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EXHIBIT 10(iii)A(4)
INCENTIVE STOCK OPTION AGREEMENT
FOR EXECUTIVE OFFICERS AND OPERATING UNIT PRESIDENTS
THIS AGREEMENT, made as of the 1st day of June, 1999 (the "Grant Date"),
between National Service Industries, Inc., a Delaware corporation (the
"Company"), and Xxxxxx X. Xxxxxxx, Xx. (the "Optionee").
WHEREAS, the Company has adopted the National Service Industries, Inc.
Long-Term Achievement Incentive Plan (the "Plan") in order to provide additional
incentive to certain officers and key employees of the Company and its
Subsidiaries; and
WHEREAS, the Optionee performs services for the Company or one of its
Subsidiaries; and
WHEREAS, the Committee responsible for administration of the Plan has
determined to grant the Option to the Optionee as provided herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant of Option.
1.1 The Company hereby grants to the Optionee the right and option (the
"Option") to purchase all or any part of an aggregate of 10,844 whole Shares
subject to, and in accordance with, the terms and conditions set forth in this
Agreement.
1.2 The Option is intended to qualify as an Incentive Stock Option within
the meaning of Section 422 of the Code and shall be so construed; provided,
however, that nothing in this Agreement shall be interpreted as a
representation, guarantee or other undertaking on the part of the Company that
the Option is or will be determined to be an Incentive Stock Option within the
meaning of Section 422 of the Code. To the extent this Option is not treated as
an Incentive Stock Option, it will be treated as a Nonqualified Stock Option.
1.3 This Agreement shall be construed in accordance and consistent with,
and subject to, the provisions of the Plan (the provisions of which are
incorporated herein 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. Purchase Price.
The price at which the Optionee shall be entitled to purchase Shares upon
the exercise of the Option shall be $36.875 per Share.
Page 24
EXHIBIT 10(iii)A(4)
3. Duration of Option.
The Option shall be exercisable to the extent and in the manner provided
herein for a period of ten (10) years from the Grant Date (the "Exercise Term");
provided, however, that the Option may be earlier terminated as provided in
Section 6 hereof.
4. Exercisability of Option.
Unless otherwise provided in this Agreement or the Plan, the Option shall
entitle the Optionee to purchase, in whole at any time or in part from time to
time, 25% of the total number of Shares covered by the Option after the
expiration of one (1) year from the Grant Date and an additional 25% of the
total number of Shares covered by the Option on each of the second, third, and
fourth anniversaries of the Grant Date. Each such right of purchase shall be
cumulative and shall continue, unless sooner exercised or terminated as herein
provided during the remaining period of the Exercise Term.
5. Manner of Exercise and Payment.
5.1 Subject to the terms and conditions of this Agreement and the Plan, the
Option may be exercised by delivery of written notice to the Company, at its
principal executive office. Such notice shall state that the Optionee is
electing to exercise the Option and the number of Shares in respect of which the
Option is being exercised and shall be signed by the person or persons
exercising the Option. If requested by the Committee, such person or persons
shall (i) deliver this Agreement to the Secretary of the Company who shall
endorse thereon a notation of such exercise and (ii) provide satisfactory proof
as to the right of such person or persons to exercise the Option.
5.2 The notice of exercise described in Section 5.1 shall be accompanied by
the full purchase price for the Shares in respect of which the Option is being
exercised, in cash, by check or by transferring Shares to the Company having a
Fair Market Value on the day preceding the date of exercise equal to the cash
amount for which such Shares are substituted.
5.3 Upon receipt of notice of exercise and full payment for the Shares in
respect of which the Option is being exercised, the Company shall, subject to
Section 17 of the Plan, take such action as may be necessary to effect the
transfer to the Optionee of the number of Shares as to which such exercise was
effective.
5.4 The Optionee shall not be deemed to be the holder of, or to have any of
the rights of a holder with respect to any Shares subject to the Option until
(i) the Option shall have been exercised pursuant to the terms of this Agreement
and the Optionee shall have paid the full purchase price for the number of
Shares in respect of which the Option was exercised, (ii) the Company shall have
issued and delivered the Shares to the Optionee, and (iii) the Optionee's name
shall have been entered as a stockholder of record on the books of the Company,
whereupon the Optionee shall have full voting and other ownership rights with
respect to such Shares.
