Exhibit 10.1

 

MAC-GRAY CORPORATION

 

LONG TERM INCENTIVE PLAN

(Amended and Restated as of January 9, 2009)

 

1.             PURPOSE.  THIS PLAN IS INTENDED TO CREATE INCENTIVES FOR CERTAIN
EXECUTIVE OFFICERS AND KEY EMPLOYEES OF THE COMPANY AND ANY SUBSIDIARY TO ALLOW
THE COMPANY TO ATTRACT AND RETAIN IN ITS EMPLOY PERSONS WHO WILL CONTRIBUTE TO
THE FUTURE SUCCESS OF THE COMPANY.  IT IS FURTHER THE INTENT OF THE COMPANY THAT
AWARDS MADE UNDER THIS PLAN BE USED TO ACHIEVE THE TWIN GOALS OF (I) ALIGNING
EXECUTIVE INCENTIVE COMPENSATION WITH INCREASES IN STOCKHOLDER VALUE OVER THE
LONG TERM, AND (II) USING EQUITY COMPENSATION AS A TOOL TO RETAIN EXECUTIVE
OFFICERS AND KEY EMPLOYEES.  IN FURTHERANCE OF THE GOALS, IT IS THE INTENTION OF
THE COMPANY THAT, EXCEPT IN LIMITED CIRCUMSTANCES, FIFTY PERCENT (50%) OF EACH
AWARD MADE UNDER THIS PLAN WILL BE MADE IN THE FORM OF RESTRICTED STOCK UNITS
AND THE REMAINING FIFTY PERCENT (50%) IN THE FORM OF STOCK OPTIONS.  ADDITIONAL
AWARDS OF RESTRICTED STOCK UNITS ONLY MAY BE MADE FOR ANNUAL EXCESS AWARDS.

 

2.             DEFINITIONS.  CAPITALIZED TERMS NOT OTHERWISE DEFINED HEREIN
SHALL HAVE THE MEANINGS SET FORTH BELOW:

 

2.1           “ANNUAL TARGET AWARD” SHALL MEAN, FOR ANY PARTICIPANT, A
PERCENTAGE OF HIS OR HER BASE SALARY AT THE BEGINNING OF EACH FISCAL YEAR.

 

2.2           “ANNUAL EXCESS AWARD” SHALL MEAN, FOR ANY PARTICIPANT, A
PERCENTAGE OF HIS OR HER ANNUAL TARGET AWARD.

 

2.3           “COMMITTEE” SHALL MEAN THOSE MEMBERS OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS OF THE COMPANY WHO ARE “NON-EMPLOYEE DIRECTORS” AS
SUCH TERM IS DEFINED UNDER RULE 16B-3 PROMULGATED UNDER THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.

 

2.4           “COMPANY” SHALL MEAN MAC-GRAY CORPORATION.

 

2.5           “EFFECTIVE DATE” SHALL MEAN FEBRUARY 27, 2006.

 

2.6           “FISCAL YEAR” SHALL MEAN THE FISCAL YEAR OF THE COMPANY, WHICH IS
THE 12-MONTH PERIOD ENDING DECEMBER 31 OF EACH YEAR.

 

2.7           “PARTICIPANT” SHALL MEAN ANY EXECUTIVE OFFICER OR KEY EMPLOYEE
RECOMMENDED BY THE CHIEF EXECUTIVE OFFICER AND APPROVED BY THE COMMITTEE
PURSUANT TO SECTION 4 TO PARTICIPATE HEREIN.

 

2.8                                 “PERFORMANCE MEASURE” SHALL MEAN, FOR ANY
FISCAL YEAR, THE QUOTIENT OBTAINED BY DIVIDING (X) THE DIFFERENCE BETWEEN
(A) THE COMPANY’S EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION
(EBITDA) FOR SUCH FISCAL YEAR, LESS (B) THE COMPANY’S INTEREST EXPENSE AND
CAPITAL EXPENDITURES FOR SUCH FISCAL YEAR, BY (Y) THE WEIGHTED AVERAGE NUMBER OF
SHARES OF STOCK OUTSTANDING FOR SUCH FISCAL YEAR DETERMINED ON A DILUTED BASIS
USING THE TREASURY

 

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STOCK METHOD, ALL AS DETERMINED BY REFERENCE TO THE COMPANY’S AUDITED FINANCIAL
STATEMENTS FOR SUCH FISCAL YEAR.

