Page 83
Exhibit 10(iii)A(40)
ASPIRATION ACHIEVEMENT INCENTIVE AWARD AGREEMENT
FOR EXECUTIVE OFFICERS
THIS AGREEMENT, made as of the 7th day of October, 1999 (the "Grant
Date"), between NATIONAL SERVICE INDUSTRIES, INC., a Delaware corporation
("NSI"), and NSI SERVICES, L.P. (GA), a Subsidiary of NSI (together, the
"Company"), and _____________________________ ("Grantee").
WHEREAS, NSI has adopted the National Service Industries, Inc.
Long-Term Achievement Incentive Plan (the "Plan") in order to provide additional
incentives to certain officers and key employees of NSI and its Subsidiaries;
and
WHEREAS, the Committee responsible for administration of the Plan has
determined to grant to Grantee an Aspiration Achievement Incentive Award as
provided herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant of Aspiration Award.
1.1 The Company hereby grants to Grantee an Aspiration
Achievement Incentive Award (the "Award"), which has a value determined as
provided in Section 2 below based upon the performance of NSI during the
Performance Cycle from September 1, 1999 to August 31, 2002. As provided in the
Plan, Grantee's right to payment of this Award is dependent upon Grantee's
continued employment in Grantee's current position with the Company, or in a
position with responsibilities of substantially similar value to the Company
during the Performance Cycle. Under certain circumstances as described below,
Grantee may be entitled to receive payment for some portion of the Award if
Grantee's employment terminates prior to the end of the Performance Cycle.
1.2 Grantee hereby acknowledges receipt of a copy of the Plan
and agrees to be bound by all the terms and provisions thereof. This Agreement
shall be construed in accordance with, and subject to, the provisions of the
Plan (the provisions of which are hereby incorporated by reference) and, except
as otherwise expressly set forth herein, the capitalized terms used in this
Agreement shall have the same definitions as set forth in the Plan.
2. Performance Measure and Performance Levels.
The Committee has established the performance measure (the
"Performance Measure"), and award and performance levels set forth in Appendix A
attached hereto. The chart in Appendix A specifies a Commitment performance
level, at which the Commitment Level Award will be paid, an Aspiration
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Exhibit 10(iii)A(40)
performance level, at or above which an Aspiration Level Award will be paid, and
a threshold performance level, at which a minimum incentive award will be paid
and below which no award will be paid. For each level of performance at or above
the threshold performance level through the Aspiration performance level,
Grantee will receive an award determined in accordance with the chart and
formulae set forth in Appendix A. The terms used in determining the Performance
Measure are defined in Appendix B.
3. Determination of Aspiration Award.
3.1 Determination Notice. Subject to Section 3.2, as soon as
practical following the last day of the Performance Cycle, the Committee will
determine, in accordance with Section 7(c) of the Plan, the performance level of
NSI with respect to the Performance Measure for the Performance Cycle. The
Committee may in determining the performance level with respect to the
Performance Measure adjust NSI's financial results for the Performance Cycle to
exclude the effect of unusual charges or income items which are distortive of
financial results for the Performance Cycle; provided, that in determining
financial results, items whose exclusion from consideration will increase the
performance level of NSI shall only have their effects excluded if they
constitute "extraordinary items" under generally accepted accounting principles
and all such items shall be excluded. The Committee shall also adjust the
performance calculations to exclude the unanticipated effect on financial
results of changes in the Code, or other tax laws, and the regulations
thereunder. The Committee shall also exclude from consideration the effect on
financial performance of each of the following events or items where the result
of excluding the particular event or item is to increase the performance level
of NSI: (i) an acquisition or a divestiture involving more than $10 million in
net worth or $25 million in business revenues; (ii) an equity restructuring
involving more than $1 million; (iii) asset impairment charges involving more
than $1 million and restructuring costs involving more than $1 million
associated with facility closings or reduction in employment levels; (iv)
changes in accounting treatment or rules involving more than $1 million. The
Committee may decrease the amount of the Award otherwise payable to Grantee if,
in the Committee's view, such adjustment is necessary or desirable, regardless
of the extent to which the Performance Measure has been achieved. The Committee
may establish such guidelines and procedures for reducing the amount of an Award
as it deems appropriate.
