to
that of the Company. Such peer group does not necessarily include the companies
comprising the Standard and Poor's Engineering and Construction Index reflected
in the performance graph in this Proxy Statement, which is the industry
categorization the Company has been placed in by its market makers. In
evaluating the performance of the Company's Named Executive Officers, the
Committee takes into consideration such factors as revenue and earnings targets,
improved safety performance through reduced rates of recordable injuries of the
Company as well as the achievement of specific qualitative goals by the
individual relating to the particular officer's area of responsibility.
Base compensation is established through negotiation between the
Company and the Named Executive Officer at the time the executive is hired, or
named to the executive position, and then subsequently (in general annually)
when such officer's base compensation is subject to review or reconsideration.
Base salaries after the initial year will be determined by the Compensation
Committee after review of the officer's performance. In establishing or
reviewing base compensation levels for each Named Executive Officer, the
Committee, in accordance with its general compensation policy, considers
numerous factors, including the responsibilities relating to the position, the
qualifications of the executive and the relevant experience the individual
brings to the Company, strategic goals for which the executive has
responsibility, and compensation levels of other companies at a comparable stage
of development to compete with the Company for business and executive talents.
No predetermined weights are given to any such factors. The salaries for each of
the Named Executive Officers in fiscal year 1999 were set taking into account
these factors in accordance with the Company's general compensation policy
discussed above.
14
<PAGE>
In addition to each Named Executive Officer's base compensation, the
Committee may award cash bonuses and/or grant awards under the Company's Stock
Option Plan to Named Executive Officers depending on the extent to which certain
defined personal and corporate performance goals are achieved. Such corporate
performance goals include revenue and earnings targets of the Company, as
discussed above.
The Chief Executive Officer's compensation is the responsibility of the
Compensation Committee. Based upon the Compensation Committee's assessment of
Mr. Rinehart's and then Mr. Vetal's ability to effectively lead the Company into
the future as determined by his past performance and experience with the
Company's business and markets, the Compensation Committee determined that Mr.
Rinehart's compensation package would consist of the following: (i) annual base
salary of $125,000, (ii) annual bonus target of $125,000 based upon the Company
achieving specific earnings, and (iii) a Stock Option Agreement granting Mr.
Rinehart an option to purchase 60,000 shares of Common Stock over a one year
period beginning March 1998 under the Company's 1991 Stock Option Plan at an
exercise price of $7.00 per share (the market value of the Common Stock on the
date of grant). On October 15, 1998, the exercise price was repriced to $4.375
per share with vesting over a one-year period beginning October, 1998.
Mr. Rinehart stepped down as Chief Executive Officer and a Director in
March, 1999 and Mr. Vetal was appointed by the Board of Directors to replace Mr.
Rinehart as Chief Executive Officer and subsequently elected to the Board of
Directors. Mr. Vetal's compensation package would consist of the following (i)
annual base salary of $210,000, (ii) annual bonus target of 0 - 70% of salary
based upon the Company achieving specific financial targets, and (iii) a Stock
Option Agreement granting Mr. Vetal an option to purchase 150,000 shares of
Common Stock over a five year period beginning March 16, 2000 under the
Company's 1990 Stock Option Plan at an exercise price of $3.78 per share. (the
market value of the Common Stock on the date of grant).
Equity incentives are not limited to executive officers. Grants of
stock options are made to management and staff of the Company in amounts
determined by the Compensation Committee. The amounts of such grants are
determined based on the individual employee's position with the Company and his
or her potential ability to beneficially impact the performance of the Company.
By giving management and staff a stake in the financial performance of the
Company, the Compensation Committee's goal is to provide incentives to these
employees of the Company to enhance the financial performance of the Company
and, thus, stockholder value.
All salaried employees of the Company, including Named Executive
Officers, are eligible to receive long-term stock based incentive awards under
the Company's Stock Option Plan as a means of providing such individuals with a
continuing proprietary interest in the Company. Such grants further the mutual
interests of the Company's employees and its stockholders by providing
significant incentives for such employees to achieve and maintain high levels of
performance. The Company's Stock Option Plan enhances the Company's ability to
attract and retain the services of qualified individuals. Factors considered in
determining whether such awards are granted includes the employee's position in
the Company, his or her performance and responsibilities, the number of options,
if any, currently held, and the vesting schedule of any such options. While the
Committee does not adhere to any firmly established formulas or schedules for
the issuance of options, the Committee will generally tailor the terms of any
such grant to achievement of its goal as a long-term incentive award by
providing for a vesting schedule encompassing several years as opposed to tying
the vesting dates to particular corporate or personal milestones.
15
<PAGE>
The report of the Compensation Committee shall not be deemed
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing under the Securities Act of 1933, as
amended, or under the Securities Exchange Act of 1934, as amended, except to the
extent that the Company specifically incorporates this information by reference,
and shall not otherwise be deemed filed under such acts.
Compensation Committee
Hugh E. Bradley
Robert A. Peterson
John S. Zink
Certain Transactions
Mr. Robert Peterson, a director, is the Chief Executive Officer of Melton Truck
Lines, Inc., a transportation company that has provided trucking services to
Matrix Service Company. During fiscal year 1999, Melton Truck Lines, Inc.
billed Matrix Service Company $111,995 and Matrix Service Company is current on
its open account obligations, which are the same terms as all other Melton Truck
Lines' customers.
Compliance with Section 16(a)
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and officers, and persons who own more than ten
percent of the Common Stock, to file initial reports of ownership and reports of
changes in ownership (Forms 3, 4 and 5) of the Common Stock with the Securities
and Exchange Commission (the "SEC") and the NASDAQ Stock Market. Officers,
directors and greater than 10 percent stockholders are required by SEC
regulations to furnish the Company with copies of all such forms that they file.
To the Company's knowledge, based solely on the Company's review of the
copies of such reports received by the Company and on written representations by
certain reporting persons, the Section 16(a) filing requirements were satisfied
by the Company's directors, officers and ten percent stockholders, except for
four transactions for the granting or repricing of options by Bradley S. Vetal,
Martin L. Rinehart, Michael J. Hall and George L. Austin not timely reported on
Form 4.
PROPOSAL NUMBER 2: Amendment to the Company's 1990 and 1991 Stock Option Plans
Proposed Amendment
The Company proposes that the expiration date of the 1990 Plan (as defined
below) and the 1991 Plan (as defined below) be extended to October 25, 2005.
Background
1990 Incentive Stock Option Plan
In 1989, the Company adopted the Matrix Environmental Company 1989
Incentive Stock Option Plan (the "ISO Plan"). The ISO Plan was designed to
provide additional incentives for officers and other key employees of the
Company to promote the success of the business and to enhance the
16
<PAGE>
Company's ability to attract and retain the services of qualified persons. The
ISO Plan was amended in July 1990 by the Company's Board of Directors and
shareholders to increase the number of options that could be granted thereunder
from 450,000 to 900,000 and to change the name of the ISO Plan to the Matrix
Service Company 1990 Incentive Stock Option Plan (the "1990 Plan"). The 1990
Plan was registered with the SEC on January 30, 1991.
The 1990 Plan is administered by the Compensation Committee of the Board
of Directors. No member of the Committee is eligible to participate in the 1990
Plan. The 1990 Plan authorizes the Compensation Committee to grant to key
employees selected by it incentive stock options and stock appreciation rights
("SARs"). No grants may be made after December 31, 1999. As of May 31, 1999,
approximately 611,000 incentive stock options had been granted (net of options
cancelled) under the 1990 Plan to 101 persons, with an average exercise price of
$5.80. Approximately 396,000 of the granted options had been exercised and
approximately 215,000 of the granted options remain outstanding with expiration
dates that range from December 1999 to March 2009.
Approximately 289,000 additional incentive stock options or SARs are
available for grant under the 1990 Plan, and additional stock options may become
available as the result of the expiration, lapse, termination or cancellation of
outstanding incentive stock options prior to their exercise.
1991 Incentive Stock Option Plan
The Company's 1991 Stock Option Plan (the "1991 Plan") was adopted by
the Board of Directors of the Company on May 17, 1991 and approved by the
Company's stockholders on October 24, 1991. The purpose of the 1991 Plan is to
provide long-term incentives to selected officers and key employees to
contribute to the future success and prosperity of the Company. At the October
1992 Annual Meeting of Stockholders, the Company's stockholders approved an
amendment increasing the number of shares of Common Stock that may be issued
under the plan from 350,000 to 700,000. In April 1993 the Company's Board of
Directors approved an amendment increasing such number to 770,000. At the
November 1994 Annual Meeting of Stockholders, the Company's Stockholders
approved an amendment increasing the number of shares of common stock that may
be issued under the Plan from 770,000 to 970,000. At the October 1997 Annual
Meeting of Stockholders, the Company's stockholders approved an amendment
increasing the number of shares that may be issued under the Plan from 970,000
to 1,320,000. The 1991 Plan was initially registered with the SEC on November
12, 1993, with an additional registration on June 12, 1998.
The 1991 Plan authorizes the Compensation Committee to grant incentive
stock options ("ISOs") to the Company's key employees and nonqualified stock
options ("NQOs") to key employees and nonemployees who are elected for the first
time as directors of the Company after January 1, 1991 ("outside directors"). No
grants may be made after December 31, 2000. As of May 31, 1999, approximately
1,280,000 incentive stock options had been granted (net of options cancelled)
under the 1991 Plan to 435 persons, with an average exercise price of $7.43.
Approximately 233,000 of the granted options had been exercised and
approximately 1,047,000 of the granted options remained outstanding with
expiration dates that range from November 2002 to April 2009.
Approximately 40,000 additional incentive stock options are available
for grant under the 1991 Plan and additional stock options may become available
as a result of the expiration lapse, termination or cancellation of outstanding
incentive stock options prior to their exercise.
17
<PAGE>
Summary of the 1990 and 1991 Plans
Set forth below is a summary of the material terms of the 1990 and 1991
Plans. This summary is qualified in its entirety by reference to the full text
of the 1990 and 1991 Plans, as proposed to be amended, which is attached as
Exhibits A and B to this Proxy Statement.
General
The 1990 and 1991 Plans are administered by the Compensation Committee
of the Board of Directors. The Compensation Committee selects the key employees
to whom options are granted, the time at which options are granted and expire,
and the number of shares of Common Stock which may be purchased upon the
exercise of options.
ISOs and NQOs enable optionees to purchase shares of Common Stock at the
option price. The option price per share may not be less than the fair market
value of the Common Stock at the time the option is granted. In order to
purchase the shares, a participant must pay the full option price to the
Company. The purchase price may be paid in any combination of cash or stock of
the Company, including stock previously acquired under the same option or in
accordance with the cashless exchange procedure under Regulation T of the
Federal Reserve Board. ISOs granted under the 1990 and 1991 Plans are intended
to qualify under Section 422 of the Internal Revenue Code (the "Code").
Options may be granted under the 1990 and 1991 Plans with durations of
no more than ten years from the date of grant, but, in any event, may expire
sooner if, in the case of employee optionees, the optionee's employment
terminates. Any shares, as to which an option expires, lapses unexercised, or
is terminated or canceled may be subject to a new option.
Options granted under the 1990 and 1991 Plans are not transferable
except by will or the laws of intestate succession. Upon an optionee's death,
options are exercisable by the optionee's legal representative or beneficiary
for up to three months.
Federal Income Tax Consequences
Under current federal tax law, a participant who is granted an ISO does
not recognize any taxable income at the time of grant or at the time of
exercise. Likewise, the Company is not entitled to any deduction at the time of
grant or at the time of exercise. When an ISO is exercised, the difference
between the fair market value of the shares on the exercise date and the
exercise price is an item of tax adjustment which may cause the participant to
be subject to the alternative minimum tax. When the shares of Common Stock
acquired upon exercise of an ISO are sold, the participant will recognize a
capital gain or loss equal to the difference between the sale price and the
exercise price, provided the participant has held the stock for the longer of
two years from the date of grant or one year from the date of exercise. If an
optionee makes a "disposition" of the stock received upon exercise of an ISO
prior to meeting the holding periods described above, the gain on the
disposition will be treated as ordinary income to the extent of the excess of
the fair market value on the date of exercise over the exercise price. The
balance of the gain, if any, realized upon such a disposition generally will be
treated as capital gain. The Company will be entitled to a deduction in the
year of disposition only to the extent of the amount of gain, if any, that is
taxable to the optionee as ordinary income. If the amount realized at the time
of the disposition is less than the option price, the optionee will not be
required to treat any amount as ordinary income provided the disposition is a
type that would give rise to a recognizable loss, and in such event the loss
will be treated as a long-term or short-term capital loss depending on the
holding period of the shares.
18
<PAGE>
A participant who is granted a NQO does not recognize taxable income at
the time of grant, but does recognize taxable income at the time of exercise
equal to the difference between the fair market value of the shares on the
exercise date and the exercise price of the shares, and the Company is entitled
to a corresponding compensation expense deduction. When the shares acquired
upon exercise of a NQO are sold, the participant will recognize a capital gain
or loss equal to the difference between the sale price and the fair market value
at the time of exercise; and in such event the gain, if any, will be treated as
long-term, mid-term or short-term capital gain, depending on the holding period
of the shares. Any loss will be treated as long-term or short-term capital
loss, depending on the holding period of the shares.
Amendment
The Board of Directors may amend the 1990 and 1991 Plans at any time but
may not, without stockholder approval, adopt any amendment which would
materially increase the maximum number of options that may be granted or the
number of shares that may be issued upon the exercise of options granted under
the 1990 and 1991 Plans, unless the increase results from a stock dividend,
stock split or other change in the capital stock of the Company, or materially
modify the eligibility requirements of the 1990 and 1991 Plans.
Vote Required
The affirmative vote of holders of a majority of the shares of Common
Stock entitled to vote at the Annual Meeting is required to approve the
amendment to the 1990 and 1991 Plans. For purposes of determining whether the
requisite approval has been received, abstentions are treated as "no" votes
while broker non-votes are disregarded. The Board of Directors recommends a vote
"For" approval of the amendment to the 1990 and 1991 Plans extending the date to
which grants may be made to coincide with that of the 1995 Nonemployee
Directors' Stock Option Plan which is October 25, 2005.
PROPOSAL NUMBER 3: Selection of Auditors
The Board of Directors has reappointed the firm of Ernst & Young LLP as
the Company's independent public accountants for the fiscal year ending May 31,
2000, subject to ratification by the Company's stockholders. Representatives of
Ernst & Young LLP are expected to be present at the Annual Meeting of
Stockholders and will have an opportunity to make a statement, if they desire to
do so, and to respond to appropriate questions from those attending the meeting.