 

2.9                                 “PLAN” SHALL MEAN THE MAC-GRAY CORPORATION
LONG TERM INCENTIVE PLAN, AS AMENDED FROM TIME TO TIME.

 

2.10                           “STOCK” SHALL MEAN THE COMMON STOCK, PAR VALUE
$.01 PER SHARE, OF THE COMPANY.

 

2.11                           “STOCK OPTION PLAN” SHALL MEAN THE MAC-GRAY
CORPORATION 2005 STOCK OPTION AND INCENTIVE PLAN, AS AMENDED OR AMENDED AND/OR
RESTATED FROM TIME TO TIME.

 

2.12                           “SUBSIDIARY” SHALL MEAN ANY CORPORATION OR OTHER
ENTITY IN WHICH THE COMPANY HAS A CONTROLLING INTEREST, EITHER DIRECTORY OR
INDIRECTLY.

 

3.                                       ADMINISTRATION.  THE COMMITTEE SHALL
HAVE SOLE DISCRETIONARY POWER TO DETERMINE THE TARGET AMOUNT FOR THE PERFORMANCE
MEASURE EACH YEAR, TO INTERPRET THE PROVISIONS OF THIS PLAN, TO ADMINISTER AND
MAKE ALL DECISIONS AND EXERCISE ALL RIGHTS OF THE COMPANY WITH RESPECT TO THIS
PLAN.  THE COMMITTEE SHALL HAVE FINAL AUTHORITY TO APPLY THE PROVISIONS OF THE
PLAN AND DETERMINE, IN ITS SOLE DISCRETION, THE AMOUNT OF THE ANNUAL TARGET
AWARDS AND EXCESS AWARDS FOR PARTICIPANTS HEREUNDER AND SHALL ALSO HAVE THE
EXCLUSIVE DISCRETIONARY AUTHORITY TO MAKE ALL OTHER DETERMINATIONS (INCLUDING,
WITHOUT LIMITATION, THE INTERPRETATION AND CONSTRUCTION OF THE PLAN AND THE
DETERMINATION OF RELEVANT FACTS) REGARDING THE ENTITLEMENT TO BENEFITS HEREUNDER
AND THE AMOUNT OF BENEFITS TO BE PAID FROM THE PLAN.  THE COMMITTEE’S EXERCISE
OF THIS DISCRETIONARY AUTHORITY SHALL AT ALL TIMES BE IN ACCORDANCE WITH THE
TERMS OF THE PLAN AND SHALL BE ENTITLED TO DEFERENCE UPON REVIEW BY ANY COURT,
AGENCY OR OTHER ENTITY EMPOWERED TO REVIEW ITS DECISION, AND SHALL BE ENFORCED
PROVIDED THAT IT IS NOT ARBITRARY, CAPRICIOUS OR FRAUDULENT.

 

4.                                       ELIGIBILITY.  FOR EACH FISCAL YEAR,
THOSE EXECUTIVE OFFICERS AND KEY EMPLOYEES RECOMMENDED BY THE CHIEF EXECUTIVE
OFFICER AND APPROVED BY THE COMMITTEE SHALL BE PARTICIPANTS.  THE SELECTION OF
AN INDIVIDUAL TO BE A PARTICIPANT IN ANY ONE FISCAL YEAR DOES NOT ENTITLE THE
INDIVIDUAL TO BE A PARTICIPANT IN ANY OTHER FISCAL YEAR.

