EXHIBIT 10.12
LONG-TERM INCENTIVE AGREEMENT
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This AGREEMENT, dated October 31, 1998, is made between Coyne International
Enterprises Corp d/b/a/ Coyne Textile Services (the "Corporation") and Donald
F.X. Keegan (the "Participant").
WHEREAS, the Corporation currently employs the Participant and the
Participant serves the Corporation pursuant to the Employment Agreement dated
June 19, 1995, between the parties (the "Employment Agreement"); and
WHEREAS, in consideration of services rendered on behalf of the
Corporation, as well as in providing an inducement for ongoing valuable services
until retirement, the Corporation has agreed to provide a long-term incentive
benefit to the Participant.
W I T N E S S E TH:
1. Grant of Long-Term Incentive Account
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The Corporation hereby grants and establishes for the benefit of the
Participant a long-term incentive account ("Account"), subject to the terms and
conditions herein set forth.
2. Terms and Conditions
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It is understood and agreed that the Account evidenced hereby is subject to
the following terms and conditions:
a. Initial Balance of Account. The Corporation hereby credits to the
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Account an initial balance of Sixty Thousand Dollars ($60,000.00).
b. Vesting of Account. Except to the extent otherwise provided in
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Paragraphs 2(e) and 2(f), the initial balance shall vest in full on the second
anniversary from the date of this Agreement, and all additional amounts credited
to the Account ("Additional Amounts") shall vest in full pursuant to the
attached vesting schedule.
c. Growth of Account. Any Additional Amounts shall be credited to
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the Account by the Corporation as follows: At each fiscal year end of the
Corporation, the Corporation's annual EBITDA shall be determined pursuant to an
annual, certified financial statement prepared by the Corporation's independent
auditors. The percentage increase, if any, in EBITDA from the last, immediately
preceding fiscal year shall be multiplied times the current balance of the
Account (which shall include the initial balance and all subsequent Additional
Amounts only), and such resulting dollar amount, if any, shall be credited to
the Account by the Corporation.
Example, for illustration purposes only:
Fiscal Year Corporation EBITDA Percent Increase New Balance
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Times Current Balance
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1998 $16 Million N/A $60,000.00
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1999 $18 Million 12.5% x $60,000.00 $67,500.00
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2000 $19 Million 5.5% x $67,500.00 $71,212.50
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2001 $19 Million 0% x $71,212.50 $71,212.50
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2002 $22 Million 15.8% x $71,212.50 $82,464.00
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2003 $26 Million 18.2% x $82,464.00 $97,472.50
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Provided, however, that the Participant shall only be entitled to have such
Additional Amount credited to the Account if the Participant has fulfilled his
performance agreement or his "KRAs" for that fiscal year, which determination
shall be made in the sole discretion of the Chief Executive Officer of the
Corporation. Such determination shall be made on an annual basis, and shall be
binding on the Corporation and Participant, and the applicable Additional
Amount, if any, shall then vest pursuant to Paragraph 2(b). The Participant
shall be provided with an annual statement or letter indicating the Additional
Amount, if any, credited to the Account.
d. Assets. The Account shall at all times be entirely unfunded and no
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provision shall at any time be made with respect to segregating assets
of the Corporation for payment of any benefits hereunder. The
Participant shall not have any property interest whatsoever in any
specific assets of the Corporation.
e. Acceleration of Vesting. Upon the sale of all or substantially all
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of the assets of stock (excluding any public offerings) of the
Corporation which results in any Coyne family member (or any trust of
which a Coyne family member is a beneficiary) not having voting control
of the Corporation, the Participant shall vest in all of the Account
balance, and the Account balance shall be paid in full upon such sale.
f. Termination of Employment.
