EXHIBIT 10(iii)A(63)
ASPIRATION ACHIEVEMENT INCENTIVE AWARD AGREEMENT
FOR KEY EMPLOYEES OF OPERATING UNITS
THIS AGREEMENT, made as of the 7th day of October, 1999 (the "Grant
Date"), between National Service Industries, Inc., a Delaware corporation
("NSI"), and NATIONAL SERVICE INDUSTRIES, INC. (GA), a Subsidiary of NSI
(together, the "Company"), and ((GRANTEE)) ("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, Grantee, as a key employee of the above-referenced Subsidiary,
performs services with respect to the ((Division)) operations of the Company
(the "Operations"); 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 the Operations 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
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. 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 the
Operations 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 the Operations' financial results for the Performance
Cycle to exclude the effect of unusual charges or income items or other events,
including acquisitions or dispositions of businesses or assets, gains, and
losses resulting from divestitures, currency fluctuations, changes in tax laws,
or changes in accounting treatment, which are distortive of financial results
for the Performance Cycle. The Committee may also increase or decrease the
amount of the Award otherwise payable to Grantee if, in the Committee's view,
the financial performance of the Operations during the Performance Cycle
justifies such adjustment, regardless of the extent to which the Performance
Measure has been achieved.
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 the Operations with respect to the Performance
Measure for the Performance Cycle and the amount of Award (if any) Grantee will
be entitled to receive. The amount Grantee is entitled to receive will be paid
one-half in cash and one-half in Shares, with the Shares being valued at their
Fair Market Value as of the last day of the Performance Cycle.
3.2 Revision of Performance Levels. At any time prior to
the end of a Performance Cycle, the Committee may 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 performance of the Operations and which in the judgment of the
Committee make the application of the performance levels unfair unless a
revision is made.
-2-
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
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 after one (1) year following the end of the Performance Cycle and the
other fifty percent (50%) shall vest after 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
-3-
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
death, Disability, or Retirement (on or after age 65) 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; 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 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
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
-4-
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
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; 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
-5-
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.
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
NATIONAL SERVICE INDUSTRIES, INC. (GA),
Subsidiary
By:
------------------------------------------------
JAMES S. BALLOUN
Chairman, President, and Chief Executive Officer
---------------------------------------------------
Name of Grantee: ((GRANTEE))
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Aspiration Achievement Incentive Award Appendix A -- Key Employees
- ----------------------------------------------------------------------------------------------
Name Kenneth W. Honeycutt John K. Morgan
- ----------------------------------------------------------------------------------------------
Position EVP, Operations EVP, Sales & Marketing;
GM-Holophane
- ----------------------------------------------------------------------------------------------
Salary $275,000 $275,000
- ----------------------------------------------------------------------------------------------
Division Lithonia Lithonia
- ----------------------------------------------------------------------------------------------
Total LTI Multiple 100% 100%
- ----------------------------------------------------------------------------------------------
AAI % of LTI 72.7% 72.7%
- ----------------------------------------------------------------------------------------------
FY 00-02
- ----------------------------------------------------------------------------------------------
Threshold * *
- ----------------------------------------------------------------------------------------------
Commitment * *
- ----------------------------------------------------------------------------------------------
Aspiration * *
- ----------------------------------------------------------------------------------------------
Individual AAI Opportunity
- ----------------------------------------------------------------------------------------------
Threshold $50,000 $50,000
- ----------------------------------------------------------------------------------------------
Commitment $200,000 $200,000
- ----------------------------------------------------------------------------------------------
Aspiration $1,000,000 $1,000,000
- ----------------------------------------------------------------------------------------------
ASPIRATION ACHIEVEMENT INCENTIVE AWARD AGREEMENT
FOR OPERATING UNIT PRESIDENTS
THIS AGREEMENT, made as of the 7th day of October, 1999 (the "Grant
Date"), between National Service Industries, Inc., a Delaware corporation
("NSI"), and NATIONAL SERVICE INDUSTRIES, INC. (GA), a Subsidiary of NSI
(together, the "Company"), and ((GRANTEE)) ("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, Grantee, as an executive of the above-referenced Subsidiary,
performs services with respect to the ((Division)) operations of the Company
(the "Operations"); 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 the Operations 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
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. 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 the
Operations 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 the Operations' financial results for the Performance
Cycle to exclude the effect of unusual charges or income items or other events,
including acquisitions or dispositions of businesses or assets, gains, and
losses resulting from divestitures, currency fluctuations, changes in tax laws,
or changes in accounting treatment, which are distortive of financial results
for the Performance Cycle. The Committee may also increase or decrease the
amount of the Award otherwise payable to Grantee if, in the Committee's view,
the financial performance of the Operations during the Performance Cycle
justifies such adjustment, regardless of the extent to which the Performance
Measure has been achieved.
