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Exhibit 10(iii)A(5)
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT, made as of the 17th day of September, 1996 (the "Grant
Date"), between National Service Industries, Inc., a Delaware corporation (the
"Company"), and __________________ (the "Optionee").
WHEREAS, the Company has adopted the National Service Industries, Inc.
Long-Term Incentive Program (the "Program") in order to provide additional
incentive to certain officers and 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 Program 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 ________ 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.
1.3 This Agreement shall be construed in accordance and consistent
with, and subject to, the provisions of the Program (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 Program.
2. Purchase Price.
The price at which the Optionee shall be entitled to purchase Shares
upon the exercise of the Option shall be $38.00 per Share.
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Exhibit 10(iii)A(5)
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 Program, the Option
shall entitle the Optionee to purchase, in whole at any time or in part from
time to time, _____, and 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
Program, 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 Program, 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(5)
6. Termination of Employment.
6.1 Death, Disability, Retirement, or Change in Control. If the
employment of the Optionee is terminated as a result of his death, Disability,
Retirement, or within two (2) years following a Change in Control, the Option
shall continue to be exercisable in whole or in part (to the extent exercisable
on the date of the Optionee's termination of employment) at any time within
three (3) years after the date of such termination of employment, but in no
event after the expiration of the Exercise Term. In the event of the Optionee's
death, the Option shall be exercisable, to the extent provided in the Program
and this Agreement, by the legatee or legatees under his will, or by his
personal representatives or distributees and such person or persons shall be
substituted for the Optionee each time the Optionee is referred to herein.
6.2 Other Termination of Employment. If the employment of the Optionee
is terminated for any reason other than the reasons set forth in Section 6.1
(including the Optionee's ceasing to be employed by a Subsidiary or Division as
a result of the sale of such Subsidiary or Division or an interest in such
Subsidiary or Division), the Option shall terminate on the date of the
Optionee's termination of employment, whether or not exercisable.
7. Effect of Change in Control.
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.
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.
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Exhibit 10(iii)A(5)
9. No Right to Continued Employment.
Nothing in this Agreement or the Program shall be interpreted or
construed to confer upon the Optionee any right with respect to continuance of
employment by the Company, nor shall this Agreement or the Program interfere in
any way with the right of the Company to terminate the Optionee's employment at
any time.
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 Program and shall be effective and final,
binding, and conclusive for all purposes of the Program 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 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
on the date preceding the Tax Date (as defined below) equal to the Withholding
Taxes, provided that (i) if the Optionee may be subject to liability under
Section 16(b) of the Exchange Act (unless his or her employment was terminated
due to Disability or death), (A) the Optionee makes the Tax Election at least
six (6) months after the Grant Date and (B) the Tax Election is made either at
least six (6) months prior to the date that the amount of the Withholding Taxes
are determined (the "Tax Date") or during the ten (10) day period beginning on
the third business day and ending on the twelfth business day following the
release for publication of the Company's quarterly or annual statements of
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Exhibit 10(iii)A(5)
earnings, (ii) the Tax Election is made prior to the Tax Date, and
(iii) the Tax Election is irrevocable; provided, however, in the event that the
Tax Date occurs subsequent to the exercise of the Option, the Optionee shall
tender back to the Company on the Tax Date that number of Shares having a Fair
Market value on the date preceding the Tax Date equal to the Withholding Taxes.
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
(2) year period commencing on the day after the Grant Date or within the one (1)
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.
13. Employee Bound by the Program.
The Optionee hereby acknowledges receipt of a copy of the Program 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
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Exhibit 10(iii)A(5)
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.
ATTEST: NATIONAL SERVICE INDUSTRIES, INC.
By: /s/ James S. Balloun
Secretary James S. Balloun
Chairman of the Board
and Chief Executive Officer
/s/
Name of Optionee: