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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into by and
between PHILIP J. HAWK, an individual ("Hawk"), and TEAM, INC., a Texas
corporation ("Team"), to be effective as of the date appearing on the signature
pages hereof (the "Effective Date").
INTRODUCTION
Team desires to employ Hawk as its Chief Executive Officer and Hawk
desires to serve as Team's Chief Executive Officer. The parties desire to enter
into this Agreement to set forth the terms and conditions of Hawk's employment
relationship with Team.
NOW, THEREFORE, in consideration of the premises, and the covenants
herein set forth and for other good and valuable consideration, the receipt and
sufficiency and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
AGREEMENT
1. EMPLOYMENT AS CHIEF EXECUTIVE OFFICER. Subject to the terms and
conditions hereinafter stated, Team shall employ Hawk and Hawk shall serve as
Chief Executive Officer of Team with the duties specified in Section 2 below
throughout the Term (defined in Section 7 below).
2. DUTIES AS CHIEF EXECUTIVE OFFICER. Hawk agrees to serve throughout
the Term as Chief Executive Officer of Team, subject to the Team Bylaws and
management policies, and to perform such other duties as shall from time to time
be reasonably assigned to Hawk by the Board of Directors of Team ("Board") which
are consistent with Hawk's position as Chief Executive Officer. Hawk shall, as
consideration for serving hereunder as Team's Chief Executive Officer, be
compensated in the manner provided in Section 3 below. No change in the duties
of Hawk which are consistent with his position as Chief Executive Officer shall
result in a termination or rescission of this Agreement. Hawk acknowledges that
the position of Chief Executive Officer is a full-time position, and he shall
devote such time and attention to perform his duties hereunder as is consistent
with such full-time position. Hawk shall be permitted to serve on the Boards of
Directors of Highlands Insurance Group and of such other corporations as may be
approved by the Board from time to time. The foregoing notwithstanding, the
parties recognize and agree that Hawk may engage in personal investments and
other business activities that do not conflict with the business of and affairs
of Team or interfere with Hawk's performance of his duties as a full-time
employee hereunder. Hawk shall make available to Team any and all business
opportunities that become available to Hawk which involve an area of business in
which Team or any Affiliate thereof conducts business. Any such business
opportunities shall be the property of Team.
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3. COMPENSATION.
a. CHIEF EXECUTIVE OFFICER. Throughout the Term, Hawk shall be
paid not less than Two Hundred Twenty Five Thousand Dollars ($225,000.00) per
year ("Base Compensation"), in equal and consecutive monthly installments of not
less than Eighteen Thousand Seven Hundred Fifty Three Dollars ($18,753.00), as
that sum may increase from time to time ("Monthly Salary Payments").
b. PERFORMANCE BONUS. As promptly as practical hereafter, the
Board, acting in its sole discretion, will establish performance goals for Hawk
for Team's current fiscal year which ends on May 31, 1999. As promptly as
practical following the end of each of Team's fiscal years thereafter during
which Hawk serves as Team's Chief Executive Officer, the Board, acting in its
sole discretion, will likewise meet and confer with Hawk to establish
performance goals for Hawk for the next fiscal year. Hawk shall receive a
performance bonus with respect to each such fiscal period during which he
achieves Board-established performance goals, which bonus shall be equal to up
to fifty percent (50%) of the Base Compensation that he earns during such fiscal
year or part thereof, assuming that he fully achieves the Board-established
performance goals. In establishing such performance goals, the Board shall meet
and confer with Hawk.
c. DEFERRAL OPTION. Hawk shall have the right to defer all or a
portion of the Base Compensation and bonuses due to him under this Section 3.
At such time as Hawk elects to defer any compensation, Hawk and Team shall enter
into a Salary Deferred Compensation Agreement in substantially the form attached
hereto as Exhibit "A," except that under such agreement Hawk may make an
election to defer all or a portion of his Base Compensation and/or bonus for a
calendar year at any time prior to the beginning of such year. In addition, Team
shall pay such deferred compensation to a trust to be created with terms
substantially the same as the form of the Deferred Compensation Trust Agreement
attached hereto as Exhibit "B." The trustee of such trust shall be a trustee
possessing corporate trust powers under the laws of the State of Texas and
acceptable to Hawk.
4. STOCK PURCHASE AND SALE. Team hereby grants to Hawk an option to
purchase up to 65,000 shares of Team common stock, $0.30 par value per share
("Common Stock"), at a purchase price equal to the market price for Team Common
Stock trading on the American Stock Exchange as of the close of business on the
date of exercise of such option right by Hawk, less that number of shares of
Common Stock of which Hawk is the Beneficial Owner as of the date of exercise of
such option right by Hawk. Hawk shall have the right to exercise the option
granted under this Section 4 in whole or in part at any time within thirty (30)
days after the Effective Date by delivery of written notice to Team. Payment for
such shares shall be due three (3) business days after the date Hawk delivers
written notice of exercise to Team, and such sale of Team Common Stock to Hawk
shall be consummated as promptly as practicable thereafter. To the extent that
Hawk does not exercise this option granted under this Section 4 in full within
thirty (30) days of the Effective Date, then the remainder of this option shall
lapse. The Team Common Stock that Hawk receives under this Section 4 shall be
"restricted stock" under SEC Rule 144.
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5. STOCK OPTIONS.
a. INCENTIVE STOCK OPTIONS. Pursuant to a separate award agreement
to be executed simultaneously with this Agreement, Team shall issue to Hawk
incentive stock options ("ISOs") to purchase that number of shares of Team
Common Stock that is equal to the quotient of $400,000.00 divided by the market
price for Team Common Stock trading on the American Stock Exchange as of the
close of business on the Effective Date, less 1,000 shares and rounded to the
nearest whole share. Such award of ISOs to Hawk shall be in accordance with
Team's incentive stock option plan now in effect (the "ISO Plan"). One-fourth
of the ISOs shall become exercisable as of the end of each of the three (3)
succeeding annual anniversary dates of the Effective Date with the last
one-fourth becoming exercisable as of January 30, 2002.
b. STANDARD NON-QUALIFIED OPTIONS. Pursuant to a separate award
agreement to be executed simultaneously with this Agreement, Team shall issue
to Hawk standard non-qualified options ("SNOs") to purchase that number of
shares of Team Common Stock equal to 150,000 less the number of ISOs issued to
Hawk under Section 5(a) herein. One-third of the SNOs shall become exercisable
as of the end of each of the three succeeding annual anniversary dates of the
Effective Date and shall generally be subject to the same exercise price,
conditions and restrictions as the ISOs under the ISO Plan; provided, however,
that (i) in the event that this Agreement is terminated as provided in Section
8(a) herein or as provided in Section 8(c) herein, the SNOs shall become fully
vested as of the effective date of such termination, and (ii) in the event a
"Change of Control" of Team (as that term is defined in Section 25(b) of this
Agreement) occurs in a transaction which is not recommended by the Board, then
all the SNOs shall become fully vested immediately prior to consummation of
such transaction, irrespective of any termination of this Agreement. In
addition, upon the occurrence of any of the events causing acceleration of the
vesting of any of the SNOs as provided above in this Section 5(b), Team shall,
simultaneously with such event causing acceleration, issue to Hawk more SNOs
(the "Additional SNOs") in addition to the SNOs issued to Hawk as of the
Effective Date (the "Original SNOs"). The number of shares of Team Common Stock
purchasable under the Additional SNOs shall equal the number of shares of Team
Common Stock that would have become vested under the ISOs had such event
causing acceleration of vesting of the Original SNOs applied to the remaining
non-vested ISOs. Such Additional SNOs shall be immediately exercisable at the
same exercise price as the Original SNOs and shall otherwise be subject to
the same terms and conditions as the Original SNOs. The remaining non-vested
ISOs as of the date of such acceleration shall be reduced by the same number of
shares as are included in the Additional SNOs.
c. PRICE-VESTED OPTIONS. Pursuant to a separate award agreement to
be executed simultaneously with this Agreement, Team shall issue price vested
options ("PVOs") to Hawk to purchase 200,000 shares of Team Common Stock. The
PVOs shall be generally subject to the same conditions and restrictions as the
SNOs; provided, however, that (i) in the event that this Agreement is
terminated as provided in Section 8(a) herein or as provided in Section 8(c)
herein, the PVOs shall become fully vested as of the effective date of such
termination, and (ii) in the event a "Change of Control" of Team (as that term
is defined in Section 25(b) of this Agreement) occurs in a transaction which is
not recommended by the Board, then all the PVOs
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shall, notwithstanding anything to the contrary herein, become fully vested
immediately prior to consummation of such transaction, irrespective of any
termination of this Agreement. Further provided and subject to the vesting
acceleration provisions in this Section 5(c), that the vesting for the PVOs
shall occur in three vesting levels ("Vesting Levels"): vesting for 33 1/3% of
the PVOs shall occur at the end of any consecutive six-month period during which
the average market price of Team Common Stock is $7.00 per share (as adjusted
for any splits, stock dividends and the like), provided that the market price is
also at least that high at the end of such six-month period; the next 33 1/3% of
the PVOs shall vest at the end of any consecutive six-month period during which
the average market price of Team Common Stock is $10.50 per share (as adjusted
for any splits, stock dividends and the like) provided that the market price is
also at least that high at the end of such six-month period; and the last
33 1/3% of the PVOs shall vest when the average market price of Team Common
Stock is $14.00 per share (as adjusted for any splits, stock dividends and the
like), provided that the market price is also at least that high at the end of
such six-month period. If the market price requirements for two or more
previously unachieved Vesting Levels are achieved in a single six-month period,
then the vesting of PVOs for all such Vesting Levels achieved in such single
six-month period shall occur.
d. Team shall, at its sole expense, cause to be filed within a
reasonable time after the date of this Agreement and cause to become and remain
effective with the Securities and Exchange Commission, a Registration Statement
on Form S-8 or the equivalent with respect to the shares of Common Stock
underlying the ISOs, SHOs and PVOs.
