Exhibit 10.9
FORM OF
VOLUME SERVICES AMERICA HOLDINGS, INC.
LONG-TERM INCENTIVE PLAN
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VOLUME SERVICES AMERICA HOLDINGS, INC.
LONG-TERM INCENTIVE PLAN
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Purpose of Long-Term Incentive Plan
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The purpose of the Volume Services America Holdings, Inc. Long-Term
Incentive Plan (the "Plan") is to enable Volume Services America Holdings, Inc.
(the "Corporation") to strengthen the mutuality of interests between employees
of the Corporation and its Subsidiaries and the Corporation's Unitholders, by
providing long-term performance-based compensation incentives.
1. Defined Terms
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1.1 In this Plan, the following terms have the following meanings:
"Account" has the meaning given to such term in Section 4.1.
"Account Balance" has the meaning given to such term in Section 4.1.
"Actual Distribution Per Unit" means, for the applicable Fiscal Year,
the quotient of (x) the Aggregate Distribution Amount in respect of such
Fiscal Year, divided by (y) the average number of Units outstanding in such
Fiscal Year (calculated by adding the number of Units issued and
outstanding at the end of each calendar month ending in such Fiscal Year
and dividing such sum by the number of calendar months ending in such
Fiscal Year).
"Affiliate" means, with respect to any Person, any other Person that
directly, or through one or more intermediaries, controls or is controlled
by or is under common control with such Person.
"Aggregate Distribution Amount" in respect of any given Fiscal Year
means the aggregate amount of the Distributions.
AMEX" means the American Stock Exchange, or any other principal U.S.
exchange or market upon which the Units are listed or posted for trading.
"Annual Allocation Amount" has the meaning given to such term in
Section 4.1.
"Applicable Laws" means all applicable provisions of law, domestic or
foreign, including, without limitation, the United States Securities Act of
1933, as amended (the "US Securities Act"), the United States Securities
Exchange Act of 1934, as amended (the "US Exchange Act"), and the
Securities Act (Ontario) as amended (the "Ontario Securities Act"),
together with all regulations, rules, policy statements, rulings, notices,
orders or other instruments promulgated thereunder and Stock Exchange
Rules.
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"Base Distribution Per Unit" means, for the Fiscal Year 2004, an
Actual Distribution Per Unit equal to $1.20; and the Committee shall set
the Base Distribution Per Unit in respect of each Fiscal Year thereafter.
"Beneficiary" means any person designated by a Participant by written
instrument filed with the Corporation to receive any amount, securities or
property payable under the Plan in the event of a Participant's death or,
failing any such effective designation, the Participant's estate as
provided in Section 5.3.
"BNY" means the Bank of New York, in its capacity as depositary of
Units pursuant to the Prospectus, and any successor thererto.
"Board" means the board of directors of the Corporation or any
committee thereof designated by the full board of directors of the
Corporation, in each case as constituted from time to time.
"Cause" means (i) if the applicable Participant is party to an
effective employment agreement with the Corporation or any of its
Subsidiaries, "Cause" shall have the same meaning as such term is defined
therein; (ii) if the applicable Participant is not a party to an effective
employment agreement but is a party to an effective equity award agreement
pursuant to any stock incentive plan of the Corporation, "Cause" shall have
the same meaning as such term is defined therein; and (iii) if the
applicable Participant is not a party to any such effective agreements,
"Cause" shall be defined in the good faith determination of the Committee,
and shall include notice to the Participant of such determination and an
opportunity for the Participant to cure such event (if the Committee
determines such event is reasonably curable).
"Code" means the United States Internal Revenue Code of 1986, as
amended from time to time.
"Committee" means the compensation committee of the Board, as such
committee is from time to time constituted and which, for purposes of
meeting certain requirements of Section 162(m) of Code and any regulations
promulgated thereunder, which may be deemed to be any subcommittee of the
Committee, to which the Committee has delegated its duties and authority
under this Plan, consisting solely of at least two "outside directors," as
defined under Section 162(m) of the Code and the regulations promulgated
thereunder.
"Corporation" means Volume Services America Holdings, Inc. and its
successors.