 

5.                                       ANNUAL TARGET AWARDS AND ANNUAL EXCESS
AWARDS.  THE COMMITTEE SHALL DETERMINE THE ANNUAL TARGET AWARD AND ANNUAL EXCESS
AWARD FOR EACH PARTICIPANT.  IT IS EXPECTED THAT 50 PERCENT OF THE VALUE OF THE
ANNUAL TARGET AWARD SHALL BE AWARDED ANNUALLY IN THE FORM OF STOCK OPTIONS AND
50 PERCENT OF THE VALUE OF THE ANNUAL TARGET AWARD SHALL BE AWARDED ANNUALLY IN
THE FORM OF RESTRICTED STOCK UNITS.  IT IS EXPECTED THAT 100 PERCENT OF THE
VALUE OF THE ANNUAL EXCESS AWARD SHALL BE AWARDED ANNUALLY IN THE FORM OF
RESTRICTED STOCK UNITS.  VALUE FOR THIS PURPOSE SHALL MEAN (A) IN THE CASE OF
STOCK OPTIONS, THE BLACK-SCHOLES VALUE OF SUCH STOCK OPTIONS, AND (B) IN THE
CASE OF RESTRICTED STOCK UNITS, THE NUMBER OF UNITS SUBJECT TO THE AWARD
MULTIPLIED BY THE AVERAGE CLOSING PRICE OF THE STOCK FOR THE TEN TRADING DAYS
IMMEDIATELY PRECEDING THE AWARD DATE.  STOCK OPTIONS SHALL HAVE AN EXERCISE
PRICE EQUAL TO THE FAIR MARKET VALUE OF THE STOCK ON THE DATE OF GRANT AND SHALL
BECOME EXERCISABLE OVER A THREE-YEAR PERIOD, AT THE RATE OF 331/3 PERCENT EACH
YEAR, SUBJECT TO CONTINUED EMPLOYMENT OF THE PARTICIPANT BY THE COMPANY OR A
SUBSIDIARY.  UP TO 331/3 PERCENT OF THE RESTRICTED STOCK UNITS SUBJECT TO AN
AWARD SHALL BECOME VESTED FOLLOWING EACH FISCAL YEAR ON THE DATE (THE “VESTING
DATE”) ON WHICH THE COMMITTEE MAKES A DETERMINATION THAT THE COMPANY HAS
ACHIEVED THE PERFORMANCE MEASURE FOR SUCH FISCAL YEAR, SUBJECT TO CONTINUED

 

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EMPLOYMENT OF THE PARTICIPANT BY THE COMPANY OR A SUBSIDIARY.  THE ACTUAL NUMBER
OF RESTRICTED STOCK UNITS THAT WILL VEST ON A PARTICULAR VESTING DATE WILL
DEPEND ON THE PERCENTAGE OF THE PERFORMANCE MEASURE THE COMPANY ACHIEVED FOR THE
RELEVANT FISCAL YEAR.  FOR RESTRICTED STOCK UNITS ISSUED IN RESPECT OF ANNUAL
TARGET AWARDS, SUCH VESTING WILL BE BASED ON THE FOLLOWING PERCENTAGE
THRESHOLDS:

 

If this % of the Performance Measure is achieved
(without rounding):

 

This % of one third (1/3) of the restricted stock units
will become vested on the Vesting Date:

 

Less than 80%

 

0.00%

 

80%

 

30.0%

 

81%

 

33.5%

 

82%

 

37.0%

 

83%

 

40.5%

 

84%

 

44.0%

 

85%

 

47.5%

 

86%

 

51.0%

 

87%

 

54.5%

 

88%

 

58.0%

 

89%

 

61.5%

 

90%

 

65.0%

 

91%

 

68.5%

 

92%

 

72.0%

 

93%

 

75.5%

 

94%

 

79.0%

 

95%

 

82.5%

 

96%

 

86.0%

 

97%

 

89.5%

 

98%

 

93.0%

 

99%

 

96.5%

 

100%

 

100%

 

 

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For restricted stock units issued in respect of Annual Excess Awards, such
vesting will be based on the following percentage thresholds:

 

If this % of the Performance Measure is achieved
(without rounding):

 

This % of one third (1/3) of the restricted stock units
will become vested on the Vesting Date:

 

Less than 101%

 

0.00%

 

101%

 

10%

 

102%

 

20%

 

103%

 

30%

 

104%

 

40%

 

