<PAGE>
                                                                    EXHIBIT 10.1





         TAX DISAFFILIATION AGREEMENT dated as of November 30, 2001, by and
between NATIONAL SERVICE INDUSTRIES, INC. ("NSI-Del"), a Delaware corporation,
NATIONAL SERVICE INDUSTRIES, INC. ("NSI Enterprises"), a California corporation,
and ACUITY BRANDS, INC. ("Spinco"), a Delaware corporation.

                                    RECITALS

A.       NSI Enterprises and National Services Industries, Inc. ("NSI-GA"), a
Georgia corporation, are first tier subsidiaries of NSI-Del.

         B.       NSI-Del is the common parent of an affiliated group of
corporations within the meaning of Section 1504(a) of the Internal Revenue Code
of 1986, as amended (the "Code"), which currently files consolidated Federal
income tax returns.

         C.       As reflected in the Agreement and Plan of Distribution (the
"Distribution Agreement") dated November 30, 2001 by and between NSI-Del and
Spinco, NSI Enterprises has formed Spinco as a first tier subsidiary.

         D.       In addition, NSI-GA has merged into NSI Enterprises.
Immediately after such merger, NSI Enterprises contributed its lighting
equipment and chemical businesses to Spinco along with certain intercompany
debt.

         E.       As reflected in the Distribution Agreement, NSI Enterprises
then distributed all of the outstanding shares of stock of Spinco to NSI-Del
(the "First Distribution").

         F.       After the First Distribution, NSI-Del contributed to Spinco
the stock of certain foreign subsidiaries and certain intercompany debt owed by
Spinco to NSI-Del. Further contributions were then made by Spinco to
subsidiaries of Spinco.

         G.       After these contributions and pursuant to the Distribution
Agreement, NSI-Del shall distribute to its stockholders all of the outstanding
shares of stock of Spinco, together with associated preferred stock purchase
rights, on a pro rata basis (the "Second Distribution," together with the First
Distribution, the "Distributions").

         H.       NSI-Del, NSI Enterprises and Spinco intend that the
Distributions will qualify as distributions described in Section 355 of the Code
and will not result in the recognition of any taxable gain or income to NSI-Del,
NSI Enterprises, Spinco or any of their respective stockholders.

         I.       From the day after the Date of the Second Distribution
forward, Spinco and its subsidiaries shall cease to be a member of the NSI-Del
affiliated group for all applicable tax purposes.

         J.       NSI-Del, NSI Enterprises and Spinco desire on behalf of
themselves, their


<PAGE>
subsidiaries and their successors to set forth their rights and obligations with
respect to taxes due for periods before and after the Second Distribution.

         NOW, THEREFORE, in consideration of the transactions recited above and
for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto do hereby agree as follows:


                                    ARTICLE I

                                   Definitions

         For the purposes of this Agreement:

         1.01     "40 Percent Interest" shall have the meaning ascribed to the
term "50-percent or greater interest" in Section 355(e)(4) of the Code,
substituting therein "40" each place "50" appears.

         1.02     "40 Percent Threshold" shall have the meaning set forth in
Section 2.04(d)(v).

         1.03     "Ancillary Agreements" shall have the meaning specified in the
Distribution Agreement.

         1.04     "Affiliate" shall mean, when used with respect to any
specified Person, a Person that directly or indirectly controls, is controlled
by, or is under common control with such specified Person; provided, however,
that for purposes of this Agreement, any Person who was a member of both Groups
prior to the Second Distribution shall be deemed to be an Affiliate only of the
Group of which such Person is a member following the Second Distribution. As
used herein, "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities or other interests,
by contract or otherwise. Any contrary provision of this Agreement
notwithstanding, neither NSI-Del nor any NSI-Del Subsidiaries shall be deemed to
be an Affiliate of SpinCo, and neither SpinCo nor any SpinCo Subsidiaries shall
be deemed to be an Affiliate of NSI-Del.

         1.05     "After Tax Basis" shall mean, with respect to any payment to
be received, that the amount of such payment is increased to the extent
necessary so that, after deduction of all taxes (assuming for this purpose that
the recipient of such payment is subject to taxation at the highest federal and
applicable state and local marginal rates applicable to widely held corporations
for the year in which such income is taxable) required to be paid by the
recipient (less any tax savings to be realized, utilizing the same tax rate
assumptions as set forth in the immediately preceding parenthetical phrase, by
the recipient as a result of the payment of such amounts) with respect to the
receipt of such amounts, such increased payment (as so reduced) is equal to the
payment otherwise required to be made.

         1.06     "Agreement" shall mean this Tax Disaffiliation Agreement dated
November 30, 2001, between NSI-Del, NSI Enterprises, and Spinco, as the same may
be amended from time to time.


