Exhibit 10(iii)A(61)
EMPLOYMENT AGREEMENT
This Employment Agreement entered into as of the 27th day of November,
2001, by and between NATIONAL SERVICE INDUSTRIES, INC., a Delaware corporation
(the "Company"), and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, an individual resident of the State of
Georgia (the "Executive"), the terms and conditions of which are as follows:
SECTION 1. TERM OF EMPLOYMENT
(a) The Company shall employ Executive as Chairman, President and Chief
Executive Officer during the term of his employment, subject to the terms and
conditions set forth in this Employment Agreement, and Executive hereby accepts
such employment. Executive shall perform the responsibilities of a Chairman,
President and Chief Executive Officer and such additional executive duties and
responsibilities commensurate with his position, as shall be assigned to him in
accordance with the terms of this Agreement.
(b) The Company and Executive acknowledge that it is currently the
intention of the Company to spin-off ACUITY BRANDS, INC., a Delaware corporation
("Acuity") and a wholly-owned subsidiary of the Company, by means of a
distribution of all of Acuity's issued and outstanding common stock in a
tax-free dividend to the Company's stockholders (the "Spin-off"). Such date as
the Spin-off is effective shall be termed the "Effective Date."
(c) Subject to the terms and conditions set forth in this Employment
Agreement, the Company agrees to employ Executive and Executive agrees to be
employed by the Company for an initial term ("Initial Term") of three years,
commencing on the Effective Date, and ending on the third anniversary of the
Effective Date; provided, however, the Initial Term automatically shall extend
for one additional year on the first anniversary of the Effective Date and on
each subsequent anniversary of the Effective Date, unless the Company or
Executive notifies the other pursuant to Section 6(a) that no such extension
will be effected at least ninety (90) days before the first anniversary date or
any subsequent anniversary date. The Initial Term described in this Section 1
and any extensions of such Initial Term, shall be referred to in this Employment
Agreement as the "Term".
SECTION 2. POSITION AND DUTIES AND RESPONSIBILITIES
(a) Position. Executive shall be the Chairman, President and Chief
Executive Officer of the Company.
(b) Duties and Responsibilities. Executive's duties and responsibilities
shall be those normally associated with Executive's position as a Chairman,
President and Chief Executive Officer plus any additional duties and
responsibilities that the Company's Board of Directors from time to time may
assign orally or in writing to Executive. Executive shall report to the
Company's Board of Directors and shall have such powers as may be delegated to
him by such Board. Executive shall undertake to perform all Executive's duties
and responsibilities for the
Company in good faith and on a full-time basis and shall at all times act in the
course of Executive's employment under this Employment Agreement in the best
interest of the Company.
SECTION 3. COMPENSATION AND BENEFITS
(a) Base Salary. Executive's initial base salary shall be Six Hundred
Thousand Dollars ($600,000) per year (the "Base Salary"), which Base Salary
shall be payable in accordance with the Company's standard payroll practices and
policies for executive officers and shall be subject to such withholdings as
required by law or as otherwise permissible under such practices or policies.
The Base Salary shall be subject to periodic adjustments as determined by the
Compensation Committee of the Company's Board of Directors (the "Compensation
Committee").
(b) Conversion of NSI Options. The Executive currently has 353,813
options to acquire shares of Common Stock of the Company. Of these options,
122,313 were granted in lieu of aspiration award payments of $988,934.31 and
231,500 were granted under the Company's option plans. As soon as practicable
after execution of this Agreement and before the Effective Date, the Company
will pay the Executive $988,934.31 in cash (subject to applicable withholding
taxes) upon the surrender of the 122,313 options. With respect to the remaining
231,500 options, these options will be addressed in connection with the Spin-Off
and Executive will be treated in a manner consistent with other executive
officers of the Company.
