ASPIRATION ACHIEVEMENT INCENTIVE AWARD AGREEMENT FOR EXECUTIVE OFFICERS
THIS AGREEMENT, made as of the 23rd day of September, 1997 (the “Grant Date”), between National Service Industries, Inc., a Delaware corporation (“NSI”) and NSI SERVICES, L.P. (GA), a Subsidiary of NSI (together, the “Company”), and Grantee (the “Grantee”).
WHEREAS, NSI has adopted the National Service Industries, Inc. Long-Term Achievement Incentive Plan (the “Plan”) in order to provide additional incentives to certain officers and key employees of NSI and its Subsidiaries; and
WHEREAS, the Committee responsible for administration of the Plan has determined to grant to the Grantee an Aspiration Achievement Incentive Award as provided herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant of Aspiration Award.
1.1 The Company hereby grants to the Grantee an Aspiration Achievement Incentive
Award (the
“Award”), which has a value determined as provided in Section 2 below
based upon the performance of the Operations during the Performance Cycle from
September 1, 1997 to August 31, 2000. As provided in the Plan, Grantee’s
right to payment of this Award is dependent upon Grantee’s continued
employment in Grantee’s current position with the Company, or in a position
with responsibilities of substantially similar value to the Company during the
Performance Cycle. Under certain circumstances as described below, Grantee may
be entitled to receive payment for some portion of the Award if Grantee’s
employment terminates prior to the end of the Performance Cycle.
1.2 The Grantee hereby acknowledges receipt of a copy of the Plan and agrees to be
bound by all the terms and provisions thereof. This Agreement shall be construed in accordance with, and
subject to, the provisions of the Plan (the provisions of which are hereby
incorporated by reference) and, except as otherwise expressly set forth herein,
the capitalized terms used in this Agreement shall have the same definitions as
set forth in the Plan.
2. Performance Measure and Performance Levels.
The
Committee has established the performance measure (the “Performance
Measure”), and award and performance levels set forth in Appendix A
attached hereto. The chart in Appendix A specifies a Commitment performance
level, at which the Commitment Level Award will be paid, an Aspiration
performance level, at or above which an Aspiration Level Award will be paid, and
a threshold performance level, at which a minimum incentive award will be paid
and below which no award will be paid. For each level of performance at or above
the threshold performance level through the Aspiration performance level,
Grantee will receive an award determined in accordance with the chart and
formulae set forth in Appendix A. The terms used in determining the Performance
Measure are defined in Appendix B.
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3. Determination of Aspiration Award.
3.1 Determination Notice. Subject to Section 3.2, as soon as practical following the
last day of the Performance
Cycle, the Committee will determine, in accordance with Section 7(c) of the
Plan, the performance level of NSI with respect to the Performance Measure for
the Performance Cycle. The Committee may in determining the performance level
with respect to the Performance Measure adjust NSI’s financial results for
the Performance Cycle to exclude the effect of unusual charges or income items
which are distortive of financial results for the Performance Cycle; provided,
that, in determining financial results, items whose exclusion from consideration
will increase the performance level of NSI shall only have their effects
excluded if they constitute “extraordinary items” under generally
accepted accounting principles and all such items shall be excluded. The
Committee shall also adjust the performance calculations to exclude the
unanticipated effect on financial results of changes in the Code, or other tax
laws, and the regulations thereunder. The Committee shall also exclude from
consideration the effect on financial performance of each of the following
events or items where the result of excluding the particular event or item is to
increase the performance level of NSI: (i) an acquisition or a divestiture
involving more than $10 million in net worth or $25 million in business
revenues; (ii) an equity restructuring involving more than $1 million; (iii)
asset impairment charges involving more than $1 million and restructuring costs
involving more than $1 million associated with facility closings or reduction in
employment levels; (iv) changes in accounting treatment or rules involving more
than $1 million. The Committee may decrease the amount of the Award otherwise
payable to Grantee if, in the Committee’s view, such adjustment is
necessary or desirable, regardless of the extent to which the Performance
Measure has been achieved. The Committee may establish such guidelines and
procedures for reducing the amount of an Award as it deems appropriate.