The Company will notify Grantee (or the executors or administrators of
Grantee's estate, if applicable) of the Committee's determination (the
"Determination Notice"). The Determination Notice shall specify the performance
level of NSI with respect to the Performance Measure for the Performance Cycle
and the amount of Award (if any) Grantee will be entitled to receive.
3.2 Significant Corporate Events. If, during a Performance
Cycle, NSI consummates an acquisition or disposition that (i) involves assets
whose value equals or exceeds twenty percent (20%) of the total value of NSI's
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Exhibit 10(iii)A(40)
assets, (ii) represents a part of the business whose revenues equal or exceed
twenty percent (20%) of the total of NSI's revenues, or (iii) causes a material
restructuring of NSI, the following rules shall apply:
(a) If the transaction is consummated during the first year of the
Performance Cycle, the Performance Cycle and Grantee's outstanding Award will be
terminated with no payout and a new Performance Cycle containing a new Award
will be started.
(b) If the transaction is consummated after the first year of the
Performance Cycle, the Performance Cycle will end and the outstanding Award will
be determined and paid at NSI's actual performance level to such date, taking
into account the adjustments provided for in Section 3.1 above and using
prorated performance levels of the Performance Measure to reflect the portion of
the Performance Cycle that had elapsed as of the date of consummation of the
acquisition or disposition. Payment of the Award will be made as soon as
practical after it is determined. A new Performance Cycle will be started to
cover the period remaining in the initial Performance Cycle or, if that result
is not practical, the Committee will make an appropriate adjustment to reflect
the premature termination of the initial Performance Cycle.
If, during a Performance Cycle, NSI consummates an acquisition or
disposition that is not covered by the special provisions of this Section 3.2,
the financial effects of such acquisition or disposition shall be handled as
provided in Section 3.1.
Any actions under this Section 3.2 shall be taken in accordance with the
requirements of Code Section 162(m) and the regulations thereunder.
4.Payment of Aspiration Award.
4.1 Unless the Committee determines otherwise at the time the
Award is paid, and except as otherwise provided in the event of a Change in
Control, the amount Grantee is entitled to receive will be paid as follows: (a)
for a payment level up to and including twice the Commitment Level Award, the
Award will be paid one-half in cash and one-half in Shares, payable as soon as
administratively practicable following the determination of the performance
level pursuant to Section 3.1 above, and (b) to the extent the payment level is
more than twice the Commitment Level Award, that portion of the Award will be
paid one-half in Restricted Stock and one-half in cash, to be paid out upon
vesting of the Restricted Stock as described in Section 4.4 below. The Shares
and Restricted Stock issued upon payment of an Award shall be valued at the
average of the Fair Market Value of the shares for the last ten (10) trading
days of the Performance Cycle. Except in the case of a Change in Control, the
Committee may, in its discretion, attach restrictions, terms, and conditions to
the Shares issued as part of the Award.
4.2 Prior to vesting, the Restricted Stock shall not be
transferable by Grantee by means of sale, assignment, exchange, pledge, or
otherwise; provided, however, that with NSI's consent Grantee shall have the
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Exhibit 10(iii)A(40)
right to tender for sale or exchange any such shares in the event of any tender
offer within the meaning of Section 14(d) of the Securities Exchange Act of
1934. Any attempt to convey any interest in the Restricted Stock in violation of
this paragraph shall not be recognized by the Company and shall be null and
void. Grantee shall otherwise be entitled with respect to the Restricted Stock
to the rights of a stockholder of NSI, including the right to vote the shares
and receive dividends and any other distributions declared on NSI's stock.
Grantee's rights with respect to the Restricted Stock shall remain forfeitable
at all times prior to the dates on which such rights become vested, as set forth
in Section 4.4 below.
4.3 The stock certificate(s) evidencing the Restricted Stock
shall be registered on NSI's books in the name of Grantee as soon as practicable
following the Determination Notice. NSI or the Company may retain physical
possession and custody of the certificate(s) until vesting of the Restricted
Stock as set forth in Section 4.4 below, and the certificate(s) shall bear a
legend referring to the restrictions on transfer set forth in this Agreement.
Grantee shall sign a power of attorney enabling the certificate(s) to be
transferred to the Company in the event and to the extent the Restricted Stock
is forfeited as set forth in Section 4.4 below. Upon vesting of the Restricted
Stock as set forth in Section 4.4 below, NSI shall cause a stock certificate for
the requisite number of shares to be delivered to Grantee, free of any
restrictive legend.