Ernst & Young LLP has served as auditors for the Company since 1984.
The affirmative vote of holders of a majority of the shares of Common
Stock present in person or represented by proxy at the Annual Meeting is
required to ratify the appointment of Ernst & Young LLP as the independent
accountants for fiscal 2000.
The Board of Directors recommends a vote "For" ratification of Ernst & Young's
appointment.
Proposals of Stockholders
A proposal of a stockholder intended to be presented at the next annual
meeting of stockholders must be received at the Company's principal executive
offices no later than May 31, 2000, if the proposal is to be considered for
inclusion in the Company's proxy statement relating to such meeting.
19
<PAGE>
Financial Information
A copy of the Company's Annual Report on Form 10-K, including any
financial statements and schedules and exhibits thereto, may be obtained without
charge by written request to Michael J. Hall, Vice President-Finance, Matrix
Service Company, 10701 East Ute Street, Tulsa, Oklahoma 74116.
Other Matters
The cost of solicitation of these proxies will be borne by the Company.
In addition to solicitation by mail, certain directors, officers, and regular
employees of the Company may solicit proxies by telecopy, telephone, and
personal interview.
By Order of the Board of Directors
Michael J. Hall
September 17, 1999
Tulsa, Oklahoma
20
<PAGE>
EXHIBIT A
MATRIX SERVICE COMPANY
1990 INCENTIVE STOCK OPTION PLAN,
AS AMENDED
1. Purpose
The Matrix Service Company 1990 Incentive Stock Option Plan (the "Plan")
is intended to provide a means whereby key employees of Matrix Service Company,
a Delaware corporation (together with any "parent" or "subsidiary" as defined in
Section 425 of the Code (as hereinafter defined), the "Company"), may develop a
sense of proprietorship and personal involvement in the development and
financial success of the Company, and to encourage them to remain with and
devote their best efforts to the business of the Company, thereby advancing the
interests of the Company and its shareholders. Accordingly, the Company may
grant to key employees ("Optionees") the option (the "Option") to purchase
shares of Common Stock, par value $0.01 per share (the "Stock"), of Matrix
Service Company, on the terms set forth below. It is intended that Options
granted under the Plan will qualify as "incentive stock options" as defined
under Section 422A of the Internal Revenue code of 1986, as amended (the
"Code"). No stock options other than incentive stock options may be granted
under the Plan.
2. Administration and Interpretations
The Plan shall be administered by the Board of Directors of the Company
or such committee of members of the Board as the Board may appoint (the
"Committee"); however, if the Company becomes subject to the reporting
requirements of the Securities Exchange Act of 1934 (" 1934 Act"), the members
of the Committee shall be "disinterested persons" within the meaning of
paragraph (d)(3) of Rule 16b-3, adopted by the Securities and Exchange
Commission under the 1934 Act, as such Rule or its equivalent is then in effect.
Committee members may resign at any time by delivering written notice to the
Board of Directors. Vacancies in the Committee, however caused, shall be filled
by the Board of Directors. The Committee shall have sole authority to select
the persons who are to be granted Options from among those eligible hereunder
and to establish the number of shares which may be issued under each Option, The
Committee is authorized to interpret the Plan and may from time to time adopt
such rules and regulations, not inconsistent with the provisions of the Plan, as
it may deem advisable to carry out the Plan. The Committee shall act by a
majority of its members in office and the Committee may act either by vote at a
telephonic or other meeting or 'by a memorandum or other written instrument
signed by all of the members of the Committee. All decisions made by the
Committee in selecting the persons to whom Options shall be granted, in
establishing the number of shares which may be issued under each Option and in
construing the provisions of the Plan shall be final. In its absolute
discretion, the Board of Directors may at any time and from time to time
exercise any and all rights and duties of the Committee under the Plan.
The day-to-day administration of the Plan may be carried out by such
officers and employees of the Company as shall be designated from time to time
by the Committee. Members of the Committee shall not receive compensation for
their services as members, but all expenses and liabilities they incur in
connection with the administration of the Plan shall be borne by the Company.
The Committee may employ attorneys, consultants, accountants, appraisers,
brokers or other persons, and the Committee, the Board, the Company and the
officers and employees of the Company shall be entitled to
1
<PAGE>
rely upon the advice, opinions or valuations of any such persons. The
interpretation and construction by the Committee of any provisions of the Plan
or of any grant under the Plan and any determination by the Committee under any
provision of the Plan or any such grant shall be final and conclusive for all
purposes. Neither the Committee nor any member thereof shall be liable for any
act, omission, interpretation, construction or determination made in connection
with the Plan in good faith, and the members of the Committee shall be entitled
to indemnification and reimbursement by the Company in respect of any claim,
loss, damage or expense (including attorneys' fees) arising therefrom to the
full extent permitted by law. The members of the Committee shall be named as
insureds under any directors and officers liability insurance coverage that may
be in effect from time to time.
3. Eligibility of Optionee
(a) Options may be granted only to individuals who are key employees
(including officers who are also key employees) of the Company at the time
the Option is granted. Options may be granted to the same individual on
more than one occasion. In no event shall any employee or his legal
representatives, heirs, legatees, distributees or successors have any right
to participate in the Plan except to such extent, if any, as the Committee
shall determine.
(b) No employee shall be eligible to receive any Option if, on the
Grant Date, such employee owns (including ownership through the attribution
provisions of Section 425 of the Code), in excess of ten percent (10%) of
the outstanding voting stock of the Company (or of its parent or subsidiary
as defined in Section 425 of the Code) unless the following two conditions
are met:
(i) the option price for the shares of Stock subject to the
Option is at least 1 10% of the fair market value of the shares of
Stock on the date the Option is granted (the "Grant Date"); and
(ii) the Option Agreement (defined below) provides that the term
of the Option does not exceed ten years.
(c) No employee shall be eligible to receive Options under this Plan
(and all other option plans of the Company) that are exercisable for the
first time by such Optionee in any calendar year with respect to stock with
an aggregate fair market value (determined at the Grant Date) in excess of
$100,000.
4. Shares Subject to the Plan
The aggregate number of shares of Stock which may be issued under
Options granted under the Plan shall not exceed 900,000 shares. Such shares may
consist of authorized but unissued shares of Stock or previously issued shares
of Stock reacquired by the Company. Any of such shares which remain unissued
and which are not subject to outstanding options at the termination of the Plan
shall cease to be subject to the Plan, but until termination of the Plan, the
Company shall at all times make available a sufficient number of shares to meet
the requirements of the Plan. Should any Option hereunder expire or terminate
prior to its exercise in full, the shares theretofore subject to such Option may
again be subject to an Option granted under the Plan. The aggregate number of
shares which may be issued under Options granted under the Plan shall be subject
to adjustment as provided in Paragraph VIII hereof. Exercise of an Option in
any manner, or cancellation of an Option as provided in Paragraph V hereof,
shall result in a decrease in the number of shares of Stock which may thereafter
be available for purposes of the Plan by the number of shares as to which the
Option is exercised or cancelled.
2
<PAGE>
5. Option Agreements
Each Option shall be evidenced by a written agreement (an "Option
Agreement") executed by the Optionee and an authorized officer of the Company,
which shall contain such terms, conditions and restrictions, and may be
exercisable at such times and for such periods, as may be approved by the
Committee; provided, however, that no Option may be exercised to any extent
after, and every Option shall expire no later than, the tenth anniversary of the
Grant Date. Options that are granted shall be evidenced by Option Agreements in
the form approved by the Board. The terms, conditions and restrictions of
separate Option Agreements need not be identical. Specifically, an Option
Agreement (i) may provide for the cancellation at any time by the Company in its
sole discretion of the right to purchase all or part of the shares under the
Option in return for a payment in cash or shares of Stock or a combination of
cash and shares of Stock equal in value to the excess (if any) of the fair
market value of the shares with respect to which the right to purchase is
cancelled over the option price therefor, i.e., the "spread," and/or (ii) may
provide that upon exercise of the Option, such exercise may be treated by the
Company as a cancellation of the Option with respect to those shares by the
payment to the Optionee of the spread, all on such terms and conditions as the
Committee in its sole discretion may prescribe. Moreover, an Option Agreement
may provide for the payment of the option price, in whole or in part, by the
delivery of a number of shares of Stock (plus cash if necessary) having a fair
market value equal to such option price.
The purchase price per share of Stock issued under each Option $hall be
determined by the Committee and shall not be less than the fair market value of
a share of Stock on the Grant Date. For purposes of the Plan and any Option
Agreement, the determination of the fair market value of a share of Stock on any
particular date shall be made in good faith by the Committee and such
determination shall be binding for all purposes.
The Committee may accelerate the exercisability of any Option in its
sole discretion and also may modify an outstanding Option, including reducing
the exercise price of the Option, or cancel an outstanding Option in exchange
for the grant of a new Option with such terms and conditions that are in
accordance with the Plan at the time of such grant; provided that any Option, as
so amended, or any such new Option, will qualify as an incentive stock option
under Section 422A of the Code,
6. Exercise of Options
During the lifetime of the Optionee, only the Optionee (or if
incapacitated, his duly authorized representative) may exercise an Option
granted to him, or any portion thereof. After the death of the Optionee, any
exercisable portion of an Option may, prior to the time when such portion-
becomes unexercisable pursuant to Paragraph V or the Option Agreement, be
exercised by his personal representative or by any person empowered to do so
under the deceased Optionee's will or under the then applicable laws of descent
and distribution.
At any time and from time to time prior to the time when any exercisable
Option or exercisable portion thereof expires or becomes unexercisable pursuant
to Paragraph V or the Option Agreement, such exercisable Option or exercisable
portion thereof may be exercised in whole or in part; provided, however, that
the Company shall not be required to issue fractional shares and the Committee
may, in the Option Agreement, require any partial exercise to be made with
respect to a specified minimum number of shares.
An exercisable Option, or any exercisable portion thereof, may be
exercised solely by delivery to the Secretary of the Company of all of the
following prior to the time when such Option becomes unexercisable:
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(a) notice in writing signed by the Optionee or other person then
entitled to exercise such Option or portion thereof, stating that such
Option or portion thereof is exercised;
(b) full payment of the option price (in cash or by check, bank draft or
money order payable to the Company for the shares of Stock with respect to
which such Option or portion thereof is thereby exercised, together with
payment or arrangement for payment of any federal, state or other tax
required to be withheld by the Company with respect to such exercise;
(c) such representations and documents as the Committee reasonably deems
necessary or advisable to effect compliance with all applicable provisions
of the Securities Act of 1933, as amended, and any other federal, state or
foreign securities laws or regulations; the Committee, in its absolute
discretion, also may take whatever additional actions it deems appropriate
to effect such compliance, including, without limitation, placing legends on
share certificates and issuing stop-transfer orders to transfer agents and
registrars; and
(d) in the event that the Option or portion thereof shall be exercised
pursuant to this Paragraph VI by any person or persons other than the
Optionee, appropriate proof of the right of such person or persons to
exercise the Option or portion thereof.
7. Transferability of Options and Stock
No Option or interest or right therein shall be subject to disposition
by transfer, alienation, anticipation, pledge, encumbrance, assignment or any
other means, whether such disposition be voluntary or involuntary or by
operation of law or by judgment, levy, attachment, garnishment or any other
legal or equitable proceeding (including bankruptcy), and any attempted
disposition thereof shall be null and void and of no effect; provided, however,
that nothing in this Paragraph shall prevent transfers by will or by the
applicable laws of descent and distribution.
The Committee, in its absolute discretion, may impose such restrictions
on the transferability of the shares of Stock purchasable upon the exercise of
an Option as it deems appropriate, including without limitation (i) the right to
exercise a right of first refusal in the event of an offer to purchase the Stock
from the Optionee or any transferee of the Optionee, (ii) the right of the
Company to repurchase the shares of Stock from the Optionee or any transferee of
the Optionee and (iii) the right to require an escrow of the certificates
evidencing the shares of Stock. Any such restriction shall be set forth or
incorporated by reference in the respective Option Agreement and may be referred
to on the certificates evidencing such Stock.
8. Recapitalization, Reorganization or Change in Control
(a) The existence of the Plan and the Options granted hereunder shall
not affect in any way the right or power of the Board of Directors or the
shareholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, any merger or consolidation of the Company, any
issuance of debt or equity securities senior to or affecting Stock or the
rights thereof, the dissolution or liquidation of the Company or any sale or
transfer of all or any part of its assets or business, or any other
corporate act or proceeding.
(b) The shares with respect to which Options may he granted are shares
of Stock as presently constituted, but if, and whenever, prior to the
termination of the Plan or the expiration of an Option theretofore granted,
the Company shall effect a subdivision or consolidation of shares of Stock
or the payment of a stock dividend on Stock without receipt of consideration
by the Company, the
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remaining shares of Stock available under the Plan and the number of shares
of Stock with respect to which any Option may thereafter be exercised (i) in
the event of an increase in the number of outstanding shares, shall be
proportionately increased, and the purchase price per share under an
outstanding Option shall be proportionately reduced, and (ii) in the event
of a reduction in the number of outstanding shares, shall be proportionately
reduced, and the purchase price per share under an outstanding Option shall
be proportionately increased.
(c) Except as may otherwise be expressly provided in the Plan, the
issuance by the Company of shares of stock of any class or securities
convertible into shares of stock of any class, for cash, property, labor or
services, upon direct sale, upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of shares or obligations of the
Company convertible into such shares or other securities, and in any case
whether or not for fair value, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number of shares of Stock subject
to Options theretofore granted or the purchase price per share.
(d) If the Company effects a recapitalization or otherwise materially
changes its capital structure (both of the foregoing are herein referred to
as a "Fundamental Change"), then thereafter upon any exercise of an Option
theretofore granted the Optionee shall be entitled to purchase under such
Option, in lieu of the number of shares of Stock as to which such Option
shall then be exercisable, the number and class of shares of stock and
securities to which the Optionee would have been entitled pursuant to the
terms of the Fundamental Change if, immediately prior to such Fundamental
Change, the Optionee had been the holder of record of the number of shares
of Stock as to which such Option was then exercisable.