6. OTHER BENEFITS AS CHIEF EXECUTIVE OFFICER. While serving as Team's
Chief Executive Officer, Hawk shall be entitled to paid vacations (up to five
(5) weeks per year), expense reimbursements, automobile allowances and similar
perquisites incidental or necessary to the performance of his duties or in
accordance with the policies and procedures established by Team from time to
time. Team shall pay Hawk's YPO membership and meeting expenses, not to exceed
$6,000.00 per year. Hawk shall further be entitled to participate in each plan
established to provide fringe benefits or insurance benefits to employees of
Team at the time and for so long as he meets the eligibility criteria
established for the plan and shall receive benefits thereunder based on the
terms of the plan. Hawk's eligibility and benefit level shall be determined
separately for each plan and all determinations shall be made by the parties
charged with responsibility for such determinations in the plan. Team is under
no obligation to establish any plan or plans to provide benefits for its
employees and this provision shall not be interpreted to require the
establishment of any benefit plan. The terms of any benefit plans existing,
established, or provided hereafter do not constitute a part of this Agreement
and are not incorporated herein for any purpose.
7. TERM. The Term ("Term") of this Agreement commenced as of the
Effective Date and, unless sooner terminated by the parties pursuant to Section
8, shall terminate on January 31, 2002. The Term shall also include any renewal,
extension or continuation of this Agreement. Should this Agreement not be
extended beyond the Term by mutual agreement of Hawk and Team, then this
Agreement shall renew on a month-to-month basis, and all provisions of this
Agreement shall continue to apply in full force and effect, specifically
including all acceleration rights for the PVOs as provided in Section 5(c)
herein, except that the employment relationship
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between Hawk and Team shall be terminable at any time upon thirty (30) days'
prior written notice by either Hawk or Team for any reason whatsoever, with or
without cause. However, if Hawk's employment beyond the Term continues on a
month-to-month basis, and this Agreement is terminated for any of the reasons or
purposes set forth in Section 8(a) herein or Section 8(c) herein, then Hawk
shall be entitled to receive the following benefits: (i) Monthly Salary Payments
for each of the twelve (12) consecutive months following the effective date of
such termination, (ii) a pro rata bonus payment pursuant to Section 3(b) with
respect to the portion of the fiscal year actually worked for the fiscal year in
which effective date of such termination occurred, and (iii) the provisions in
Section 5(c) herein regarding the acceleration of vesting of the PVOs shall
continue to apply.
8. TERMINATION.
a. WITHOUT CAUSE. Team shall not terminate this Agreement "without
cause"; provided, however, that Team shall be permitted to so terminate Hawk's
employment hereunder by giving Hawk at least thirty (30) days' prior written
notice of such termination. Hawk shall be entitled to receive a pro-rata bonus
payment pursuant to Section 3(b) with respect to the portion of the fiscal year
actually worked for the fiscal year in which this Agreement is terminated. Hawk
shall, immediately after this Agreement is terminated pursuant to this Section
8(a), continue to receive Monthly Salary Payments for each of the twelve (12)
consecutive months following his termination under this Section 8(a), and Hawk
shall be entitled to all acceleration of vesting of the options granted pursuant
to Section 5 herein. For purposes of this Agreement, Hawk's death or permanent
disability (as reasonably determined by the Board after conferring with Hawk and
whatever medical doctors Hawk may select, provided such medical doctors are
reasonably acceptable to the Board, to assist in such determination) shall be
deemed a termination without cause and shall be subject to all of the provisions
of this Section 8(a).
b. FOR CAUSE. Notwithstanding anything to the contrary contained
or implied herein, Team may terminate this Agreement and all of its continuing
obligations to Hawk hereunder "for cause" by giving written notice of such
termination "for cause" to Hawk. For purposes of Section 8(b) this Agreement,
the phrase "for cause" shall mean the good faith determination by the Board one
of the following events has occurred: (i) Hawk has knowingly committed acts
involving fraud, dishonesty or violations of criminal or other statutes
involving moral turpitude; or (ii) Hawk's material breach of any material
provision of this Agreement which remains uncorrected for thirty (30) days
following written notice to Hawk by Team of such breach. At least ten (10) days
prior to making a final determination that "cause" exists for termination of the
employment relationship between Team and Hawk, the Board shall provide Hawk
written notice as to the facts and circumstances which are the basis for a
possible determination that "cause" exists and shall provide an opportunity for
Hawk to meet with and be heard by the entire Board prior to making such final
determination;
In making the determinations described in Section 8(b) above, Team
shall act reasonably and in good faith and any such determination shall be
required to be made by the affirmative vote of a majority of the members of the
Board. In the event that Team terminates this Agreement for cause as specified
above, Hawk shall not be entitled to receive any further compensation under this
Agreement from and after the date of such termination for cause.
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c. HAWK'S TERMINATION RIGHTS FOR CAUSE. Hawk may terminate this
Agreement "for cause" after the occurrence of one or more of the following
events:
(i) Team's assignment to Hawk of duties inconsistent with the
duties of Chief Executive Officer of Team;
(ii) the failure of Team to maintain Hawk in the position of Chief
Executive Officer;
(iii) the removal or non-election of Hawk to Team's Board of
Directors as its Chairman;
(iv) the reduction in Hawk's Base Compensation;
(v) the failure of Team to provide Hawk the performance goals and
bonus opportunities as set forth in Section 3(b), which
failure continues for thirty (30) days following written
notice to Team by Hawk;
(vi) a material breach by Team of any material provision of this
Agreement which remains uncorrected for thirty (30) days
following written notice to Team by Hawk of such breach; or
(vii) the change of the location for the primary performance of
Hawk's services under this Agreement from Alvin, Texas to a
city which is more than fifty (50) miles away from such
location, which change is not approved by Hawk.
Hawk shall, immediately after termination of this Agreement pursuant to this
Section 8(c), continue to receive Monthly Salary Payments for each of the twelve
(12) consecutive months following termination of this Agreement under this
Section 8(c), and Hawk shall be entitled to all acceleration of vesting of the
options granted pursuant to Section 5 herein. Hawk shall also be entitled to
receive a pro-rata bonus payment pursuant to Section 3(b) with respect to the
portion of the fiscal year actually worked for the fiscal year in which this
Agreement is terminated.
d. HAWK'S TERMINATION RIGHTS WITHOUT CAUSE. Hawk may terminate this
Agreement without cause upon thirty (30) days' prior written notice to Team. In
such event, Hawk shall be entitled to receive as his total remaining
entitlements hereunder the Monthly Salary Payments through the last date Hawk
actually works and shall not be entitled to receive any further compensation
from and after such date.
e. REEMPLOYMENT. Hawk shall not be under any duty or obligation to
seek or accept other employment following any termination of this Agreement, and
the amounts due Hawk hereunder shall not be reduced or suspended if Hawk accepts
subsequent employment thereafter.
9. PROTECTION OF CONFIDENTIAL INFORMATION AND GOODWILL. Hawk hereby
covenants and agrees as follows:
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a. While serving as Team's Chief Executive Officer, Hawk shall
have access to confidential or proprietary information or trade secrets of Team,
including, but not limited to, information with respect to Team or its
Affiliates (as hereinafter defined) as follows: the identity, lists, and/or
descriptions of any customers of Team; financial statements, cost reports, and
other financial information; product or service pricing information; contracts,
contract proposals and bidding information; policies and procedures developed as
part of a confidential business plan; and management systems and procedures,
including manuals and supplements thereto (collectively, "Trade Secrets").