105%

 

50%

 

106%

 

60%

 

107%

 

70%

 

108%

 

80%

 

109%

 

90%

 

110%

 

100%

 

 

THE COMMITTEE SHALL REVIEW THE COMPANY’S AUDITED FINANCIAL STATEMENTS PROMPTLY
AFTER THEIR PREPARATION EACH YEAR TO DETERMINE THE PERCENTAGE OF THE PERFORMANCE
MEASURE THAT WAS ACHIEVED FOR PURPOSES OF THE PLAN.  THE COMMITTEE SHALL HAVE
FULL DISCRETION TO MODIFY THE PERFORMANCE MEASURE TARGET AMOUNT FOR ANY FISCAL
YEAR AT ANY TIME, INCLUDING WITHOUT LIMITATION TO TAKE INTO ACCOUNT ANY
ACQUISITIONS OR OTHER CORPORATE TRANSACTIONS OCCURRING DURING SUCH FISCAL YEAR. 
IF ON ANY VESTING DATE ALL OR SOME OF THE RESTRICTED STOCK UNITS SUBJECT TO AN
AWARD DO NOT VEST BECAUSE THE APPLICABLE PERFORMANCE MEASURE IS NOT ACHIEVED AT
THE REQUISITE LEVEL, THEN SUCH UNVESTED RESTRICTED STOCK UNITS SHALL BE
FORFEITED.

 

IN VIEW OF THE CHIEF EXECUTIVE OFFICER’S SIGNIFICANT OWNERSHIP POSITION IN THE
STOCK, HE SHALL HAVE THE RIGHT, WITH RESPECT TO ANY AWARD OF RESTRICTED STOCK
UNITS, TO ELECT TO HAVE SUCH RESTRICTED STOCK UNITS SETTLED IN CASH RATHER THAN
IN STOCK.  THE CHIEF EXECUTIVE OFFICER MAY MAKE SUCH ELECTION WITH RESPECT TO
ANY AWARD OF RESTRICTED STOCK UNITS AT ANY TIME WITHIN FIFTEEN (15) DAYS
FOLLOWING THE GRANT DATE OF SUCH AWARD.  IF SUCH ELECTION IS TIMELY MADE, SUCH
AWARD WILL BE SETTLED IN CASH ON EACH APPLICABLE VESTING DATE WITH THE PAYMENT
AMOUNT EQUAL TO THE AGGREGATE NUMBER OF RESTRICTED STOCK UNITS THAT VEST ON SUCH
VESTING DATE MULTIPLIED BY THE CLOSING PRICE OF THE STOCK ON SUCH VESTING DATE. 
IF NO SUCH ELECTION IS TIMELY MADE, SUCH AWARD WILL BE SETTLED IN STOCK.

 

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6.                                       FORFEITURE.  UNLESS OTHERWISE
DETERMINED BY THE COMMITTEE, A PARTICIPANT WHOSE EMPLOYMENT WITH THE COMPANY
TERMINATES FOR ANY REASON PRIOR TO FULFILLING THE VESTING REQUIREMENTS FOR HIS
OR HER STOCK OPTIONS AND RESTRICTED STOCK UNITS HEREUNDER SHALL FORFEIT ALL
RIGHTS TO HIS OR HER STOCK OPTIONS AND RESTRICTED STOCK UNITS THAT REMAIN
UNVESTED ON HIS OR HER TERMINATION DATE.

 

7.                                       AMENDMENT OR TERMINATION OF PLAN.  THE
COMPENSATION COMMITTEE MAY AMEND OR TERMINATE THIS PLAN AT ANY TIME OR FROM TIME
TO TIME; PROVIDED, HOWEVER, THAT NO SUCH AMENDMENT OR TERMINATION SHALL, WITHOUT
THE WRITTEN CONSENT OF THE PARTICIPANTS, IN ANY MATERIAL ADVERSE WAY AFFECT THE
RIGHTS OF A PARTICIPANT WITH RESPECT TO BENEFITS EARNED PRIOR TO THE DATE OF
AMENDMENT OR TERMINATION.