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 the Operations with respect to the Performance
Measure for the Performance Cycle and the amount of Award (if any) Grantee will
be entitled to receive.
3.2 Revision of Performance Levels. At any time prior to
the end of a Performance Cycle, the Committee may 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 performance of the Operations and which in the judgment of the
Committee make the application of the performance levels unfair unless a
revision is made.
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
-2-
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
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 after 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
-3-
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
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; 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
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
-4-
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
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; 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
-5-
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.
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
NATIONAL SERVICE INDUSTRIES, INC. (GA),
Subsidiary
By:
------------------------------------------------
JAMES S. BALLOUN
Chairman, President, and Chief Executive Officer
---------------------------------------------------
Name of Grantee: ((GRANTEE))
-6-
Aspiration Achievement Incentive Award Appendix A -- Division Presidents
- ----------------------------------------------------------------------------------------------------------------------
Name Richard W. LeBer J. Randolph Zook
- ----------------------------------------------------------------------------------------------------------------------
Position President, NLS President, AECO
- ----------------------------------------------------------------------------------------------------------------------
Salary $250,000 $260,000
- ----------------------------------------------------------------------------------------------------------------------
Division National Linen Service AECO Products
- ----------------------------------------------------------------------------------------------------------------------
Total LTI Multiple 100% 160%
- ----------------------------------------------------------------------------------------------------------------------
AAI % of LTI 70% 70%
- ----------------------------------------------------------------------------------------------------------------------
FY 00-02
- ----------------------------------------------------------------------------------------------------------------------
Threshold * *
- ----------------------------------------------------------------------------------------------------------------------
Commitment * *
- ----------------------------------------------------------------------------------------------------------------------
Aspiration * *
- ----------------------------------------------------------------------------------------------------------------------
Individual AAI Opportunity
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Threshold $43,750 $72,800
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Commitment $175,000 $291,200
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Aspiration $875,000 $1,456,000
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ASPIRATION ACHIEVEMENT INCENTIVE AWARD AGREEMENT
FOR CORPORATE 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 NATIONAL SERVICE INDUSTRIES, INC. (GA), a Subsidiary of NSI
(together, the "Company"), and Kenyon W. Murphy ("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
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. 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 or other events, including acquisitions or
dispositions of businesses or assets, gains, and losses resulting from
divestitures, currency fluctuations, changes in tax laws, or changes in
accounting treatment, which are distortive of financial results for the
Performance Cycle. The Committee may also increase or decrease the amount of the
Award otherwise payable to Grantee if, in the Committee's view, the financial
performance of NSI during the Performance Cycle justifies such adjustment,
regardless of the extent to which the Performance Measure has been achieved.
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 Revision of Performance Levels. At any time prior to
the end of a Performance Cycle, the Committee may 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 performance of NSI and which in the judgment of the Committee make
the application of the performance levels unfair unless a revision is made.
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
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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
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 after one (1) year following the end of the Performance Cycle and the
other fifty percent (50%) shall vest after 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
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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
death, Disability, or Retirement (on or after age 65) 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; 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 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
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
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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 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; 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
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to the Company under this Agreement shall be binding upon Grantee's heirs,
executors, and administrators.
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:
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JAMES S. BALLOUN
Chairman, President and Chief Executive Officer
NATIONAL SERVICE INDUSTRIES, INC. (GA),
Subsidiary
By:
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JAMES S. BALLOUN
Chairman, President and Chief Executive Officer
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Name of Grantee: Kenyon W. Murphy
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Aspiration Achievement Incentive Award Appendix A -- Corporate Employees
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Name Kenyon W. Murphy
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Position VP & Assoc. Counsel
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Salary $155,000
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Division Total NSI
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Total LTI Multiple 50%
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AAI % of LTI 30%
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FY 00-02
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Threshold *
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Commitment *
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Aspiration *
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Individual AAI Opportunity
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Threshold $5,813
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Commitment $23,250
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Aspiration $116,250
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