(e) If (i) the Company shall not be the surviving entity in any merger
or consolidation (or survives only as a subsidiary of another entity), (ii)
the Company sells all or substantially all of its assets to any other person
or entity (other than a wholly-owned subsidiary), (iii) any person or entity
(including a "group" as contemplated by Section 13(d)(3) of the 1934 Act)
after the date hereof acquires or gains ownership or control of (including,
without limitation, power to vote) more than 50% of the outstanding shares
of Stock, (iv) the Company is to be dissolved and liquidated, or (v) as a
result of or in connection with a contested election of directors, the
persons who were directors of the Company before such election shall cease
to constitute a majority of the Board (each such event in clauses (i)
through (v) above is referred to herein as a "Corporate Change"), then,
effective as of a date selected by the Committee, which date shall be (a) in
the event of the occurrence of a Corporate Change specified in clause (i),
(ii) or (iv) above, no later than a date determined by the Committee to be
far enough in advance of the date of such Corporate Change to permit each
Optionee to exercise such Optionee's Option to purchase shares of Stock and
participate therewith in such Corporate Change or (b) in the event of the
occurrence of a Corporate Change specified in clause (iii) or (v) above, no
later than thirty days after such Corporate Change, the Committee (which for
purposes of the Corporate Changes described in (iii) and (v) above shall be
either the Committee as constituted prior to the occurrence of such
Corporate Change or, if no Committee had been appointed, the Board of
Director as constituted prior to the occurrence of such Corporate Change)
acting in its sole discretion without the consent or approval of any
Optionee, shall effect one or more of the following alternatives or
combination of alternatives with respect to all outstanding Options (which
alternatives may be made conditional on the occurrence of any of the
Corporate Changes specified in clause (i) through (v) above and which may
vary among individual Optionees): (1) in the case of a Corporate Change
specified in clauses (i), (ii) or (iv), accelerate the time at which Options
then outstanding may be exercised so that such Options may be exercised in
full for a limited period of time on or before a specified date fixed by the
Committee, after which specified date all unexercised Options and all rights
of Optionees thereunder shall terminate, (2) accelerate the time at which
Options then outstanding may be exercised so that such Options may be
exercised in full for their then remaining term or (3)
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require the mandatory surrender to the Company of outstanding Options held
by such Optionees (irrespective or whether such Options are then exercisable
under the provisions of the Plan) as of a date, before or not later than
sixty days after such Corporate Change, specified by the Committee, and in
such event the Committee shall thereupon cancel such Options and the Company
shall pay to each Optionee an amount of cash equal to the excess of the fair
market value of the aggregate shares of Stock subject to such Option,
determined as of the date such Corporate Change is effective, over the
aggregate exercise price of the options covering such shares; provided,
however, the Committee shall not select an alternative (unless consented to
by the Optionee) such that, if an Optionee exercised his accelerated Option
pursuant to alternative I or 2 and participated in a transaction specified
in clause (i), (ii) or (iv) or received cash pursuant to alternative 3, the
alternative would result in the Optionee's owing any money by virtue of
operation of Section 16(b) of the 1934 Act. If all such alternatives have
such a result, the Committee shall take such action, which is hereby
authorized, to put such Optionees in as close to the same position as such
Optionee would have been in had alternative 1, 2 or 3 been selected but
without resulting in any payment by such Optionee pursuant to Section 16(b)
of the 1934 Act. Notwithstanding the foregoing, (1) with the consent of the
Optionee, the Committee may in lieu of the foregoing make such provision
with respect to any Corporate Change as it deems appropriate, and (II) in
the event that a Corporate Change described in clauses (i), (ii) or (iii)
occurs, but such Corporate Change does not result in any effective change in
ownership or control of the Company, the Committee shall make such
adjustments in the designation and number of unpurchased shares subject to
this Plan, the number of shares subject to Options outstanding under this
Plan, the exercise price specified in Options outstanding under the Plan,
and such other terms and provisions of the Options outstanding under this
Plan as the Committee may determine to be appropriate and equitable.
(f) Any adjustment provided for above shall be subject to any
shareholder action required by applicable Delaware corporate law.
9. Optionee Rights limited
Nothing in this Plan or in any Option Agreement hereunder shall confer
upon any Optionee any right to continue in the employ of the Company or shall
interfere with or restrict in any way the rights of the Company, which are
hereby expressly reserved, to discharge any Optionee at any time for any reason
whatsoever, with or without just cause.
The holders of Options shall not be, nor have any of the rights or
privileges of, shareholders of the Company in respect of any shares purchasable
upon the exercise of any part of an Option unless and until certificates
representing such shares have been issued by the Company to such holders.
10. Amendment or Termination of the Plan
The Board of Directors in its discretion may terminate the Plan at any
time with respect to any shares for which Options have not theretofore been
granted. The Board of Directors shall have the right to alter or amend the Plan
or any part thereof from time to time; provided, that no change in any Option
theretofore granted may be made which would impair the rights of the Optionee
without the consent of such Optionee.- and provided, further, that the Board of
Directors or the Committee may not make any alterations or amendment which would
materially increase the benefits accruing to Optionees under the Plan, increase
the aggregate number of shares which may be issued pursuant to the provisions of
the Plan, change the class of employees eligible to receive Options under the
Plan or extend the term of the Plan, without the approval of the holders of a
majority of the outstanding shares of each class of capital stock of the Company
voting or acting separately as a class.
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11. Term of Plan
The Plan shall be effective upon the date specified by the Board of
Directors in its adoption of the Plan. Except with respect to Options then
outstanding, if not sooner terminated under the other provisions hereof, the
Plan shall terminate upon and no further Options shall be granted after October
25, 2005. The adoption of this Plan shall not affect any other compensation or
incentive plans in effect for the Company or any subsidiary. Nothing in this
Plan shall be construed to limit the right of the Company or any subsidiary to
grant or assume options otherwise than under this Plan in connection with any
proper corporate purpose, including, but not by way of limitation, the grant or
assumption of options in connection with the acquisition by purchase, lease,
merger, consolidation or otherwise, of the business, stock or assets of any
corporation, firm or association.
12. Effective Date
The Plan was initially adopted as the Matrix Environmental Company 1989
Incentive Stock Option Plan by the Board of Directors of Matrix Environmental
Company on November 29, 1989. On September 4, 1990, the Board of Directors of
Matrix Service Company approved an amendment to the Plan renaming it the Matrix
Service Company 1990 Incentive Stock Option Plan and increasing the number of
shares of common stock which may be issued under the Plan from 300,000 shares to
900,000 shares.
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EXHIBIT B
MATRIX SERVICE COMPANY
1991 INCENTIVE STOCK OPTION PLAN,
AS AMENDED
1. Purpose
The purpose of the Matrix Service Company 1991 Stock Option Plan, as
amended, (the "Plan"), is to enhance the ability of Matrix Service Company (the
"Company") and its Subsidiaries (as defined below) to attract and retain
individuals possessing superior managerial talent to serve as employees of the
Company and its Subsidiaries, and to provide long-term incentives to such
persons to contribute to the future success and prosperity of the Company and
its Subsidiaries. Accordingly, under the Plan the Company may grant to key
employees options ("Options") to purchase shares of the Company's common stock,
par value $.01 per share ("Common Stock"). Options granted under the Plan may be
either (i) incentive stock options ("ISOs") which are qualified under Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"), with respect
to grants to key employees, or (ii) nonqualified stock options ("Nonqualified
Options"), with respect to grants to key employees.
For purposes of the Plan, a "Subsidiary" shall be any corporation in
which the Company has a direct or indirect ownership interest of 50% or more of
the total combined voting power of all classes of stock in such corporation.
