Page 25
Exhibit 10(iii)A(7)
NATIONAL SERVICE INDUSTRIES, INC.
LONG-TERM ACHIEVEMENT INCENTIVE PLAN
1. Purpose. The purposes of the National Service Industries, Inc. Long-Term
Achievement Incentive Plan (the "Plan") are to provide additional incentives to
those officers and key executives of National Service Industries, Inc. (the
"Company") and its Subsidiaries (as hereinafter defined) whose substantial
contributions are essential to the continued growth and profitability of the
Company's businesses, to strengthen their commitment to the Company and its
Subsidiaries, to motivate those officers and other executives to perform their
assigned responsibilities diligently and skillfully, and to attract and retain
competent and dedicated individuals whose efforts will result in the long term
growth and profitability of the Company. To accomplish these purposes, the
Program provides that the Company may grant Incentive Stock Options,
Nonqualified Stock Options, Aspiration Achievement Incentive Awards, Restricted
Stock, Performance Units and Performance Shares (as each term is hereinafter
defined).
2. Definitions. For purposes of the Program:
(a) "Adjusted Fair Market Value" means in the event of a Change in
Control, the greater of (i) the highest price per share paid to holders of
the Shares in any transaction (or series of transactions) constituting or
resulting in a Change in Control or (ii) the highest Fair Market Value of a
Share during the ninety (90) day period ending on the date of a Change in
Control.
(b) "Agreement" means the written agreement between the Company and an
Optionee or Grantee evidencing the grant of an Option or Award and setting
forth the terms and conditions thereof.
(c) "Aspiration Achievement Incentive Award" or "Aspiration Award"
means an Award granted to an Eligible Employee, as described in Section 7
of the Plan.
(d) "Award" means a grant of an Aspiration Award, Restricted Stock,
Performance Awards, or any or all of them.
(e) "Board" means the Board of Directors of the Company.
(f) "Change in Capitalization" means any increase or reduction in the
number of Shares, or any change (including, but not limited to, a change in
value) or exchange of Shares for a different number or kind of shares or
other securities of the Company, by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, spin-off,
split-up, issuance of warrants or rights or debentures, stock dividend,
stock split or reverse stock split, cash dividend, property dividend,
combination or exchange of shares, repurchase of shares, public offering,
private placement, change in corporate structure or otherwise, which in the
judgment of the Committee is material or significant.
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Exhibit 10(iii)A(7)
(g) "Change in Control" means any of the following events:
(i) The acquisition (other than from the Company) by any "Person"
(as the term is used for purposes of Sections 13(d) or 14(d) of the
Exchange Act) of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of twenty percent (20%) or
more of the combined voting power of the Company's then outstanding
voting securities; or
(ii) The individuals who, as of September 18, 1996, are members
of the Board (the "Incumbent Board"), cease for any reason to
constitute at least two-thirds of the Board; provided, however, that
if the election, or nomination for election by the Company's
stockholders, of any new director was approved by a vote of at least
two-thirds of the Incumbent Board, such new director shall, for
purposes of this Agreement, be considered as a member of the Incumbent
Board; or
(iii) Approval by stockholders of the Company of (i) a merger or
consolidation involving the Company if the stockholders of the
Company, immediately before such merger or consolidation do not, as a
result of such merger or consolidation, own, directly or indirectly,
more than seventy percent (70%) of the combined voting power of the
then outstanding voting securities of the corporation resulting from
such merger or consolidation in substantially the same proportion as
their ownership of the combined voting power of the voting securities
of the Company outstanding immediately before such merger or
consolidation, or (ii) a complete liquidation or dissolution of the
Company or an agreement for the sale or other disposition of all or
substantially all of the assets of the Company.
Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur pursuant to Section 2(g)(i), solely because twenty percent (20%) or more
of the combined voting power of the Company's then outstanding securities is
acquired by (i) a trustee or other fiduciary holding securities, under one or
more employee benefit plans maintained by the Company or any of its subsidiaries
or (ii) any corporation which, immediately prior to such acquisition, is owned
directly or indirectly by the stockholders of the Company in the same proportion
as their ownership of stock in the Company immediately prior to such
acquisition.
(h) "Code" means the Internal Revenue Code of 1986, as amended.
(i) "Committee" means a committee consisting of two or more
Non-Employee Directors appointed by the Board to administer the Plan
and to perform the functions set forth herein.
(j) "Company" means National Service Industries, Inc., a Delaware
corporation, or any successor corporation.
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Exhibit 10(iii)A(7)
(k) "Disability" means a physical or mental infirmity which
impairs the Optionee's or Grantee's ability to substantially perform
his duties for a period of one hundred eighty (180) consecutive days.
(l) "Division" means any of the operating units or divisions of
the Company, or its Subsidiaries, designated as a Division by the
Committee.
(m) "Eligible Employee" means any officer or other designated
employee of the Company or a Subsidiary designated by the Committee as
eligible to receive Options or Awards, subject to the conditions set
forth herein.
(n) "Exchange Act" means the Securities Exchange Act 1934, as
amended.
(o) "Fair Market Value" means the fair market value of the Shares
as determined in good faith by the Committee; provided, however, that
(A) if the Shares are admitted to trading on a national securities
exchange, Fair Market Value on any date shall be the last sale price
reported for the Shares on such exchange on such date or, if no sale
was reported on such date, on the last date preceding such date on
which a sale was reported, (B) if the Shares are admitted to quotation
on the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") or other comparable quotation system and have been
designated as a National Market System ("NMS") security, Fair Market
Value on any date shall be the last sale price reported for the Shares
on such system on such date or on the last day preceding such date on
which a sale was reported, or (C) if the Shares are admitted to
Quotation on NASDAQ and have not been designated a NMS Security, Fair
Market Value on any date shall be the average of the highest bid and
lowest asked prices of the Shares on such system on such date.
(p) "Grantee" means a person to whom an Award has been granted
under the Plan.
(q) "Incentive Stock Option" means an Option within the meaning
of Section 422 of the Code.
(r) "Named Executive Officer" means an Eligible Employee who as
of the date of grant, vesting and/or payout of an Award or Option is
deemed by the Committee to be one of the group of "covered" employees"
as defined in Code Section 162(m) and the regulations thereunder.
(s) "Non-Employee Director" means a director of the Company who
satisfies the requirements under Rule 16b-3(b)(3) of the Exchange Act,
as amended.
(t) "Nonqualified Stock Option" means an Option which is not an
Incentive Stock Option.