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EXHIBIT 10(iii)A(4)
6. Termination of Employment.
6.1 In General.
If the employment of the Optionee with the Company and its Subsidiaries
shall terminate for any reason, other than for the reasons set forth in Sections
6.2 and 7.2 below, the Option shall continue to be exercisable (to the extent
the Option was vested and exercisable on the date of the Optionee's termination
of employment) at any time within three (3) months after the date of such
termination of employment, but in no event after the expiration of the Exercise
Term.
6.2 Termination of Employment Due to Death, Disability or Retirement.
If the Optionee's termination of employment is due to Death, Disability or
Retirement (termination on or after age 65), or if Optionee terminates
employment after age 55, the following shall apply:
(a) Termination Due To Death. In the event the Optionee dies while
actively employed, all vested Options at the date of death shall
remain exercisable at any time prior to the expiration of the
Exercise Term by (A) such person(s) that have acquired the
Optionee's rights under such Options by will or by the laws of
descent and distribution, or (B) if no such person described in
(A) exists, the Optionee's estate or representative of the
Optionee's estate. All Options that are not vested as of the date
of death shall be immediately forfeited.
(b) Termination by Disability. In the event the employment of the
Optionee is terminated by reason of Disability, all vested
Options as of the date the Committee determines the Optionee
terminated for Disability shall remain exercisable at any time
prior to the expiration of the Exercise Term. All Options that
are not vested as of the date of termination for Disability shall
be immediately forfeited.
(c) Termination by Retirement. In the event the employment of the
Optionee is terminated by reason of Retirement, the Optionee's
Options shall continue to vest in accordance with the original
schedule (just as if the Optionee had remained employed) and
shall remain exercisable at any time prior to the expiration of
the lesser of five years or the remaining Exercise Term of the
Options. In the event of the Optionee's death after Retirement,
the Options shall continue to vest and be exercisable in
accordance with this subsection (c) as if the Optionee had lived
and the Options shall be exercisable by the persons described in
(a) above.
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EXHIBIT 10(iii)A(4)
(d) Termination After Attaining Age 55. If the Optionee terminates
employment (other than as a result of death or Disability) after
attaining age 55 but prior to age 65, unless the Committee
determines otherwise at the time of such termination, the
Optionee's Options shall continue to vest in accordance with the
original schedule (just as if the Optionee had remained employed)
and shall remain exercisable at any time prior to the expiration
of the lesser of five years or the remaining Exercise Term of the
Options. In the event of the Optionee's death after Retirement,
the Options shall continue to vest and be exercisable in
accordance with this subsection (d) as if the Optionee had lived
and the Options shall be exercisable by the persons described in
(a) above.
7. Effect of Change in Control.
7.1 Notwithstanding anything contained to the contrary in this Agreement,
in the event of a Change in Control, (i) the Option shall become immediately and
fully exercisable, and (ii) the Optionee will be permitted to surrender for
cancellation within sixty (60) days after such Change in Control, the Option or
any portion of the Option to the extent not yet exercised, and the Optionee
shall be entitled to receive immediately a cash payment in an amount equal to
the excess, if any, of (A) the Fair Market Value, at the time of surrender, of
the Shares subject to the Option or portion thereof surrendered, over (B) the
aggregate purchase price for such Shares under the Option; provided, however,
that if the Option was granted within six (6) months prior to the Change in
Control and the Optionee may be subject to liability under Section 16(b) of the
Exchange Act, the Optionee shall be entitled to surrender the Option, or any
portion of the Option, for cancellation during the sixty (60) day period
following the expiration of six (6) months from the Grant Date and to receive
the amount described above with respect to such surrender for cancellation.
7.2 If the employment of the Optionee is terminated within two (2) years
following a Change in Control, all vested Options shall continue to be
exercisable at any time within three (3) years after the date of such
termination of employment, but in no event after expiration of the Exercise
Term.