"Distributions" means all distributions of cash (including interest
and dividends), securities and other property made in respect of
outstanding Units made to Unitholders of the Corporation, pursuant to the
terms of the Prospectus and other Offering documents.
"Effective Date" means the closing date of the Offering.
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"Eligible Person" means an executive officer or other senior employee
of the Corporation or one of its Subsidiaries.
"Excess" for a given Fiscal Year means the amount determined when the
Excess Per Unit for such Fiscal Year is multiplied by the average number of
Units issued and outstanding during such Fiscal Year (calculated by adding
the number of Units issued and outstanding at the end of each calendar
month ending in such Fiscal Year and dividing such sum by the number of
calendar months ending in such Fiscal Year).
"Excess Per Unit" in a Fiscal Year means the amount by which the
Actual Distribution Per Unit in that Fiscal Year exceeds the Base
Distribution Per Unit in respect of such Fiscal Year.
"Fiscal Year" means any fiscal year of the Corporation and its
Subsidiaries, as in existence from time to time and reported in the
Corporation's annual reports filed with the AMEX and/or the TSX, as
applicable.
"Initial Performance Period" means the period beginning on January 1,
2004 and ending on the last day of the Fiscal Year 2006.
"Offering" means the initial public offering of the Units as described
in the Prospectus.
"Participant" means an Eligible Person to whom a Right has been
granted by the Committee.
"Performance Period" means any period during which a Participant may
become vested in his or her Rights, as may be established by the Committee.
"Performance Targets" means, collectively, the Base Distribution Per
Unit and the Target Distribution Per Unit, all as may be established by the
Committee for any given Performance Period not later than 90 days after the
commencement of any such Performance Period.
"Person" means an individual, corporation, limited liability company,
partnership, association, trust, unincorporated organization, other entity
or group (as defined in the US Exchange Act).
"Plan" means this Volume Services America Holdings, Inc. Long-Term
Incentive Plan, as an "employee benefit plan" (within the meanings of the
US Exchange Act and the Ontario Securities Act), as amended from time to
time.
"Prescribed Portion" means, for the Fiscal Year 2004, 20% of the
Excess; and for each subsequent Fiscal Year means such percentage or
percentages of the Excess as the Committee may establish for that Fiscal
Year.
"Prospectus" means the (final) Prospectus filed as the Corporation's
Form S-1 Registration Statement under the US Securities Act providing for
the Offering, and includes any amendment or amendments thereof.
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"Right" means the right of a Participant to vest in and otherwise
receive payment of all Annual Allocation Amounts credited to his or her
Account upon the Corporation's achievement of the established Performance
Targets in respect of the applicable Performance Period, subject to and in
accordance with the terms and conditions of the Plan.
"Stock Exchange Rules" means the applicable rules of the AMEX and the
TSX, or any other principal stock exchange or market upon which the Units
are listed or posted for trading.
"Subsidiary" means any corporation (other than the Corporation) in an
unbroken chain of corporations beginning with the Corporation 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 the chain.
"Target Distribution Per Unit" means, for Fiscal Year 2004, an Actual
Distribution Per Unit equal to $1.275; and the Committee will set the
annual Target Distribution Per Unit in respect of each Fiscal Year
thereafter in respect of the applicable Performance Period.
"TSX" means the Toronto Stock Exchange, or any other principal
Canadian exchange or market upon which the Units are listed or posted for
trading.
"Units" means the Income Depository Receipts ("IDRs") offered to the
public pursuant to the Prospectus (or such other securities as the IDRs may
convert into or be exchanged for).
"Unit Value" means, per Unit, on the last day of the applicable
Performance Period in respect of which Account Balances are to be paid to a
Participant (or, if the Account Balances are payable upon a termination of
employment, on the Participant's termination date), (i) the closing trading
price of the Units as reported on the AMEX (or, if the Units are not traded
on AMEX, as reported on the TSX) on such day or (ii) if the closing trading
price is not available for the Units on such date, then the next preceding
practicable date for which such closing trading price is available.
2. Administration of the Plan
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2.1 The Committee shall administer the Plan in accordance with its
provisions. The Committee may, from time to time, establish administrative rules
and regulations and prescribe forms or documents relating to the operation of
the Plan as it may deem necessary to implement or further the purpose of the
Plan and amend or repeal such rules and regulations or forms or documents.
