Document:

Exhibit 10.1

 

MAC-GRAY
CORPORATION

 

LONG TERM INCENTIVE PLAN

(Amended and Restated as of January 17, 2008)

 

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.

 

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           “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.

 

2.3           “Company”
shall mean Mac-Gray Corporation.

 

2.4           “Effective
Date” shall mean February 27, 2006.

 

2.5           “Fiscal
Year” shall mean the fiscal year of the Company, which is the
12-month period ending December 31 of each year.

 

2.6           “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.

 

2.7           “Performance Measure” shall mean, for any Fiscal Year, (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, as determined by reference to the
Company’s audited financial statements for such Fiscal Year.

 

2.8           “Plan”
shall mean the Mac-Gray Corporation Long Term Incentive Plan, as amended from
time to time.

 

2.9           “Stock”
shall mean the common stock, par value $.01 per share, of the Company.

 

 

 

2.10         “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.

 

2.11         “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 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.  The Committee
shall determine the Annual Target 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. 
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 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 based
on the following percentage thresholds:

 

2

 

	
  If
  this % of the Performance Measure is achieved

  	
   

  	
  This
  % of one third (1/3) of the restricted stock units

  
	
  (without
  rounding):

  	
   

  	
  will
  become vested on the Vesting Date:

  
	
  Less than 90%

  	
   

  	
  0%

  
	
  90%

  	
   

  	
  50%

  
	
  91%

  	
   

  	
  55%

  
	
  92%

  	
   

  	
  60%

  
	
  93%

  	
   

  	
  65%

  
	
  94%

  	
   

  	
  70%

  
	
  95%

  	
   

  	
  75%

  
	
  96%

  	
   

  	
  80%

  
	
  97%

  	
   

  	
  85%

  
	
  98%

  	
   

  	
  90%

  
	
  99%

  	
   

  	
  95%

  
	
  100%

  	
   

  	
  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 100% 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.

 

3

 

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.

 

4Exhibit 10.2

 

Cash-Settled

 

FORM OF
RESTRICTED STOCK UNIT AGREEMENT

 

UNDER THE
MAC-GRAY CORPORATION

2005 STOCK OPTION AND INCENTIVE PLAN

 

Name of Grantee:                                                                

No. of Restricted Stock Units Granted:                                                     

Grant Date:                                                            

Final Acceptance Date:                                                       

 

Pursuant to the Mac-Gray Corporation 2005 Stock Option and Incentive
Plan (the “Plan”) as amended through the date hereof, Mac-Gray Corporation (the
“Company”) hereby grants a deferred stock award consisting of the number of
Restricted Stock Units listed above (an “Award”) to the Grantee named
above.  Each Restricted Stock Unit shall
relate to one share of Common Stock, par value $0.01 per share (the “Stock”) of
the Company specified above, subject to the restrictions and conditions set
forth herein and in the Plan.

 

1.                                       Acceptance of Award.  The Grantee
shall have no rights with respect to this Award unless he or she shall have
accepted this Award prior to the close of business on the Final Acceptance Date
specified above by signing and delivering to the Company a copy of this Award
Agreement.  Any consideration due to the
Company on the issuance of the Award has been deemed to be satisfied by past
services rendered by the Grantee to the Company.

 

2.                                       Restrictions on Transfer of Award.

 

(a)                                  The Award may not be sold, transferred,
pledged, assigned or otherwise encumbered or disposed of by the Grantee until
the Restricted Stock Units have vested pursuant to Section 3.

 

(b)                                 If the Grantee’s employment with the
Company and its Subsidiaries is voluntarily or involuntarily terminated for any
reason prior to the satisfaction of the vesting conditions set forth in Section 3
below, any Restricted Shares that have not vested as of such date shall
automatically and without notice terminate, be forfeited and be and become null
and void, and neither the Grantee nor any of his or her successors, heirs,
assigns, or personal representatives will thereafter have any further rights or
interests in such unvested Restricted Stock Units.

 

3.                                       Vesting of Restricted Stock Units. 
The restrictions and conditions in Section 2 of this Agreement
shall lapse on up to one third (1/3) of the Restricted Stock Units following
each of the Company’s fiscal years ended December 31, 2008, 2009 and 2010
(each, a “Fiscal Year”) on the date (the “Vesting Date”) on which the Committee
makes a determination that the Company has achieved the Performance Measure (as
defined below) target amount established by the Committee for such Fiscal Year,
provided that the Grantee is an employee of the Company or a Subsidiary on such
Vesting Date.  The actual number of
Restricted Stock Units that will vest on a particular Vesting Date will depend
on the percentage of the Performance Measure target award the Company achieved
for the previous Fiscal Year based on the following percentage thresholds:

 

 

	
  If this % of the
  Performance Measure target amount 

  is achieved (without rounding):

  	
   

  	
  Grantee will earn this %
  of one third (1/3) of the 

  Restricted Stock Units on the Vesting Date:

  
	
  Less than 90%

  	
   

  	
  0%

  
	
  90%

  	
   