Notwithstanding the foregoing, Trade Secrets shall not include any data or
information that (i) has been voluntarily disclosed to the general public by the
Team or its Affiliates; (ii) has been independently developed and disclosed to
the general public by others; or (iii) otherwise enters the public domain
through lawful means.
b. Hawk shall not use or disclose, directly or indirectly, for any
reason whatsoever or in any way the Trade Secrets, other than (i) at the
direction of Team during the course of Hawk's employment, (ii) after receipt of
the prior written consent of Team, (iii) as required by any court or
governmental regulatory agency having competent jurisdiction over Team or its
business or over Hawk, or (iv) information made public by Team or information
known or generally available within Team's industry.
c. During the Term and for a period of two (2) years after the
termination of Hawk's employment with Team, Hawk shall not, directly or
indirectly, either as an employee, employer, consultant, agent, principal,
partner, stockholder, corporate officer, director, or in any other individual or
representative capacity, engage or participate in any business that is in
competition in any manner whatsoever with the business of Team or any Affiliate
of Team (as defined in Paragraph 14 hereof) as such business is presently
conducted and as conducted during the Term; provided, however, that following
the Term, the covenant contained in this subsection shall not pertain to
activities which occur more than one hundred (100) miles from any operating
facility of Team or any Affiliate of Team.
d. During the Term and for a period of two (2) years following the
termination of Hawk's employment with Team, Hawk shall not solicit or negotiate,
directly or indirectly, any contract or agreement that constitutes or would
constitute engaging in competition with the business of Team or any Affiliate of
Team as presently conducted and as conducted during the Term; provided, however,
that following the Term, the covenant contained in this subsection shall not
pertain to activities which occur more than one hundred (100) miles from any
operating facility of Team or any Affiliate of Team.
e. During the Term and for a period of two (2) years following the
termination of Hawk's employment with Team, Hawk shall not solicit for
employment or employ, directly or indirectly, any employee employed by Team or
any Affiliate within the one (1) year period immediately prior to such
solicitation for employment.
f. Hawk shall not use the name of Team or any Affiliate of Team in
connection with any business that is in competition in any manner whatsoever
with the business of Team or any Affiliate of Team as presently conducted and as
conducted during the Term.
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g. Team and Hawk agree that the covenants set forth in this Section
9 shall accrue to the benefit of Team, irrespective of the reason for
termination of the other provisions of this Agreement and the corresponding
employment relationship created herein, or Hawk's performance hereunder.
h. In connection with the limited protection afforded Team by the
covenants contained within this Section 9, Hawk recognizes that Team's need for
the covenants is based on the following:
i. Team has spent and will expend substantial time, money
and effort in developing (x) its maintenance, repair and energy
management businesses and (y) valuable Trade Secrets, including, without
limitation, a valuable list of customers and information about their
requirements and needs, purchasing patterns and internal purchasing
procedures;
ii. Hawk, in the course of the Term, has been and will be
compensated to help develop, and has been and will be personally
entrusted with and exposed to, the Trade Secrets, including, without
limitation, Team's contract, business development plans and
opportunities, trade secrets and other confidential and proprietary
information;
iii. Team, during the Term and after its termination, will be
engaged in the highly competitive maintenance, repair and energy
management businesses in which many firms, including Team, compete;
iv. Team provides and will provide services throughout the
United States and Hawk will be involved in providing such services
through operating facilities and Affiliates of Team;
V. Hawk could, after having access to the Trade Secrets,
including, without limitation, Team's financial records, contracts,
technology and associated trade secrets and know-how and receiving
further training by and experience with Team, and after reviewing Team's
trade secrets and confidential information, become a competitor; and
vi. Team will suffer great loss and irreparable harm if,
during or after the Term, Hawk enters directly or indirectly into
competition with Team.
vii. Hawk hereby specifically acknowledges and agrees that
the temporal, geographical and other restrictions contained in this
Section 9 are reasonable and necessary to protect the business and
prospects of Team, and that the enforcement of the provisions of this
Section 9 will not work an undue hardship on him.
viii. Hawk further agrees that in the event either the length
of time, geographical or any other restrictions, or portion thereof, set
forth in this Section 9 is overly restrictive and unenforceable in any
court proceeding, the court may reduce or modify such restrictions to
those which it deems reasonable and enforceable under the
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circumstances and the parties agree that the restrictions of this
Section 9 will remain in full force and effect as reduced or modified.
i. Hawk further agrees and acknowledges that Team does not have an
adequate remedy at law for the breach or threatened breach by him of the
covenants contained in this Section 9 and Hawk therefore specifically agrees
that Team, in the event of the breach or threatened breach by Hawk of any of the
Hawk's covenants contained in Section 9 of this Agreement, in addition to other
remedies which may be available to it hereunder, may file a suit in equity to
enjoin Hawk from such breach or threatened breach.
j. Nothing in this Section 9 shall be deemed to prevent Hawk from
acquiring through market purchases and owning, solely as an investment, less
than one percent (1%) in the aggregate of the equity or debt securities of any
class of any issuer whose shares are registered under Section 12(b) or Section
12(g) of the Securities Exchange Act of 1934, as amended, and are listed or
admitted for trading on any United States national securities exchange or are
quoted on the National Association of Securities Dealers Automated Quotations
System, or any similar system of automated dissemination of quotations of
securities prices in common use of any such issuer.
Hawk further agrees, in the event that any provision of this Section 9 is
held to be invalid or against public policy, the remaining provisions of this
Section 9 and the remainder of this Agreement shall not be affected thereby.
10. PROPERTY OF TEAM. Hawk agrees that, upon the termination of the Term,
he will immediately surrender to Team all property, equipment, funds, lists,
books, records, and other materials of Team in the possession of or provided to
Hawk.
11. INDEMNIFICATION. Team and its Affiliates shall indemnify Hawk to the
maximum extent allowed or provided in the Articles of Incorporation and/or
Bylaws of Team and its Affiliates and also to the maximum extent provided for
in any agreement containing indemnification provisions between Team, its
Affiliates and any other director or officer of Team and/or its Affiliates. Hawk
shall be entitled to such insurance coverages to secure Team's indemnity
obligations described herein as are afforded to other Team officers and
directors.
12. GOVERNING LAW. This Agreement and all issues relating to the
validity, interpretation, and performance hereof shall be governed by and
interpreted under the laws of the State of Texas, without regard to any law,
whether of Texas or any other jurisdiction, that would apply the laws of any
jurisdiction other than Texas. The parties hereby consent to jurisdiction and
venue in any court of competent jurisdiction in Harris County, Texas, or the
United States District Court for the Southern District of Texas, Houston
Division, and either party may bring any suit that they desire to institute upon
this Agreement in any such court.
13. ARBITRATION. If a dispute arises out of or related to this Agreement,
or its breach, and if the dispute cannot be settled through direct discussion,
then Team and Hawk agree that any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be settled by
arbitration administered in Houston, Texas by the American Arbitration
Association
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under its commercial arbitration rules, and judgment on the award rendered by
the arbitrator(s) may be entered in any court having jurisdiction thereof.
14. REMEDIES. With respect to each and every breach, violation, or
threatened breach or violation by either party of any of the covenants set
forth herein, the other party, in addition to all other remedies available at
law or in equity, including specific performance of the provisions hereof, shall
be entitled to enjoin the commencement or continuance thereof and, without
notice to the other party, may apply for entry of an immediate restraining order
or injunction. In addition, each party agrees, upon demand, to immediately
account for and pay over to the other party an amount equal to all compensation,
commissions, bonuses, salary, gratuities, or other emoluments of any kind
directly or indirectly received by, or for the use or benefit of, the other
party resulting from any activity, transaction, or employment in breach or
violation of any of the covenants set forth in this Agreement, such amount being
agreed to constitute liquidated damages because the exact amount of actual
damages to be sustained on account of any such breach or violation cannot be
determined with complete accuracy. In addition, each party agrees to pay the
other party a reasonable sum as and for his or its attorneys' fees and costs of
litigation should such other party bring an action against the breaching party
for breach of this Agreement and prevail in such action. Each party may pursue
any of the remedies described in this Section 14 concurrently or consecutively,
in any order, as to any such breach or violation, and the pursuit of one of such
remedies at any time will not be deemed an election of remedies or waiver of the
right to pursue any of the other such remedies.
15. NOTICES. Any notice or request herein required or permitted to be
given to any party hereunder shall be given in writing and shall be personally
delivered or sent to such party by United States mail, certified or registered
mail, return receipt requested, with postage prepaid, at the address set forth
below the signature of such party hereto or at such other address as such party
may designate by written communication to the other party pursuant to, and in
accordance with, this Paragraph 15. Each notice given in accordance with this
Paragraph 15 shall be deemed to have been given, if personally delivered, on the
date personally delivered, or, if mailed, on the day on which it is deposited in
the United States mail, and shall be deemed to be received or delivered, if
personally delivered, on the date personally delivered, or, if mailed, on the
third business day following the day on which it is deposited in the United
States mail.
16. HEADINGS. The headings of the paragraphs of this Agreement have been
inserted for convenience of reference only and shall not be construed or
interpreted to restrict or modify any of the terms or provisions hereof.
17. SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under present or future laws effective during
the term hereof, such provision shall be fully severable, and this Agreement and
each separate provision hereof shall be construed and enforced as if such
illegal, invalid, or unenforceable provision had never comprised a part of this
Agreement, and the remaining provisions of this Agreement shall remain in full
force and effect and shall not be affected by the illegal, invalid, or
unenforceable provision or by its severance from this Agreement. In addition, in
lieu of such illegal, invalid, or unenforceable provision, there shall be added
automatically as a part of this Agreement, a provision as similar in terms to
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such illegal, invalid, or unenforceable provision as may be possible and be
legal, valid, and enforceable, if such reformation is allowable under applicable
law.
18. BINDING EFFECT. This Agreement shall be binding upon and shall inure
to the benefit of each party hereto and each party's respective successors,
heirs, permitted assigns, and legal representatives.
19. DEFINITION OF "AFFILIATE." For purposes of this Agreement, the term
"Affiliate" means any subsidiary of Team. For purposes of this definition, a
subsidiary of Team means any corporation or other entity whose outstanding
equity interest are more than fifty percent (50%) directly owned by Team and
shall further mean any corporation or other entity whose outstanding equity
interest are at least fifty percent (50%) owned through an unbroken chain of
ownership through other subsidiaries of Team.
20. ASSIGNMENT. This Agreement and any interest herein or rights, duties,
or obligations hereunder may be assigned or delegated by Team without the prior
written consent of the Hawk, but no such assignment may be made by Hawk.
21. SEPARATE AGREEMENTS. The provisions of Section 9 shall be construed
as a separate agreement in each of the separate geographical areas, if any,
referred to in Section 9, and to the extent that it may be found to be illegal
and/or unenforceable in any of said geographical areas, this Agreement shall not
be affected thereby with respect to each other geographical area.
22. TEAM POLICIES, REGULATIONS, AND GUIDELINES FOR EMPLOYEES. Team may
issue policies, rules, regulations, guidelines, procedures, or other
informational material, whether in the form of handbooks, memoranda, or
otherwise, relating to its employees. These materials are general guidelines for
Hawk's information and shall not be construed to alter, modify, or amend this
Agreement for any purpose whatsoever.
23. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings, whether written
or oral, relating to the subject matter hereof, unless expressly provided
otherwise herein. No amendment, modification, or termination of this Agreement,
unless expressly provided otherwise herein, shall be valid unless made in
writing and signed by each of the parties whose rights, duties, or obligations
hereunder would in any way be affected by an amendment, modification, or
termination. Unless expressly set forth herein, no representations, inducements,
or agreements have been made to induce either Hawk or Team to enter into this
Agreement. This Agreement is the sole source of rights and duties as between
Team and Hawk relating to the subject matter of this Agreement.
24. KEY-MAN INSURANCE. Team shall be entitled to own, purchase and
maintain life or other insurance on the life or disability of the Hawk for
Team's exclusive benefit. Hawk shall execute all documents and perform all acts
necessary to enable Team to effect such insurance.
11
12
25. MISCELLANEOUS DEFINITIONS.
a. "Beneficial Owner" shall be defined by reference to Rule 13(d)-3
under the Securities Exchange Act of 1934; provided, however, and without
limitation, any individual, corporation, partnership, group, association or
other person or entity which has the right to acquire any Voting Stock at any
time in the future, whether such right is contingent or absolute, pursuant to
any agreement, arrangement or understanding or upon exercise of conversion
rights, warrants or options, or otherwise, shall be the Beneficial Owner of such
Voting Stock.
b. "Change of Control" shall mean the occurrence of any of the
following: (i) the consummation of any Business Combination, as such term is
defined in the Restated Articles of Incorporation of Team filed with the
Secretary of State of Texas on November 15, 1989; (ii) Team merges or
consolidates with any other entity other than a merger or consolidation of Team
which would result in the Voting Stock of Team outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least 70% of the
total voting power represented by the voting securities of Team or such
surviving entity immediately after, (iii) Team sells all or substantially all of
its assets to any other person or entity or group or persons acting in concert,
or (iv) Team is dissolved, or if (v) any third person or entity together with
its affiliated or subsidiary entities shall become, directly or indirectly, the
Beneficial Owner of at least 30% of the Voting Stock of Team, or if (vi) the
individuals who constituted the members of Team's Board of Directors as of the
Effective Date ("Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director whose election or
nomination for election by Team's stockholders was approved by a vote of eighty
percent (80%) of the directors comprising the Incumbent Board (either by a
specific vote or by approval of the proxy statement of Team in which such person
is named as a nominee for director, without objection to such nomination) shall
be, for purposes of this clause (vi), considered as though such person were a
member of the Incumbent Board.
c. "Voting Stock" shall mean all outstanding shares of capital stock
of Team entitled to vote generally in elections for directors, considered as one
class; provided, however, that if Team has shares of Voting Stock entitled to
more or less than one vote for any such share, each reference to a proportion of
shares of Voting Stock shall be deemed to refer to such proportion of the Votes
entitled to be cast by such shares.
26. PARACHUTE TAX. In the event that any amount payable to Hawk under
this Agreement or as a result of the acceleration of the vesting of any stock
option granted to Hawk shall constitute "excess parachute payments" within the
meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"), and any regulations thereunder, and Hawk becomes liable for any excise
tax penalties ("Parachute Tax Amount") that are imposed on excess parachute
payments" pursuant to Section 4999 of the Code, Team shall make a cash payment
to Hawk in an amount equal to the result obtained by multiplying the Parachute
Tax Amount by a fraction, the numerator of which is one and the denominator of
which is one minus the sum of the "parachute tax rate" (as such term is
hereinafter defined) and the "regular tax rate" (as such term is hereinafter
defined). As used herein, the term "parachute tax rate" shall mean the maximum
rate of tax imposed under Section 4999 of the Code or the corresponding
provision of any
12
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successor statute and the term "regular tax rate" shall mean the maximum
statutory rate of federal income tax imposed on individuals under Section 1 of
the Code or the corresponding provision of any successor statute (disregarding
any tax rate imposed on limited amounts of income as a phase-out of a lower tax
rate).
27. EXECUTION. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. Any telecopied signature shall be deemed a manually
executed and delivered original.
IN WITNESS WHEREOF, the parties have executed this Agreement on this the
16th day of November, 1998, TO BE EFFECTIVE as of November 2, 1998.
/s/ PHILIP J. HAWK
-------------------------------------------------
PHILIP J. HAWK
Address:
4 Bradfield Ct.
-------------------------
Houston, TX 77024
-------------------------
TEAM, INC.
By: /s/ SIDNEY B. WILLIAMS
-------------------------------------------------
Printed Name: Sidney B. Williams
-------------------------------------------------
Title: Director and Member of Executive Committee
-------------------------------------------------
Address:
200 Hermann Drive
Alvin, TX 77511
13
14
EXHIBIT "A"
SALARY DEFERRED COMPENSATION AGREEMENT
15
1998 SALARY DEFERRED COMPENSATION AGREEMENT
THIS 1998 SALARY DEFERRED COMPENSATION AGREEMENT ("Agreement") is
entered into this ______ day of ______________________, 1998, by and between
Team, Inc. (the "Company"), a Delaware corporation, and ___________________, a
resident of Harris County, Texas (the "Employee") effective beginning on
_________________, in order to revise certain administrative features requested
by the Trustee of the Trust established under this Agreement to coordinate the
administrative features of this Agreement with the Trust Agreement.
WHEREAS, the Employee performs valued services for the
Company; and
WHEREAS, the Company and Employee both desire that payment of the
Employee's compensation be deferred in accordance with a formal agreement
between them;
THEREFORE, in consideration of the foregoing and other good and
valuable consideration, as more fully set forth herein, the receipt and adequacy
of which are hereby acknowledged, the parties hereby agree as follows:
Section 1. Employee's Services.
The Employee is an employee of the Company. Except as otherwise
expressly provided herein, this Agreement does not alter or affect the
Employee's employment agreement or relations with the Company or any of the
Company's subsidiaries.
16
Section 2. Deferral of Employee's Compensation.
2.1 Prior to the beginning of each calendar year the Employee may elect
on the form prescribed by the Company to defer the payment to him of a
percentage of the basic salary (not in excess of one hundred (100%) percent) due
and payable to him for such calendar year. For the first year of this Agreement,
this election may be made no later than the date which is 30 days following the
date this Agreement is executed and shall only apply to the pro rata portion of
the annual salary following the date of this Agreement. The salary to be
deferred pursuant to this election for each year shall be deducted and withheld
from the Employee's paycheck on a uniform basis each payroll period unless
otherwise designated by the Employee on the election form.