2.2 The Committee may correct any defect or supply any omission or
reconcile any inconsistency in the Plan in the manner and to the extent the
Committee deems necessary or desirable to carry it into effect. Any decision of
the Committee in the interpretation and administration of the Plan, as described
herein, shall lie within its sole and absolute discretion and shall be final,
conclusive and binding on all parties concerned. No member of the
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Committee and no officer of the Company shall be liable for anything done or
omitted to be done by him or her, by any other member of the Committee or by
any officer of the Company in connection with the performance of duties under
the Plan.
3. Grant and Vesting of Rights by the Corporation
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3.1 From time to time, the Committee may grant Rights to a Participant in
accordance with the Plan. In granting such Rights, the Committee shall have the
power to determine:
(a) the Eligible Persons who will be a Participant;
(b) subject to Section 3.2, the Rights of each Participant;
(c) the Base Distribution Per Unit and Target Distribution Per Unit;
(d) subject to Section 3.4, the Performance Period; and
(e) such other terms or conditions that the Committee may, in its
sole discretion, determine.
3.2 In making its determinations pursuant to Section 3.1(a), the Committee
may take into account the Participant's level of responsibility, rate of
compensation, individual performance and contribution, and such other criteria
as it deems appropriate in assessing the value of the Participant's service.
Notwithstanding the foregoing, the maximum amount (in cash or Unit Value payable
in Units) that any one Participant is entitled to receive in any three-year
period may not exceed $2,000,000 (USD).
3.3 The Committee is not obligated to grant any Rights to any specific
individual, to grant any Rights at all, or to continue granting Rights to any
Eligible Person once such grants have commenced. Neither the designation of an
individual as a Participant nor the grant of any Rights to any Participant
entitles any Participant to the grant, or any additional grants, as the case may
be, of any Rights under the Plan.
3.4 Subject to the provisions of Section 7, Rights granted to Participants
in respect of the Initial Performance Period shall vest on the last day of the
Initial Performance Period.
3.5 No certificates shall be issued with respect to any Rights granted
hereunder.
4. Accounts
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4.1 Creation and Crediting of Accounts. The Corporation shall establish and
maintain a separate notional account for each Participant (each, an "Account")
to which the percentage, if any, of the Prescribed Portion that the Participant
is allocated by the Committee in respect of any given Fiscal Year during an
applicable Performance Period, upon the achievement of applicable Performance
Targets (the "Annual Allocation Amounts") are to be credited. The Corporation
shall credit all Annual Allocation Amounts, if any, to each Participant's
Account, by no later than the last day of the first fiscal quarter following the
end of the applicable Fiscal Year in respect of which the Annual Allocation
Amounts are determined.
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All Annual Allocation Amounts credited to a Participant's account, collectively,
are hereinafter referred to as the "Account Balance."
4.2 Payment of Accounts; Form of Payment. Unless otherwise agreed in
writing, the Corporation shall make payment to each Participant of his or her
Account Balance following the end of the applicable Performance Period, but in
no event later than the last day of the first fiscal quarter following the end
of the applicable Performance Period; provided, however, that in the event that
a Participant's Account Balance is to be paid pursuant to the provisions of
Section 7, such payment shall be required to be made no later than thirty (30)
business days after the date the Participant ceases to be an Eligible Person.
Account Balances will be paid in the form of Units (including Units purchased by
the Corporation in the open market (either on the AMEX or the TSX, as the
Committee deems appropriate, consistent with Applicable Laws)) and/or cash, in
the discretion of the Committee; provided, that if the Account Balances are paid
in the form of Units, the number of Units that will be paid out to the
Participant will be equal to the quotient of (x) the Participant's Account
Balance divided by (y) the Unit Value on the last day of the applicable
Performance Period (or, if the Account Balance is being paid pursuant to Section
7, the Unit Value on the date the Participant ceases to be an Eligible Person).
5. Operation of the Plan
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5.1 As a condition of participating in the Plan, each Participant agrees to
comply with all such Applicable Laws and agrees to furnish to the Corporation
all information and undertakings as may be required to permit compliance with
such Applicable Laws.