4.4 Fifty percent (50%) of the shares of Restricted Stock
shall vest one (1) year following the end of the Performance Cycle and the other
fifty percent (50%) shall vest two (2) years following the end of the
Performance Cycle. In the event of Grantee's termination of employment within
two (2) years after the end of the Performance Cycle, by death, Disability,
Retirement (termination at or after age 65), or by the Company without Cause,
the Restricted Stock, to the extent not already vested, shall vest in full as of
the date of termination. Except as the Committee may otherwise determine, in the
event of Grantee's termination of employment for any other reason, including
voluntary termination or termination for Cause, the Restricted Stock shall be
forfeited to the extent not already vested and Grantee's rights as a stockholder
with respect to that forfeited Restricted Stock will thereupon cease.
Notwithstanding the foregoing, the Restricted Stock will fully vest in the event
of a Change in Control during Grantee's employment. The cash portion of the
Award corresponding to the Restricted Stock will be paid to Grantee when and as
the Restricted Stock vests; that cash portion shall be subject to the same
vesting and forfeiture provisions as are set forth above for the Restricted
Stock.
5. Termination of Employment.
5.1 In General. Except as provided in Sections 5.2, 5.3, and
5.4 below, in the event that Grantee's employment terminates during a
Performance Cycle, all unearned Aspiration Awards shall be immediately forfeited
by Grantee.
5.2 Termination of Employment Due to Death, Disability, or
Retirement. In the event the employment of Grantee is terminated by reason of
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Exhibit 10(iii)A(40)
death or Disability during a Performance Cycle, Grantee shall be entitled to a
prorated payout with respect to the unearned Award. The prorated payout shall be
determined by the Committee based upon the length of time that Grantee was
actively employed during the Performance Cycle relative to the full length of
the Performance Cycle; provided, that payment shall only be made to the extent
at the end of the Performance Cycle the Award would have been earned based upon
the performance level achieved for the Performance Cycle (taking into account
the adjustment provisions and other rules in Section 3 above; and provided,
further, that the performance level used to determine the prorated award cannot
exceed two hundred percent (200%) of the Commitment performance level.
In the event of Grantee's Retirement (on or after age 65), the full Award
shall continue to be eligible for payout at the end of the Performance Cycle,
just as if Grantee had remained employed for the remainder of the Performance
Cycle (including if Grantee dies after Retirement but before the end of the
Performance Cycle). At the end of the Performance Cycle, the Committee shall
make its determination in the same manner as provided in Section 3.
Payment of earned Awards to Grantee in the event of termination due to
death, Disability, or Retirement shall be made at the same time payments would
be made to Grantee if Grantee did not terminate employment during the
Performance Cycle.
5.3 Change In Control. Notwithstanding anything in this
Agreement to the contrary, if a Change in Control occurs during the Performance
Cycle, then Grantee's Award shall be determined for the Performance Cycle then
in progress as though the Performance Cycle had ended as of the date of the
Change in Control and the outstanding Award will be paid at the Commitment Level
Award or the actual performance level to such date (using, for such purpose,
prorated performance levels of the Performance Measure to reflect the portion of
the Performance Cycle that has elapsed as of the date of the Change in Control),
whichever provides the greater payment. The Award determined in accordance with
the preceding sentence shall be fully vested and payable immediately to Grantee.
The Committee shall determine the amount of the Award under this Section 5.3,
subject to the terms of this section, and no downward adjustment of the Award
which would result in reduction of the Award by more than fifty percent (50%)
shall be permitted. The Award will be paid in full in cash, unless Grantee
elects to receive one-half of the Award in Shares. For purposes of determining
the number of Shares to be paid to Grantee under this Section 5.3, the Fair
Market Value of a Share shall be determined by taking the average closing price
per share for the last twenty (20) trading days prior to the commencement of the
offer, transaction, or other event which resulted in a Change in Control.
5.4 Termination Without Cause. In the event Grantee's
employment is terminated by the Company without Cause more than one (1) year
after the commencement of the Performance Cycle and prior to the end of the
Performance Cycle, Grantee shall be entitled to a prorated payout of the Award
based upon the length of time that Grantee was actively employed during the
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Exhibit 10(iii)A(40)
Performance Cycle relative to the full length of the Performance Cycle;
provided, that payment shall be made only to the extent at the end of the
Performance Cycle the Award would have been earned based upon the performance
level achieved during the Performance Cycle (taking into account the adjustment
provisions and other rules in Section 3 above); and provided, further, that the
performance level used to determine the prorated award cannot exceed two hundred
percent (200%) of the Commitment performance level. Payment shall be made to
Grantee at the same time as if Grantee had not terminated employment during the
Performance Cycle.