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         1.07     "Applicable Federal Rate" shall have the meaning set forth in
Section 1274(d) of the Code for a short term rate, compounded quarterly.

         1.08     "Assets" shall mean the assets of NSI-Del, NSI Enterprises,
Spinco, their respective Affiliates, or a "predecessor or successor" (within the
meaning Section 355(e)(4)(D) of the Code) of such corporations or their
Affiliates; it being understood that any transfer, sale or assignment of the
assets of NSI-Del, NSI Enterprises, Spinco, their Affiliates, or a predecessor
or a successor in the ordinary course of business shall not be taken into
account for purposes of Section 2.04(d) of this Agreement, unless in conjunction
with a transaction described in Section 355(e)(3)(B) of the Code or Final or
Temporary regulations promulgated thereunder.

         1.09     "Claim" shall have the meaning set forth in Section 5.03(a).

         1.10     "Closing Price" of Spinco Common Stock or NSI-Del Common Stock
on any day shall mean the last reported sales price for such stock, on such day,
or in the case no sale takes place on such day, the average of the reported
closing bid and asked prices for the stock in either case as reported on the New
York Stock Exchange.

         1.11     "Code" shall have the meaning set forth in paragraph B of the
recitals.

         1.12     "Controlling Party" shall have the meaning set forth in
Section 5.01.

         1.13     "Corporate Transactions" shall have the meaning set forth in
the Distribution Agreement.

         1.14     "Date of the First Distribution" shall mean August 31, 2001.

         1.15     "Date of the Second Distribution" shall mean the Distribution
Date specified in the Distribution Agreement.

         1.16     "Distribution Agreement" shall have the meaning set forth in
paragraph C of the recitals.

         1.17     "Distribution Related Gain" shall mean any gain recognized by
NSI Enterprises or NSI-Del, respectively, or NSI-Del's or Spinco's stockholders,
by virtue of (i) either Distribution failing to qualify as a distribution
described in Section 355 of the Code, (ii) any stock or securities of Spinco
failing to qualify as "qualified property" within the meaning of Section
355(c)(2)(B) and 361(c)(2)(B) of the Code, (iii) the application of Section
355(f) of the Code to the First Distribution, or (iv) the application of Section
355(e) of the Code to the Second Distribution.

         1.18     "Distributions" shall have the meaning set forth in paragraph
G of the recitals.

         1.19     "Final Determination" shall mean with respect to any issue (a)
a decision,


                                       3
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judgment, decree or other order by any court of competent jurisdiction, which
decision, judgment, decree or other order has become final and not subject to
further appeal, (b) a binding closing agreement whether or not entered into
under Section 7121 of the Code or any other binding settlement agreement
(whether or not with the Internal Revenue Service), or (c) the completion of the
highest level of administrative proceedings if a judicial contest is not or is
no longer available.

         1.20     "First Distribution" shall have the meaning set forth in
paragraph E of the recitals.

         1.21     "First Spinco Notification Letter" shall have the meaning set
forth in Section 2.03(c)(ii).

         1.22     "Indemnitor" shall have the meaning set forth in Section 5.02.

         1.23     "IRS" shall have the meaning set forth in Section 2.04(d)(vi).

         1.24     "Market Cap" shall mean, with respect to NSI-Del or Spinco,
the total of (a) the average Closing Price of NSI-Del Common Stock or Spinco
Common Stock, respectively, over the 10 business days following the Date of the
Second Distribution, multiplied by (b) the number of outstanding shares of such
common stock on the Date of the Second Distribution.

         1.25     "NSI-Del" shall have the meaning set forth in the preamble to
this Agreement.

         1.26     "NSI-Del Common Stock" shall mean the common stock of NSI-Del,
par value $1.00 per share.

         1.27     "NSI-Del Group" shall mean, for any period, NSI-Del and its
then Subsidiaries. Under no circumstances shall the NSI-Del Group include any
member of the Spinco Group.

         1.28     "NSI-Del Notification Letter" shall have the meaning set forth
in Section 2.03(c)(ii).

         1.29     "NSI-Del Subsidiary" or "Subsidiary of NSI-Del" shall include
all of the Subsidiaries listed on EXHIBIT A attached hereto. None of Spinco or
the Spinco Subsidiaries shall be considered a Subsidiary of NSI-Del.