5.2 In the event that a Participant's Account Balance is to be paid in
Units, the Corporation shall immediately transfer such Units to such Participant
through the book-entry system maintained by BNY. Payment (whether in cash or
other property) of the Participant's Account Balance shall be immediately
transferred by the Corporation to the Participant or as the Participant
otherwise direct.
5.3 Each Participant agrees to notify in writing the Corporation, as soon
as practicable after receipt of notification of such Participant's participation
in this Plan, of the name of the Participant's nominee or Beneficiary, as
applicable to which the Account Balance is to be transferred, and any other
account details necessary to effect the transfer. The Participant shall promptly
notify the Corporation in writing of any changes to the Participant's nominee
and/or Beneficiary.
5.4 The Corporation may withhold from the payment of each Participant's
Account Balance all taxes and other assessments, if any, required by Applicable
Law to be withheld.
6. Fundamental Changes and Adjustments
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6.1 If (a) the Corporation merges into any other entity and more than 50%
of its voting power is acquired by a Person or group of Persons acting in
concert; (ii) the Corporation shall sell the whole or substantially the whole of
its assets or business for cash or securities of another corporation or entity
(other than to an Affiliate of the Corporation); or (iii) upon any other form of
business combination involving the Corporation wherein more than 50% of the
voting power of the Corporation is acquired by a Person or Group of Persons
acting in concert: then (i) the then current Fiscal Year shall be deemed to end
on the last day of the month prior to
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the effective date of the merger, business combination or sale; (ii) the
Base Distribution Per Unit and Actual Distribution Per Unit shall be pro rated
for the number of months in such shortened Fiscal Year; and (iii) the Committee
shall determine whether there is any Excess, and, if so, the Participants shall
vest, immediately prior to the effective date of such merger, business
combination or sale, in any unvested Account Balances.
6.2 To the extent applicable (in connection with Section 6.1 or otherwise),
the Committee shall give effect to adjustments in the number of Units if any,
payable hereunder resulting from subdivisions, consolidations or
reclassifications of the Units, or other relevant changes, to the Units or
capital structure of the Corporation. The appropriate adjustment in any
particular circumstance shall be conclusively determined by the Committee in its
sole discretion, subject to acceptance by the AMEX and/or TSX, if applicable. If
any such adjustment would entitle a Participant to a fractional Unit, the
Participant will have the right to acquire only an adjusted number of full
Units, rounded downward to the next whole Unit, and no payment or other
adjustment will be made with respect to the disregarded fractional Units.
7. Termination of Employment
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7.1 If a Participant ceases to be an Eligible Person as a result of (i) the
resignation of such Participant or (ii) the termination of such Participant with
Cause by the Corporation or its Subsidiaries, then in each case all outstanding
Rights held by such Participant shall immediately expire.
7.2 If a Participant ceases to be an Eligible Person as a result of the
death or disability (as defined in the Corporation's long-term disability plan
as in effect from time to time) of such Participant, then such Participant shall
immediately vest in his or her Account, and the Corporation shall pay the
Participant's Account Balances to the Participant (or, in the event termination
was as a result of death, to the Participant's Beneficiary) in accordance with
Section 4.2.
7.3 If a Participant ceases to be an Eligible Person as a result of the
termination without Cause (other than due to disability) by the Corporation or
its Subsidiaries, then such Participant shall immediately vest in a pro-rata
portion of the Participant's Account, and the Corporation shall pay such
pro-rata amount of the Participant's Account Balance to the Participant in
accordance with Section 4.2. For purposes of this Section 7.3, the pro-rata
portion of the Participant's Account shall be determined by multiplying the
Participant's Account Balance by a fraction, the numerator of which shall be the
number of days during the applicable Performance Period that the Participant was
employed by the Corporation (or its Subsidiary) and the denominator of which
shall be the number of days in the applicable Performance Period.
7.4 The Corporation may enter in agreements with Participants to provide
rights upon a termination of employment that differ from the provisions set
forth in Sections 7.1, 7.2 and/or 7.3.