2.2 Any amounts deferred in accordance with Section 2.1 above shall be
currently paid to the trustee (the "Trustee") of the trust (the "Trust")
established or to be established by the Company (known as the "Team, Inc. 1998
Salary Deferred Compensation Trust") to be held in the Employee's account (the
"Account") in accordance with the terms of such Trust and this Agreement or any
other trust established by the Company for this purpose which conforms to the
terms of the Internal Revenue Service model trust prescribed in Rev. Proc.
92-64.
2.3 The deferral percentage in effect for a calendar year shall
continue in effect for the succeeding calendar year until
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17
otherwise designated by the Employee in a new election form prior to the
beginning of such succeeding calendar year.
2.4 In lieu of filing an election form for the first year in which this
Agreement is effective, the Employee may designate the deferral percentage here:
---------- percentage (up to maximum 100%)
---------- Employee's initials
Section 3. Investment of Account.
3.1 The Account shall be invested in any assets determined by the
Trustee in the sole discretion of the Trustee in accordance with the terms of
the Trust after consultation with the Employee as to any investment
recommendations of the Employee; provided such recommendations shall be merely
advisory and not binding on the Trustee. The Company shall cooperate in
communicating any exchange of investment information between the Trustee and the
Employee and in communicating any investment recommendations of the Employee.
3.2 Any earnings (or losses), net of any expenses charged to the Trust
in accordance with the provisions of the Trust Agreement on the assets realized
by the Trust in the Account, shall be added to (or subtracted from) the balance
in the Account and as part of such balance shall be distributed in accordance
with Section 4 below. Any income tax imposed on the Company attributable to such
earnings shall be paid by the Company and not charged against or paid from the
Account.
-3-
18
Section 4. Payment of Account.
4.1 The balance of the amount in the Account shall be paid at the time
or times set forth below in this Section 4, in cash unless the Employee
requests, subject to the consent of the Trustee, to pay such amounts in kind (in
the form of the assets held as investments).
4.2 The distribution of the balance of the Account shall be made to the
Employee in ________________ substantially equal quarterly installments over the
__________-year period beginning with the calendar quarter in which the earlier
of the following occurs:
(a) the Employee's death or Disability; or
(b) the Employee's termination of employment with the Company
(including subsidiaries thereof) for any reason (other than death
or Disability).
Subsequent installments shall be paid in succeeding calendar quarters until the
amounts in the Employee's Account have been paid in full. Payment of the
distribution shall commence within 30 days following the operative date in
Section 4.2(a) and (b) above.
In the event of the Employee's death while receiving payments
hereunder, the Designated Beneficiary (as defined in Section 5 below) shall
receive any remaining (as of the date of death) amounts due hereunder either (at
the Company's sole discretion) in
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19
the same manner and to the same extent as the deceased Employee would have
received had the Employee not died or in a lump sum.
If the Designated Beneficiary dies following the death of the Employee
before all amounts otherwise payable to the Employee have been paid, the balance
remaining in the Account shall be paid in one lump sum to the estate of such
Designated Beneficiary. If no Designated Beneficiary survives the Employee,
payments otherwise payable hereunder to a Designated Beneficiary shall be paid
in one lump sum to the Employee's estate. Payments under the preceding two
sentences shall be made as soon as practicable after the Employee's death (or
the Designated Beneficiary's death, as the case may be) in an amount equal to
the value of the Account as of the last day of the calendar quarter in which
such death occurred.
4.3 Notwithstanding any other provision of this Agreement, payment of
the balance of the Account shall be made in a single lump sum during the month
of January immediately following the calendar year in which occurs the operative
date specified in the first sentence of Section 4.2 above, if the Employee so
elects at the time of execution of this Agreement. This election shall be
signified by the Employee's initials in the following space:
Lump Sum Elected __________
4.4 For purposes of this Agreement the Employee shall be considered
Disabled if a qualified physician selected by the Company determines that the
Employee is unable due to physical or mental illness or other impairment, to
perform the majority of the
-5-
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Employee's customary duties with the Company (including subsidiaries thereof)
and that such condition will likely be permanent or of indefinite duration.
4.5 Notwithstanding any other provision of this Section 4, in the event
of an unforeseeable emergency of the Employee, the Employee shall have the right
to receive an immediate payment under this Agreement from his Account subject to
the following terms and conditions. The term "unforeseeable emergency" shall
mean:
(a) an unanticipated emergency that is caused by an event beyond
the control of the Employee or the Designated Beneficiary that
would result in severe financial hardship to the individual if
a distribution or early withdrawal were not permitted; or
(b) a severe financial hardship to the Employee
resulting from a sudden and unexpected illness or
accident of the Employee or of a dependent (for
income tax purposes) of the Employee, loss of the
Employee's property due to casualty, or other
similar extraordinary and unforeseeable
circumstances arising as a result of events beyond
the control of the Employee.
(c) Examples of what are not considered to be
unforeseeable emergencies include the need to send
an Employee's child to college or the desire to
purchase a home.
-6-
21
(d) The amount distributed to the Employee under this
Agreement pursuant to the preceding provisions of
this Section 4.5 shall only be made following the
review and approval by the Company of the claim of
the Employee (or Designated Beneficiary) for early
withdrawal pursuant to this provision and shall be
limited to an amount reasonably necessary to
satisfy the unforeseeable emergency. The Company
shall administer this provision in accordance with
the limitations of the provisions of this Section
4.5. The determination by the Company of an
unforeseeable emergency shall, in accordance with
the provisions of Rev. Proc. 92-65ss.3.01(c) (or any
successor later ruling guidelines or regulations of
the Internal Revenue Service), be limited to cases
involving an "unforeseeable emergency" as defined
above. The circumstances that will constitute an
unforeseeable emergency will depend upon the facts
of each case, but, in any case, payment may not be
made to the extent that the severe financial
hardship is or may be relieved --
(i) Through reimbursement or compensation by
insurance or otherwise,
-7-
22
(ii) By liquidation of the Employee's assets, to the
extent the liquidation of such assets would not itself cause
severe financial hardship, or
(iii) By cessation of deferrals under this Agreement.
4.6 The participant shall have the right at any time to make an
election to receive the entire remaining amount in the participant's account,
and as soon as practicable (but generally no later than 30 days) following the
making and filing with the Committee of such a withdrawal election, 90 percent
of the entire amount of the account shall be paid to the participant in a single
sum, and the remaining 10 percent shall be forfeited. Following such a
withdrawal election and distribution, the participant shall not be eligible to
thereafter again participate in the Plan.
4.7 Unless the Committee otherwise determines, for the Plan as a whole,
Employee shall be given the right to make a one time change in the method of
payment elected in each deferral election with respect to Section 4.2 above,
provided such change is made at least two years prior to the participant's
retirement date.
-8-
23
Section 5. Designation of Beneficiary.
The Employee designates the person(s) listed on Exhibit A as the
beneficiary or beneficiaries ("Designated Beneficiary") to receive payments
under this Agreement in the event of the Employee's death. The Employee may
change the Designated Beneficiary without the consent of any prior Designated
Beneficiary by notifying the Company of such change on a form provided by the
Company for this purpose. The Company shall promptly deliver a copy of the
current beneficiary designation to the Trustee.
Section 6. Facility of Payment.
If the Trustee determines that a payee under this Agreement is unable
to care for his own affairs because of physical or mental condition or minority,
any such payment may be made in accordance with the terms of Section 13(c) of
the Trust or comparable provisions of whichever trust is in effect or in the
event the trust in effect has no such comparable provisions, then to the payee's
guardian or spouse, or to any descendant, parent, relative, or other person
determined by the Trustee to be trustworthy to utilize the payment for the
benefit of the payee.
Section 7. Nonassignability by Employee.
The Employee shall not have the right to assign, anticipate, sale,
transfer, pledge, encumber, or create a security interest in, or dispose of any
right or interest provided for in this Agreement,
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24
including, without limitation, the right to receive any severance, retirement,
disability, or death payment or benefit, and no right of the Employee or the
Designated Beneficiary to any such payment or benefit shall be subject to
attachment or garnishment by any of the creditors of the Employee or of the
Designated Beneficiary.
Section 8. Continuation as Employee.
Nothing contained in this Agreement or in the Trust, nor the payment of
any contributions to the Trust, nor the payment of any benefits under this
Agreement or the Trust shall be construed to grant the Employee any right to be
retained in the service of the Company or to restrict the right of the Company
to discharge the Employee regardless of the effects such discharge would have
upon the Employee or upon any other person as a Beneficiary of the Trust. The
Company expressly reserves the right to hire and discharge persons providing
services as if neither this Agreement nor the Trust had been entered into or
established. For purposes of this Section 8, the term "Company" shall include
any subsidiaries which are, directly or indirectly, 50 percent or more owned by
the Company.
Section 9. Status of Account.
