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Exhibit 10(iii)A(3)
AMENDMENT OF
ASPIRATION ACHIEVEMENT INCENTIVE
AWARD AGREEMENT
AND
ELECTION FORM
WHEREAS, the undersigned Participant was granted an Aspiration Award
under the NSI Long-Term Achievement Incentive Plan (the "Plan") for the
Performance Cycle ending August 31, 2000; and
WHEREAS, under the Plan, the amount (if any) of the Aspiration Award
the Participant will receive for such Performance Cycle is currently uncertain;
and
WHEREAS, the Plan has been amended to permit the Participant to receive
all or a portion of the Aspiration Award in a different form;
NOW, THEREFORE, the Participant hereby elects to receive any Aspiration
Award earned for the Performance Cycle ending August 31, 2000 in the manner
provided below and agrees to amend the Aspiration Achievement Incentive Award
Agreement in accordance with such election:
1. Amendment To Exchange Award For Stock Options. By checking "YES"
below, you are electing to amend your Aspiration Achievement Incentive Award
Agreement for the Performance Cycle ending August 31, 2000 to provide that the
Award or portion of your Award that you specify below will be exchanged for the
grant of Options to acquire NSI stock under the terms and subject to the
limitations set forth below.
2. Exchange Formula. The number of Options you will receive will be
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Exhibit 10(iii)(A)(3)
determined as follows: the amount of the Award to be exchanged will be divided
by $12.29 (the value of an Option for one Share of NSI stock as of September 8,
1999, based on Black-Scholes methodology) and multiplied by 1.5. The Options are
expected to be granted in October 2000, after approval of an amended and
restated Plan by stockholders of National Service Industries, Inc. in January
2000. The exercise price for each Option will be the closing price of one Share
of NSI stock on the New York Stock Exchange on the date of the grant. In the
event stockholders do not approve the amended and restated Plan, the Executive
Resource and Compensation Committee of the Board of Directors (the "Committee")
will have discretion to pay the Award in Shares of NSI stock or in cash (or any
combination of stock and cash) without regard to your exchange election. Any
unexchanged portion of your Award will be payable half in NSI stock and half in
cash.
3. Adjustment to Award Value. Originally, one-half of the Aspiration
Award, determined as of August 31, 2000, was to have been paid in cash and
one-half in NSI stock. If you elect to amend your Agreement, the value of the
component of your Aspiration Award which would have originally been paid in NSI
stock will be adjusted to reflect any change in NSI's stock price during the
period August 31, 2000 to the Determination Date (meaning that date in October
2000 on which the Committee determines the amount of the Award earned and
payable). The total value of the Award at the Determination Date will therefore
be equal to the total of (a) the amount of the Award as of August 31, 2000 and
(b) the amount (either gain or loss) calculated by multiplying (i) the number of
Shares you would have originally received by (ii)
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Exhibit 10(iii)(A)(3)
the amount resulting from subtracting the Fair Market Value of NSI stock on
August 31 from the Fair Market Value at the Determination Date.
4. Limitation on Number of Options. The exchange will be limited by the
size of your Award payment and may be further reduced, on a pro rata basis, for
Options elected in excess of the aggregate number of Options granted to you in
fiscal 2000 (or a fraction thereof determined by the Committee on the
Determination Date), if the total number of Options elected by all participants
exceeds the pool of Options available for exchange. It is the intention of the
Committee that a total of up to 400,000 Options will be available for exchange.
The final number of Options available will be established by the Committee at
the Determination Date, and your election will be adjusted in accordance with
the final number of Options available.
5. Tax Treatment. The amount of your Aspiration Award exchanged for
Options should not be currently taxable (i.e., it should be treated much like a
bonus deferral). The Options will be nonqualified options under the Plan. Please
see the description of the tax treatment for nonqualified options attached
hereto as Exhibit "1". Of course, you should consult your tax advisor.
6. Terms of Stock Options. The Options will be nonqualified stock
options, will be fully vested at the time of receipt, and will have a ten-year
term except as follows:
(a) in the case of termination due to death, Disability,
Retirement at or after age 65, or involuntary termination by the
Company (other than for Cause), the Options will remain exercisable
until seven years after the date of grant, or one year after the date
of termination,
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Exhibit 10(iii)(A)(3)
whichever is later;
(b) in the case of voluntary termination, the Options will
remain exercisable until 90 days after the date of termination; and
(c) in the case of involuntary termination for "Cause", the
Options will expire on the date of termination.
The Options will generally have such other terms and conditions as the
nonqualified Options granted by the Company in fiscal 2000.
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ELECTION
_____ YES, I elect to amend my Agreement to provide for the exchange of my
Award, to the fullest extent possible, for the grant of Options to acquire NSI
stock, under the terms set forth above, to the following extent:
[ ] In exchange for $__________ of my Award (minimum $1,000).
[ ] In exchange for _________% of my Award (minimum $1,000).
[ ] In exchange for the grant of_________ Options (minimum 100 options).
The portion of the Award elected above (whether measured in dollars, percentage,
or Options) will be surrendered from the total value of the Award at the
Determination Date. The calculation of Options granted in the exchange will be
rounded down to the next whole amount.
_____ NO, I elect to continue to receive the entire Award payment half in NSI
stock and half in cash.
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Exhibit 10(iii)(A)(3)
In order to make this election effective, sign and date this form
below and return it to Helen Haines prior to November 23, 1999.
The undersigned hereby agrees to amend the Aspiration Achievement
Incentive Award Agreement in accordance with the above election.
---------------------------
Grantee
---------------------------
Date
Received and Award Agreement
Amendment approved
on behalf of
National Service Industries, Inc.:
By:/s/ Helen D. Haines
Helen D. Haines
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Date