8. Amendment or Termination of Plan
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8.1 Subject to Section 8.2, the Committee may amend, suspend or discontinue
the Plan at any time, subject to the receipt of any required regulatory
approvals and, where required
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by Applicable Law (whether pursuant to Stock Exchange Rules or in order to
cause the Account Balances payable under this Plan to be fully deductible by the
Corporation and its Subsidiaries pursuant to Section 162(m) of the Code),
subject to approval by the equityholders of the Corporation.
8.2 No amendment, suspension or discontinuance of the Plan may contravene
the requirements of the TSX, AMEX or any Applicable Laws to which the Plan or
the Corporation is now or may hereafter be subject.
9. Rights of Participants
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9.1 Nothing contained herein shall be deemed to create a trust of any kind
or any fiduciary relationship between the Corporation and any Participant. To
the extent that any Participant acquires a right to receive payments from the
Corporation under the Plan, such right shall be no greater than the right of any
unsecured general creditor of the Company, and the holder of a Right in respect
of an unvested Account shall not have any rights to any claim thereon until such
holder is vested in his or her Account.
9.2 The interest of any Participant under the Plan or in any Right shall
not be transferable or alienable by him or her either by pledge, assignment or
in any other manner, and after his or her lifetime shall enure to the benefit of
and be binding upon the Participant's Beneficiary.
9.3 The transfer of a Participant's employment from (a) the Corporation to
an Affiliate or the Corporation, (b) an Affiliate of the Corporation to the
Corporation, or (c) an Affiliate of the Corporation to another Affiliate of the
Corporation, in any such case shall not be considered a termination of
employment for the purposes of the Plan, nor shall it be considered a
termination of employment if a Participant is placed on such other leave of
absence which is considered by the Committee as continuing intact the employment
relationship; in such a case, the employment relationship shall be continued
until the later of the date when the leave equals ninety days or the date when a
Participant's right to re-employment shall no longer be guaranteed by contract,
if applicable, except that in the event active employment is not renewed at the
end of the leave of absence, the employment relationship shall be deemed to have
ceased at the beginning of the leave of absence.
10. Miscellaneous
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10.1 Any payment, notice, statement, certificate or other instrument
required or permitted to be given to a Participant or any person claiming or
deriving any rights through him or her shall be given by:
(a) delivering it personally to the Participant or the person claiming
or deriving rights through him or her, as the case may be; or
(b) mailing it, postage prepaid (provided that the postal service is
then in operation) or delivering it to the address, which is
maintained for the Participant in the records of the Corporation.
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10.2 Any notice, statement, certificate or instrument required or permitted
to be given to the Corporation shall be given by mailing it, postage prepaid
(provided that the postal service is then in operation) or delivering it to the
Corporation at the following address:
Volume Services America Holdings, Inc.
201 East Broad Street
Spartanburg, South Carolina 29306
Attention: General Counsel
or to such other person or in such other manner as is
notified to a Participant.
10.3 Any payment, notice, statement, certificate or instrument referred to
in Section 10.1 or 10.2, if delivered, shall be deemed to have been given or
delivered, on the date on which it was delivered or, if mailed (provided that
the postal service is then in operation), shall be deemed to have been given or
delivered on the second business day following the date on which it was mailed.
10.4 No member of the Board (including any member of the Board in his or
her capacity as a member of the Committee) shall be liable for any action or
determination made in good faith in connection with the Plan and all members of
the Board shall be entitled to indemnification and reimbursement from the
Corporation in respect of any claim relating thereto.
10.5 If any provision of this Plan is determined to be invalid or
unenforceable in whole or in part, such invalidity or unenforceability shall
attach only to such provision or part thereof and the remaining part, if any, of
such provision and all other provisions hereof shall continue in full force and
effect.
10.6 The holding of a Right does not affect the right of the Corporation or
any Subsidiary thereof to terminate, at any time, the employment of, or their
relationship with, the Participant. Neither any period of notice, nor any
payment in lieu thereof, upon termination of employment shall be considered as
extending the period of employment for the purposes of the Plan.
10.7 This Plan shall be construed and interpreted in accordance with the
laws of the State of Delaware.
11. Effective Date of Plan and Term of Plan
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11.1 The Plan shall take effect on the Effective Date, subject to approval
of this Plan by the Corporation's shareholders.
11.2 The Plan shall expire, unless earlier terminated pursuant to Section
8, on the fifth anniversary of the Effective Date.