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 and outside directors 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 and to persons who
are first elected as directors of the Company after January 1, 1991
("outside directors") 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 either
key employees or outside directors.
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.
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 970,000 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 and outside directors as the
Committee from time to time shall determine; provided, however,
that outside directors shall only be eligible to receive
Nonqualified Options under the Plan. 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 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 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:
(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 December 31, 2000.
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.
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 share 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.
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
December 31, 2000, 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.
I. Effective Date. The Plan was initially adopted by
the Board of Directors of the Company in May 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 in April 1993, increasing the
number of shares of Common Stock under the Plan to 770,000
shares. In July 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, which was approved by the
Company's stockholders at the November 3, 1994 Annual Meeting of
Stockholders. In August 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 subject to
approval by the Company's stockholders at the 1997 annual meeting
of stockholders.