(c) Annual Bonus and Other Incentive Compensation. Executive during the
Term shall be eligible to receive an annual bonus of 60% of Base Salary based
upon achieving targeted financial objectives, provided the Executive may, in
accordance with the annual bonus plan established by the Compensation Committee,
receive a greater or lesser annual bonus if such targeted financial objectives
are exceeded or only partially met. Executive shall also be eligible to
participate in such other annual bonus and incentive compensation programs as
the Compensation Committee shall make available to executive officers.
(d) Employee Benefit Plans. Executive shall be eligible to participate
in the employee benefit plans, programs and policies (including any executive
life insurance program) maintained by the Company that cover executive officers
in accordance with the terms and conditions of such plans, programs and policies
as in effect from time to time.
(e) Stock Option and Stock Grants. On and after the Effective Date,
Executive will be eligible to receive annual grants of stock options, restricted
stock and other long-term incentive awards equal in value to 260% of his Base
Salary. The nature and structure of such grants shall be determined by the Board
of Directors.
(f) Vacation. Executive shall be entitled to four weeks of vacation (or
such larger amount as Executive may be entitled to under Company policy) during
each successive one year period in the Term, which vacation time shall be taken
at such time or times in each such one year period so as not to materially and
adversely interfere with the business of the Company.
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Executive shall have the right to carryover unused vacation from any such one
year period to any other such one year period, in accordance with Company policy
for executives.
(g) Business Expenses. Executive shall have a right to be promptly
reimbursed for Executive's reasonable and appropriate business expenses which
Executive actually incurs in connection with the performance of Executive's
duties and responsibilities under this Employment Agreement in accordance with
the Company's expense reimbursement policies and procedures for its senior
executive officers.
(h) Directors' and Officers' Insurance. Effective as of the Effective
Date, the Company shall take all reasonable steps to ensure that Executive has
been provided coverage under directors' and officers' liability insurance, the
terms of which insurance shall be substantially similar to the terms contained
in such directors' and officers' liability insurance which is in place for the
Company's directors and executive officers on the Effective Date.
(i) SERP. Upon his employment in September 1996, Executive became an
eligible executive under the Supplemental Retirement Plan for Executives of
National Service Industries, Inc. (the "SERP") and certain special provisions
for Executive's SERP benefit are set forth in Appendix E of the SERP. Appendix E
to the SERP has previously been amended to provide that, upon termination on or
after age 55, Executive will be (1) credited with five additional years of
service, thereby becoming eligible for Early Retirement upon attainment of age
55 and increasing his benefit (e.g., 12/20 of the full benefit rather than 7/20)
and (2) treated as being five years older so that if he commenced benefits at
age 55, he would be treated as commencing at age 60, with five years of
reduction for early commencement rather than ten. As of the Effective Date,
Appendix E shall be further amended to provide that Executive will be allowed to
make an election at retirement to be paid his benefit in an immediate lump sum
payment calculated by discounting the future payment stream at an interest rate
equal to the lesser of the GATT interest rate or the PBGC immediate annuity rate
with an assumed life span to age 85, or in annual installments over a period of
up to five years, or in accordance with the usual SERP payout rules.
(j) Pension Plan. Executive will continue to participate in a pension
plan of the Company.
(k) Severance Protection Agreement. Executive will continue to be
covered by a Severance Protection Agreement comparable to the agreement in
effect on the Effective Date, amended to the extent necessary to reflect the
terms of this Agreement.
SECTION 4. TERMINATION OF EMPLOYMENT
(a) Termination By The Company Other Than For Cause Or Disability Or By
Executive For Good Reason.
(1) The Company shall have the right to terminate Executive's
employment at any time, and Executive shall have the right to resign at
any time. However, a proper notice under Section 1 that no extension of
Executive's Term will be effected shall not constitute a termination of
Executive's employment by the Company or a resignation by
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Executive. If either the Company or Executive elects to give such notice,
the Company's only obligation to Executive under this Employment Agreement
after the expiration of the Term shall be to pay Executive's earned but
unpaid Base Salary until the date the Term expired and any earned, but
unpaid bonus.