         1.30     "NSI-Del Tainting Act" means (a) any breach of any written
representation given by Brock A. Hattox on behalf of NSI-Del in the letter to
King & Spalding and Ernst & Young dated November 29, 2001 (notwithstanding such
representation was also given by James S. Balloun on behalf of Spinco and
NSI-Del in a separate letter to King & Spalding and Ernst & Young dated November
29, 2001), or (b) any act or acts first occurring after the Date of the Second
Distribution of or involving any Person (other than Spinco or any Person that is
an Affiliate of Spinco immediately before or immediately after such action or
actions), or any omission or omissions of any Person (other than Spinco or any
Person that is an Affiliate of Spinco immediately before or immediately after
such omission or omissions), of an act or acts first available to it after the
Date of the Second Distribution, if such breach, action or omission


                                       4
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described in (a) or (b) contributes to a Final Determination that the First or
Second Distribution results in any Distribution Related Gain. Notwithstanding
any provision of this Agreement to the contrary, a breach of any written
representation given by Brock A. Hattox on behalf of NSI-Del in the letter to
King & Spalding and Ernst & Young dated November 29, 2001 shall not be
considered an NSI-Del Tainting Act under clause (a) of the first sentence of
this Section 1.30, if such breach is the result of a Spinco Tainting Act.

         1.31     "NSI Enterprises" shall have the meaning set forth in the
preamble to this Agreement.

         1.32     "NSI-GA" shall have the meaning set forth in paragraph A of
the recitals.

         1.33     "Period After the Second Distribution" shall mean (i) any
taxable year or other taxable period beginning after the Date of the Second
Distribution and, (ii) in the case of any Stub Period, that part of the Stub
Period that begins on the day immediately after the Date of the Second
Distribution.

         1.34     "Period Before the Second Distribution" shall mean (i) any
taxable year or other taxable period that ends on, at the close of, or before
the Date of the Second Distribution and, (ii) in the case of any Stub Period,
that part of the Stub Period through and including the Date of the Second
Distribution.

         1.35     "Person" shall mean any individual, partnership, joint
venture, corporation, limited liability company, trust, unincorporated
organization, government or department or agency of a government.

         1.36     "Restructuring Taxes" means any taxes resulting from the
Corporate Transactions or either Distribution, including, but not limited to,
any taxes imposed pursuant to or as a result of Sections 311 or 1001 of the Code
or the Treasury Regulations under Section 1502 of the Code (and any applicable
similar federal, state, local or foreign taxes, together with related interest,
penalties and additions to tax), but excluding (i) any taxes imposed as a result
of a Final Determination that the First or Second Distribution results in any
Distribution Related Gain, and (ii) any transfer taxes imposed on the transfer
of real or personal property in the Corporate Transactions.

         1.37     "Second Distribution" shall have the meaning set forth in
paragraph G of the recitals.

         1.38     "Second Spinco Notification Letter" shall have the meaning set
forth in Section 2.03(c)(ii).

         1.39     "Spinco" shall have the meaning set forth in the preamble to
this Agreement.

         1.40     "Spinco Common Stock" shall mean the common stock of Spinco,
par value $.01 per share.


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          1.41    "Spinco Group" shall mean, for any period, Spinco and its then
Subsidiaries. Under no circumstances shall the Spinco Group include any member
of the NSI-Del Group.

         1.42     "Spinco Subsidiary" or "Subsidiary of Spinco" shall include
all of the Subsidiaries listed on EXHIBIT B attached hereto. None of the NSI-Del
Subsidiaries shall be considered a Subsidiary of Spinco.

         1.43     "Spinco Tainting Act" means (a) any breach of any written
representation given by James S. Balloun on behalf of Spinco and NSI-Del in the
letter to King & Spalding and Ernst & Young dated November 29, 2001
(notwithstanding such representation was also given by Brock A. Hattox on behalf
of NSI-Del in a separate letter to King & Spalding and Ernst & Young dated
November 29, 2001), or (b) any act or acts first occurring after the Date of the
Second Distribution of or involving any Person (other than NSI-Del or any Person
that is an Affiliate of NSI-Del immediately before or immediately after such
action or actions), or any omission or omissions of any Person (other than
NSI-Del or any Person that is an Affiliate of NSI-Del immediately before or
immediately after such omission or omissions) of an act or acts first available
to it after the Date of the Second Distribution, if such breach, act or omission
described in (a) or (b) contributes to a Final Determination that First or
Second Distribution results in any Distribution Related Gain. Notwithstanding
any provision of this Agreement to the contrary, a breach of any written
representation given by James S. Balloun on behalf of Spinco and NSI-Del in the
letter to King & Spalding and Ernst & Young dated November 29, 2001 shall not be
considered a Spinco Tainting Act under clause (a) of the first sentence of this
Section 1.43, if such breach is the result of an NSI-Del Tainting Act.

         1.44     "Spinco Tax Adjustment Amount" shall have the meaning set
forth in Section 2.03(c)(ii).

         1.45     "Spinco Tax Position" shall have the meaning set forth in
Section 2.03(c)(i).