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i. If the Participant voluntarily terminates his employment
prior to an applicable vesting date of the Account,
(otherwise than on account of retirement, disability or
death), all rights arising in connection with such applicable
vesting date shall be forfeited and the Corporation shall not
be under any further obligation to the Participant, except
for such amounts as may have previously vested.
ii. If the Participant leaves the employ of the Corporation on
account of death or disability, the vesting dates set forth
in Paragraph 2(b) above shall be accelerated to the date of
the termination of the Participant's employment. "Disability"
is defined for purposes of this Agreement as, and being
deemed to have occurred after, the incapacity of the
Participant to fully perform his normal duties and
responsibilities under the Employment Agreement.
iii. If the Participant terminates his employment on account of
retirement after attaining the age of 65, or if the
Corporation terminates the employment of the Participant
other than a termination "for cause," the Participant shall
be entitled only to the Account balance that has vested as of
the date of termination.
iv. If the Participant's employment is terminated by the
Corporation "for cause," all rights of the Participant shall
terminate and the Corporation shall not be under any further
obligation to the Participant. "For cause" termination is
defined for purposes of this Agreement as termination for
reason of personal dishonesty, fraud, bad faith, willful or
reckless misconduct, poor judgment not befitting a senior
executive, breach of fiduciary duty, intentional failure to
perform stated duties, or material breach of any provision of
the Employment Agreement.
g. Payment.
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i. Upon termination from the Corporation (except "for cause"),
the Participant shall receive payment of all vested amounts
from the Account in two (2) equal annual installments without
interest.
The Chief Executive Officer shall have the option, in his
sole discretion, to pay such amounts in the form of single,
lump sum payment.
ii. Provided, however, that if the vested amounts total less than
One Hundred Thousand Dollars ($100,000.00) the Corporation
shall pay such amounts in full within six (6) months of the
date of termination, without interest.
h. Non-Competition. Regardless of the foregoing provisions of the
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Agreement, the Corporation shall not be obligated to make any
payments hereunder after the termination of Participant's employment
if Participant fails to abide by his restrictive covenant with the
Corporation.
i. No Guarantee of Employment. Nothing in this Agreement shall be
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construed as guaranteeing future employment to the Participant. The
Participant continues to be an employee of the Corporation solely at
the will of the Corporation.
j. Liability of the Corporation. Nothing in this Agreement shall
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constitute the creation of a trust or other fiduciary relationship
between the Corporation and the Participant or between the
Corporation and any other person. The Corporation shall not be
considered a trustee by reason of this Agreement. No member of the
Board of Directors shall be liable to any person for any action
taken hereunder except those actions undertaken with lack of good
faith.
k. Compliance with Laws and Regulations. The Account and the obligation
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of the Corporation to make payments to the Participant hereunder,
shall be subject to all applicable federal and state laws, rules and
regulations and to such approvals by any government or regulatory
agency as may be required.
l. Not "Compensation" For Other Purposes. The Account and all amounts
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credited thereto shall not be deemed salary or other compensation to
the Participant for purposes of any qualified retirement plan
maintained by the Corporation or for purposes of any other fringe
benefit obligations of the Corporation.
m. Non-transferability. This Account shall not be transferable other
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than by will or by the laws of descent and distribution.
n. Entire Agreement. This document constitutes the entire Agreement
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between the parties. This Agreement may only be modified, altered,
or amended by prior written approval and consent of the parties
hereto.
o. Governing Law. This Agreement shall be governed by and construed in
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accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed by an appropriate officer and Participant has executed this Agreement,
both as of the day and year first above written.
COYNE INTERNATIONAL ENTERPRISES CORP.
d/b/a COYNE TEXTILE SERVICES
By: /s/ Thomas M. Coyne
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Thomas M. Coyne
Chief Executive Officer
/s/ Donald F. X. Keegan
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Participant - Donald F.X. Keegan
VESTING SCHEDULE
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Initial Balance Second Anniversary from date of Agreement
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All Additional Amounts Credited in Years One Fifth Anniversary from date of Agreement
Through Five
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All Additional Amounts Credited in Years Six Tenth Anniversary from date of Agreement
Through Ten
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All Additional Amounts Credited in Years Fifteenth Anniversary from date of Agreement
Eleven Through Fifteen
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All Additional Amounts Credited in Years Twentieth Anniversary from date of Agreement
Sixteen Through Twenty
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All Additional Amounts Credited in Years Twenty-Fifth Anniversary from date of Agreement
Twenty-One Through Twenty-Five
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All Additional Amounts Credited in Years Thirtieth Anniversary from date of Agreement
Twenty-Six Through Thirty
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All Additional Amounts Credited in Years Thirty-Fifth Anniversary from date of Agreement
Thirty-One Through Thirty-Five
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