The
Company will notify the Grantee (or the executors or administrators of the
Grantee’s estate, if applicable) of the Committee’s determination (the
“Determination Notice”). The Determination Notice shall specify the
performance level of the Operations with respect to the Performance Measure for
the Performance Cycle and the amount of Award (if any) Grantee will be entitled
to receive. Unless the Committee determines otherwise at the time the Award is
paid and except as otherwise provided in the event of a Change in Control, the
amount Grantee is entitled to receive will be paid one-half in cash and one-half
in Shares. The Shares will be valued at their Fair Market Value as of the last
day of the Performance Cycle. Except in the case of a Change in Control, the
Committee may, in its discretion, attach restrictions, terms and conditions to
the Shares issued as part of the Award.
3.2 Significant Corporate Events. If, during a Performance Cycle, NSI consummates
an acquisition or
disposition that (i) involves assets whose value equals or exceeds 20% of the
total value of NSI’s assets, (ii) represents a part of the business whose
revenues equal or exceed 20% of the total of NSI’s revenues, or (iii)
causes a material restructuring of NSI, the following rules shall apply:
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(a) If the transaction is consummated during the first year of the Performance
Cycle, the Performance
Cycle and the Grantee’s outstanding Award will be terminated with no payout
and a new Performance Cycle containing a new Award will be started.
(b) If the transaction is consummated after the first year of the Performance
Cycle, the Performance
Cycle will end and the outstanding Award will be determined and paid at
NSI’s actual performance level to such date, taking into account the
adjustments provided for in Section 3.1 above and using prorated performance
levels of the Performance Measure to reflect the portion of the Performance
Cycle that had elapsed as of the date of consummation of the acquisition or
disposition. Payment of the Award will be made as soon as practical after it is
determined. A new Performance Cycle will be started to cover the period
remaining in the initial Performance Cycle or, if that result is not practical,
the Committee will make an appropriate adjustment to reflect the premature
termination of the initial Performance Cycle.
If,
during a Performance Cycle, NSI consummates an acquisition or disposition that
is not covered by the special provisions of this Section 3.2, the financial
effects of such acquisition or disposition shall be handled as provided in
Section 3.1.
Any
actions under this Section 3.2 shall be taken in accordance with the
requirements of Code Section 162(m) and the regulations thereunder.
4. Termination of Employment.
4.1 In General. Except as provided in Sections 4.2, 4.3 and 4.4 below, in the
event that a Grantee’s
employment terminates during a Performance Cycle, all unearned Aspiration Awards
shall be immediately forfeited by the Grantee.
4.2 Termination of Employment Due to Death, Disability, or Retirement. In the
event the employment of a
Grantee is terminated by reason of death or Disability during a Performance
Cycle, the Grantee shall be entitled to a prorated payout with respect to the
unearned Award. The prorated payout shall be determined by the Committee based
upon the length of time that the Grantee was actively employed during the
Performance Cycle relative to the full length of the Performance Cycle;
provided, that payment shall only be made to the extent at the end of the
Performance Cycle the Award would have been earned based upon the performance
level achieved for the Performance Cycle (taking into account the adjustment
provisions and other rules in Section 3 above); and provided, further, that the
performance level used to determine the prorated award cannot exceed 200% of the
Commitment performance level.
In the event of Grantee's Retirement (on or after age 65), the full Award shall
continue to be eligible for
payout at the end of the Performance Cycle, just as if Grantee had remained
employed for the remainder of the Performance Cycle (including if the Grantee
dies after Retirement but before the end of the Performance Cycle). At the end
of the Performance Cycle, the Committee shall make its determination in the same
manner as provided in Section 3.
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Payment of earned Awards to Grantee in the event of termination due to death,
Disability, or Retirement
shall be made at the same time payments would be made to Grantee if Grantee did
not terminate employment during the Performance Cycle.
4.3 Change In Control. Notwithstanding anything in this Agreement to the
contrary, if a Change in
Control occurs during the Performance Cycle, then the Grantee’s Award shall
be determined for the Performance Cycle then in progress as though the
Performance Cycle had ended as of the date of the Change in Control and the
outstanding Award will be paid at the Commitment Level Award or the actual
performance level to such date (using, for such purpose, prorated performance
levels of the Performance Measure to reflect the portion of the Performance
Cycle that has elapsed as of the date of the Change in Control), whichever
provides the greater payment. The Award determined in accordance with the
preceding sentence shall be fully vested and payable immediately to the Grantee.
The Committee shall determine the amount of the Award under this Section 4.3,
subject to the terms of this section, and no downward adjustment of the Award
which would result in reduction of the Award by more than 50% shall be
permitted. The Award will be paid in full in cash, unless the Grantee elects to
receive one-half of the Award in Shares. For purposes of determining the number
of Shares to be paid to a Grantee under this Section 4.3, the Fair Market Value
of a Share shall be determined by taking the average closing price per share for
the last twenty (20) trading days prior to the commencement of the offer,
transaction or other event which resulted in a Change in Control.