(2) If the Company terminates Executive's employment other than
for Cause, death or Disability or if Executive resigns for Good Reason,
the Company shall (in lieu of any other severance benefits under any of
the Company's employee benefit plans, programs or policies except for his
rights under the Severance Protection Agreement as provided in (4) below)
pay or provide to Executive the following:
(i) Executive will continue to receive his Base Salary as then
in effect for the remaining Term of this Agreement or if his termination
occurs after the first anniversary of the Effective Date, for a period of
twenty-four (24) months (such period is hereinafter referred to as the
"Severance Period"), payable in the same manner as it was being paid on
his date of termination;
(ii) Executive will be paid monthly an amount equal to $30,000
(his target bonus of $360,000 divided by 12), subject to withholding of
applicable taxes, for the Severance Period;
(iii) Executive will continue to receive the healthcare and
life insurance coverages in effect on his date of termination for the
Severance Period just as if he had remained an active employee, subject to
Executive paying the customary employee portion of such coverages,
provided that if the Company cannot continue to cover Executive under its
plans, the Company will separately provide Executive with comparable
coverages or pay Executive in a lump sum the costs of such coverages; and
(iv) If Executive's employment is terminated prior to his
attaining age 55, he will be treated for all purposes under the SERP as if
he had continued to remain actively employed until he reached age 55.
(3) If the Company terminates Executive's employment other than
for Cause, death or Disability or if Executive resigns for Good Reason,
Executive shall become immediately fully vested in (i) all restricted
stock previously granted to Executive, including any restricted shares of
Common Stock granted pursuant to Section 3 (e), and (ii) all stock options
previously granted to Executive, in which event all such options shall be
fully exercisable by Executive and shall remain exercisable for 12 months
after Executive's date of termination (unless the option provides for a
longer exercise period).
(4) If Executive's employment is terminated under circumstances
qualifying Executive for compensation and benefits under this Section 4(a)
and he also qualifies for compensation and benefits under the Severance
Protection Agreement, Executive shall be entitled to receive whichever
compensation and benefits are greater and there shall be no duplication of
compensation or benefits.
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(b) Termination By the Company For Cause or By Executive Other Than
For Good Reason.
(1) The Company shall have the right to terminate Executive's
employment at any time for Cause, and Executive shall have the right to
resign at any time other than for Good Reason.
(2) If the Company terminates Executive's employment for Cause or
Executive resigns other than for Good Reason, the Company's only
obligation to Executive under this Employment Agreement shall be to pay
Executive's earned but unpaid Base Salary then in effect under Section
3(a), if any, up to the date Executive's employment terminates. If
Executive is terminated for Cause, further vesting of Executive's stock
options, shall cease. Furthermore, if terminated for Cause, further
vesting of Executive's restricted stock grants shall cease and Executive
shall forfeit all further vesting of any restricted stock grants.
(c) Cause. The term "Cause" as used in this Employment Agreement
means,
(1) Executive has engaged in conduct which in the reasonable
judgment of the Company's Board of Directors constitutes gross negligence,
gross misconduct or gross neglect in the performance of Executive's duties
and responsibilities under this Employment Agreement, including conduct
resulting or intending to result directly or indirectly in gain or
personal enrichment for Executive at the Company's expense; or
(2) Executive has been convicted of a felony or of any crime
involving fraud, embezzlement or theft.
With respect to clause (1) above, Executive shall not be deemed to have
been terminated for "Cause" until there shall have been delivered to him
written notice, not less than 30 days prior to the proposed termination
date, specifying the basis for such termination.
(d) Good Reason. The term "Good Reason" means,
(1) Any material reduction in Executive's Base Salary;
(2) A material reduction in Executive's job functions, duties or
responsibilities, or a similar change in Executive's reporting
relationships;
(3) The failure by the Company to continue in effect any material
compensation plan in which Executive participates on the Effective Date
(unless such plan is replaced by a comparable plan) or to continue to
provide Executive with benefits substantially comparable to those in
effect on the Effective Date;
(4) The relocation of the Company's principal executive offices to
a location more than fifty (50) miles from Atlanta, Georgia, unless the
Executive consents to such relocation; or
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(5) Any material breach of any of the terms of this Employment
Agreement by the Company.