Notwithstanding any other provision of this Agreement, and regardless
of the extent amounts deferred by the Employee or payable to Employee have been
transferred to and are held in the
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25
Trust, the Employee's rights to all such amounts whether or not held in the
Trust, are that of a general unsecured creditor of the Company and such amounts
represent nothing more than a mere promise by the Company to pay such amounts at
the future time or times provided in this Agreement. The Employee shall have a
right only to the balance of the Account including earnings or losses thereon as
provided under Section 3.2, and shall have no right against the Company under
this Agreement with respect to amounts properly contributed to the Account,
beyond payment of the balance in the Account. Notwithstanding the preceding
sentence, the Company shall remain liable to the Employee for payment of the
balance in the Account -
(a) in the event of any noninvestment loss to the Account
while in the Trust for any reason including failure, receivership,
liquidation, bankruptcy or fraud or embezzlement of or by the Trustee,
without regard to any such noninvestment loss to the Account; and
(b) to the extent that amounts in the Account become
unavailable for payment under this Agreement in the event such amounts
pursuant to the terms of the Trust are paid or otherwise become subject
to the creditors of the Company.
Section 10. Miscellaneous.
10.1 The Company, acting in good faith, shall have the sole right and
absolute discretion to interpret and administer this
-11-
26
Agreement. The Company's interpretation and actions hereunder, including the
computation of payments or the determination of the proper recipient of payments
if made in good faith, shall be conclusive and binding upon all persons for all
purposes. An appropriate procedure shall be established under this Agreement for
the submission for a claim for benefits by the Employee or Designated
Beneficiary for amounts due under this Agreement and the review and
determination by the Company of such claims, and in cases of denial of a claim,
a review of any request for reconsideration.
10.2 This Agreement shall be binding upon and inure to the benefit of
the Company, its successors and assigns, and the Employee, his heirs, executors,
administrators, and legal representatives.
10.3 This Agreement (along with the existing provisions of the Trust)
embodies the full understanding of the parties and may not be amended or
modified except in writing signed by the party to be charged. This Agreement may
be amended by mutual agreement of the Company and the Employee; provided that no
such amendment shall become effective with respect to the Trustee until the
Trustee has received notice of such amendment and that no such amendment shall
alter the duties or obligations of the Trustee without its written consent.
10.4 The laws of Texas shall govern the validity, interpretation,
construction, and performance of this Agreement.
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10.5 This Agreement is intended to comply with the law and rulings
under Sections 83, 402(b), 451 and 671 of the Internal Revenue Code of 1986 as
amended (the "Code" or corresponding provisions of future laws) and the economic
benefit and constructive receipt doctrines thereunder, including the ruling
positions and criteria of the Internal Revenue Service as in effect from time to
time and the related rulings and regulations which result in a deferral of
income tax to the Employee (or the Designated Beneficiary). This Agreement is
also intended to comply with Sections 201(2), 301(a)(3) and 401(a)(1) of the
Employee Retirement Income Security Act of 1974, as amended and the related
rules and regulations thereunder applying to unfunded plans maintained primarily
for the purpose of providing deferred compensation for a select group of
management or highly compensated employees. This Agreement shall be deemed to be
automatically amended to comply with the law, rules and regulations referred to
in this Section 10.5 except to the extent that the Trustee or Company objects in
writing to such amendment within sixty (60) days from the date of the receipt of
notice from the Company of any such amendment.
10.6 Payment of amounts or benefits to the Employee under this
Agreement shall be subject to any applicable tax withholding including federal
income tax withholding, by the Trustee, the Company or the other payor. The
Company and the Trustee may
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allocate or delineate the tax withholding responsibilities in a
separate letter agreement.
10.7 The Company shall deliver the original or a certified copy of this
Agreement to the Trustee within 10 days of the date of execution hereof, and the
Employee shall become a beneficiary of the Trust on the later of the date of
delivery as aforesaid or on the date of the first contribution made to the Trust
by the Company on behalf of the Employee pursuant to this Agreement.
10.8 This Agreement may be executed in any number of counterparts and
each executed counterpart shall be deemed an original and such counterpart shall
constitute one and the same instrument which may be sufficiently evidenced by
any one counterpart.
IN WITNESS WHEREOF, the parties hereto have caused the Amendment and
Restatement of the Agreement to be executed on the day and year first above
written.
ATTEST TEAM, INC.
[Affix Corporate Seal]
By:
-----------------------------------
Kenneth H. Tholan,
President
EMPLOYEE:
-----------------------------------
Philip J. Hawk
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EXHIBIT "A"
DESIGNATED BENEFICIARY
PRIMARY:
Name:
--------------------------------------------------------
Relationship:
--------------------------------------------------------
Percentage:
--------------------------------------------------------
SECONDARY ALTERNATES
(in the event the primary does not survive me) the following
alternates in equal vested shares per stirpes:
Name:
--------------------------------------------------------
Relationship:
--------------------------------------------------------
Percentage:
--------------------------------------------------------
Name:
--------------------------------------------------------
Relationship:
--------------------------------------------------------
Percentage:
--------------------------------------------------------
Name:
--------------------------------------------------------
Relationship:
--------------------------------------------------------
Percentage:
--------------------------------------------------------
Name:
--------------------------------------------------------
Relationship:
--------------------------------------------------------
Percentage:
--------------------------------------------------------
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EXHIBIT "B"
DEFERRED COMPENSATION TRUST AGREEMENT
31
TEAM, INC.
1998
DEFERRED COMPENSATION TRUST AGREEMENT
For The
1998
Salary Deferred Compensation Agreement
(a) This Team, Inc. 1998 Deferred Compensation Trust Agreement ("Trust
Agreement") is made this ______ day of ____________, 199_, to be effective as of
_____________ by and between Team, Inc. ("Company") and
_________________________ ("Trustee") for use in conjunction with the 1998
Salary Deferred Compensation Agreement.
(b) WHEREAS, Company has adopted the nonqualified deferred compensation
agreement listed in Appendix I hereto (the "Agreement");
(c) WHEREAS, Company has incurred or expects to incur liability under
the terms of such Agreement with respect to the individual employee
participating in the Agreement (the "Participant");
(d) WHEREAS, Company wishes to establish a trust (hereinafter called
"Trust") and to contribute to the Trust assets that shall be held therein,
subject to the claims of Company's creditors in the event of Company's
Insolvency, as herein defined, until paid to the Participant and his
beneficiaries in such manner and at such times as specified in the Agreement;
32
(e) WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of the
Agreement as an unfunded plan maintained for the purpose of providing deferred
compensation for a select group of management or highly compensated employees
for purposes of Title I of the Employee Retirement Income Security Act of 1974;
(f) WHEREAS, it is the intention of Company to make contributions to
the Trust to provide itself with a source of funds to assist it in the meeting
of its liability under the Agreement;
NOW THEREFORE, this Trust Agreement, is hereby made by and between the
Company and the Trustee with provisions as follows:
SECTION 1. ESTABLISHMENT OF TRUST.
(a) Company has deposited with Trustee in trust an amount equal to or
no less than $500, which shall become the principal of the Trust to be held,
administered and disposed of by Trustee as provided in this Trust Agreement.
(b) The Trust hereby established shall be irrevocable.
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33
(c) The Trust is intended to be a grantor trust, of which Company is
the grantor, within the meaning of subpart E, part I, subchapter J, chapter 1,
subtitle A of the Internal Revenue Code of 1986, as amended, and shall be
construed accordingly.
(d) The principal of the Trust, and any earnings thereon shall be held
separate and apart from other funds of Company and shall be used exclusively for
the uses and purposes of the Participant and general creditors of the Company as
herein set forth. The Participant and his beneficiaries shall have no preferred
claim on, or any beneficial ownership interest in, any assets of the Trust. Any
rights created under the Agreement and this Trust Agreement shall be mere
unsecured contractual rights of Participant and his beneficiaries against
Company. Any assets held by the Trust will be subject to the claims of Company's
general creditors under federal and state law in the event of Insolvency, as
defined in Section 3(a) herein.
(e) After the Trust has become irrevocable pursuant to Section 1(b)
hereof, Company shall be required in accordance with the terms of the Agreement
to make periodic (but no less frequently than quarterly) contributions of cash
or other property to the Trust in an amount sufficient to pay the Participant or
beneficiary the benefits payable pursuant to the terms of the Agreement.
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34
SECTION 2. PAYMENTS TO THE PARTICIPANT AND HIS BENEFICIARIES.
(a) Company shall deliver to Trustee a copy of the executed Agreement.
The Agreement shall provide the time and manner of payment to the Participant of
funds from the Trust. Except as otherwise provided herein, Trustee shall make
payments in cash or in kind to the Participant and his beneficiaries in
accordance with the Agreement. Trustee shall, unless otherwise agreed with
Company, report and withhold any federal, state or local taxes that may be
required to be withheld with respect to the accumulation of funds in the Trust
and the payment of funds from the Trust.
(b) The determination of "unforeseeable emergency" under Section 4.5 of
the Agreement shall be solely made by Company and not Trustee.