         1.46     "Stock" shall mean common or preferred stock or any instrument
that might reasonably be treated as common or preferred stock for federal income
tax purposes; provided, however, for purposes of Section 2.04(d) only, the term
Stock shall not include stock in NSI-Del, NSI Enterprises or Spinco acquired by
an employee or director of such corporation (or a Person related to such
corporation under Section 355(d)(7)(A) of the Code) in connection with the
performance of services as an employee or director for the corporation or a
Person related to it under Section 355(d)(7)(A) of the Code (and that is not
excessive by reference to the services performed) in a transaction in which
Section 83 of the Code applies.

         1.47     "Stock Options" shall mean call options, warrants, convertible
obligations, the conversion feature of convertible stock, put options,
redemption agreements (including rights to cause the redemption of stock), any
other instruments that provide for the right or possibility to issue, redeem, or
transfer stock (including an option on an option), or any other similar interest
treated as an option; provided, however, for purposes of Section 2.04(d) only
the term Stock Options only includes instruments that provide for the right or
possibility to issue, redeem or transfer stock and does not include: (i) an
option that is part of a security arrangement in a typical lending transaction
(including a purchase money loan), if the arrangement is subject to


                                       6
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customary commercial conditions; (ii) an option to acquire stock in NSI-Del, NSI
Enterprises or Spinco with customary terms and conditions provided to an
employee or director of such corporation, or a person related to NSI-Del, NSI
Enterprises, or Spinco under Section 355(d)(7)(A) of the Code in connection with
the performance of services for the corporation or a person related to it under
Section 355(d)(7)(A) of the Code (and is not excessive by reference to the
services performed) and that immediately after the Second Distribution and 6
months thereafter (a) is nontransferable within the meaning of Treasury
Regulation Section 1.83-3(d) and (b) does not have a readily ascertainable fair
market value as defined in Treasury Regulation Section 1.83-7(b); and (iii) an
option entered into between shareholders of a corporation (or a shareholder and
the corporation) that is exercisable only upon death, disability or mental
incompetency of the shareholder, or, in the case of stock acquired in connection
with the performance of services for a corporation, or a person related to the
corporation under Section 355(d)(7)(A) (and that is not excessive by reference
to the services performed), the shareholder's separation from service.

         1.48     "Stub Period" shall mean any taxable year or other taxable
period that begins on or before and ends after the Date of the Second
Distribution.

         1.49     "Subsidiary" shall mean a corporation, limited liability
company, partnership, joint venture or other business entity if 50% or more
of the outstanding equity or voting power of such entity is owned directly or
indirectly by the corporation with respect to which such term is used. Each of
the Subsidiaries listed on Exhibit A, attached hereto, shall be considered a
Subsidiary of NSI-Del. Each of the Subsidiaries listed on Exhibit B, attached
hereto, shall be considered a Subsidiary of Spinco. Notwithstanding any
provision of this agreement to the contrary, Spinco shall not be considered a
Subsidiary of NSI-Del.

         1.50     "tax" or "taxes" whether used in the form of a noun or
adjective, shall mean all forms of taxation, whenever created or imposed,
including, but not limited to, taxes on or measured by income, franchise,
gross receipts, sales, use, excise, payroll, personal property (tangible or
intangible), real property, ad-valorem, value-added, leasing, leasing use or
other taxes, levies, imposts, duties, charges or withholdings of any nature
whether imposed by a nation, locality, municipality, government, state,
federation, or other governmental body (a "Taxing Authority"). Whenever the
term "tax" or "taxes" is used (including, without limitation, in the context of
any duty to pay, or to reimburse another party or indemnify for taxes or
refunds or credits of taxes) it shall include penalties, fines, additions to
tax and interest thereon. The term "tax" or "taxes" does not include any
unclaimed or abandoned property remitted or required to be remitted to any
Taxing Authority under applicable law.

         1.51     "Taxing Authority" shall have the meaning set forth in Section
1.50.

         1.52     "Tax Returns" shall mean all reports, returns, information
statements, questionnaires, evidence of tax payments, invoices or other
documents received from, or required to be filed or that may be filed for any
period with, any Taxing Authority (whether domestic or foreign) in connection
with any tax or taxes (whether domestic or foreign).


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<PAGE>

         All capitalized terms used but not defined herein shall have the
meaning given to such terms in the Distribution Agreement.


                                   ARTICLE II

              Tax Returns, Tax Payments and Tax Sharing Obligations

         2.01     Obligations to File Tax Returns.

                  (a)      Spinco shall prepare, at its own expense, and
shall timely file or cause to be filed (i) all Tax Returns with respect to the
Spinco Group and the NSI-Del Group that are due (including extensions) after
the Date of the Second Distribution but are for a taxable year or period ending
on or before the Date of the Second Distribution, (ii) all Tax Returns with
respect to the Spinco Group for any taxable year or other taxable period
beginning after the Date of the Second Distribution, (iii) all Tax Returns
filed on a separate company basis for any member of the Spinco Group for any
Stub Period, and (iv) all Tax Returns filed on a consolidated, combined or
unitary basis for the Stub Period other than those described in clause (iii) of
Section 2.01(b). Spinco shall make full and timely payment of all taxes shown
due on all Tax Returns described in this Section 2.01(a).