(u) "Option" means an Incentive Stock Option, a Nonqualified
Stock Option, or either or both of them.
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Exhibit 10(iii)A(7)
(v) "Optionee" means a person to whom an Option has been granted
under the Plan.
(w) "Participant" means an Eligible Employee who has an
outstanding Award or Option under the Plan.
(x) "Performance Awards" means Performance Units, Performance
Shares or either or both of them.
(y) "Performance Cycle" means the time period specified by the
Committee at the time an Aspiration Award or a Performance Award is
granted during which the performance of the Company, a Subsidiary or a
Division will be measured, which period shall be at least two fiscal
years.
(z) "Performance Shares" means Restricted Stock granted under
Section 9 of the Plan.
(aa) "Performance Unit" means Performance Units granted under
Section 9 of the Plan.
(bb) "Restricted Stock" means Shares issued or transferred to an
Eligible Employee which are subject to restrictions. Restricted Stock
may be subject to restrictions which lapse over time without regard to
the performance of the Company, a Subsidiary or a Division, pursuant
to Section 8 hereof, or may be awarded as Performance Shares pursuant
to Section 9 hereof.
(cc) "Retirement" means the voluntary termination of employment
by the Grantee or Optionee at any time on or after the Grantee or
Optionee attains age 65.
(dd) "Shares" means the common stock, par value $1.00 per share,
of the Company (including any new, additional or different stock or
securities resulting from a Change in Capitalization).
(ee) "Subsidiary" means any corporation in an unbroken chain of
corporations, beginning with the Company, if each of the corporations
other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain. The
term "Subsidiary" shall also include a partnership in which the
Company or a Subsidiary owns 50% or more of the profits interest or
capital interest in the partnership.
(ff) "Successor Corporation" means a corporation, or a parent or
subsidiary thereof within the meaning of Section 424(a) of the Code,
which issues or assumes an Option in a transaction to which Section
424(a) of the Code applies.
(gg) "Ten-Percent Stockholder" means an Eligible Employee who, at
the time an Incentive Stock Option is to be granted to him, owns
Page 29
Exhibit 10(iii)A(7)
(within the meaning of Section 422(b)(6) of the Code) stock possessing
more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company.
(hh) "Termination of Cause" means the Optionee or Grantee has
terminated employment and has been found by the Committee to be guilty
of theft, embezzlement, fraud or misappropriation of the Company's
property or any action which, if the individual were an officer of the
Company, would constitute a breach of fiduciary duty.
3. Administration.
(a) The Plan shall be administered by the Committee which shall
hold such meetings as may be necessary for the proper administration
of the Plan. Each member of the Committee shall be a Non-Employee
Director. No member of the Committee shall be personally liable for
any action, determination or interpretation made in good faith with
respect to the Plan, Agreements, Options or Awards, and all members of
the Committee shall be fully indemnified by the Company with respect
to any such action, determination or interpretation.
(b) Subject to the express terms and conditions set forth herein,
the Committee shall have the power from time to time:
(i) to determine those Eligible Employees to whom Options
shall be granted under the Plan and the number of Incentive Stock
Options and/or Nonqualified Stock Options to be granted to each
Eligible Employee and to prescribe the terms and conditions
(which need not be identical) of each Option, including the
purchase price per Share subject to each Option, and to make any
amendment or modification to any Agreement consistent with the
terms of the Plan;
(ii) to select those Eligible Employees to whom Awards shall
be granted under the Plan and to determine the amount of
Aspiration Award and Shares payable, the number of Performance
Units, Performance Shares, and/or shares of Restricted Stock, to
be granted pursuant to each Award, the terms and conditions of
each Award, including the restrictions or performance criteria
relating to such Award, the maximum value of each Award, and to
make any amendment or modification to any Agreement consistent
with the terms of the Plan;
provided, however, that the Board can exercise any of the
powers set forth in this Section 3(b), subject to any limitations
imposed by Code Section 162(m) or Rule 16b-3.
(c) Subject to the express terms and conditions set forth herein,
the Committee shall have the power from time to time:
(i) to construe and interpret the Plan and the Options and
Awards granted thereunder and to establish, amend and revoke
rules and regulations for the administration of the Plan,
including, but not limited to, correcting any defect or supplying
Page 30
Exhibit 10(iii)A(7)
any omission, or reconciling any inconsistency in the Plan or in
any Agreement, in the manner and to the extent it shall deem
necessary or advisable to make the Plan fully effective, and all
decisions and determinations by the Committee in the exercise of
this power shall be final, binding and conclusive upon the
Company, a Subsidiary, and the Optionees and Grantees, as the
case may be;
(ii) to determine the duration and purposes for leaves of
absence which may be granted to an Optionee or Grantee on an
individual basis without constituting a termination of employment
or service for purposes of the Plan;
(iii) to exercise its discretion with respect to the powers
and rights granted to it as set forth in the Plan;
(iv) generally, to exercise such powers and to perform such
acts as are deemed necessary or advisable to promote the best
interests of the Company with respect to the Plan.
4. Shares Subject to Program.
(a) The maximum number of Shares that may be issued or
transferred pursuant to Options and Awards under the Plan is 1,750,000
Shares (or the number and kind of shares of stock or other securities
to which such Shares are adjusted upon a Change in Capitalization
pursuant to Section 11) and the Company shall reserve for the purposes
of the Plan, out of its authorized but unissued Shares or out of
Shares held in the Company's treasury, or partly out of each, such
numbers of shares as shall be determined by the Board.
(b) Not more than fifteen percent (15%) of the Shares referred to
in Section 4(a) may be issued or transferred in connection with Awards
of Restricted Stock made pursuant to Section 8 (other than Awards of
Performance Shares pursuant to Section 9).
(c) Whenever any outstanding Option or Award or portion thereof
expires, is canceled or is otherwise terminated for any reason (other
than by exercise of the Option), the Shares allocable to the canceled
or otherwise terminated portion of such Option or Award may again be
the subject of Options and Awards hereunder.
(d) Whenever any Shares subject to an Award or Option are
forfeited for any reason pursuant to the terms of the Plan, such
shares may again be the subject of Options and Awards hereunder.
(e) With respect to Shares used to exercise an Option or for tax
withholding, the Committee shall, in its discretion and in accordance
with applicable law, determine whether to charge such Shares against
the maximum number of Shares that may be issued under the Plan.