6. No Right to Continued Employment.
Nothing in this Agreement or the Plan shall be interpreted to
confer upon Grantee any rights with respect to continuance of employment by the
Company, nor shall this Agreement or the Plan interfere in any way with the
right of the Company to terminate Grantee's employment at any time.
7. Nonassignment.
Grantee shall not have the right to assign, alienate, pledge,
transfer, or encumber any amounts due Grantee hereunder, and any attempt to
assign, alienate, pledge, transfer, or encumber Grantee's rights or benefits
shall be null and void and not recognized by the Plan or the Company.
8. Modification of Agreement.
This Agreement may be modified, amended, suspended, or
terminated, and any terms or conditions may be waived, but only by a written
instrument executed by the parties hereto.
9. Severability; Governing Law.
Should any provision of this Agreement be held by a court of
competent jurisdiction to be unenforceable or invalid for any reason, the
remaining provisions of this Agreement shall not be affected by such holding and
shall continue in full force in accordance with their terms.
The validity, interpretation, construction, and performance of
this Agreement shall be governed by the laws of the State of Delaware without
giving effect to the conflicts of laws principles thereof.
10. Successors in Interest.
This Agreement shall inure to the benefit of and be binding
upon any successor to the Company. All obligations imposed upon Grantee and all
rights granted to the Company under this Agreement shall be binding upon
Grantee's heirs, executors, and administrators.
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Exhibit 10(iii)A(40)
11. Resolution of Disputes.
Any dispute or disagreement which may arise under, or as a
result of, or in any way relate to, the interpretation, construction, or
application of this Agreement shall be determined by the Committee. Any
determination made hereunder shall be final, binding, and conclusive on Grantee
and the Company for all purposes.
12. Withholding of Taxes.
The Company shall have the right to deduct from any amount
payable under this Agreement, an amount equal to the federal, state, and local
income taxes and other amounts as may be required by law to be withheld (the
"Withholding Taxes") with respect to any such amount. In satisfaction of all or
part of the Withholding Taxes, Grantee may make a written election, which may be
accepted or rejected in the discretion of the Company, to have withheld a
portion of the Shares issuable to him or her pursuant to an Award, having an
aggregate Fair Market Value equal to the Withholding Taxes.
NATIONAL SERVICE INDUSTRIES, INC.
By:__________________________________________________
JAMES S. BALLOUN
Chairman, President, and
Chief Executive Officer
NSI SERVICES, L.P. (GA), Subsidiary
By:__________________________________________________
JAMES S. BALLOUN
Chairman, President, and
Chief Executive Officer
-----------------------------------------------------
Name of Grantee: _____________________
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EXHIBIT 10(iii)A(40)
Appendix A
Aspiration Award Program Illustration - FY 2000-2002
Name: James S. Balloun Division: Corporate
Position: Chairman, President, & CEO
Salary: $850,000
Achievement Level
Threshold Commitment Aspiration
FY00-02 Economic Profit (in millions) ** ** **
Individual AAI Opportunity $ 100,000 $ 400,000 $ 2,000,000
Aspiration Award Program Opportunity
The following graph depicts the potential incentive award that would be paid out
at different levels of NSI cumulative economic profit, including: a Threshold
performance level; a Commitment performance level; and an Aspiration performance
level.
Individual
Aspiration
Economic Profit Award
Threshold ** $ 100,000
Commitment ** $ 400,000
Aspiration ** $ 2,000,000
** Confidential information has been omitted and filed separately with Securities and Exchange Commission.
Page 91
Exhibit 10(iii)A(40)
ASPIRATION ACHIEVEMENT INCENTIVE AWARD
FOR
2000 - 2002 PERFORMANCE PERIOD
NSI CORPORATE
Formula: Payout as a Percent of Commitment Award = a x EP + b
Below Commitment Level EP:
a = 0.02885
b = -0.29808
Above Commitment Level EP:
a = 0.0303
b = -0.36364
Notes:
1. EP = Cumulative Economic Profit for performance period, which will be
expressed in millions, rounded to one decimal place.