                  (b)      NSI-Del shall prepare, at its own expense, and shall
timely file or cause to be filed (i) all Tax Returns with respect to the NSI-Del
Group for any taxable year or other taxable period beginning after the Date of
the Second Distribution, (ii) all Tax Returns filed on a separate company basis,
for any member of the NSI-Del Group for any Stub Period, and (iii) all Tax
Returns filed on a consolidated, combined or unitary basis for the Stub Period
that include one or more members of the NSI-Del Group (whether or not they
include one or more members of the Spinco Group). Subject to Section 2.03(c)
hereof, NSI-Del shall make full and timely payment of all taxes shown due on all
Tax Returns described in this Section 2.01(b).

                  (c)      To the extent required or permitted by law or
administrative practice, in the case of any Tax Return prepared by NSI-Del
pursuant to clause (iii) of Section 2.01(b) that includes one or more members of
the Spinco Group, the taxable year of the Spinco Group shall be treated as
closing at the close of the Date of the Second Distribution.

         2.02     Obligation to Remit Taxes. Spinco and NSI-Del shall each
timely remit or cause to be remitted any taxes due in respect of any tax for
which it is required to file a Tax Return hereunder and shall be entitled to
reimbursement for such payments only to the extent provided in Section 2.03.

         2.03     Tax Sharing Obligations and Prior Agreements.

                  (a)      Spinco's obligations. Other than liabilities dealt
with elsewhere in this Agreement and except as provided in Section 3.01(d),
Spinco shall be liable for and shall indemnify and hold the NSI-Del Group
harmless on an After Tax Basis against (i) any tax liability of any member of
the Spinco Group or any member of the NSI-Del Group for any Period Before the
Second Distribution, except for $5,258,977 of which NSI-Del is liable


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pursuant to Section 2.03(b), (ii) any tax liability for any member of the Spinco
Group for any Period After the Second Distribution, and (iii) any amount
determined to be Spinco's liability under Section 2.04 hereof. Except as
provided in Section 3.01 for refunds attributable to carry backs, Spinco shall
be entitled to any refund of or credit for taxes for which Spinco is responsible
under this Section 2.03(a) or with respect to which Spinco is required to file a
Tax Return under Section 2.01 hereof.

                  (b)  NSI-Del's Obligations. Other than liabilities dealt with
elsewhere in this Agreement, NSI-Del shall be liable for, and shall hold the
Spinco Group harmless on an After Tax Basis against (i) any tax liability of any
member of the NSI-Del Group for any Period After the Second Distribution, and
(ii) any amount determined to be NSI-Del's liability under Section 2.04 hereof.
In addition, NSI-Del shall be liable for, and shall hold the Spinco Group
harmless on an After Tax Basis against, $5,258,977 of tax liability of any
member of the Spinco Group or any member of the NSI-Del Group for any Period
Before the Second Distribution. Except as provided in Section 3.01 for refunds
attributable to carry backs, NSI-Del shall be entitled to any refund of or
credit for taxes for any periods for which NSI-Del is responsible under this
Section 2.03(b) or with respect to which NSI-Del is required to file a Tax
Return under Section 2.01 hereof.

                  (c)  Spinco's Stub Period Liability. (i) Subject to clause
(ii) of this Section 2.03(c), with respect to any Tax Return that is described
in clause (ii) or (iii) of Section 2.01(b), or with respect to any estimated tax
payment relating to any such Tax Return, NSI-Del shall, in good faith, calculate
Spinco's tax liability under clause (i) of the first sentence of Section 2.03(a)
with respect to such Tax Return or estimated tax payment (taking into account
one-fourth of NSI-Del's $5,258,977 obligation under Section 2.03(b) when
calculating Spinco's obligation for each of the four estimated tax payments for
fiscal year 2002 (i.e. the estimated tax payments due on December 15, 2001,
February 15, 2002, May 15, 2002 and August 15, 2002 )) and notify Spinco of such
amount. Such notification shall constitute a request for payment, and, subject
to the following sentence, Spinco shall pay such amount, in immediately
available funds, to NSI-Del within five (5) days after receipt of such notice
from NSI-Del, provided that Spinco shall not be obligated to make such payment
to NSI-Del (A) earlier than ten (10) days prior to the due date for the filing
or making of the relevant Tax Return or estimated tax payment or (B) unless
NSI-Del has offset Spinco's tax liability for the each of the prior estimated
tax payments for fiscal year 2002 by one-fourth of $5,258,977 in satisfaction of
NSI-Del's obligation under Section 2.03(b) and (c). If Spinco determines, in
good faith, that its tax liability under clause (i) of the first sentence of
Section 2.03(a) with respect to such Tax Return or estimated payment should be
greater than the amount determined by NSI-Del for such return or payment, Spinco
can elect to pay a greater amount to NSI-Del and provide NSI-Del with a
statement describing the tax position taken by Spinco implicit in the
determination of such larger amount (the "Spinco Tax Position"). If pursuant to
the proceeding sentence Spinco pays a greater amount, NSI-Del covenants, to the
extent permitted by law, to take the Spinco Tax Position on the Tax Return or
payment in question and will remit the larger amount received from Spinco to the
appropriate Taxing Authority when filing such return or payment. After the
filing or making of any Tax Return or estimated tax payment mentioned in this
clause (i) of Section 2.03(c), NSI-Del shall supply Spinco with a copy of each
tax return (or evidence of each estimated tax payment) with respect to which
Spinco shall have made payment.