2. Administration and Interpretation
A. Administration. The Plan shall be administered by the
Compensation Committee (the "Committee") of the Board of Directors of
the Company (the "Board"). The Committee may prescribe, amend and
rescind rules and regulations for administration of the Plan and shall
have full power and authority to construe and interpret the Plan. The
Committee may correct any defect or any omission or reconcile any
inconsistency in the Plan or in any grant made under the Plan in the
manner and to the extent it shall deem desirable.
Committee members shall be appointed by and shall serve at the
pleasure of the Board. All members of the Committee shall be
"disinterested persons" within the meaning of Rule 16b-3 of the General
Rules and Regulations of the Securities Exchange Act of 1934 (the "1934
Act"). The Board may from time to time appoint members of the Committee
in substitution for or in addition to members previously appointed and
may fill vacancies, however caused, in the Committee. A majority of the
members of the Committee shall constitute a quorum, and the acts of a
majority of the members present at a meeting, or the acts of a majority
of the members evidenced in writing, shall be the acts of the Committee.
Members of the Committee may, in the discretion of the Board, receive
compensation for their services as members, and all expenses and
liabilities they incur in connection with the administration of the Plan
shall be borne by the Company.
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The day-to-day administration of the Plan may be carried out by such
officers and employees of the Company or its Subsidiaries as shall be
designated from time to time by the Committee. The Committee may employ
attorneys, consultants, accountants, appraisers, brokers or other persons,
and the Committee, the Company and the officers and employees of the
Company shall be entitled to rely upon the advice, opinions or valuations
of any such persons.
The Committee shall have the authority to make all decisions concerning
Options granted under the Plan, including without limitation the selection
of the persons to whom Options are granted, the number of shares of Common
Stock subject to each Option and the terms and conditions of each Option,
to construe the terms and provisions of the Plan and the option agreements
("Agreements") under which Options are granted, and to adopt, from time to
time, such rules and regulations, not inconsistent with the terms of the
Plan, as it may deem advisable to carry out the Plan. All decisions by the
Committee shall be final. The effective date of an Option, as determined by
the Committee, is referred to herein as the "Grant Date."
B. Interpretation. The interpretation and construction by the Committee
of any provisions of the Plan or of any grant under the Plan and any
determination by the Committee under any provision of the Plan or any such
grant shall be final and conclusive for all purposes.
C. Limitation on Liability. Neither the Committee nor any member
thereof shall be liable for any act, omission, interpretation, construction
or determination made in connection with the Plan in good faith, and the
members of the Committee shall be entitled to indemnification and
reimbursement by the Company in respect of any claim, loss, damage or
expense (including counsel fees) arising therefrom to the full extent
permitted by law and the articles of incorporation of the Company. The
members of the Committee, if appointed, shall be named as insureds under
any directors and officers liability insurance coverage that may be in
effect from time to time.
3. Shares Subject to Grants Under the Plan
The aggregate number of shares which may be issued under Options granted
under the Plan shall not exceed 1,320,000 shares of Common Stock. Such shares
may consist of authorized but unissued shares of Common Stock or previously
issued shares of Common Stock reacquired by the Company. Any of such shares
which remain unissued and which are not subject to outstanding Options at the
termination of the Plan shall cease to be subject to the Plan, but until
termination of the Plan, the Company shall at all times make available a
sufficient number of shares to meet the requirements of the Plan and the
outstanding Options. The number of shares of Common Stock which are available
for Options under the Plan shall be decreased by each exercise of an Option, and
to the extent that such Option lapses the shares theretofore subject to such
Option may again be subject to other Options granted under the Plan. If any
Option, in whole or in part, expires or terminates unexercised or is canceled or
forfeited, the shares theretofore subject to such Option may be subject to
another Option granted under the Plan. The aggregate number of shares which may
be issued under Options granted under the Plan shall be subject to adjustment as
provided in Section 6 hereof.
4. Eligibility
The individuals who shall be eligible to receive Options under the Plan
shall be such key employees as the Committee from time to time shall determine.
In granting Options, the Committee shall take into consideration the
contribution an individual has made or may make to the success of the Company or
its Subsidiaries and such other factors as the Committee shall determine. The
Committee shall also have the authority to consult with and receive
recommendations from officers and other
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employees of the Company and its Subsidiaries with regard to these matters. In
no event shall any individual or his legal representatives, heirs, legatees,
distributees or successors have any right to participate in the Plan except to
such extent, if any, as the Committee shall determine.
Options may be granted under the Plan from time to time in substitution
for stock options, restricted stock or other stock-based compensation granted by
other corporations where, as a result of a merger or consolidation of such other
corporation with the Company or a Subsidiary, or the acquisition by the Company
or a Subsidiary of the assets of such other corporation, or the acquisition by
the Company or a subsidiary of stock of, or other beneficial ownership interest
in, such other corporation, the individuals who held such other stock options,
restricted stock or other stock-based compensation become eligible to receive
Options under the Plan.
5. Grants and Terms of Options
A. Grants of Options. Grants of Options under the Plan shall be for
such number of shares of Common Stock and shall be subject to such terms and
conditions as the Committee shall designate.
B. Terms of Options. Each grant of an Option shall be evidenced by an
Agreement executed by the recipient of the Option (the "Optionee") and an
authorized officer of the Company. Each Agreement shall be in a form approved by
the Committee, shall comply with and be subject to the terms and conditions of
the Plan and may contain such other provisions, consistent with the terms and
conditions of the Plan, as the Committee shall deem advisable. References herein
to an Agreement shall include, to the extent applicable, any amendment to the
Agreement and any interpretation or construction thereof by the Committee
pursuant to this Plan.
(1) Exercise of Options. Options shall not be exercisable prior
to the date six months following the Grant Date. In addition, the
Committee may include in each Agreement a provision stating that the
Option granted therein may not be exercised in whole or in part for an
additional period of time specified in such Agreement, and may further
limit the exercisability of the Option in such manner as the Committee
deems appropriate. Except as provided herein or as so specified in the
Agreement or in a resolution of the Committee, any Option may be
exercised in whole at any time or in part from time to time during its
term. The Committee may, in its discretion, at any time and from time to
time accelerate the exercisability of all or part of any Option. An
Optionee may exercise an Option by providing written notice to the
Company at any time or from time to time during the period such Option
is exercisable and by satisfying such other conditions as are set forth
in the Agreement relating to the Option including, without limitation,
satisfying the requirements for tax withholding with respect to such
exercise.
(2) Payment of Option Exercise Price. Upon exercise of an
Option, the full price per share (the "Exercise Price") for the shares
with respect to which the Option is being exercised shall be payable to
the Company (i) in cash or by check payable and acceptable to the
Company or (ii) subject to the approval of the Committee, (a) by
tendering to the Company shares of Common Stock owned by the Optionee
having an aggregate market Value Per Share (as defined below) as of the
date of exercise and tender that is not greater than the Exercise Price
for the shares with respect to which the Option is being exercised and
by paying any remaining amount of the Exercise Price as provided in (i)
above; provided, however, that the Committee may, upon confirming that
the Optionee owns the number of additional shares being tendered,
authorize the issuance of a new certificate for the number of shares
being acquired pursuant to the exercise of the Option less the number of
shares being tendered upon the exercise, and return to the Optionee (or
not require surrender of) the
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certificate for the shares being tendered upon the exercise; or (b) by
the Optionee delivering to the Company a properly executed exercise
notice together with irrevocable instructions to a broker to promptly
deliver to the Company cash or a check payable and acceptable to the
Company to pay the option exercise price; provided that in the event the
Optionee chooses to pay the Option exercise as provided in (ii)(b)
above, the Optionee and the broker shall comply with such procedures and
enter into such agreements of indemnity and other agreements as the
Committee shall prescribe as a condition of such payment procedure.