2. Values for "a" and "b" will be rounded to five decimal places.
3. Payout percentages will be rounded to a tenth of a percent.
4. No award is payable below the Threshold Level EP, notwithstanding the
formula set forth above.
5. The maximum award payable is 500% of the Commitment Level award,
notwithstanding the formula set forth above.
Page 92
EXHIBIT 10(iii)A(40)
Appendix A
Aspiration Award Program Illustration - FY 2000-2002
Name: Brock A. Hattox Division: Corporate
Position: Executive Vice President
& Chief Financial Officer
Salary: $390,000
Achievement Level
Threshold Commitment Aspiration
FY00-02 Economic Profit (in millions) ** ** **
Individual AAI Opportunity $ 46,800 $ 187,200 $ 936,000
Aspiration Award Program Opportunity
The following graph depicts the potential incentive award that would be paid out
at different levels of NSI cumulative economic profit, including: a Threshold
performance level; a Commitment performance level; and an Aspiration performance
level.
Individual
Aspiration
Economic Profit Award
Threshold ** $ 46,800
Commitment ** $ 187,200
Aspiration ** $ 936,000
** Confidential information has been omitted and filed separately with Securities and Exchange Commission.
Page 93
Exhibit 10(iii)A(40)
ASPIRATION ACHIEVEMENT INCENTIVE AWARD
FOR
2000 - 2002 PERFORMANCE PERIOD
NSI CORPORATE
Formula: Payout as a Percent of Commitment Award = a x EP + b
Below Commitment Level EP:
a = 0.02885
b = -0.29808
Above Commitment Level EP:
a = 0.0303
b = -0.36364
Notes:
1. EP = Cumulative Economic Profit for performance period, which will be
expressed in millions, rounded to one decimal place.
2. Values for "a" and "b" will be rounded to five decimal places.
3. Payout percentages will be rounded to a tenth of a percent.
4. No award is payable below the Threshold Level EP, notwithstanding the
formula set forth above.
5. The maximum award payable is 500% of the Commitment Level award,
notwithstanding the formula set forth above.
Page 94
EXHIBIT 10(iii)A(40)
Appendix A
Aspiration Award Program Illustration - FY 2000-2002
Name: David Levy Division: Corporate
Position: Executive Vice President, Administration
& Counsel
Salary: $375,000
Achievement Level
Threshold Commitment Aspiration
FY00-02 Economic Profit (in millions) ** ** **
Individual AAI Opportunity $ 45,000 $ 180,000 $ 900,000
Aspiration Award Program Opportunity
The following graph depicts the potential incentive award that would be paid out
at different levels of NSI cumulative economic profit, including: a Threshold
performance level; a Commitment performance level; and an Aspiration performance
level.
Individual
Aspiration
Economic Profit Award
Threshold ** $ 45,000
Commitment ** $ 180,000
Aspiration ** $ 900,000
** Confidential information has been omitted and filed separately with Securities and Exchange Commission.
Page 95
Exhibit 10(iii)A(40)
ASPIRATION ACHIEVEMENT INCENTIVE AWARD
FOR
2000 - 2002 PERFORMANCE PERIOD
NSI CORPORATE
Formula: Payout as a Percent of Commitment Award = a x EP + b
Below Commitment Level EP:
a = 0.02885
b = -0.29808
Above Commitment Level EP:
a = 0.0303
b = -0.36364
Notes:
1. EP = Cumulative Economic Profit for performance period, which will be
expressed in millions, rounded to one decimal place.
2. Values for "a" and "b" will be rounded to five decimal places.
3. Payout percentages will be rounded to a tenth of a percent.
4. No award is payable below the Threshold Level EP, notwithstanding the
formula set forth above.
5. The maximum award payable is 500% of the Commitment Level award,
notwithstanding the formula set forth above.
Page 96
EXHIBIT 10(iii)A(40)
Appendix A
Aspiration Award Program Illustration - FY 2000-2002
Name: Stewart A. Searle Division: Corporate
Position: Senior Vice President, Planning & Development
Salary: $250,000
Achievement Level
Threshold Commitment Aspiration
FY00-02 Economic Profit (in millions) ** ** **
Individual AAI Opportunity $ 30,000 $ 120,000 $ 600,000
Aspiration Award Program Opportunity
The following graph depicts the potential incentive award that would be paid out
at different levels of NSI cumulative economic profit, including: a Threshold
performance level; a Commitment performance level; and an Aspiration performance
level.