8. Nontransferability.
The Option shall not be transferable other than by will or by the laws of
descent and distribution. During the lifetime of the Optionee, the Option shall
be exercisable only by the Optionee.
9. No Right to Continued Employment.
Nothing in this Agreement or the Plan shall be interpreted or construed to
confer upon the Optionee any right with respect to continuance of employment by
the Company or a Subsidiary, nor shall this Agreement or the Plan interfere in
any way with the right of the Company or a Subsidiary to terminate the
Optionee's employment at any time.
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EXHIBIT 10(iii)A(4)
10. Adjustments.
In the event of a Change in Capitalization, the Committee may make
appropriate adjustments to the number and class of Shares or other stock or
securities subject to the Option and the purchase price for such Shares or other
stock or securities. The Committee's adjustment shall be made in accordance with
the provisions of Section 11 of the Plan and shall be effective and final,
binding, and conclusive for all purposes of the Plan and this Agreement.
11. Terminating Events.
Subject to Section 7 hereof, upon the effective date of (i) the liquidation
or dissolution of the Company or (ii) a merger or consolidation of the Company
(a "Transaction"), the Option shall continue in effect in accordance with its
terms and the Optionee shall be entitled to receive in respect of all Shares
subject to the Option, upon exercise of the Option, the same number and kind of
stock, securities, cash, property, or other consideration that each holder of
Shares was entitled to receive in the Transaction.
12. Withholding of Taxes and Notice of Disposition.
12.1 The Company shall have the right to deduct from any distribution of
cash to the Optionee 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 the Option. If the Optionee is entitled to
receive Shares upon exercise of the Option, the Optionee shall pay the
Withholding Taxes (if any) to the Company in cash prior to the issuance of such
Shares. In satisfaction of the Withholding Taxes, the Optionee may make a
written election (the "Tax Election"), which may be accepted or rejected in the
discretion of the Committee, to have withheld a portion of the Shares issuable
to him or her upon exercise of the Option, having an aggregate Fair Market Value
equal to the withholding Taxes, provided that, if the Optionee may be subject to
liability under Section 16(b) of the Exchange Act, the election must comply with
the requirements applicable to Share transactions by such Optionees.
12.2 If the Optionee makes a disposition, within the meaning of Section
424(c) of the Code and regulations promulgated thereunder, of any Share or
Shares issued to him pursuant to his exercise of the Option within the two-year
period commencing on the day after the Grant Date or within the one-year period
commencing on the day after the date of transfer of such Share or Shares to the
Optionee pursuant to such exercise, the Optionee shall, within ten (10) days of
such disposition, notify the Company thereof, by delivery of written notice to
the Company at its principal executive office, and immediately deliver to the
Company the amount of Withholding Taxes.
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EXHIBIT 10(iii)A(4)
13. Employee Bound by the Plan.
The Optionee hereby acknowledges receipt of a copy of the Plan and agrees
to be bound by all the terms and provisions thereof.
14. 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.
15. Severability.
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.
16. Governing Law.
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.
17. Successors in Interest.
This Agreement shall inure to the benefit of and be binding upon each
successor corporation. This Agreement shall inure to the benefit of the
Optionee's legal representatives. All obligations imposed upon the Optionee and
all rights granted to the Company under this Agreement shall be final, binding,
and conclusive upon the Optionee's heirs, executors, administrators, and
successors.
18. 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 the Optionee and the Company for all
purposes.
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EXHIBIT 10(iii)A(4)
19. Shareholder Approval.
The effectiveness of this Agreement and of the grant of the Option pursuant
hereto is subject to the approval of the Plan by the stockholders of the Company
in accordance with the terms of the Plan.
ATTEST: NATIONAL SERVICE INDUSTRIES, INC.
/s/ Xxxxx X. Xxxxxx By:/s/ Xxxxx X. Xxxxxxx
Secretary Xxxxx X. Xxxxxxx
Chairman, President, and
Chief Executive Officer
/s/ Xxxxxx X. Xxxxxxx, Xx.
Name of Optionee: Xxxxxx X. Xxxxxxx, Xx.
