EXHIBIT 10(iii)(A)(1)
AMENDMENT NO. 2 TO
EMPLOYMENT AGREEMENT
OF
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THIS AMENDMENT made and entered into as of the 19th day of December,
2002 by and between NATIONAL SERVICE INDUSTRIES, INC. (the "Company") and ▇▇▇▇▇
▇. ▇▇▇▇▇▇ ("Executive");
W I T N E S S E T H:
WHEREAS, the Company and Executive entered into an Employment
Agreement, dated as of November 27, 2001, which Agreement became effective on
November 30, 2001, and which Agreement has previously been amended on October 4,
2002 (the Agreement as amended is hereinafter referred to as the "Employment
Agreement");
WHEREAS, the parties now desire to amend the Employment Agreement to
provide that, subject to certain conditions, Executive's employment and the Term
shall end on or about the date that the Company hires his successor as Chief
Executive Officer and that Executive shall receive compensation and benefits as
hereinafter provided; and
WHEREAS, the parties desire to enter into this Amendment to the
Employment Agreement in order to provide for, among other things, an orderly
transition of Executive's duties and responsibilities.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements contained herein and in the Employment Agreement, the
parties hereby agree to amend the Employment Agreement as follows:
1.
Section 1(c) is hereby amended by deleting the present section in its
entirety and substituting the following in lieu thereof:
"(c) Executive's employment under this Agreement shall
commence at the Effective Date and shall end on or about the date the
Executive's successor as Chief Executive Officer of the Company
commences employment with the Company, unless the parties mutually
agree in writing to a different termination date (the "Term"; the last
day of the Term is hereinafter referred to as the "Separation Date").
The parties acknowledge and agree that Section 2 and Sections 3(a)
through 3(k) shall remain in effect through the Separation Date and
cease to be in effect thereafter. During the period from the date of
this Amendment to the Separation Date, the Executive shall assist the
Board in locating and retaining a new Chief Executive Officer for the
Corporation and shall cooperate in the transition of Executive's duties
and responsibilities to his successor. The Company and Executive shall
mutually agree upon a press release announcing the execution of this
Amendment to the Employment Agreement."
2.
Unless events or circumstances have occurred prior to the Separation
Date (taking into account Section 1(c), as amended) which give rise to a claim
under Sections 4(a) by Executive (it being understood that any such claims shall
not be duplicative of the rights under Section 4(g), as added below), Sections
4(a) and 4(b) shall cease to be effective on and after the Separation Date. The
following new Section 4(g) shall be added to the end of the present Section 4:
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"(g) Mutually Agreeable Termination - The Company and
Executive agree that Executive will terminate his employment on the
Separation Date (as defined in Section 1(c) above) and that Executive
shall receive the following compensation and benefits:
(i) Base Salary - Executive will continue to
receive his Base Salary as then in effect for a period of
twelve (12) months, payable in the same manner as it was being
paid on his date of termination.
Bonus - Executive will be paid monthly an
amount equal to $30,000, subject to withholding of applicable
taxes, for a period of twelve (12) months.
(ii) Healthcare - Executive will continue to be
provided with the Company's healthcare coverage for the period
from his date of termination until the earlier of the date
Executive becomes eligible for Medicare coverage (currently
age 65) or the date of his death ("Coverage Period"), just as
if he had remained an active employee in an executive
position. For each year during the Coverage Period, the
Company shall pay to Executive monthly (or on such other
dates, e.g., annually or quarterly, as the parties may agree
upon) an amount equal to the costs the Company is paying for
such year to provide healthcare coverage to similarly situated
active employees. In addition to the amount payable to
Executive pursuant to the preceding sentence, for each year
during the Coverage Period the Company shall pay to Executive
a tax gross-up payment in an amount sufficient to make
Executive whole for any federal
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or state taxes (and the taxes on such payment of taxes)
Executive must pay as a result of receiving the payments from
the Company under this subsection. The tax gross-up payment
shall be made to Executive no later than the April 15th of the
year following the year in which the payment is treated as
taxable income.
For each year during the Coverage Period,
Executive shall pay the Company monthly (or on such other
dates, e.g., annually or quarterly, as the parties may agree
upon) the amount required to provide Executive healthcare
coverage for such year (determined in a manner comparable to
COBRA coverage costs), including any additional amounts for
dependent coverages. If the Company cannot continue to cover
Executive under its healthcare coverage plan as contemplated
by this subsection, the Company will separately provide
Executive with, or make available to Executive, comparable
coverages at comparable costs. The Company's provision of
healthcare coverage to Executive under this subsection shall
be structured in a manner such that benefits payable to
Executive and his dependents are not taxable to Executive.