SECTION 3. TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST
BENEFICIARY WHEN COMPANY IS INSOLVENT.
(a) Trustee shall cease payment of benefits to the Participant and his
beneficiaries if Company is Insolvent. Company shall be considered "Insolvent"
for purposes of this Trust Agreement if (i) Company is unable to pay its debts
as they become due, or (ii) Company is subject to a pending proceeding as a
debtor under the United States Bankruptcy Code.
(b) At all times during the continuance of this Trust, as provided in
Section 1(d) hereof, the principal and income of the Trust shall be subject to
claims of general creditors of Company under federal and state law as set
forth below.
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(1) The Board of Directors and an officer (other than the
Participant) designated by the Company shall have the duty to inform
Trustee in writing of Company's Insolvency. If a person claiming to be
a creditor of Company alleges in writing to Trustee that Company has
become Insolvent, Trustee shall determine whether Company is Insolvent
and, pending such determination, Trustee shall discontinue payment of
benefits to the Participant or his beneficiaries.
(2) Unless Trustee has actual knowledge of Company's
Insolvency, or has received notice from Company or a person claiming to
be a creditor alleging that Company is Insolvent, Trustee shall have no
duty to inquire whether Company is Insolvent. Trustee may in all events
rely on such evidence concerning Company's solvency as may be furnished
to Trustee and that provides Trustee with a reasonable basis for making
a determination concerning Company's solvency.
(3) If at any time Trustee has determined that Company is
Insolvent, Trustee shall discontinue payments to the Participant or his
beneficiaries and shall hold the assets of the Trust for the benefit of
Company's general creditors. Nothing in this Trust Agreement shall in
any way diminish any rights of the Participant or his beneficiaries to
pursue their rights as general creditors of Company with respect to
benefits due under the Agreement or otherwise.
-5-
36
(4) Trustee shall resume the payment of benefits to the
Participant or his beneficiaries in accordance with Section 2 of this
Trust Agreement only after Trustee has determined that Company is not
Insolvent (or is no longer Insolvent).
(c) For purposes of this Section 3, the Trustee shall have the right as
a reimbursable administration cost and expense under this Trust Agreement to
retain any outside counsel and experts it reasonably believes is necessary or
appropriate to assist it with regard to the determination of insolvency and to
commence a judicial interpleader or declaratory judgment or other appropriate
action for direction regarding this determination.
SECTION 4. PAYMENTS TO COMPANY.
Except as provided in Section 3 hereof, after the Trust has become
irrevocable, Company shall have no right or power to direct Trustee to return to
Company or to divert to others any of the Trust assets before all payment of
benefits have been made to the Participant and his beneficiaries pursuant to the
terms of the Agreement.
-6-
37
SECTION 5. INVESTMENT AUTHORITY.
Trustee may invest in securities (including stock or rights to acquire
stock) or obligations issued by Company (or affiliated corporations within the
same commonly controlled group). All rights associated with assets of the Trust
shall be exercised by Trustee or the person designated by Trustee, and shall in
no event be exercisable by or rest with the Participant.
SECTION 5A. POWERS AND DUTIES OF TRUSTEE.
All investment and disbursement powers over all property held in this
Trust shall be vested exclusively in the Trustee. Except as provided in the
Trust Agreement to the contrary, Trustee shall have all the rights, powers and
duties granted trustees under the Texas Trust Code, as amended from time to
time, and shall have the power and authority to perform every act necessary or
appropriate to carry out the terms of this Trust to the maximum extent permitted
by law, including, without limitation, the following:
(a) The receipt of contributions or funding under the
Agreement;
(b) To hold, manage, invest, reinvest, sell and exchange all
property of the Trust, together with any additional property which may
from time to time be transferred to the Trustee as herein provided; to
collect, invest and reinvest
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any and all income resulting from all such Trust property; to
accumulate and distribute the income and principal of the Trust in
accordance with this Trust Agreement, after deducting expenses properly
payable from trust income;
(c) The entering into and performance of any agreement;
(d) Subject to the provisions of Section 3 hereof, the
undertaking of any legal action, whether as plaintiff or defendant, on
behalf of the Trust;
(e) The employment of any person, including attorneys,
accountants, investment managers and agents, to advise and assist
Trustee in the performance of its duties;
(f) The execution and delivery of all instruments necessary or
appropriate to accomplishing or facilitating the exercise of Trustee's
powers;
(g) To release, in the discretion of Trustee, any fiduciary
power at any time, in whole or in part, temporarily or permanently,
whenever Trustee may deem it advisable, by acknowledged instrument;
(h) To keep any and all securities or other assets of the
Trust in the name of some other person or entity with a power of
attorney for the transfer attached or in bearer or Federal Reserve
Book Entry form or in the name of Trustee without disclosing the
fiduciary capacity of Trustee;
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(i) To vote, either in person or by proxy, any share of stock
held as part of the assets of the Trust;
(j) To invest and reinvest Trust property and the income
therefrom in a money market fund or other mutual fund from which the
Trustee or an affiliate of the Trustee may receive advisory fees or
other remuneration;
(k) To hold cash uninvested at any time and in any amount
pending investment pursuant to the terms of this Trust Agreement. When
Trustee acts in good faith, Trustee, in all matters pertaining to
Trustee's management and investment of the Trust, may rely upon any
notice, resolution, instruction, direction, order, certificate,
opinion, letter, telegram or other document believed by Trustee to be
genuine, to have been signed by a proper representative of the
Participant or beneficiary, Company or any investment manager or third
party recordkeeper, if one is appointed, and to be the act of the
Participant or beneficiary, Company or the investment manager or third
party recordkeeper, as the case may be. Trustee may accept any
certificate or other instrument duly signed by a proper representative
of the Participant or beneficiary, Company or the investment manager or
third party recordkeeper, if one is appointed which purports to
evidence an instruction,
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direction or order of the Participant or beneficiary, Company, the
investment manager or third party recordkeeper, as the case may be, as
conclusive evidence thereof; and
(l) Any person dealing in good faith with Trustee or in good
faith assisting Trustee in conducting a transaction shall be entitled
to rely without inquiry upon the representation that Trustee has the
power Trustee purports to exercise and has exercised such power in
accordance with the provisions of this Trust Agreement, and in such
event such person shall not be responsible for the application of money
or property paid or delivered to Trustee.
Trustee may solicit from time to time from Company and take into
account in Trustee's sole discretion, an investment objective or objectives of
the Company, in managing the investments of the Trust.
[With respect to the holding of any life insurance policy or separate
account, variable annuity or mutual fund generally described in Appendix II to
this Trust Agreement, the Company shall have the right to select any one or more
life insurance carriers as the issuer or manager of such holdings, and direct
the Trustee to accept such holdings for the Trust.]
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SECTION 6. DISPOSITION OF INCOME.
During the term of this Trust, all income received by the Trust, net of
expenses, shall be accumulated and reinvested.
SECTION 7. ACCOUNTING BY TRUSTEE.
(a) Trustee shall keep accurate and detailed records of all
investments, receipts, disbursements, and all other transactions required to be
made, including such specific records as shall be agreed upon in writing between
Company and Trustee. Within 60 days after the removal or resignation of Trustee,
Trustee shall deliver to Company a written account of its administration of the
Trust during such year or during the period from the close of the last preceding
year to the date of such removal or resignation, setting forth all investments,
receipts, disbursements and other transactions effected by it, including a
description of all securities and investments purchased and sold with the cost
or net proceeds of such purchases or sales (accrued interest paid or receivable
being shown separately), and showing all cash, securities and other property
held in the Trust at the end of such year or as of the date of such removal or
resignation, as the case may be.
(b) Trustee shall keep and maintain complete and accurate records of
the Trust and all transactions involving any property of the Trust. Such records
shall be available for inspection by
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Company or Participant at all times during normal business hours. Trustee shall
produce and furnish to Company quarterly (or monthly if the Company or
Beneficiary requests) annual itemized statements identifying all transactions of
the Trust and generally reflecting the condition of the Trust.
SECTION 8. RESPONSIBILITY OF TRUSTEE.
(a) Trustee shall act with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent person acting in like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims, provided, however, that
Trustee shall incur no liability to any person for any action taken pursuant to
a direction, request or approval given by Company which is contemplated by, and
in conformity with, the terms of the Agreement or this Trust and is given in
writing by Company. In the event of a dispute between Company and a party,
Trustee may apply to a court of competent jurisdiction to resolve the dispute.
(b) Company shall indemnify and hold harmless Trustee for any damages,
expenses, liabilities or losses, incurred or sustained by or imposed on Trustee,
arising in connection with the Trust or the Agreement (including reasonable
attorneys' fees), including any litigation that the Trustee defends against or
initiates in connection with the administration of Trustee's powers and duties
under the Trust or the Agreement. If Company does not pay such costs, expenses
and liabilities in a reasonably timely manner, Trustee may obtain payment by
withdrawing funds from the Trust.
