Exhibit 10(iii)A56(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:
(i) 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
(ii) 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
(iii) 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.
(k) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended, and the rules and regulations
promulgated thereunder.
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(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.
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
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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 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
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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.
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