Payment instruments will be received subject to collection.
(3) Number of Shares. Each Agreement shall state the total
number of shares of Common Stock that is subject to the Option, which
number shall be subject to adjustment pursuant to Section 6.
(4) Exercise Price. The Exercise Price for each option shall be
fixed by the Committee on the Grant Date. The Exercise Price shall be
the market Value per Share on the Grant Date, but in no event less than
the par value of the Common Stock. The Exercise Price shall be subject
to adjustment pursuant to Section 6.
(5) Term. The term of each Option shall be determined by the
Committee at the Grant Date; provided, however, that each Option shall
expire no later than ten years from the Grant Date (such date, as
determined by the Committee or provided for herein, being referred to
hereafter as the "Expiration Time").
(6) Market Value Per Share. "Market Value Per Share" shall be
determined as of any particular date by any fair and reasonable means
determined by the Committee.
(7) Termination of Employment; Death of an Outside Director.
(a) If the employment of an employee Optionee is
terminated for any reason other than a Qualified Termination
(defined below), the Option granted to such Optionee shall
automatically expire simultaneously with such termination. In the
event of termination of an employee Optionee's employment due to
death, retirement on or after reaching age 65 (or if prior to age
65, with the consent of the Committee), permanent disability (as
determined under the standards of the Company's long-term
disability program) or termination by the Company for any reason
other than "cause" (each of such four events being a "Qualified
Termination"), the Option may be exercised by the Optionee (or
his estate, personal representative or beneficiary at any time
within the three-month period commencing on the day next
following such Qualified Termination (or within the next
succeeding three months if the Optionee dies or becomes disabled
within the three-month period following a Qualified Termination
relating to other than the Optionee's death or disability) to
the full extent that the Optionee was entitled to exercise the
same on the day immediately prior to such Qualified Termination.
For purposes of this clause, "cause" shall mean:
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(i) final conviction of the Optionee of a felony
under the laws of the United States or any state thereof which
results or was intended to result directly or indirectly in gain
or personal enrichment by the Optionee at the expense of the
Company.
(ii) participation by the Optionee as an employee,
officer or principal shareholder in any business engaged in
activities in direct competition with the Company without the
consent of the Company; or
(iii) gross and willful inattention to Optionee's
duties as an employee for a continuous period of three months
other than due to Optionee's total physical disability, or other
cause reasonably beyond the control of Employee, which
inattention to duty has a material adverse effect on the Company.
(b) In the event of the death of an Optionee that is
an outside director, the Option may be exercised by the
Optionee's estate, personal representative or beneficiary at any
time within the three- month period commencing on the day next
following such Optionee's death to the full extent that the
Optionee was entitled to exercise the same on the day immediately
prior to his death.
(c) The Committee may, in its discretion, (i)
accelerate the exercisability of all or part of an Option that is
not otherwise exercisable or (ii) provide that an Option shall
remain outstanding and be exercisable following termination of
employment (or other specified events in the case of
nonemployees) on such other terms and conditions as the Committee
shall approve.
(8) Special Terms Applicable to Incentive Stock Options.
ISOs may be granted only to individuals who are key employees of the
Company at the time the ISO is granted. ISOs may be granted to the
same individual on more than one occasion, but in no event shall an
ISO be granted after October 25, 2005.
No employee shall be eligible to receive an ISO if, on the
Grant Date, such employee owns (including ownership through the
attribution provisions of Section 424 of the code) in excess of 10% of
the outstanding voting stock of the Company (or of its parent or
subsidiary as defined in Section 424 of the code) unless the following
two conditions are met:
(i) the option price for the shares of Common Stock subject to
the ISO is at least 110% of the fair market value of the shares of
Common Stock on the Grant Date; and
(ii) the Agreement provides that the term of the ISO does not
exceed five years.
No employee shall be eligible to receive ISOs (under this
Plan and all other option Plans of the Company, its parent and subsidiary
corporations) that are exercisable for the first time in any calendar year with
respect to stock with an aggregate fair market value (determined at the Grant
Date) in excess of $100,000. Notwithstanding any provision to the contrary in
any Agreement pursuant to which Options are granted, options which are intended
to be ISOs and would otherwise qualify as ISOs but for the requirement set forth
in the preceding sentence, shall be treated as ISOs to the extent allowed under
such requirement and the balance of such Options shall be traded as Nonqualified
Options and their validity shall not be affected in any way whatsoever.
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6. Recapitalization or Reorganization
A. The existence of the Plan and the Options granted hereunder shall
not affect in any way the right or power of the Board or the shareholders of the
Company to make or authorize any adjustment, recapitalization, reorganization or
other change in the Company's capital structure or its business, any merger or
consolidation of the Company, any issue of bonds, debentures, or shares of
preferred stock ahead of or affecting Common Stock or the rights thereof, the
dissolution or liquidation of the Company or any sale or transfer of all or any
part of its assets or business, or any other corporate act or proceeding.
B. The shares with respect to which Options may be granted are shares
of Common Stock as presently constituted. If, and whenever, prior to the
termination of the Plan or the expiration of an outstanding Option, the Company
shall effect a subdivision of shares of Common Stock or the payment of a stock
dividend on Common Stock without receipt of consideration by the Company, the
remaining shares of Common Stock available under the Plan and the number of
shares of Common Stock with respect to which outstanding Options may thereafter
be exercised shall be proportionately increased, and the Exercise price under
outstanding Options shall be proportionately reduced. If, and whenever, prior to
the termination of the Plan or the expiration of an outstanding Option, the
Company shall effect a consolidation of shares of Common Stock, the remaining
shares of Common Stock available under the Plan and the number of shares of
Common Stock with respect to which any outstanding Option may thereafter be
exercised shall be proportionately reduced, and the Exercise price under the
outstanding Options shall be proportionately increased.
C. Except as may otherwise be expressly provided in the Plan, the
issuance by the Company of shares of stock of any class or securities
convertible into shares of stock of any class, for cash, property, labor or
services, upon direct sale, upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the Company convertible
into such shares or other securities, and in any case whether or not for fair
value, shall not affect, and no adjustment by reason thereof shall be made with
respect to, the number of shares of Common Stock available under the Plan or
subject to Options theretofore granted or the Exercise Price per share.
D. If the Company effects a recapitalization or otherwise materially
changes its capital structure (both of the foregoing are herein referred to as a
"Fundamental Change"), then thereafter upon any exercise of an Option
theretofore granted, the holder shall be entitled to purchase under such Option,
in lieu of the number of shares of Common Stock that would have been received
the number and class of shares of stock and securities to which the holder would
have been entitled pursuant to the terms of the Fundamental Change if,
immediately prior to such Fundamental Change, the Optionee had been the holder
of record of the number of shares of Common Stock.
E. Any adjustment provided for above shall be subject to any required
shareholder action.