5. Eligibility. Subject to the provisions of the Plan, the Committee
shall have full and final authority to select those Eligible Employees who will
Page 31
Exhibit 10(iii)A(7)
receive Options and/or Awards; provided, however, that no Eligible Employee
shall receive any Incentive Stock Options unless he is an employee of the
Company or a Subsidiary (other than a Subsidiary that is a partnership) at the
time the Incentive Stock Option is granted.
6. Options. The Committee may grant Options in accordance with the
Plan and the terms and conditions of the Option shall be set forth in an
Agreement. The Committee shall have sole discretion in determining the number of
Shares underlying each Option to grant a Participant; provided, however, that in
the case of any Incentive Stock Option granted under the Plan, the aggregate
Fair Market Value (determined at the time such Option is granted) of the Shares
to which Incentive Stock Options are exercisable for the first time by the
Participant during any calendar year (under the Plan and all other incentive
stock option plans of the Company and any Subsidiary) shall not exceed $100,000.
The maximum number of Shares subject to Options which can be granted under the
Plan during a 12-month period to any Participant, including a Named Executive
Officer, is 100,000 Shares. Each Option and Agreement shall be subject to the
following conditions:
(a) Purchase Price. The purchase price or the manner in which the
purchase price is to be determined for Shares under each Option shall
be set forth in the Agreement, provided, that the purchase price per
Share under each Option shall not be less than 100% of the Fair Market
Value of a Share on the date the Option is granted (110% in the case
of an Incentive Stock Option granted to a Ten-Percent Stockholder.
(b) Duration. Options granted hereunder shall be for such term as
the Committee shall determine, provided that no Option shall be
exercisable after the expiration of ten (10) years from the date it is
granted (five (5) years in the case of an Incentive Stock Option
granted to a Ten-Percent Stockholder). The Committee may, subsequent
to the granting of any Option, extend the term thereof, but in no
event shall the term as so extended exceed the maximum term provided
for in the preceding sentence.
(c) Non-transferability. Unless the Committee otherwise provides
in the Agreement, no Option granted hereunder shall be transferable by
the Optionee, otherwise than by will or the laws of descent and
distribution, and an Option may be exercised during the lifetime of
such Optionee only by the Optionee or his guardian or legal
representative. The terms of such Option shall be final, binding and
conclusive upon the beneficiaries, executors, administrators, heirs
and successors of the Optionee.
(d) Vesting. Subject to Section 6(h) hereof, each Option shall be
exercisable in such installments (which need not be equal or the same
for each Optionee) and at such times as may be designated by the
Committee and set forth in the Agreement. To the extent not exercised,
installments shall accumulate and be exercisable, in whole or in part,
at any time after becoming exercisable, but not later than the date
the Option expires. The Committee may accelerate the exercisability of
any Option or portion thereof at any time, subject to any limitations
required by Code Section 162(m).
(e) Method of Exercise. The exercise of an Option shall be made
only by a written notice delivered in person or by mail to the
Page 32
Exhibit 10(iii)A(7)
Secretary of the Company at the Company's principal executive office,
specifying the number of Shares to be purchased and accompanied by
payment therefor and otherwise in accordance with the Agreement
pursuant to which the Option was granted. The purchase price for any
Shares purchased pursuant to the exercise of an Option shall be paid
in full upon such exercise, as determined by the Committee in its
discretion, in cash, by check, or by transferring Shares to the
Company upon such terms and conditions as determined by the Committee.
The written notice pursuant to this Section 6(e) may also provide
instructions from the Optionee to the Company that upon receipt of the
purchase price in cash from the Optionee's broker or dealer,
designated as such on the written notice, in payment for any Shares
purchased pursuant to the exercise of an Option, the Company shall
issue such Shares directly to the designated broker or dealer. Any
Shares transferred to the Company as payment of the purchase price
under an Option shall be valued at their Fair Market Value on the day
preceding the date of exercise of such Option. If requested by the
Committee, the Optionee shall deliver the Agreement evidencing the
Option to the Secretary of the Company who shall endorse thereon a
notation of such exercise and return such Agreement to the Optionee.
No fractional Shares shall be issued upon exercise of an Option and
the number of Shares that may be purchased upon exercise shall be
rounded to the nearest number of whole Shares.
(f) Rights of Optionees. No Optionee shall be deemed for any
purpose to be the owner of any Shares subject to any Option unless and
until (i) the Option shall have been exercised pursuant to the terms
thereof, (ii) the Company shall have issued and delivered the Shares
to the Optionee and (iii) the Optionee's name shall have been entered
as a stockholder of record on the books of the Company. Thereupon, the
Optionee shall have full voting, dividend and other ownership rights
with respect to such Shares.
(g) Termination of Employment. The Agreement shall set forth the
terms and conditions of the Option upon the termination of the
Optionee's employment with the Company, a Subsidiary or a Division
(including a Grantee's ceasing to be employed by a Subsidiary or
Division as a result of the sale of such Subsidiary or Division or an
interest in such Subsidiary or Division), as the Committee may, in its
discretion, determine at the time the Option is granted or thereafter,
provided, however no Option shall be exercisable beyond its maximum
term as described in Section 6(b) hereof.
(h) Effect of Change in Control. Notwithstanding anything
contained in the Plan or an Agreement to the contrary, in the event of
a Change in Control, (i) all Options outstanding on the date of such
Change in Control shall become immediately and fully exercisable and
(ii) an Optionee will be permitted to surrender for cancellation
within sixty (60) days after such Change in Control, any Option or
portion of an Option to the extent not yet exercised and the Optionee
will be entitled to receive a cash payment in the amount equal to the
excess, if any, of (x) (A) in the case of a Nonqualified Stock Option,
the greater of (1) the Fair Market Value, on the date preceding the
date of surrender, of the Shares subject to the Option or portion
thereof surrendered or (2) the Adjusted Fair Market Value of the
Shares subject to the option or portion thereof surrendered or (B) in
the case of an Incentive Stock Option, the Fair Market Value, at the
time of surrender, of the Shares subject to the Option or portion
Page 33
Exhibit 10(iii)A(7)
thereof surrendered, over (y) the aggregate purchase price for such
Shares under the Option; provided, however, in the case of any
Optionee who may be subject to liability under Section 16(b) of the
Exchange Act, such Optionee shall be entitled to surrender for
cancellation his or her Option during the sixty (60) day period
commencing upon the expiration of six (6) months from the date of
grant of any such Option.
(i) Modification or Substitution. Subject to the terms of the
Plan, the Committee may, in its discretion, modify outstanding Options
or accept the surrender of outstanding Options (to the extent not
exercised) and grant new Options in substitution for them.