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(c) Trustee may consult with legal counsel (who may also be counsel for
Company generally) with respect to any of its duties or obligations hereunder.
(d) Trustee may hire agents, accountants, actuaries, investment
advisors, financial consultants or other professionals to assist it in
performing any of its duties or obligations hereunder.
(e) Trustee shall have, without exclusion, all powers conferred on
trustees by applicable law, unless expressly provided otherwise herein.
(f) Notwithstanding any powers granted to Trustee pursuant to this
Trust Agreement or to applicable law, Trustee shall not have any power that
could give this Trust the objective of carrying on a business and dividing the
gains therefrom, within the meaning of section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Internal Revenue Code.
(g) Notwithstanding any provisions of this Trust Agreement or the
Agreement to the contrary, Trustee may in good faith fully rely on any
representations or directions given to Trustee by Company (or its officers and
employees designated to Trustee for this purpose) under this Trust Agreement or
the Agreement.
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(h) Notwithstanding any provisions of this Trust Agreement or the
Agreement to the contrary, Trustee shall not be liable for any action taken or
omitted as Trustee of this Trust unless such action or omission constitutes bad
faith, gross negligence or willful disregard for the provisions of this Trust
Agreement.
(i) The Trustee shall be responsible and liable for the assets in the
Trust including assets accepted as contributions to the Trust from the Company.
The Trustee shall be under no obligation and shall not have the duty to collect
or recover any funds or assets that have not yet been contributed to the Trust
until those funds and assets have both been contributed by the Company and
accepted by the Trustee.
SECTION 9. COMPENSATION AND EXPENSES OF TRUSTEE.
For its services hereunder, Trustee shall receive reasonable annual
compensation in accordance with its standard fee schedule in effect at the time
that such services are furnished to the Trust. Except to the extent otherwise
provided in Section 6 hereof, Company shall pay all reasonable or agreed upon
administrative and Trustee's fees and expenses, including any expenses
attributable to the payment of persons engaged or expenses paid in accordance
with the provisions of Sections 3(c), 5A and 8 above. The Trustee shall
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periodically (but no less frequently than quarterly) submit its statements of
account to the Company. Payment shall be made by Company in a prompt manner. If
not so paid, the fees and expenses shall be paid from the Trust.
SECTION 10. RESIGNATION AND REMOVAL OF TRUSTEE.
(a) Trustee may resign at any time by written notice to Company, which
shall be effective 7 days after receipt of such notice unless Company and
Trustee agree otherwise.
(b) Trustee may be removed by Company on 30 days written notice or upon
shorter notice accepted by Trustee.
(c) Upon resignation or removal of Trustee and appointment of a
successor Trustee, all assets shall subsequently be transferred to the successor
Trustee. The transfer shall be completed within 120 days after receipt of
written notice of resignation, removal or transfer, unless Company extends the
time limit.
(d) If Trustee resigns or is removed, a successor shall be appointed,
in accordance with Section 11 hereof, by the effective date of resignation or
removal under paragraph (a) or (b) of this section. If no such appointment has
been made, Trustee may apply to a court of competent jurisdiction for
appointment of a successor or for instructions. All expenses of Trustee in
connection with the proceeding shall be allowed as administrative expenses of
the Trust.
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SECTION 11. APPOINTMENT OF SUCCESSOR.
(a) If Trustee resigns or is removed in accordance with Section 10(a)
or (b) hereof, Company may appoint any qualified corporate fiduciary, such as a
bank trust department or other party that may be granted corporate trustee
powers under state law, as a successor to replace Trustee upon resignation or
removal. The appointment shall be effective when accepted in writing by the new
Trustee, who shall have all of the rights and powers of the former Trustee,
including ownership rights in the Trust assets. The former Trustee shall execute
any instrument necessary or reasonably requested by Company or the successor
Trustee to evidence the transfer.
(b) The successor Trustee need not examine the records and acts of any
prior Trustee and may retain or dispose of existing Trust assets, subject to
Sections 7 and 8 hereof. The successor Trustee shall not be responsible for and
Company shall indemnify and defend the successor Trustee from any claim or
liability resulting from any action or inaction of any prior Trustee or from any
other past event, or any condition existing at the time it becomes successor
Trustee.
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SECTION 12. AMENDMENT OR TERMINATION.
(a) This Trust Agreement may be amended by a written instrument
executed by Trustee and Company. Notwithstanding the foregoing, no such
amendment shall conflict with the terms of the Agreement or shall make the Trust
revocable after it has become irrevocable in accordance with Section 1(b)
hereof.
(b) The Trust shall not terminate until the date on which the
Participant and his beneficiaries are no longer entitled to benefits pursuant to
the terms of the Agreement. Upon termination of the Trust any assets remaining
in the Trust shall be returned to Company.
(c) Upon written approval of the Participant (or his beneficiaries)
entitled to payment of benefits pursuant to the terms of the Agreement, Company
may terminate this Trust prior to the time all benefit payments under the
Agreement have been made. In such case, all assets in the Trust at termination
shall be returned to Company.
(d) Notwithstanding the preceding provisions of this Section 12, the
Trust shall terminate (to the extent required under the applicable rule against
perpetuities) one day prior to the last day of the period ending 21 years after
the death of the Participant.
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SECTION 13. MISCELLANEOUS.
(a) Any provision of this Trust Agreement prohibited by law shall be
ineffective to the extent of any such prohibition, without invalidating the
remaining provisions hereof.
(b) Benefits payable to the Participant and his beneficiaries under
this Trust Agreement may not be anticipated, assigned (either at law or in
equity), alienated, pledged, encumbered or subjected to attachment, garnishment,
levy, execution or other legal or equitable process.
(c) For purposes of facility of payment, in the event that the
Participant or beneficiary to receive a payment or distribution from the Trust
is incompetent or otherwise incapacitated in a manner that the Trustee can
reasonably question that individual's ability to manage his own affairs, the
Trustee may make the payment to (i) such individual's guardian or other legal
representative; (ii) the person responsible for the support and care of such
individual if the trustee can reasonably determine that such person is
trustworthy; or (iii) any other person a court with proper jurisdiction may
direct. Notwithstanding the preceding provisions of this Section 13(c), if in
the judgment of Trustee, the Participant becomes incapacitated, Trustee shall
have full discretionary authority to utilize the income and principal of the
Trust for the health, education, maintenance, support and other needs of the
Participant, as determined by Trustee in its sole
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discretion. No judicial determination shall be required and the Trustee shall
incur no liability to any person whatsoever for making such distributions to or
for the benefit of the Participant.
(d) This Trust Agreement shall be governed by and construed in
accordance with the laws of Texas.
(e) Any provision or requirement for notice to be made under this Trust
Agreement shall mean written notice. Written notice may be delivered in hand
(i.e., personal hand delivery) or by certified mail with a return receipt to the
current address of the person to receive the notice. Telecopy or electronic
facsimile transmissions of notice shall not be binding.
(j) In the event of any inconsistency or conflict between the terms of
this Trust Agreement and the Plan, the Trustee shall be bound and obligated only
to follow the terms of this Trust Agreement, which shall be controlling.
SECTION 14. EFFECTIVE DATE.
The effective date of this Trust Agreement shall be January 1, 1996.
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In witness whereof, this Trust Agreement has been entered into and is
effective on the dates first set forth hereinabove.
TRUSTEE: TEAM, INC.
By: By:
--------------------------- ---------------------------
, Trust Officer
----------
THE STATE OF TEXAS ss.
ss.
COUNTY OF HARRIS ss.
BEFORE ME, the undersigned authority, on this day personally appeared
____________, known to me to be the person whose name is subscribed to the
foregoing instrument as Vice President & Trust Officer of
________________________, a banking institution, and acknowledged to me that
he/she executed the same for the purposes and consideration therein expressed,
in the capacity therein stated, and as the act and deed of said banking
institution.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the _____ day of
_______________, 199_.
------------------------------
NOTARY PUBLIC IN AND FOR
THE STATE OF T E X A S
Printed Name:
-----------------
My commission expires:
--------
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THE STATE OF TEXAS ss.
ss.
COUNTY OF HARRIS ss.
BEFORE ME, the undersigned authority, on this day personally
appeared_________________, known to me to be the person whose name is subscribed
to the foregoing instrument as ___________________ of Team, Inc., a Delaware
state corporation, and acknowledged to me that he executed the same for the
purposes and consideration therein expressed, in the capacity therein stated,
and as the act and deed of said corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the _____ day of
_______________, 199_.
------------------------------
NOTARY PUBLIC IN AND FOR
THE STATE OF T E X A S
Printed Name:
-----------------
My commission expires:
--------
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APPENDIX I
"Agreement"
1998 Salary Deferred Compensation Agreement executed by and
between Philip J. Hawk and Team, Inc. on ________________.
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