(e) Termination for Disability or Death.
(1) The Company shall have the right to terminate Executive's
employment on or after the date Executive has a Disability, and
Executive's employment shall terminate at Executive's death.
(2) If Executive's employment terminates under this Section 4(e),
the Company's only obligation under this Employment Agreement shall be to
pay Executive or, if Executive dies, Executive's estate, any earned but
unpaid Base Salary then in effect under Section 3(a) through the date
Executive's employment terminates, provided that Executive shall have such
rights under the Company's benefit plans as are provided in such plans.
The term "Disability" as used in this Employment Agreement shall have the
same meaning as under the Company's long-term disability plan and if no such
plan is in effect, then Disability shall mean the suffering by Executive for at
least a 180 consecutive day period of a physical or mental condition resulting
from bodily injury, disease, or mental disorder which renders Executive
incapable of continuing even with reasonable accommodation to perform the
essential functions of Executive's job. The Company's Board of Directors shall
determine whether Executive has a Disability. If Executive disputes such
determination, the issue shall be submitted to a panel consisting of three
physicians who specialize in the physical or mental condition from which
Executive suffers, one appointed and paid by the Company, one appointed and paid
by Executive and the third appointed by these two physicians and paid one-half
by the Company and one-half by Executive. The determination as to whether
Executive has a Disability shall be made by such panel and shall be binding on
the Company and on Executive.
(f) Benefits at Termination of Employment. Upon Executive's termination
of employment, Executive shall have the right to receive any benefits payable
under the Company's employee benefit plans, programs and policies which
Executive otherwise has a nonforfeitable right to receive under the terms of
such plans, programs and policies (other than severance benefits) independent of
Executive's rights under this Employment Agreement, without regard to the reason
for such termination of employment.
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SECTION 5. COVENANTS BY EXECUTIVE
(a) The Company's Property.
(1) Upon the termination of Executive's employment for any reason
or, if earlier, upon the Company's request, Executive shall promptly
return all "Property" which had been entrusted or made available to
Executive by the Company.
(2) The term "Property" means all records, files, memoranda,
reports, price lists, customer lists, drawings, plans, sketches, keys,
codes, computer hardware and software and other property of any kind or
description prepared, used or possessed by Executive during Executive's
employment by the Company and, if applicable, any of its affiliates (and
any duplicates of any such property) together with any and all
information, ideas, concepts, discoveries, and inventions and the like
conceived, made, developed or acquired at any time by Executive
individually or, with others during Executive's employment which relate to
the Company business, products or services.
(b) Trade Secrets.
(1) Executive agrees that Executive will hold in a fiduciary
capacity for the benefit of the Company, and any of its affiliates, and
will not directly or indirectly use or disclose, any "Trade Secret" that
Executive may have acquired during the term of Executive's employment by
the Company or any of its affiliates for so long as such information
remains a Trade Secret.
(2) The term "Trade Secret" means information, including, but not
limited to, technical or nontechnical data, a formula, a pattern, a
compilation, a program, a device, a method, a technique, a drawing, a
process, financial data, financial plans, product plans, or a list of
actual or potential customers or suppliers that (a) derives economic
value, actual or potential, from not being generally known to, and not
being generally readily ascertainable by proper means by, other persons
who can obtain economic value from its disclosure or use and (b) is the
subject of reasonable efforts by the Company and any of its affiliates to
maintain its secrecy.
(3) This Section 5(b) and Section 5(c) are intended to provide
rights to the Company which are in addition to, not in lieu of, those
rights the Company has under the common law or applicable statutes for the
protection of trade secrets.
(c) Confidential Information.