Notwithstanding the foregoing, no modification of an Option shall
adversely alter or impair any rights or obligations under the
Agreement without the Optionee's consent.
7. Aspiration Achievement Incentive Awards.
(a) Grant of Aspiration Awards. Subject to the terms of the Plan,
the Committee may grant Aspiration Awards to Eligible Employees. The
Committee shall have the discretion to determine the amount of each
Aspiration Award and the other terms and conditions relating to the
grant of such awards.
(b) Terms of Aspiration Awards. The following rules shall apply
to the Aspiration Awards:
(i) Prior to or at the beginning of the Performance Cycle
(or within such time period as is permitted by Code Section
162(m) and the regulations thereunder), the Committee shall
determine, based upon the Participant's salary and level of
responsibility, the Aspiration Award applicable to the
Participant. The Award will contain performance levels related to
the Performance Measure(s) that will determine the actual award
the Participant will receive at the end of the Performance Cycle.
The Committee will select one or more of the Performance Measures
listed on Appendix A (which objectives may be different for
different Participants or Performance Cycles) for purposes of the
Aspiration Awards under the Plan. Performance Measures may be in
respect of the performance of the Company and its Subsidiaries on
a consolidated basis, or a Subsidiary or a Division, or some
combination of the foregoing. Performance levels with respect to
a Performance Measure may be absolute or relative and may be
expressed in terms of a progression within a specified range.
Except with respect to Named Executive Officers, the Committee
may establish additional Performance Measures for purposes of
Aspiration Awards under the Plan. Further, in the event that
applicable tax and/or securities laws (including, but not limited
to, Code Section 162(m) and Section 16 of the Exchange Act)
change to permit Committee discretion to alter the governing
Performance Measures for Named Executive Officers without
obtaining stockholder approval of such changes, the Committee
shall have sole discretion to make such changes without obtaining
stockholder approval.
(ii) No Participant may receive an Aspiration Award in
excess of $4 million with respect to a single three-year
Performance Cycle.
Page 34
Exhibit 10(iii)A(7)
(iii) Performance Cycles shall equal or exceed three (3)
years in length.
(c) Earning of Aspiration Awards. After the applicable
Performance Cycle has ended, the Committee shall certify the extent to
which the performance levels for the Performance Measure(s) have been
achieved. The Committee may, in determining whether the performance
levels have been met, adjust the financial results for a Performance
Cycle to exclude the effect of unusual charges or income items, or
other events (such as acquisitions or divestitures), which are
distortive of financial results for the Performance Cycle; provided,
that, with respect to Named Executive Officers, in determining
financial results, items whose exclusion from consideration will
increase the Award 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 may decrease the amount
of an Award otherwise payable if, in the Committee's view, the
financial performance during the Performance Cycle justifies such
adjustment, regardless of the extent to which the Performance Measure
was achieved.
The Agreement may provide the Committee with the right to revise
the performance levels for the Performance Measure and the Award
amounts, if unforeseen events (including, without limitation, a Change
in Capitalization, an equity restructuring, an acquisition or a
divestiture) occur which have a substantial effect on the financial
results and which in the judgment of the Committee make the
application of the performance levels unfair unless a revision is
made. For Named Executive Officers, such changes shall be made in a
manner consistent with Code Section 162(m).
(d) Form and Timing of Payment of Aspiration Awards. The
Agreement shall set forth the manner in which payment of earned
Aspiration Awards will be made. Payment will be made in cash or in
Shares, or in a combination of cash and Shares, as determined by the
Committee in the Agreement. Payment will be made as soon as practical
after the end of the Performance Cycle to which the Award relates. For
purposes of the portion of the Award paid in Shares, the Shares shall
be valued on their Fair Market Value as of the last day of Performance
Cycle (unless the Agreement provides otherwise).
(e) Termination of Employment. The Agreement shall set forth the
terms and conditions of the Aspiration Award upon the termination of
the Participant's employment with the Company, Subsidiary or a
Division (including a Participant's ceasing to be employed by a
Subsidiary or Division as a result of the sale of such Subsidiary or
Division or an interest in such Subsidiary or Division), as the
Committee may, in its discretion, determine at the time the Aspiration
Award is granted or thereafter.
(f) Nontransferability. Unless the Agreement provides otherwise,
Aspiration Awards may not be sold, transferred, pledged, assigned or
otherwise alienated or hypothecated, other than, if amounts are
payable after the Participant's death, by will or by the laws of
descent and distribution.
Page 35
Exhibit 10(iii)A(7)
(g) Effect of Change in Control. In the event of a Change in
Control, the Participant shall earn and become entitled to payment of
such portion of the Aspiration Award as set forth in the Agreement.
The time of payment of the Aspiration Award and the form of such
payment shall also be as set forth in the Agreement.
8. Restricted Stock. The Committee may grant Awards of Restricted
Stock, and may issue Shares of Restricted Stock in payment in respect of
Aspiration Awards or vested Performance Units (as hereinafter provided in
Section 9(b)), which shall be evidenced by an Agreement between the Company and
the Grantee. Each Agreement shall contain such restrictions, terms and
conditions as the Committee may, in its discretion, determine and (without
limiting the generality of the foregoing) such Agreements may require that an
appropriate legend be placed on Share certificates. The maximum number of Shares
that may be awarded under a Restricted Stock Award to a Named Executive Officer
during any 12-month period is 20,000 Shares. Awards of Restricted Stock shall be
subject to the following terms and provisions:
(a) Rights of Grantee. Shares of Restricted Stock granted
pursuant to an Award hereunder shall be issued in the name of the
Grantee as soon as reasonably practicable after the Award is granted,
provided that the Grantee has executed an Agreement evidencing the
Award, the appropriate blank stock powers and, in the discretion of
the Committee, an escrow agreement and any other documents which the
Committee may require as a condition to the issuance of such Shares.
If a Grantee shall fail to execute the documents which the Committee
may require within the time period prescribed by the Committee at the
time the Award is granted, the Award shall be null and void. At the
discretion of the Committee, Shares issued in connection with a
Restricted Stock Award shall be deposited together with the stock
powers with an escrow agent designated by the Committee. Unless the
Committee determines otherwise and as set forth in the Agreement, upon
delivery of the Shares to the escrow agent, the Grantee shall have all
of the rights of a stockholder with respect to such Shares, including
the right to vote the Shares and to receive all dividends or other
distributions paid or made with respect to the Shares.