4.4 Termination Without Cause. In the event Grantee's employment is terminated by
the Company without Cause
more than one (1) year after the commencement of the Performance Cycle and prior
to the end of the Performance Cycle, the Grantee shall be entitled to a prorated
payout of the Award based upon the length of time that the Grantee was actively
employed during the Performance Cycle relative to the full length of the
Performance Cycle; provided, that payment shall be made only to the extent at
the end of the Performance Cycle the Award would have been earned based upon the
performance level achieved during the Performance Cycle (taking into account the
adjustment provisions and other rules in Section 3 above); and provided,
further, that the performance level used to determine the prorated award cannot
exceed 200% of the Commitment performance level. Payment shall be made to
Grantee at the same time as if Grantee had not terminated employment during the
Performance Cycle
5. No Right to Continued Employment.
Nothing
in this Agreement or the Plan shall be interpreted to confer upon the Grantee
any rights with respect to continuance of employment by the Company, nor shall
this Agreement or the Plan interfere in any way with the right of the Company to
terminate the Grantee’s employment at any time.
6. Nonassignment.
The
Grantee shall not have the right to assign, alienate, pledge, transfer or
encumber any amounts due Grantee hereunder, and any attempt to assign, alienate,
pledge, transfer, or encumber Grantee’s rights or benefits shall be null
and void and not recognized by the Plan or the Company.
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7. Modification of Agreement.
This
Agreement may be modified, amended, suspended or terminated, and any terms or
conditions may be waived, but only by a written instrument executed by the
parties hereto.
8. Severability; Governing Law
Should
any provision of this Agreement be held by a court of competent jurisdiction to
be unenforceable or invalid for any reason, the remaining provisions of this
Agreement shall not be affected by such holding and shall continue in full force
in accordance with their terms.
The
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the State of Delaware without giving effect to the
conflicts of laws principles thereof.
9. Successors in Interest.
This
Agreement shall inure to the benefit of and be binding upon any successor to the
Company. All obligations imposed upon the Grantee and all rights granted to the
Company under this Agreement shall be binding upon the Grantee’s heirs,
executors, and administrators.
10. Resolution of Disputes.
Any
dispute or disagreement which may arise under, or as a result of, or in any way
relate to, the interpretation, construction or application of this Agreement
shall be determined by the Committee. Any determination made hereunder shall be
final, binding and conclusive on the Grantee and the Company for all purposes.
11. Withholding of Taxes.
The
Company shall have the right to deduct from any amount payable under this
Agreement, an amount equal to the federal, state and local income taxes and
other amounts as may be required by law to be withheld (the “Withholding
Taxes”) with respect to any such amount. In satisfaction of all or part of
the Withholding Taxes, the Grantee may make a written election (the “Tax
Election”), which may be accepted or rejected in the discretion of the
Company, to have withheld a portion of the Shares issuable to him or her
pursuant to an Award, having an aggregate Fair Market Value equal to the
Withholding Taxes.
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12. Shareholder Approval.
The
effectiveness of this Agreement and of the grant of the Award pursuant hereto is
subject to the approval of the Plan by the stockholders of NSI in accordance
with the terms of the Plan.
NATIONAL SERVICE INDUSTRIES, INC.
By:
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chairman, President and Chief Executive Officer
NSI SERVICES, L.P. (GA), Subsidiary
By:
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chairman, President and Chief Executive Officer
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Name of Grantee: Grantee
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NSI Aspiration Award Program Illustration - FY 1998-2000
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Name ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Position Chairman & Chief EVP, SVP, Corporate EVP, Chief
Executive Officer Administration & Development Financial Officer
Counsel
Salary $ 750,000 $ 350,000 $ 225,000 $ 360,000
Division NSI Total NSI Total NSI Total NSI Total
Total LTI Multiple 160% 160% 160% 160%
AAI % of LTI 30% 30% 30% 30%
FY 98-00 Economic Profit ($000,000)
Threshold 24.15 24.15 24.15 24.15
Commitment 42.1 42.1 42.1 42.1
Aspiration 97.25 97.25 97.25 97.25
Individual AAI Opportunity
Threshold $90,000 $42,000 $27,000 $43,200
Commitment $360,000 $168,000 $108,000 $172,800
Aspiration $1,800,000 $840,000 $540,000 $864,000
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