(1) Executive, while employed under this Employment Agreement and
thereafter during the "Restricted Period", shall hold in a fiduciary
capacity for the benefit of the Company and any of its affiliates, and
shall not directly or indirectly use or disclose, any "Confidential
Information" that Executive may have acquired (whether or not developed or
compiled by Executive and whether or not Executive is authorized to
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have access to such information) during the term of, and in the course of,
or as a result of Executive's employment by the Company or any of its
affiliates.
(2) The term "Confidential Information" means any secret,
confidential or proprietary information possessed by the Company or any of
its affiliates relating to their businesses, including, without
limitation, trade secrets, customer lists, details of client or consultant
contracts, current and anticipated customer requirements, pricing
policies, price lists, market studies, business plans, operational
methods, marketing plans or strategies, legal advice and communications
with the Company's counsel, product development techniques or flaws,
computer software programs (including object code and source code), data
and documentation data, base technologies, systems, structures and
architectures, inventions and ideas, past current and planned research and
development, compilations, devices, methods, techniques, processes,
financial information and data, business acquisition plans and new
personnel acquisition plans (not otherwise included in the definition of a
Trade Secret under this Employment Agreement) that has not become
generally available to the public by the act of one who has the right to
disclose such information without violating any right of the Company or
any of its affiliates. Confidential Information may include, but not be
limited to, future business plans, licensing strategies, advertising
campaigns, information regarding customers, executives and independent
contractors and the terms and conditions of this Employment Agreement.
(d) Restricted Period. The term "Restricted Period" as used in the
Employment Agreement shall mean the two-year period which starts on the date
Executive's employment terminates with the Company without regard to whether
such termination comes before or after the end of the Term.
(e) Nonsolicitation of Customers or Employees.
(1) Executive (i) while employed under this Employment Agreement
shall not, on Executive's own behalf or on behalf of any person, firm,
partnership, association, corporation or business organization, entity or
enterprise (other than the Company or one of its affiliates), solicit
Competing Business of customers of the Company or any of its affiliates
and (ii) during the Restricted Period shall not, on Executive's own behalf
or on behalf of any person, firm, partnership, association, corporation or
business organization, entity or enterprise, solicit Competing Business of
customers of the Company or any of its affiliates with whom Executive
within the twenty-four month period immediately preceding the beginning of
the Restricted Period had or made contact with in the course of
Executive's employment by the Company.
(2) Executive (i) while employed under this Employment Agreement
shall not, either directly or indirectly, call on, solicit or attempt to
induce any other officer, employee or independent contractor of the
Company or any of its affiliates to terminate his or her employment with
the Company or any of its affiliates and shall not assist any other person
or entity in such a solicitation (regardless of whether any such officer,
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employee or independent contractor would commit a breach of contract by
terminating his employment), and (ii) during the Restricted Period, shall
not, either directly or indirectly, call on, solicit or attempt to induce
any other officer, employee or independent contractor of the Company or
any of its affiliates with whom Executive had contact, knowledge of, or
association in the course of Executive's employment with the Company or
any of its affiliates as the case may be, during the twelve month period
immediately preceding the beginning of the Restricted Period, to terminate
his employment with the Company or any of its affiliates and shall not
assist any other person or entity in such a solicitation (regardless of
whether any such officer, employee or independent contractor would commit
a breach of contract by terminating his employment).
(3) The term "Competing Business" as used in this Employment
Agreement means (i) the business of selling, renting, leasing or otherwise
distributing, directly or indirectly, textiles, including, without
limitation, napkins, table and bed linens, bath towels, pillow cases, bar
towels, scrubs and surgical drapery, mats, mops, and restroom supplies and
(ii) the business of manufacturing, producing and distributing, directly
or indirectly, envelopes, including, without limitation, custom business
and courier envelopes, as well as specialty filing products.
(f) Noncompetition Obligation. Executive, while employed under this
Employment Agreement and thereafter during the Restricted Period and within the
United States of America and her territories and commonwealths, shall not
organize or form any other business that will conduct Competing Business and
shall not engage in the executive management of, or provide consulting
concerning the executive management of, Competing Business on behalf of any
business other than the Company or its affiliates. Executive acknowledges and
agrees that the geographic areas identified in this Section 5(f) are areas in
which Executive performs services for the Company by being actively engaged as a
member of the Company's executive management team in the Company's operations in
these areas.