(b) Non-transferability. Unless the Agreement provides otherwise,
until any restrictions upon the Shares of Restricted Stock awarded to
a Grantee shall have lapsed in the manner set forth in Section 8(c),
such Shares shall not be sold, transferred or otherwise disposed of
and shall not be pledged or otherwise hypothecated, nor shall they be
delivered to the Grantee.
(c) Lapse of Restrictions.
(i) Generally. Restrictions upon Shares of Restricted Stock
awarded hereunder shall lapse at such time or times and on such
terms and conditions as the Committee may provide in the
Agreement.
(ii) Effect of Change in Control. Notwithstanding anything
contained in the Plan to the contrary, in the event of a Change
Page 36
Exhibit 10(iii)A(7)
in Control, all restrictions upon any Shares of Restricted Stock
(other than Performance Shares) shall lapse immediately and all
such Shares shall become fully vested in the Grantee.
(d) Termination of Employment. The Agreement shall set forth
the terms and conditions that shall apply upon the termination of
the Grantee's employment with the Company, a Subsidiary or a
Division (including a forfeiture of Shares for which the
restrictions have not lapsed upon Grantee's ceasing to be
employed) as the Committee may, in its discretion, determine at
the time the Award is granted or thereafter.
(e) Modification or Substitution. Subject to the terms of
the Plan, the Committee may modify outstanding Awards of
Restricted Stock or accept the surrender of outstanding Awards of
Restricted Stock (to the extent not exercised) and grant new
Awards in substitution for them. Notwithstanding the foregoing,
no modification of an Award shall adversely alter or impair any
rights or obligations under the Agreement without the Grantee's
consent.
(f) Treatment of Dividends. At the time the Award of Shares
of Restricted Stock is granted, the Committee may, in its
discretion, determine that the payment to the Grantee of
dividends, or a specified portion thereof, declared or paid on
such Shares by the Company shall be (i) deferred until the
lapsing of the restrictions imposed upon such Shares and (ii)
held by the Company for the account of the Grantee until such
time. In the event of such deferral, there shall be credited at
the end of each year (or portion thereof) interest on the amount
of the account at the beginning of the year at a rate per annum
as the Committee, in its discretion, may determine. Payment of
deferred dividends, together with interest accrued thereon, shall
be made upon the lapsing of restrictions imposed on such Shares,
and any dividends deferred (together with any interest accrued
thereon) in respect of any Shares of Restricted Stock shall be
forfeited upon the forfeiture of such Shares pursuant to Section
8(d) or otherwise.
(g) Delivery of Shares. Upon the lapse of the restrictions
on Shares of Restricted Stock, the Committee shall cause a stock
certificate to be delivered to the Grantee with respect to such
Shares, free of all restrictions hereunder (except any
restrictions under Section 17).
9. Performance Awards.
(a) Performance Objectives. The Committee will select one or
more of the Performance Measures listed on Appendix A attached
hereto for purposes of Performance Awards under the Plan.
Performance Measures may be in respect of the performance of the
Company and its Subsidiaries (which may be on a consolidated
basis), a Subsidiary or a Division, or any combination of the
foregoing. Performance objectives may be absolute or relative and
may be expressed in terms of a progression within a specified
range, with the Grantee becoming vested in (i) a minimum
percentage of such Performance Awards in the event the Minimum
Acceptable Objective is met or, if surpassed, a greater
percentage (ii) an intermediate percentage of such Performance
Awards in the event the Good Objective is met or, if surpassed, a
Page 37
Exhibit 10(iii)A(7)
greater percentage and (iii) one hundred percent (100%) of such
Performance Awards in the event the Maximum Realistic Objective
is met or surpassed. The Committee may, in determining whether
the performance levels have been met, adjust the financial
results for a Performance Cycle to exclude the effect of unusual
charges or income items, or other events (such as acquisition or
divestitures), which are distortive of financial results for the
Performance Cycle; provided, that, with respect to Named
Executive Officers, in determining financial results, items whose
exclusion from consideration will increase the Award 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 may decrease the amount
of an Award otherwise payable if, in the Committee's view, the
financial performance during the Performance Cycle justifies such
adjustment, regardless of the extent to which the Performance
Measure was achieved.
The Agreement may provide the Committee with the right to
revise the performance levels for the Performance Measure and the
Award amounts, if unforeseen events (including, without
limitation, a Change in Capitalization, an equity restructuring,
an acquisition or a divestiture) occur which have a substantial
effect on the financial results and which in the judgment of the
Committee make the application of the performance levels unfair
unless a revision is made. For Named Executive Officers, such
changes shall be made in a manner consistent with Code Section
162(m).
The maximum number of Performance Units and Performance
Shares a Named Executive Officer may earn for any Performance
Cycle shall not exceed an aggregate of 60,000 Units and Shares.
(b) Performance Units. The Committee may grant Performance
Units, the terms and conditions of which shall be set forth in an
Agreement between the Company and the Grantee. Each Performance
Unit shall, contingent upon the attainment of specified
performance objectives within the Performance Cycle, represent
one (1) Share. Each Agreement shall specify the number of the
Performance Units to which it relates, the performance objectives
which must be satisfied in order for the Performance Units to
vest, the Performance Cycle within which such objectives must be
satisfied, and the form of payment in respect of vested
Performance Units.
(i) Vesting and Forfeiture. A Grantee shall become
vested with respect to the Performance Units to the extent
that the performance objectives set forth in the Agreement
are satisfied for the Performance Cycle. Subject to Section
9(d) hereof, if the Minimum Acceptable Objective specified
in the Agreement is not satisfied for the applicable
Performance Cycle, the Grantee's rights with respect to the
Performance Shares shall be forfeited.
(ii) Payment of Awards. Payment of Performance Units to
Grantees in respect of vested Performance Units shall be
made within sixty (60) days after the last day of the
Performance Cycle to which such Award relates. Subject to
Page 38
Exhibit 10(iii)A(7)
Section 9(d), such payments may be made entirely in Shares,
entirely in cash, or in such combination of Shares and cash
as the Committee in its discretion, shall determine at any
time prior to such payment, provided, however, that if the
Committee in its discretion determines to make such payment
entirely or partially in Shares of Restricted Stock, the
Committee must determine the extent to which such payment
will be in Shares of Restricted Stock at the time the Award
is granted. Except as provided in Section 9(d), if payment
is made in the form of cash, the amount payable in respect
of any Share shall be equal to the Fair Market Value of such
Share on the last day of the Performance Cycle.