(iii) Life Insurance - Executive will continue to
receive the life insurance coverage in effect on his date or
termination for a period of twenty-four (24) months, just as
if he had remained an active employee.
(iv) SERP - If Executive's Separation Date occurs
prior to his attaining age 55, he will be treated for all
purposes under the SERP as if he had continued to remain
actively employed until he reached age 55, and
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had completed at least ten (10) years of service. In
accordance with Appendix A to the SERP, Executive shall
receive a lump sum payment of his SERP benefit as soon as
practical after the Separation Date.
(v) Stock Options and Restricted Stock - If
Executive's Separation Date occurs prior to his attaining age
55 and completing ten (10) years of service, on the Separation
Date Executive will be treated for all purposes under his
outstanding Stock Options and Restricted Stock Awards as if he
had terminated employment after attaining age 55 and
completing at least 10 years of service. The Company shall
cause the Committee to allow Executive's Stock Option and
Restricted Stock Awards to continue to vest and the Stock
Options to remain exercisable in accordance with the
agreements for such awards. Executive's outstanding Stock
Options and Restricted Stock Awards are listed on EXHIBIT A,
attached hereto.
(vi) Accrued Vacation - Executive shall be paid
his accrued vacation on the Separation Date.
(vii) Business Expenses - Executive shall be
reimbursed on or before the Separation Date for all reasonable
business expenses for which he has submitted Company expense
reports. Executive shall also be reimbursed for all other
reasonable business expenses he has incurred or paid through
the Separation Date promptly after submission of a Company
expense report for such expenses.
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(viii) Indemnification - On and after the
Separation Date, the Company shall indemnify Executive and
hold Executive harmless from and against any claim, loss or
cause of action arising from or out of Executive's performance
as an officer, director or employee of the Company or any of
its subsidiaries or other affiliates or in any other capacity,
including any fiduciary capacity, in which Executive serves at
the Company's request, in each case to the maximum extent
permitted by law and under the Company's Articles of
Incorporation and By-Laws (the "Governing Documents"),
provided that in no event shall the protection afforded to
Executive hereunder be less than that afforded under the
Governing Documents as in effect on the Separation Date,
except for changes mandated by law. On and after the
Separation Date, Executive shall be covered in accordance with
the terms of any policy of directors and officers liability
insurance maintained by the Company for the benefit of its
officers and directors. Upon request therefor, accompanied by
reasonably itemized evidence of expenses incurred, and by
Executive's written affirmation of his good faith belief that
his conduct met the standard applicable to indemnification and
that he is entitled to indemnification under the Governing
Documents, the Company shall advance to Executive the
reasonable expenses (including attorneys' fees and costs of
investigation and defense, including the fees of expert
witnesses, other professional advisors, and private
investigators), incurred by him in defending any civil or
criminal suit, action or proceeding for
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which Executive is entitled to indemnification pursuant to the
Governing Documents. Executive agrees to reimburse the Company
for all reasonable expenses paid by the Company in defending
any action, suit or proceeding against Executive in the event
and to the extent that it shall ultimately be determined that
Executive is not entitled to be indemnified by the Company for
such expenses under the Governing Documents. Any advances and
Executive's agreement to repay shall be unsecured and
interest-free.
(ix) Personal Computer - On the Separation Date,
the Company will transfer to Executive ownership of his
current personal computer and printer, including existing
software systems and accessories (subject to any restrictions
under existing licensing agreements binding the Company).
(x) Mutual Release - The Company and Executive
shall execute a Mutual Release in the form attached hereto as
EXHIBIT B on the Separation Date."
3.
Executive agrees and acknowledges that the provisions of Section 5 of
the Employment Agreement shall continue to apply to Executive after the
Separation Date in accordance with the terms thereof.
4.
This Amendment to the Employment Agreement shall be effective as of the
date of this Amendment, provided that if a Change in Control (as defined in
Executive's
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Severance Protection Agreement) occurs prior to the Separation Date or if a
Threatened Change in Control (as defined in Executive's Severance Protection
Agreement) commences prior to the Separation Date and has not ended, or resulted
in a Change in Control, as of the Separation Date, this Amendment No. 2 shall be
null and void and of no further force or effect as of the day prior to the
Separation Date and the provisions of the Employment Agreement (excluding this
Amendment No. 2) and the Severance Protection Agreement shall govern the
compensation and benefits payable upon any termination of Executive's
employment. Except as hereby modified, the Employment Agreement shall remain in
full force and effect.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the day and year first written above.
NATIONAL SERVICE INDUSTRIES, INC.
By:
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▇▇▇▇▇▇▇ ▇. ▇▇▇, Chairman
Compensation Committee
EXECUTIVE
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