                                       9
<PAGE>
                           (ii)     Spinco shall make an initial determination,
in good faith, of the amount (the "Spinco Tax Adjustment Amount") of its tax
liability under clause (i) of the first sentence of Section 2.03(a) with respect
to all Tax Returns that are described in clause (ii) and (iii) of Section
2.01(b), such tax liability to be determined without regard to payments, if any,
that Spinco shall have made to NSI-Del pursuant to clause (i) of this Section
2.03(c) (such determination, with calculations in reasonable detail, being
referred to as the "First Spinco Notification Letter"). If NSI-Del determines in
good faith that Spinco's determination of the Spinco Tax Adjustment Amount is
incorrect, NSI-Del shall notify Spinco of such determination (including in such
notification its determination of the correct amount of the Spinco Tax
Adjustment Amount) (the "NSI-Del Notification Letter") within thirty (30) days
of receipt of the First Spinco Notification Letter. If Spinco objects to
NSI-Del's determination of the Spinco Tax Adjustment Amount in the NSI-Del
Notification Letter, it must notify NSI-Del within twenty (20) days of receipt
of the NSI-Del Notification Letter (the "Second Spinco Notification Letter"). If
the dispute is not resolved by mutual accord within thirty (30) days of
NSI-Del's receipt of the Second Spinco Notification Letter, the dispute shall be
resolved under the provisions of Article VIII. Until NSI-Del and Spinco reach
agreement, or any dispute between them is resolved pursuant to Article VIII, as
to the Spinco Tax Adjustment Amount, the provisions of clause (i) of this
Section 2.03(c) shall continue to apply. Clause (i) of this Section 2.03(c) will
not apply once NSI-Del and Spinco reach agreement or any dispute between them as
to the Spinco Tax Adjustment is resolved pursuant to Article VIII. Within ten
(10) days of such agreement or resolution, Spinco shall pay to NSI-Del an amount
equal to the excess of (x) the Spinco Tax Adjustment Amount, as so agreed or
resolved, over (y) the payments, if any, that Spinco shall have theretofore made
to NSI-Del pursuant to clause (i) of this Section 2.03(c). In the event that the
payments that Spinco shall have theretofore made to NSI-Del pursuant to clause
(i) of this Section 2.03(c) shall exceed the Spinco Tax Adjustment Amount,
NSI-Del shall, within ten (10) days of such agreement or resolution, pay the
amount of such excess to Spinco.

                  (d)      Except as set forth in this Agreement and in
consideration of the mutual indemnities and other obligations of this Agreement,
any and all prior tax sharing agreements or practices between any member of the
NSI-Del Group and any member of the Spinco Group shall be terminated as of the
Date of the Second Distribution.

         2.04     Restructuring Taxes; Other Taxes Relating to the Distribution.

                  (a)      Generally. Notwithstanding any other provision of
this Agreement to the contrary, Spinco shall bear any Restructuring Taxes
(together with any reasonable expenses, including, but not limited to,
attorney's fees, incurred in defending any audit or examination with respect to
Restructuring Taxes). In the event of a Final Determination that the First or
Second Distribution results in any Distribution Related Gain (other than a Final
Determination that the First or Second Distribution results in any Distribution
Related Gain which determination would not have been made but for a NSI-Del
Tainting Act or a Spinco Tainting Act), the liability of NSI-Del and Spinco for
any taxes arising from such Final Determination, including any liability to
stockholders arising from such Final Determination (together with any reasonable
expenses, including, but not limited to, attorney's fees incurred in defending
against any liability) shall be borne by NSI-Del and Spinco pro rata based on
their relative Market Caps. Also, in the event of


                                       10
<PAGE>
a Final Determination that the First or Second Distribution results in any
Distribution Related Gain which determination would not have been made but for
the occurrence of both a NSI-Del Tainting Act and a Spinco Tainting Act, any
taxes or liability resulting from such Final Determination (together with any
reasonable expenses, including, but not limited to, attorney's fees incurred in
defending against any liability) shall be borne by NSI-Del and Spinco pro rata
based on their relative Market Caps.