(iii) Termination of Employment. The Agreement shall
set forth the terms and conditions of the Award of
Performance Units upon the termination of the Grantee's
employment with the Company, a Subsidiary, or a Division
(including a Grantee's ceasing to be employed by a
Subsidiary or Division as a result of the sale of such
Subsidiary or Division or an interest in such Subsidiary or
Division) as the Committee may, in its discretion, determine
at the time the Award is granted or thereafter.
(c) Performance Shares. The Committee, in its discretion,
may grant Awards of Performance Shares and shall be evidenced by
an Agreement between the Company and the Grantee. Each Agreement
shall contain such restrictions, if any, and the terms and
conditions as the Committee may, in its discretion, require, and
(without limiting the generality of the foregoing) such
Agreements may require that an appropriate legend be placed on
Share certificates. Awards of Performance Shares shall be subject
to the following terms and provisions:
(i) Rights of Grantee. The Committee shall provide at
the time an Award of Performance Shares is made, the time or
times at which the Performance Shares granted pursuant to
such Award hereunder shall be issued in the name of the
Grantee; provided, however, that no Performance Shares shall
be issued until the Grantee has executed an Agreement
evidencing the Award, the appropriate blank stock powers
and, in the discretion of the Committee, an escrow agreement
and any other documents which the Committee may require as a
condition to the issuance of such Performance Shares. If a
Grantee shall fail to execute the documents which the
Committee may require within the time period prescribed by
the Committee at the time the Award is granted, the award
shall be null and void. At the discretion of the Committee,
Shares issued in connection with an Award of Performance
Shares shall be deposited together with the stock powers
with an escrow agent designated by the Committee. Except as
restricted by the terms of the Agreement, upon delivery of
the Shares to the escrow agent, the Grantee shall have, in
the discretion of the Committee, all of the rights of a
stockholder with respect to such Shares, including the right
to vote the shares and to receive all dividends or other
distributions paid or made with respect to the shares.
(ii) Non-transferability. Unless the Agreement provides
otherwise, until any restrictions upon the Performance
Shares awarded to a Grantee shall have lapsed in the manner
Page 39
Exhibit 10(iii)A(7)
set forth in Sections 9(c)(3) or 9(d), such Performance
Shares shall not be sold, transferred or otherwise disposed
of and shall not be pledged or otherwise hypothecated, nor
shall they be delivered to the Grantee. The Committee may
also impose such other restrictions and conditions on the
Performance Shares, if any, as it deems appropriate.
(iii) Lapse of Restrictions. Subject to Section 9(d),
restrictions upon Performance Shares awarded hereunder shall
lapse and such Performance Shares shall become vested at
such time or times and on such terms, conditions and
satisfaction of performance objectives as the Committee may,
in its discretion, determine at the time an Award is
granted.
(iv) Termination of Employment. The Agreement shall set
forth the terms and conditions of the Award of Performance
Shares upon the termination of the Grantee's employment with
the Company, a Subsidiary or a Division (including a
Grantee's ceasing to be employed by a Subsidiary or Division
as a result of the sale of such Subsidiary or Division or an
interest in such Subsidiary or Division) as the Committee
may, in its discretion, determine at the time the Award is
granted or thereafter.
(v) Treatment of Dividends. At the time the Award of
Performance Shares is granted, the Committee may, in its
discretion, determine that the payment to the Grantee of
dividends, or a specified portion thereof, declared or paid
on Performance Shares issued by the Company to the Grantee
shall be (i) deferred until the lapsing of the restrictions
imposed upon such Performance Shares and (ii) held by the
Company for the account of the Grantee until such time. In
the event of such deferral, there shall be credited at the
end of each year (or portion thereof) interest on the amount
of the account at the beginning of the year at a rate per
annum as the Committee, in its discretion, may determine.
Payments of deferred dividends, together with interest
accrued thereon as aforesaid, shall be made upon the lapsing
of restrictions imposed on such Performance Shares, except
that any dividends deferred (together with any interest
accrued thereon) in respect of any Performance Shares shall
be forfeited upon the forfeiture of such Performance Shares
pursuant to Section 9(c)(4) or otherwise.
(vi) Delivery of Shares. Upon the lapse of the
restrictions on Performance Shares awarded hereunder, the
Committee shall cause a stock certificate to be delivered to
the Grantee with respect to such Shares, free of all
restrictions hereunder.
(d) Effect of Change in Control. Notwithstanding anything
contained in the Plan to the contrary, in the event of a Change
in Control:
(i) With respect to the Performance Units, the Grantee
shall (i) become vested in a percentage of Performance Unit
as determined by the Committee at the time of the Award of
Page 40
Exhibit 10(iii)A(7)
such Performance Units and as set forth in the Agreement and
(ii) be entitled to receive in respect of all Performance
Units which become vested as a result of a Change in
Control, a cash payment within ten (10) days after such
Change in Control equal to the product of the Adjusted Fair
Market Value of a Share multiplied by the number of
Performance Units which become vested in accordance with
this Section 9(d); and
(ii) With respect to the Performance Shares, all
restrictions shall lapse immediately on all or a portion of
the Performance Shares as determined by the Committee at the
time of the Award of such Performance Shares and as set
forth in the Agreement.
(e) Non-transferability. Unless the Agreement provides
otherwise, no Performance Awards shall be transferable by the
Grantee otherwise than by will or the laws of descent and
distribution.
(f) Modification or Substitution. Subject to the terms of
the Plan, the Committee may modify outstanding Performance Awards
or accept the surrender of outstanding Performance Awards and
grant new Performance Awards in substitution for them.
Notwithstanding the foregoing, no modification of a Performance
Award shall adversely alter or impair any rights or obligations
under the Agreement without the Grantee's consent.
(g) Definitions. For purposes of Performance Awards, the
following definitions shall apply:
(i) "Good Objective" means a challenging and above
average level of performance of the Company, a Subsidiary or
a Division during a Performance Cycle for which a
performance Award is granted, as determined by the Committee
at the time such Performance Award is granted.
(ii) "Maximum Realistic Objective" means an excellent
level of performance of the Company, a Subsidiary or a
Division during a Performance Cycle for which a Performance
Award is granted, as determined by the Committee at the time
such Performance Award is granted.
(iii) "Minimum Acceptable Objective" means a minimum
level of performance of the Company, a Subsidiary or a
Division during a Performance Cycle for which a Performance
Award is granted, as determined by the Committee at the time
such Performance Award is granted.
