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Exhibit 10(iii)A
STOCK OPTION AGREEMENT
FOR NONEMPLOYEE DIRECTORS
THIS AGREEMENT, made as of the 19th day of March, 1997 (the "Grant
Date"), between National Service Industries, Inc., a Delaware corporation
(the "Company"), and Optionee (the "Optionee").
WHEREAS, in order to provide additional incentive to nonemployee
directors joining the Board of Directors to exert maximum efforts for the
success of the Company, the Executive Resource and Compensation Committee
of the Board of Directors of the Company has on this date approved the
option grant provided herein, as further ratified by the Board of Directors
on this date; and
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant of Option.
1.1 Subject to, and in accordance with, the terms and conditions set
forth in this Agreement, the Company hereby grants to the Optionee the
right and option (the "Option") to purchase all or any part of an aggregate
of 1,000 whole shares of common stock, par value $1.00 per share, of the
Company (the "Shares").
1.2 The Option is not intended to qualify as an Incentive Stock Option
within the meaning of Section 422A of the Code.
1.3 Except as otherwise expressly set forth herein, the capitalized
terms used in this Agreement shall have the same definitions as are set
forth in the National Service Industries, Inc. 1992 Nonemployee Directors'
Stock Option Plan. Notwithstanding the foregoing reference, the Option is
not granted under that Plan.
2. Purchase Price.
The price at which the Optionee shall be entitled to purchase Shares
upon the exercise of the Option shall be $38.75 per Share.
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.
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Exhibit 10(iii)A
4. Exercisability of Option.
Unless otherwise provided in this Agreement, the Option shall entitle
the Optionee to purchase, in whole at any time or in part from time to time, the
shares covered by the option after the expiration of one (1) year from the Grant
Date.
5. Manner of Exercise and Payment.
5.1 Subject to the terms and conditions of this Agreement, 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, 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 16 below, 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.
6. Termination of Service.
6.1 Termination for Cause. If the Optionee's service as a Director
terminates for Cause, the Option shall immediately terminate in full and no
rights hereunder may be exercised.
6.2 Other Termination of Service. If the Optionee's service as a
Director is terminated for any reason other than for Cause, the Option shall
continue to be exercisable in whole or in part (to the extent exercisable on the
date of such termination) at any time within three (3) years after the date of
such termination, 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
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Exhibit 10(iii)A
extent provided in 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.
7. Effect of Change in Control.
Notwithstanding anything contained in this Agreement to the contrary,
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 greater of (x) the Fair Market value, on the date
preceding the date of the surrender, of the Shares subject to the Option or
portion of the Option surrendered or (y) the Adjusted Fair Market Value of the
Shares subject to the Option or the portion of the Option 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, the Optionee shall be entitled to surrender for cancellation
the Option or any portion of the Option 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 Optionee may designate a person or persons to receive, in the
event of the Optionee's death, the Option or any amount payable pursuant
thereto, to which the Optionee would then be entitled. Such designation will be
made upon forms supplied by and delivered to the Company and may be revoked in
writing. If an Optionee fails effectively to designate a beneficiary, then his
or her estate will be deemed to be the beneficiary. 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 Continuing Service.
Nothing in this Agreement shall be interpreted or construed to confer
upon the Optionee any right with respect to continuance of service as a director
of the Company, nor shall this Agreement interfere in any way with the right of
the Company to terminate the Optionee's service as a director at any time.
10. Adjustments.
10.1 In the event of a Change in Capitalization, the Board shall 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 Board's adjustment shall be effective and final,
binding, and conclusive for all purposes of this Agreement.
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Exhbit 10(iii)A
10.2 Any stock adjustment in the Shares or other stock or securities
subject to the Option (including any adjustments in the purchase price) shall be
made only to the extent necessary to maintain the proportionate interest of the
Optionee and preserve, without exceeding, the value of such Option.
10.3 If, by reason of a Change in Capitalization, an Optionee shall be
entitled to exercise the Option with respect to new, additional or different
shares of stock or securities, such new, additional or different shares shall
thereupon be subject to all of the conditions which were applicable to the
Shares subject to the Option, as the case may be, prior to such Change in
Capitalization.
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. 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.
13. 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.
14. 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, except to the extent that
such law is pre-empted by federal law.
15. Successors in Interest.
This Agreement shall inure to the benefit of and be binding upon each
successor to the Company. 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.
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Exhibit 10(iii)A
16. Regulations and Other Approvals; Governing Law.
16.1 The obligation of the Company to sell or deliver Shares with
respect to the Option granted under this Agreement shall be subject to all
applicable laws, rules and regulations, including all applicable federal and
state securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Board.
16.2 The grant is intended to comply with Rule 16b-3 promulgated under
the Exchange Act and the Board shall interpret and administer the provisions of
the Agreement in a manner consistent therewith.
16.3 The Option is subject to the requirement that, if at any time the
Board determines, in its discretion, that the listing, registration, or
qualification of Shares issuable pursuant to the Option is required by any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the grant of the Option or the issuance of
Shares, no payment shall be made or Shares issued, in whole or in part, unless
listing, registration, qualification, consent, or approval has been effected or
obtained free of any conditions as acceptable to the Board.
16.4 In the event that the disposition of Shares acquired pursuant
hereto is not covered by a then-current registration statement under the
Securities Act of 1933, as amended, and is not otherwise exempt from such
registration, such Shares shall be restricted against transfer to the extent
required by the Securities Act of 1933, as amended, and Rule 144 of other
regulations thereunder. The Board may require any individual receiving Shares
pursuant to the Option, as a condition precedent to receipt of such Shares upon
exercise of the Option, to represent and warrant to the Company in writing that
the Shares acquired by such individual are acquired without a view to any
distribution thereof and will not be sold or transferred other than pursuant to
an effective registration thereof under said Act or pursuant to an exemption
applicable under the Securities Act of 1933, as amended, or the rules and
regulations promulgated thereunder. The certificates evidencing any of such
Shares shall be appropriately inscribed with a legend reflecting their status as
restricted securities as aforesaid.
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Exhibit 10(iii)A
17. 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 Board. 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:
Secretary ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chairman of the Board, President, and
Chief Executive Officer
Name of Optionee: Optionee
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