7. Recipient's Agreement
If, in the opinion of counsel for the Company, at the time of the
exercise of any Option it is necessary or desirable, in order to comply with any
then applicable laws or regulations relating to the sale of securities, for the
individual exercising the option to agree to hold any shares issued to the
individual for investment and without intention to resell or distribute the same
and for the individual to agree to dispose of such shares only in compliance
with such laws and regulations, the individual shall be required, upon the
request of the Company, to execute and deliver to the Company a further
agreement to such effect.
6
<PAGE>
8. Miscellaneous
A. No Employment Contract. Nothing contained in the Plan shall be
construed as conferring upon any employee the right to continue in the employ of
the Company or any Subsidiary.
B. Employment with Subsidiaries. Employment by the Company for the
purpose of this Plan shall be deemed to include employment by, and to continue
during any period in which an employee is in the employment of, any Subsidiary.
C. No Rights as a Shareholder. A person granted an Option under the
Plan shall have no rights as a shareholder with respect to shares covered by
such person's Option until the date of the issuance of shares to the person upon
the exercise of the Option. No adjustment will be made for dividends or other
distributions or rights for which the record date is prior to the date of such
issuance.
D. No Restriction on Corporate Action. Nothing contained in the Plan
shall be construed to prevent the Company or any Subsidiary from taking any
corporate action that is deemed by the Company or such Subsidiary to be
appropriate or in its best interest, whether or not such action would have an
adverse effect the Plan or any option granted under the Plan. No person that
receives, or is eligible to receive, Options under the Plan shall have any claim
against the Company or any Subsidiary as a result of any such action.
E. Non-assignability. Neither a person that receives Options under the
Plan nor such person's beneficiary shall have the power or right to sell,
exchange, pledge, transfer, assign or otherwise encumber or dispose of such
person's or beneficiary's Options received under the Plan except by will or the
laws of intestate succession; and to the extent any such option received under
the Plan is awarded to a spouse pursuant to any divorce proceeding, such
interest shall be deemed to be terminated and forfeited notwithstanding any
vesting provisions or other terms herein or in the Agreement evidencing such
option.
F. Governing Law; Construction. All rights and obligations under the
Plan shall be governed by, and the Plan shall be construed in accordance with,
the laws of the State of Delaware without regard to the principles of conflicts
of laws. Titles and headings to Sections herein are for purposes of reference
only, and shall in no way limit, define or otherwise affect the meaning or
interpretation of any provision of the Plan.
G. Amendment and Termination. The Committee may from time to time and
at any time alter, amend, suspend, discontinue or terminate this Plan and any
grants of Options hereunder; provided, however, that no such action of the
Committee may, without the approval of the shareholders of the Company, alter
the provisions of the Plan so as to (A) materially increase the maximum number
of shares of Common Stock that may be issued upon the exercise of Options
granted under the Plan (except as provided in Section 6) or (B) materially
modify the requirements relating to eligibility to receive Options under the
Plan. The Plan shall terminate on October 25, 2005, and no options shall be
awarded after such date.
H. Preemption by Applicable Laws and Regulations. Anything in the Plan
or any Agreement to the Contrary notwithstanding, if, at any time specified
herein or therein for the making of any determination or the taking of any
action, any law, regulation or requirement of any governmental authority having
jurisdiction in the premises shall require the Company to take any additional
action not otherwise required by the Plan or an Agreement in connection with any
such determination or action, the making of such determination or the taking of
such action, as the case may be, shall be deferred until such additional action
shall have been taken.
7
<PAGE>
I. Effective Date. The Plan was initially adopted by the Board of
Directors of the Company on May 14, 1991, and approved by the Company's
stockholders on October 24, 1991, effective as of May 14, 1991. On August 13,
1992 the Board of Directors approved an amendment to the Plan increasing the
number of shares of Common Stock which may be issued under the Plan from 350,000
shares to 700,000 shares, and the stockholders of the Company approved this
increase at the annual meeting on October 30, 1992. The Board authorized a
further amendment to the Plan on April 20, 1993, increasing the number of shares
of Common Stock under the Plan to 770,000 shares. As this increase was not
deemed a "material increase" pursuant to Section 8, no stockholder approval was
required. On July 27, 1994 the Board authorized an amendment to the Plan to
increase the number of shares of Common Stock issuable under the Plan to 970,000
shares and the stockholders of the Company approved this increase at the Annual
Meeting on November 3, 1994. On August 29, 1997, the Board authorized an
amendment to the Plan to increase the number of shares of common stock issuable
under the Plan from 970,000 shares to 1,320,000 shares, and the stockholders of
the Company approved this increase at the Annual Meeting on October 29, 1997.
8
<PAGE>
PROXY PROXY
MATRIX SERVICE COMPANY
CUSIP 57685310
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints BRADLEY S. VETAL, MICHAEL J.
HALL, and each or either of them, lawful attorneys and proxies of the
undersigned, with full power of substitution and re-substitution, for and in
the name, place and stead of the undersigned, to attend the Annual Meeting of
Stockholders of Matrix Service Company (herein the "Company") to be held at Bank
One, First National Tower, The Board Room, 41st Floor, 15 East Fifth Street,
Tulsa, Oklahoma, on the 27th day of October, 1999 at 10:00 a.m., Central
Standard time, and any adjournment(s) thereof, with all powers the undersigned
would possess if personally present and to vote thereat, as specified herein,
the number of shares the undersigned would be entitled to vote if personally
present.
In accordance with their discretion, said attorneys and proxies are authorized
to vote upon such other business as may properly come before the meeting or any
adjournments thereof.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
- -----------------------------------------------------------------------------
ENVELOPE.
- --------
<PAGE>
Every properly signed proxy will be voted in accordance with the specification
made thereon. IF NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR PROPOSALS
1, 2, & 3. All prior proxies are hereby revoked.
<TABLE>
<S> <C> <C>
PROPOSAL 1: ELECTION OF DIRECTORS INSTRUCTION: To withhold authority to vote for any individual
FOR all nominees (except WITHHOLD AUTHORITY nominee strike a line through the nominee's name in the list below).
as marked to the contrary) to vote for all nominees
listed to the right Hugh E. Bradley, Michael J. Hall, Robert A. Peterson, Bradley S. Vetal,
John S. Zink
If authority to vote FOR any nominee is not withheld, this proxy will be
voted for such nominee.
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[_] [_]
PROPOSAL 2: TO CONSIDER AND VOTE UPON A PROPOSAL TO
AMEND THE COMPANY'S 1990 AND 1991 STOCK OPTION PLANS.
Shares ownership Label
FOR AGAINST ABSTAIN
[_] [_] [_]
PROPOSAL 3: TO RATIFY THE APPOINTMENT OF ERNST & YOUNG
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LLP AS THE INDEPENDENT AUDITORS OF THE COMPANY FOR (Please sign exactly as name appears hereon. When signing as attorney,
THE FISCAL YEAR 2000 executor, administrator, trustee, guardian, etc., give full title as
such. For joint accounts, each joint owner should sign.)
This Proxy will also be voted in accordance with the discretion of the
proxies or proxy or any other business. Receipt is hereby acknowledged
FOR AGAINST ABSTAIN of the Notice of Annual Meeting and Proxy Statement of the Company dated
[_] [_] [_] September 17, 1999.
Signature___________________________________________________________
Signature if held jointly___________________________________________
"NOTE" SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF Date________________________________________________________________
</TABLE>