  	
  50%

  
	
  91%

  	
   

  	
  55%

  
	
  92%

  	
   

  	
  60%

  
	
  93%

  	
   

  	
  65%

  
	
  94%

  	
   

  	
  70%

  
	
  95%

  	
   

  	
  75%

  
	
  96%

  	
   

  	
  80%

  
	
  97%

  	
   

  	
  85%

  
	
  98%

  	
   

  	
  90%

  
	
  99%

  	
   

  	
  95%

  
	
  100%

  	
   

  	
  100%

  

 

For purposes of this Section 3, the “Performance Measure” shall
mean, for any Fiscal Year, (a) the Company’s earnings before interest,
taxes, depreciation and amortization (EBITDA) for such Fiscal Year, less (b) the
Company’s interest expenses and capital expenditures for such Fiscal Year, as
determined by reference to the Company’s audited financial statements for such
Fiscal Year.  The Committee shall review
the Company’s audited financial statements promptly after their preparation
each year to determine the percentage of the Performance Measure target amount
that was achieved for purposes of this Section 3.

 

If in on any Vesting Date all or some of the Restricted Stock Units do
not vest because the conditions of this Section 3 are not satisfied, then
such unvested Restricted Stock Units shall automatically and without notice
terminate, be forfeited and be and become null and void, and neither the
Grantee nor any of his or her successors, heirs, assigns, or personal
representatives will thereafter have any further rights or interests in such
forfeited Restricted Stock Units.

 

4.                                       Dividend Equivalents.

 

(a)                                  If on any date the Company shall pay any
dividend on shares of Stock of the Company, the number of Restricted Stock
Units credited to the Grantee shall, as of such date, be increased by an amount
determined by the following formula:

 

W = (X multiplied by Y) divided by Z, where:

 

W = the number of additional Restricted Stock Units to be credited to
the Grantee on such dividend payment date;

 

2

 

X = the aggregate number of Restricted Stock Units (whether vested or
unvested) credited to the Grantee as of the record date of the dividend;

 

Y = the cash dividend per share amount; and

 

Z = the Fair Market Value per share of Stock (as determined under the
Plan) on the dividend payment date.

 

(b)                                 In the case of a dividend paid on Stock
in the form of Stock, including without limitation a distribution of Stock by
reason of a stock dividend, stock split or otherwise, the number of Restricted
Stock Units credited to the Grantee shall be increased by a number equal to the
product of (i) the aggregate number of Restricted Stock Units that have
been awarded to the Grantee through the related dividend record date, and (ii) the
number of shares of Stock (including any fraction thereof) payable as dividend
on one share of Stock.  Any additional
Restricted Stock Units shall be subject to the vesting and restrictions of this
Agreement in the same manner and for so long as the Restricted Stock Units
granted pursuant to this Agreement to which they relate remain subject to such
vesting and restrictions, and shall be promptly forfeited to the Company if and
when such Restricted Stock Units are so forfeited.

 

5.                                       Settlement of Restricted Stock Units.

 

(a)                                  As soon as practicable following each
Vesting Date, the Company shall make a cash payment to the Grantee in an amount
equal to the value of the aggregate number of Restricted Stock Units credited
to the Grantee that have vested pursuant to Section 3 of this Agreement on
such date, based on the closing price of a share of Stock on such date.

 

(b)                                 Upon a Sale Event, the Company shall make
a cash payment to the Grantee in an amount equal in value to the aggregate
number of Restricted Stock Units credited to the Grantee on the date of the
Sale Event  based on the amount payable
to the shareholders for a share of Stock upon the Sale Event.

 

6.                                       Incorporation of Plan.  Notwithstanding
anything herein to the contrary, this Agreement shall be subject to and
governed by all the terms and conditions of the Plan, including the powers of
the Administrator set forth in Section 2(b) of the Plan.  Capitalized terms in this Agreement shall
have the meaning specified in the Plan, unless a different meaning is specified
herein.

 

7.                                       Tax Withholding.  The Grantee
shall, not later than the date as of which the receipt of this Award becomes a
taxable event for Federal income tax purposes, pay to the Company or make
arrangements satisfactory to the Administrator for payment of any Federal,
state, and local taxes required by law to be withheld on account of such
taxable event.

 

8.                                       No Obligation to Continue Employment. 
Neither the Company nor any Subsidiary is obligated by or as a result of
the Plan or this Agreement to continue the Grantee in employment and neither
the Plan nor this Agreement shall interfere in any way with the right of the
Company or any Subsidiary to terminate the employment of the Grantee at any
time.

 

9.                                       Notices.  Notices
hereunder shall be mailed or delivered to the Company at its principal place of
business and shall be mailed or delivered to the Grantee at the address on file

 

3

 

with the Company or, in either case, at such other
address as one party may subsequently furnish to the other party in writing.

 

	
   

  	
  MAC-GRAY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  

 

 

The foregoing Agreement is hereby accepted and the
terms and conditions thereof hereby agreed to by the undersigned.

 

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Grantee’s Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Grantee’s name and address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

4

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