10. Loans.
(a) The Company or any Subsidiary may make loans to a
Grantee or Optionee in connection with the exercise of an Option,
subject to the following terms and conditions and such other
terms and conditions not inconsistent with the Program including
the rate of interest, if any, as the Committee shall impose from
time to time.
Page 41
Exhibit 10(iii)A(7)
(b) No loan made under the Program shall exceed the sum of
(i) the aggregate purchase price payable pursuant to the Option
with respect to which the loan is made, plus (ii) the amount of
the reasonably estimated income taxes payable by the Optionee or
Grantee with respect to the Option or Award. In no event may any
such loan exceed the Fair Market Value, at the date of exercise,
of any such Shares.
(c) No loan shall have an initial term exceeding ten (10)
years; provided, however, that loans under the Program shall be
renewable at the discretion of the Committee.
(d) Loans under the Program may be satisfied by an Optionee
or Grantee, as determined by the Committee, in cash or, with the
consent of the Committee, in whole or in part by the transfer to
the Company of Shares whose Fair Market Value on the date
preceding the date of such payment is equal to the cash amount
for which such Shares are transferred.
(e) A loan shall be secured by a pledge of Shares with a
Fair Market Value of not less than the principal amount of the
loan. After partial repayment of a loan, pledged Shares no longer
required as security may be released into escrow or pursuant to
the terms of the Option, Award or escrow agreement to the
Optionee or Grantee.
11. Adjustment Upon Changes in Capitalization.
(a) In the event of a Change in Capitalization, the
Committee shall conclusively determine the appropriate
adjustments, if any, to the maximum number and class of Shares or
other stock or securities with respect to which Options or Awards
may be granted under the Program, the number and class of Shares
or other stock or securities which are subject to outstanding
Options or Awards granted under the Program, and the purchase
price therefor, if applicable.
(b) Any such adjustment in the Shares or other stock or
securities subject to outstanding Incentive Stock Options
(including any adjustments in the purchase price) shall be made
in such manner as not to constitute a modification as defined by
Section 424(h)(3) of the Code and only to the extent otherwise
permitted by Sections 422 and 424 of the Code.
(c) If, by reason of a Change in Capitalization, a Grantee
of an Award shall be entitled to, or an Optionee shall be
entitled to exercise an Option with respect to, new, additional
or different shares of stock, securities, Aspiration Awards,
Performance Units or Performance Shares (other than rights or
warrants to purchase securities), such new, additional or
different shares shall thereupon be subject to all of the
conditions, restrictions and performance criteria which were
applicable to the Aspiration Awards, Performance Units or
Performance Shares pursuant to the Award or Shares subject to the
Option, as the case may be, prior to such Change in
Capitalization.
12. Effect of Certain Transactions. Subject to Sections 6(h), 7(g),
8(c)(ii) and 9(d), in the event of (i) the liquidation or dissolution of the
Page 42
Exhibit 10(iii)A(7)
Company or (ii) a merger or consolidation of the Company (a "Transaction"), the
Plan and the Options and Awards issued hereunder shall continue in effect in
accordance with their respective terms and each Optionee and Grantee shall be
entitled to receive in respect of each Share subject to any outstanding Options
or Awards, as the case may be, upon exercise of any Option or Award or payment
or transfer in respect of any Award, the same number and kind of stock,
securities, cash, property, or other consideration that each holder of a Share
was entitled to receive in the Transaction in respect of a Share.
13. Release of Financial Information. A copy of the Company's annual
report to stockholders shall be delivered to each Optionee and Grantee at the
time such report is distributed to the Company's stockholders. Upon reasonable
request the Company shall furnish as soon as reasonably practicable, to each
Optionee and Grantee a copy of its most recent annual report and each quarterly
report and current report filed under the Exchange Act since the end of the
Company's prior fiscal year.
14. Termination and Amendment of the Plan.
(a) The Plan shall terminate on the day preceding the tenth
anniversary of its effective date and no Option or Award may be
granted thereafter. The Board may sooner terminate or amend the
Plan (other than to reduce the rights of Optionees and Grantees,
as the case may be, under Sections 6(h), 7(g), 8(c)(ii) and 9(d),
at any time and from time to time; provided, however, that to the
extent necessary under Section 16(b) of the Exchange Act and the
rules and regulations promulgated thereunder or as may otherwise
be legally required, no amendment shall be effective unless
approved by the stockholders of the Company in accordance with
applicable law and regulations at an annual or special meeting.
(b) Except as provided in Sections 11 and 12 hereof, rights
and obligations under any Option or Award granted before any
amendment of the Plan shall not be adversely altered or impaired
by such amendment, except with the consent of the Optionee or
Grantee, as the case may be.
15. Non-Exclusivity of the Plan. The adoption of the Plan by the Board
shall not be construed as amending, modifying or rescinding any previously
approved incentive arrangement or as creating any limitations on the power of
the Board to adopt such other incentive arrangements as it may deem desirable,
including, without limitation, the granting of stock options otherwise than
under the Plan, and such arrangements may be either applicable generally or only
in specific cases.
16. Limitation of Liability. As illustrative of the limitations of
liability of the Company, but not intended to be exhaustive thereof, nothing in
the Plan shall be construed to:
(a) give any person any right to be granted an Option or
Award other than at the sole discretion of the Committee;
(b) give any person any rights whatsoever with respect to
Shares except as specifically provided in the Program;
Page 43
Exhibit 10(iii)A(7)
(c) limit in any way the right of the Company to terminate
the employment of any person at any time (with or without Cause);
or
(d) be evidence of any agreement or understanding, expressed
or implied, that the Company will employ any person in any
particular position at any particular rate of compensation or for
any particular period of time.
17. Regulation and Other Approvals; Governing Law.
(a) This Plan and the rights of all persons claiming
hereunder shall be construed and determined in accordance with
the laws of the State of Delaware without giving effect to the
conflicts of laws principles thereof, except to the extent that
such law is preempted by federal law.
(b) The obligation of the Company to sell or deliver Shares
with respect to Options and Awards granted under the Plan shall
be subject to all applicable laws, rules and regulations,
including all applicable federal and state securities laws, and
the obtaining of all such approvals by governmental agencies as
may be deemed necessary or appropriate by the Committee.
(c) The Plan is intended to comply with Rule 16b-3
promulgated under the Exchange Act and the Committee shall
interpret and administer the provisions of the Plan or any
Agreement in a manner consistent therewith. Any provisions
inconsistent with such Rule shall be inoperative and shall not
affect the validity of the Plan.