 

8.                                       LIMITATION OF COMPANY’S LIABILITY. 
SUBJECT TO ITS OBLIGATION TO MAKE PAYMENTS AS PROVIDED FOR HEREUNDER, NEITHER
THE COMPANY NOR ANY PERSON ACTING ON BEHALF OF THE COMPANY SHALL BE LIABLE FOR
ANY ACT PERFORMED OR THE FAILURE TO PERFORM ANY ACT WITH RESPECT TO THIS PLAN,
EXCEPT IN THE EVENT THAT THERE HAS BEEN A JUDICIAL DETERMINATION OF WILLFUL
MISCONDUCT ON THE PART OF THE COMPANY OR SUCH PERSON.  THE COMPANY IS UNDER NO
OBLIGATION TO FUND ANY OF THE PAYMENTS REQUIRED TO BE MADE HEREUNDER IN ADVANCE
OF THEIR ACTUAL PAYMENT OR TO ESTABLISH ANY RESERVES WITH RESPECT TO THIS PLAN. 
ANY BENEFITS WHICH BECOME PAYABLE HEREUNDER SHALL BE PAID FROM THE GENERAL
ASSETS OF THE COMPANY.  NO PARTICIPANT, OR HIS OR HER BENEFICIARY OR
BENEFICIARIES, SHALL HAVE ANY RIGHT, OTHER THAN THE RIGHT OF AN UNSECURED
GENERAL CREDITOR, AGAINST THE COMPANY IN RESPECT OF THE BENEFITS TO BE PAID
HEREUNDER.

 

9.                                       WITHHOLDING OF TAX.  ANYTHING TO THE
CONTRARY NOTWITHSTANDING, ALL PAYMENTS REQUIRED TO BE MADE BY THE COMPANY
HEREUNDER SHALL BE SUBJECT TO THE WITHHOLDING OF SUCH AMOUNTS AS THE COMPANY
REASONABLY MAY DETERMINE THAT IT IS REQUIRED TO WITHHOLD PURSUANT TO APPLICABLE
FEDERAL, STATE OR LOCAL LAW OR REGULATION.  WITHHOLDING CAN BE MADE IN THE FORM
OF STOCK UP TO THE MINIMUM WITHHOLDING AMOUNT.

 

10.                                 ASSIGNABILITY.  EXCEPT AS OTHERWISE PROVIDED
BY LAW, NO BENEFIT HEREUNDER SHALL BE ASSIGNABLE, OR SUBJECT TO ALIENATION,
GARNISHMENT, EXECUTION OR LEVY OF ANY KIND, AND ANY ATTEMPT TO CAUSE ANY BENEFIT
TO BE SO SUBJECT SHALL BE VOID.

 

11.                                 NO CONTRACT FOR CONTINUING SERVICES.  THIS
PLAN SHALL NOT BE CONSTRUED AS CREATING ANY CONTRACT FOR CONTINUED SERVICES
BETWEEN THE COMPANY AND ANY PARTICIPANT AND NOTHING HEREIN CONTAINED SHALL GIVE
ANY PARTICIPANT THE RIGHT TO BE RETAINED AS AN EMPLOYEE OF THE COMPANY.

 

12.                                 GOVERNING LAW.  THIS PLAN SHALL BE
CONSTRUED, ADMINISTERED, AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS.

 

13.                                 NON-EXCLUSIVITY.  THE PLAN DOES NOT LIMIT
THE AUTHORITY OF THE COMPANY, THE COMMITTEE, OR ANY SUBSIDIARY OF THE COMPANY,
TO GRANT AWARDS OR AUTHORIZE ANY OTHER COMPENSATION UNDER ANY OTHER PLAN OR
AUTHORITY, INCLUDING, WITHOUT LIMITATION, AWARDS OR OTHER COMPENSATION BASED ON
THE SAME PERFORMANCE MEASURE USED UNDER THE PLAN.  IN ADDITION, EXECUTIVES NOT
SELECTED TO PARTICIPATE IN THE PLAN MAY PARTICIPATE IN OTHER PLANS OF THE
COMPANY.

 

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