(g) Reasonable and Continuing Obligations. Executive agrees that
Executive's obligations under this Section 5 are obligations which will continue
beyond the date Executive's employment terminates and that such obligations are
reasonable and necessary to protect the Company's legitimate business interests.
The Company in addition shall have the right to take such other action as the
Company deems necessary or appropriate to compel compliance with the provisions
of this Section 5.
(h) Remedy for Breach. Executive agrees that the remedies at law of the
Company for any actual or threatened breach by Executive of the covenants in
this Section 5 would be inadequate and that the Company shall be entitled to
specific performance of the covenants in this Section 5, including entry of an
ex parte, temporary restraining order in state or federal court, preliminary and
permanent injunctive relief against activities in violation of this Section 5,
or both, or other appropriate judicial remedy, writ or order, in addition to any
damages and legal expenses which the Company may be legally entitled to recover.
Executive acknowledges and agrees that the covenants in this Section 5 shall be
construed as agreements independent of any other provision of this or any other
agreement between the Company and Executive, and that the
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existence of any claim or cause of action by Executive against the Company,
whether predicated upon this Employment Agreement or any other agreement, shall
not constitute a defense to the enforcement by the Company of such covenants.
SECTION 6. MISCELLANEOUS
(a) Notices. Notices and all other communications shall be in writing
and shall be deemed to have been duly given when personally delivered or when
mailed by United States registered or certified mail. Notices to the Company
shall be sent to National Service Industries, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, Attention: Corporate Secretary. Notices and
communications to Executive shall be sent to the address Executive most recently
provided to the Company.
(b) No Waiver. Except for the notice described in Section 6(a), no
failure by either the Company or Executive at any time to give notice of any
breach by the other of, or to require compliance with, any condition or
provision of this Employment Agreement shall be deemed a waiver of any
provisions or conditions of this Employment Agreement.
(c) Delaware Law. This Employment Agreement shall be governed by
Delaware law without reference to the choice of law principles thereof.
(d) Assignment. This Employment Agreement shall be binding upon and
inure to the benefit of the Company and any successor to all or substantially
all of the business or assets of the Company, other than Acuity. The Company may
assign this Employment Agreement to any affiliate or successor, and no such
assignment shall be treated as a termination of Executive's employment under
this Employment Agreement. Executive's rights and obligations under this
Employment Agreement are personal and shall not be assigned or transferred.
(e) Other Agreements. This Employment Agreement replaces and merges any
and all previous agreements and understandings regarding all the terms and
conditions of Executive's employment relationship with the Company, and this
Employment Agreement constitutes the entire agreement between the Company and
Executive with respect to such terms and conditions, except for rights under
other agreements referred to in this Agreement.
(f) Amendment. No amendment to this Employment Agreement shall be
effective unless it is in writing and signed by the Company and by Executive.
(g) Invalidity. If any part of this Employment Agreement is held by a
court of competent jurisdiction to be invalid or otherwise unenforceable, the
remaining part shall be unaffected and shall continue in full force and effect,
and the invalid or otherwise unenforceable part shall be deemed not to be part
of this Employment Agreement.
(h) Attorney's Fees. In the event Executive incurs legal fees and
expenses in seeking to enforce any rights to compensation and benefits under
this Agreement and is successful, in whole or in part, in obtaining or enforcing
any material rights to compensation or benefits through negotiation, settlement,
litigation, arbitration or otherwise, the Company shall promptly
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pay Executive's reasonable legal fees and expenses incurred in enforcing
Executive's rights under this Agreement.
IN WITNESS WHEREOF, the Company and Executive have executed this
Employment Agreement as of the date first above written to be effective on the
Effective Date.
NATIONAL SERVICE INDUSTRIES, INC. EXECUTIVE
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------ -----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman, President and
Chief Executive Officer
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