(d) The Board may make such changes as may be necessary or
appropriate to comply with the rules and regulations of any
government authority, or to obtain for Eligible Employees granted
Incentive Stock Options the tax benefits under the applicable
provisions of the code and regulations promulgated thereunder.
(e) Each Option and Award is subject to the requirement
that, if at any time the Committee determines, in its discretion,
that the listing, registration or qualification of Shares
issuable pursuant to the Plan is required by any securities
exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the grant of
an Option or the issuance of Shares, no Options shall be granted
or payment made or Shares issued, in whole or in part, unless
listing, registration, qualification, consent or approval has
been effected or obtained free of any conditions as acceptable to
the Committee.
(f) Notwithstanding anything contained in the Plan to the
contrary, in the event that the disposition of Shares acquired
pursuant to the Plan is not covered by a then current
registration statement under the Securities Act of 1933, as
amended, and is not otherwise exempt from such registration, such
Shares shall be restricted against transfer to the extent
required by the Securities Act of 1933, as amended, and Rule 144
or other regulations thereunder. The Committee may require any
individual receiving Shares pursuant to the Plan, as a condition
precedent to receipt of such Shares (including upon exercise of
Page 44
Exhibit 10(iii)A(7)
an Option), to represent and warrant to the Company in writing
that the Shares acquired by such individual are acquired without
a view to any distribution thereof and will not be sold or
transferred other than pursuant to an effective registration
thereof under said Act or pursuant to an exemption applicable
under the Securities Act of 1933, as amended, or the rules and
regulations promulgated thereunder. The certificates evidencing
any of such Shares shall be appropriately legended to reflect
their status as restricted securities as aforesaid.
(g) In the event that changes are made to Code Section
162(m) to permit greater flexibility with respect to any Award or
Option under the Plan, the Committee may, subject to this Section
17, make any adjustments it deems appropriate in such Award or
Option.
18. Miscellaneous.
(a) Multiple Agreements. The terms of each Option or Award
may differ from other Options or Awards granted under the Plan at
the same time, or at some other time. The Committee may also
grant more than one Option or Award to a given Eligible Employee
during the term of the Plan, either in addition to, or in
substitution for, one or more Options or Awards previously
granted to that Eligible Employee. The grant of multiple Options
and/or Awards may be evidenced by a single Agreement or multiple
Agreements, as determined by the Committee.
(b) Withholding of Taxes. (1) The Company shall have the
right to deduct from any distribution of cash to any Optionee or
Grantee, 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 Option or Award. If
an Optionee or Grantee is entitled to receive Shares upon
exercise of an Option or pursuant to an Award, the Optionee or
Grantee shall pay the Withholding Taxes to the Company prior to
the issuance, or release from escrow, of such Shares. In
satisfaction of the Withholding Taxes to the Company, the
Optionee or Grantee may make an irrevocable written election (the
"Tax Election"), which may be accepted or rejected in the
discretion of the Committee, to have withheld a portion of the
Shares issuable to him or her upon exercise of the Option or
pursuant to an Award having an aggregate Fair Market Value equal
to the Withholding Taxes, provided that in respect of an Optionee
or Grantee who may be subject to Section 16(b) of the Exchange
Act, the election complies with the requirements applicable to
Share transactions by such Participants.
(2) If an Optionee makes a disposition, within the meaning
of Section 424(c) of the Code and regulations promulgated
thereunder, of any Share or Shares issued to him pursuant to his
exercise of the Option within the two-year period commencing on
the day after the date of the grant or within the one-year period
commencing on the day after the date of transfer of such Share or
Shares to the Optionee pursuant to such exercise, the Optionee
shall, within ten (10) days of such disposition, notify the
Company thereof, by delivery of written notice to the Company at
its principal executive office, and immediately deliver to the
Company the amount of Withholding Taxes.
Page 45
Exhibit 10(iii)A(7)
(c) Designation of Beneficiary. To the extent applicable to
the type of Award, each Grantee (other than an Optionee) may
designate a person or persons to receive in the event of his or
her death, any Award or any amount payable pursuant thereto, to
which he or she would then be entitled under the terms of the
Plan. Such designation will be made upon forms supplied by and
delivered to the Company and may be revoked in writing.
(d) Deferral. The Committee may permit a Participant to
defer to another plan or program such Participant's receipt of
Shares or cash that would otherwise be due to such Participant by
virtue of the exercise of an Option, earning of an Aspiration
Award, the vesting of Restricted Stock or the earning of
Performance Awards. If any such deferral election is required or
permitted, the Committee shall, in its sole discretion, establish
rules and procedures for such payment deferrals.
19. Effective Date. The effective date of the Plan shall be the date
of its adoption by the Board, subject only to the approval by the affirmative
votes of the holders of a majority of the securities of the Company present, or
represented, and entitled to vote at a meeting of stockholders duly held in
accordance with the applicable laws of the State of Delaware within twelve (12)
months of such adoption.
Page 46
Exhibit 10(iii)A(7)
APPENDIX A
TO
NATIONAL SERVICE INDUSTRIES, INC.
LONG-TERM ACHIEVEMENT INCENTIVE PLAN
PERFORMANCE MEASURE DEFINITION
Capitalized Equity Value Capitalized Entity Value minus total debt
Capitalized Entity Value Sum of Average Invested Capital in the business and the
Capitalized Economic Profit
Capitalized Economic Profit Economic Profit divided by the Weighted Average Cost of
Capital (WACC)
Economic Profit Adjusted After-Tax Profits (AATP) minus Average Invested
Capital times the WACC
Average Invested Capital Average of beginning and ending Invested Capital (i.e.
total assets including cash and capitalized operating
leases minus non-interest-bearing liabilities other than
self-insurance reserves)
Weighted Average Cost of Capital (WACC) A percentage cost established for the Performance Cycle
Adjusted After-Tax Profit (AATP) Sales minus operating costs (including depreciation,
amortization and an operating lease adjustment) minus book
income taxes
Return on Invested Capital AATP divided by Average Invested Capital
AATP Margin AATP divided by Sales
Sales Growth Change in Sales from year to year
Total Return to Shareholders Change in stock price plus reinvested dividends
Cashflow Return on Capital Cashflow divided by Average Invested Capital
Cashflow Return on Capitalized Entity/Equity Value Cashflow divided by Capitalized Entity/Equity Value
Net Income Return on Capital Net Income divided by Average Invested Capital
Sales
Earnings Per Share
Net Income
Cashflow