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Exhibit 10(iii)A(26)(a)
NATIONAL SERVICE INDUSTRIES, INC.
NONEMPLOYEE DIRECTOR DEFERRED STOCK UNIT PLAN
1. Purpose
1.1 The National Service Industries, Inc. Nonemployee Director Deferred
Stock Unit Plan is intended to increase the alignment of the interests of
eligible members of the Board with the interests of stockholders of the
Corporation by increasing their incentive to contribute to the success of the
Corporation's business through the grant of Deferred Stock Units, on the terms
and conditions set forth herein.
2. Definitions
2.1 When used in this Plan, unless the context otherwise requires:
(a) "Annual Fee" shall mean the annual fee payable, in cash or under
this Plan, to an Eligible Director for service on the Board.
(b) "Board" shall mean the Board of Directors of the Corporation.
(c) "Chairman Fee" shall mean the fee, if any, payable in cash or
under this Plan to an Eligible Director for service as the
Chairman of a committee of the Board.
(d) "Change of Control" shall mean:
The acquisition (other than from the Corporation) by any
"Person" (as the term person is used for purposes of Sections
13(d) or 14(d) of the Exchange Act) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of twenty percent (20%) or more of the combined voting power
of the Corporation's then outstanding voting securities; or
The individuals who, as of the Effective Date, are members
of the Board (the "Incumbent Board") cease for any reason to
constitute at least two-thirds of the Board; provided, however,
that if the election, or nomination for election by the
Corporation's stockholders, of any new director was approved by a
vote of at least two-thirds of the Incumbent Board, such new
director shall, for purposes of this Plan, be considered as a
member of the Incumbent Board; or
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Exhibit 10(iii)A(26)(a)
Approval by stockholders of the Corporation of (1) a merger
or consolidation involving the Corporation if the stockholders of
the Corporation, immediately before such merger or consolidation
do not, as a result of such merger or consolidation, own,
directly or indirectly, more than seventy percent (70%) of the
combined voting power of the then outstanding voting securities
of the corporation resulting from such merger or consolidation in
substantially the same proportion as their ownership of the
combined voting power of the voting securities of the Corporation
outstanding immediately before such merger or consolidation, or
(2) a complete liquidation or dissolution of the Corporation or
an agreement for the sale or other disposition of all or
substantially all of the assets of the Corporation.
Notwithstanding the foregoing, a Change in Control shall not
be deemed to occur pursuant to paragraph (i) solely because
twenty percent (20%) or more of the combined voting power of the
Corporation's then outstanding securities is acquired by (i) a
trustee or other fiduciary holding securities under one or more
employee benefit plans maintained by the Corporation or any of
its subsidiaries, or (ii) any corporation which, immediately
prior to such acquisition, is owned directly or indirectly by the
stockholders of the Corporation in the same proportion as their
ownership of stock in the Corporation immediately prior to such
acquisition.
(e) "Committee" shall mean the Executive Resource and Nominating
Committee of the Board or such other committee as may be
designated by the Board.
(f) "Corporation" shall mean National Service Industries, Inc.
(g) "Date of Grant" shall mean the date on which Deferred Stock Units
are granted pursuant to Section 5.1.
(h) "Deferred Stock Units" shall mean the units issued pursuant to
Section 5.1 hereof.
(i) "Effective Date" shall mean June 1, 1996, the date when this Plan
shall go into effect.
(j) "Eligible Director" shall mean each member of the Board who is
not at the time of reference an employee of the Corporation or
any Subsidiary.
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Exhibit 10(iii)A(26)(a)
(k) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
(l) "Fair Market Value" shall mean the average of the high and low
sales prices of a share of Stock as reported on the New York
Stock Exchange Composite Tape on the five (5) trading dates
immediately preceding the date for which such value is being
determined.
(m) "Optional Amount" shall mean the amount elected by an Eligible
Director for any year during the term hereof pursuant to Section
5.2 hereof.
(n) "Plan" shall mean the National Service Industries, Inc.
Nonemployee Director Deferred Stock Unit Plan, as such Plan may
be amended from time to time.
(o) "Required Amount" shall mean one-fourth of the Annual Fee.
(p) "Stock" shall mean the Common Stock of the Corporation.
(q) "Subsidiary" shall mean any corporation more than 50% of whose
stock having general voting power is owned by the Corporation or
by a Subsidiary of the Corporation.
3. Administration
3.1 The Plan shall be administered by the Committee.
3.2 The Committee may take such rules and establish such procedures for the
administration of the Plan as it deems appropriate to carry out the purpose of
the Plan, provided that the Committee shall have no discretion with respect to
the grantee, amount, price or timing of any Deferred Stock Unit. The
interpretation and application of the Plan or of any rule or procedure, any
other matter relating to or necessary to the administration of the Plan, shall
be determined by the Committee, and any such determination shall be final and
binding on all persons. Deferred Stock Units shall be evidenced by agreements in
such form as shall be determined from time to time by the Committee, provided
that the terms and conditions of each such agreement are not inconsistent with
this Plan.