Individual
Aspiration
Economic Profit Award
Threshold ** $ 30,000
Commitment ** $ 120,000
Aspiration ** $ 600,000
** Confidential information has been omitted and filed separately with Securities and Exchange Commission.
Page 97
Exhibit 10(iii)A(40)
ASPIRATION ACHIEVEMENT INCENTIVE AWARD
FOR
2000 - 2002 PERFORMANCE PERIOD
NSI CORPORATE
Formula: Payout as a Percent of Commitment Award = a x EP + b
Below Commitment Level EP:
a = 0.02885
b = -0.29808
Above Commitment Level EP:
a = 0.0303
b = -0.36364
Notes:
1. EP = Cumulative Economic Profit for performance period, which will be
expressed in millions, rounded to one decimal place.
2. Values for "a" and "b" will be rounded to five decimal places.
3. Payout percentages will be rounded to a tenth of a percent.
4. No award is payable below the Threshold Level EP, notwithstanding the
formula set forth above.
5. The maximum award payable is 500% of the Commitment Level award,
notwithstanding the formula set forth above.
Page 98
EXHIBIT 10(iii)A(40)
Appendix A
Aspiration Award Program Illustration - FY 2000-2002
Name: George H. Gilmore, Jr. Division: Corporate
Position: Executive Vice President and Group President
Salary: $450,000
Achievement Level
Threshold Commitment Aspiration
FY00-02 Economic Profit (in millions) ** ** **
Individual AAI Opportunity $ 54,000 $ 216,000 $ 1,080,000
Aspiration Award Program Opportunity
The following graph depicts the potential incentive award that would be paid out
at different levels of NSI cumulative economic profit, including: a Threshold
performance level; a Commitment performance level; and an Aspiration performance
level.
Individual
Aspiration
Economic Profit Award
Threshold ** $ 54,000
Commitment ** $ 216,000
Aspiration ** $ 1,080,000
** Confidential information has been omitted and filed separately with Securities and Exchange Commission.
Page 99
Exhibit 10(iii)A(40)
ASPIRATION ACHIEVEMENT INCENTIVE AWARD
FOR
2000 - 2002 PERFORMANCE PERIOD
NSI CORPORATE
Formula: Payout as a Percent of Commitment Award = a x EP + b
Below Commitment Level EP:
a = 0.02885
b = -0.29808
Above Commitment Level EP:
a = 0.0303
b = -0.36364
Notes:
1. EP = Cumulative Economic Profit for performance period, which will be
expressed in millions, rounded to one decimal place.
2. Values for "a" and "b" will be rounded to five decimal places.
3. Payout percentages will be rounded to a tenth of a percent.
4. No award is payable below the Threshold Level EP, notwithstanding the
formula set forth above.
5. The maximum award payable is 500% of the Commitment Level award,
notwithstanding the formula set forth above.
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EXHIBIT 10(iii)A(40)
APPENDIX B
ASPIRATION ACHIEVEMENT
INCENTIVE AWARD
PERFORMANCE MEASURE
PERFORMANCE MEASURE DEFINITION
Economic Profit Sum of the annual economic profits for the performance
cycle. Annual economic profit shall be determined as
follows: Adjusted After-Tax Profits (AATP) minus
[Average Invested Capital times the Weighted Average
Cost of Capital (WACC)]
RELATED TERMS DEFINITION
Average Invested Capital Average of the average beginning and ending Invested
Capital balances each month.
Adjusted After-Tax Profit (AATP) Adjusted Pre-Tax Profit minus Book Income Taxes.
Adjusted Pre-Tax Profit (APTP) Income before provision for income taxes plus interest
expense plus implied interest on capitalized operating
leases.
Book Income Taxes Reported tax rate (determined by dividing
the provision for income taxes by the
income before the provision for income
taxes, as reported in NSI's annual financial
statements) applied to APTP.
Invested Capital [Total assets plus capitalized operating leases, less
short and long-term investment in tax benefits] less
[non-interest bearing liabilities except for self
insurance reserves and deferred tax credits relating to
the safe harbor lease].
Weighted Average Cost of Capital (WACC) Ten percent (10%) will be the WACC for the Performance
Cycle ending August 31, 2002.