                  (b)  Covenant and Indemnification for Spinco Tainting Acts.
Spinco covenants that neither Spinco nor any member of the Spinco Group shall
commit or be party to or the subject of any Spinco Tainting Act. In the event of
a Final Determination that the First or Second Distribution results in any
Distribution Related Gain which Final Determination would not have been made but
for a Spinco Tainting Act, Spinco shall pay, and shall indemnify and hold
harmless NSI-Del and NSI Enterprises and their Affiliates on an After Tax Basis,
from and against, any liability of NSI-Del or NSI Enterprises or their
Affiliates to any Taxing Authority, NSI-Del stockholders or Spinco stockholders
(together with any reasonable expenses, including, but not limited to,
attorney's fees incurred in defending against any such liability) resulting from
a Final Determination that the First or Second Distribution results in any
Distribution Related Gain.

                  (c)  Covenant and Indemnification for NSI-Del Tainting Acts.
NSI-Del covenants that neither NSI-Del nor any member of the NSI-Del Group shall
commit or be party to or the subject of any NSI-Del Tainting Act. In the event
of a Final Determination that the First or Second Distribution results in any
Distribution Related Gain which Final Determination would not have been made but
for a NSI-Del Tainting Act, NSI-Del shall pay, and shall indemnify and hold
harmless Spinco and its Affiliates on an After Tax Basis, from and against, any
liability of Spinco, NSI-Del, NSI Enterprises or their Affiliates to any Taxing
Authority, NSI-Del stockholders or Spinco stockholders (together with any
reasonable expenses, including, but not limited to, attorney's fees incurred in
defending against any such liability) resulting from a Final Determination that
the First or Second Distribution results in any Distribution Related Gain.

                  (d)  Reporting and Restrictions. (i) At quarterly intervals
beginning on February 30, 2001 and at any other time reasonably requested by the
party to receive such report, during the period commencing immediately after the
Date of the Second Distribution and ending two years after such date, NSI-Del
will provide to Spinco, NSI Enterprises will provide to Spinco and Spinco will
provide to NSI-Del and NSI Enterprises a report ("Report") listing for the
period commencing immediately after the Date of the Second Distribution and
ending on the date of the Report any issuance, sale, transfer, assignment or
redemption (or any agreement, understanding, arrangement, or substantial
negotiations concerning the issuance, sale, transfer, assignment or redemption)
of the reporting corporation's: (x) Stock (excluding any sale, transfer, or
assignment of Stock between two shareholders neither of whom own, either
directly or indirectly, five-percent or more of the Stock of the corporation
whose Stock is transferred (treating all options as exercised), provided that
the reporting corporation has not authorized such sale, transfer, or assignment
and that such sale, transfer, or assignment meets the requirements of the safe
harbor in Temporary regulations Section 1.355-7(f)(5)); (y) Stock Options; and
(z) Assets (excluding: (A) any sale, transfer, or assignment of Assets that is
fully taxable to the


                                       11
<PAGE>
transferor; and (B) any other sale, transfer, or assignment of Assets that in
the aggregate does not exceed 5 percent of the gross assets of the selling,
transferring, or assigning corporation as reflected on such corporation's
balance sheet during any 90 day period).

                           (ii)     In addition within two months following the
Date of the Second Distribution, Spinco shall provide to NSI-Del a Report
listing any issuance, sale, transfer, assignment or redemption (or any
agreement, understanding, arrangement, or substantial negotiations, whether or
not consummated, concerning the issuance, sale, arrangement, assignment or
redemption) of NSI-Del's, NSI Enterprises' and Spinco's Stock, Stock Options, or
Assets in each instance for the period commencing two years before the Date of
the First Distribution and ending on the Date of the Second Distribution. For
purposes of this clause (ii) of Section 2.04(d) the exclusions from NSI-Del's,
NSI Enterprises' and Spinco's Stock and Asset reporting obligations contained in
clause (i) of Section 2.04(d) shall apply.

                           (iii)    At any time that the issuance, sale,
transfer, assignment or redemption (or any agreement, understanding,
arrangement, or substantial negotiations concerning the issuance, sale,
arrangement, assignment or redemption) of the reporting corporation's Stock or
Stock Options would exceed ten (10) percent by vote or value of the reporting
corporation's outstanding Stock (treating Stock Options as exercised) or the
issuance, sale, transfer, or assignment (or any agreement, understanding,
arrangement, or substantial negotiations concerning the issuance, sale,
transfer, or assignment) of the reporting corporation's Assets would exceed 10
percent of the gross assets of the selling, transferring, or assigning
corporation as reflected on such corporation's balance sheet, a notice
("Notice") of such transaction must be given to the other party 30 days prior to
such issuance, transfer, assignment or redemption (or the entering into of any
agreement, understanding, arrangement, or substantial negotiations concerning
the issuance, sale, arrangement, assignment or redemption). For purposes of this
clause (iii) of Section 2.04(d), the exclusions from NSI-Del's, NSI Enterprises'
and Spinco's Stock and Asset reporting obligations contained in clause (i) of
Section 2.04(d) shall apply.