4. Capital Adjustments
4.1 In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, consolidation or a similar corporate
transaction, the number or class of shares of Stock represented by Deferred
Stock Units granted hereunder shall be proportionately adjusted to reflect any
such transaction.
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Exhibit 10(iii)A(26)(a)
5. Deferred Stock Units
5.1 Quarterly Grant. The Corporation shall establish a bookkeeping account
for each Eligible Director. On the first of each September, December, March, and
June on or after the Effective Date and prior to the termination of this Plan
(subject to Section 6.1 below), the bookkeeping account of each Eligible
Director shall automatically be credited with the number of Deferred Stock Units
(rounded to the nearest hundredth) equal to the sum of (a) one-fourth of the
Required Amount plus (b) one-fourth of the Optional Amount, if any, divided by
(c) the Fair Market Value.
5.2 Election of Optional Amount. Each Eligible Director shall be entitled
to elect, with respect to each year during the term of this Plan (subject to
Section 6.1 below), such portion of the Annual Fee in excess of the Required
Amount and such portion of the Chairman Fee, if applicable, which the Eligible
Director desires to be credited in Deferred Stock Units under Section 5.1 above
rather than paid in cash. Such election shall be made and submitted prior to
each such year on such form as shall be determined from time to time by the
Committee; provided, however, that the election for the portion of the 1996
calendar year that this Plan is in effect shall be made prior to September 1,
1996 and shall be effective for the remainder of the calendar year commencing on
that date.
5.3 Terms and Conditions of Deferred Stock Units.
(a) The Deferred Stock Units shall become nonforfeitable on the
earliest to occur of (i) the first anniversary of the Date of Grant, (ii) the
Eligible Director's death, disability or termination of service as a director
upon completion of the last term of office to which such director was elected or
(iii) the occurrence of a Change of Control. If an Eligible Director otherwise
terminates service as a director of the Corporation, any Deferred Stock Units
that are forfeitable shall be forfeited as of the date of such termination of
service.
(b) As of each dividend payment date declared with respect to the
Stock, the Corporation shall credit to each bookkeeping account a number of
additional Deferred Stock Units equal to (i) the product of (x) the dividend per
share of Stock payable on such dividend payment date and (y) the number of
Deferred Stock Units credited to such account as of the applicable dividend
record date divided by (ii) the Fair Market Value of a share of Stock on such
dividend payment date.
(c) Upon the termination of service of an Eligible Director the
Eligible Director shall receive a lump sum cash payment equal to the product of
(i) the Fair Market Value of a share of Stock on the date of such termination of
service and (ii) the number of nonforfeitable Deferred Stock Units then credited
to such Eligible Director's account. Notwithstanding the foregoing, an Eligible
Director may elect to receive the distribution with respect to his or her
account in five annual installments commencing as soon as practicable following
the Eligible Director's termination of service, in which event the amount of
each installment shall be determined based upon the Fair Market Value of a share
of Stock as of the date preceding the date such installment payment is made. Any
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Exhibit 10(iii)A(26)(a)
such election may be made or changed at any time without limitation, provided,
however, that any election (and any modification or revocation of any election)
shall not be given effect unless made at least two years prior to the Eligible
Director's termination of service.
(d) The holder of Deferred Stock Units shall have none of the rights
of a stockholder of the Corporation. The Corporation's obligation hereunder with
respect to Deferred Stock Units shall be an unsecured promise to pay the amount
described in paragraph (c) above at the times described therein.
6. Term of Plan
6.1 The Plan shall remain in effect until all Deferred Stock Units have
been paid under the terms of the Plan, provided that no Deferred Stock Units may
be granted on or after the tenth anniversary of the Effective Date.
7. Amendment; Termination
7.1 The Board may at any time and from time to time alter, amend, suspend,
or terminate the Plan in whole or in part; provided, however, that the
provisions of Article 5 shall not be amended more than every six months, other
than to comport with changes in the Internal Revenue Code of 1986, as amended,
the Employee Retirement Income Security Act, as amended, or the rules
thereunder. The termination or any modification or amendment of the Plan shall
not, without the consent of a director, affect his or her rights under a grant
of Deferred Stock Units.
8. Miscellaneous
8.1 Deferred Stock Units granted hereunder shall not be assignable or
transferable by the director except by will or by the laws of descent and
distribution.
8.2 Nothing in the Plan shall be construed as conferring any right upon any
director to continue as a member of the Board.
8.3 The Plan and all rights hereunder shall be construed in accordance with
and governed by the laws of the State of Delaware.
8.4 The Corporation shall have the right to require, prior to any payment
hereunder, payment by the recipient of any federal, state, local or other taxes
which may be required to be withheld or paid in connection with such payment
hereunder.