                           (iv)     NSI-Del's, NSI Enterprises' and Spinco's
obligations to issue Reports and Notices will be extended beyond the 2 year
reporting period (not to exceed 5 years after the Date of the Second
Distribution) until the consummation of any agreement, understanding,
arrangement or substantial negotiations for the issuance, sale, transfer or
assignment of the reporting corporations' Stock, Stock Options or Assets that is
reported or required to be reported during the 2 year period after the Date of
the Second Distribution.

                           (v)      If, before the expiration of the reporting
period (i.e. the two year anniversary of the Date of the Second Distribution or
later if the period is extended under clause (iv) of this Section 2.04(d)), the
issuances, sales, transfers, assignments, or redemptions (or agreement,
understanding, arrangement or substantial negotiations concerning the issuance,
sale, transfer, assignment or redemption) of the reporting corporation's Stock,
Stock Options or Assets that have been reported pursuant to clauses (i) and (ii)
of this Section 2.04(d) or would be required to be reported pursuant to clauses
(i) and (ii) of this Section 2.04(d) if such reports were due, in the aggregate,
would equal or exceed (as calculated using a method provided by a nationally
recognized tax advisor acceptable to both NSI-Del and Spinco) a 40 Percent
Interest in such reporting company (the "40 Percent Threshold"), such company
(or companies, if both have


                                       12
<PAGE>
reached the 40 Percent Threshold) shall not take any action or fail to take any
action that would cause the 40 Percent Threshold to be exceeded without
obtaining an opinion from a nationally recognized tax advisor (acceptable to
both NSI-Del and Spinco) that such issuance, sale, transfer, assignment, or
redemption (or agreement, understanding, arrangement or substantial negotiations
concerning the issuance, sale, transfer, assignment or redemption) will not
cause Section 355(e) of the Code to apply to the Second Distribution or Section
355(f) of the Code to apply to the First Distribution. The expense of obtaining
any opinion under this clause (v) of Section 2.04(d) will be borne by the party
whose issuance, sale, transfer, assignment, redemption is the subject of such
opinion.

                           (vi)     For purposes of this Section 2.04(d),
NSI-Del, NSI Enterprises and Spinco will not be required to report any issuance,
sale, transfer, assignment, or redemption of Stock, Stock Options or Assets with
respect to which (y) the Internal Revenue Service ("IRS") has issued a private
letter ruling to NSI-Del, NSI Enterprises or Spinco, or (z) a nationally
recognized tax advisor acceptable to both NSI-Del and Spinco has issued an
opinion, that such issuance, sale, transfer, assignment, or redemption is not
required to be taken into account in applying Sections 355(e) or 355(f) of the
Code by reason of any statutory provision that may hereafter be enacted, any
applicable final or temporary regulations that may be issued, or any applicable
guidance that may be published by the IRS upon which taxpayers are authorized to
rely. The expense of obtaining any opinion under this Section 2.04(d)(vi) from a
nationally recognized tax advisor or an IRS private letter ruling will be borne
by the party whose issuance, sale, transfer, assignment or redemption is the
subject of such opinion or private letter ruling.

                  (f)      Transfer Taxes. Notwithstanding clause (i) of Section
2.03(a), liability for any transfer taxes imposed on any transfer in the
Corporate Transactions of real or personal property will be allocated between
Spinco and NSI-Del according to Section 7.5 of the Distribution Agreement.


                                   ARTICLE III

                     Carrybacks, Distributions and Elections

         3.01     Carrybacks.

                  (a)      To the extent permitted by law, any member of the
Spinco Group shall be entitled to carry back any net operating loss or other
item from a taxable period ending after the Date of the Second Distribution to a
taxable period ending on or before the Date of the Second Distribution. At the
direction of Spinco, NSI-Del shall file any claim for refund relating to such
carry back. Any refund of taxes resulting from any such carryback by a member of
the Spinco Group shall be payable to Spinco as provided in Section 4.01. Spinco
shall indemnify and hold NSI-Del harmless for any tax liability that results
from any refund claim relating to a carryback under this Section 3.01(a).
Notwithstanding any other provision of this Agreement to the contrary, Spinco
shall be considered the Controlling Party for purposes of Article V for any tax
audit or proceeding involving any period ending on or before the Date of the
Second Distribution to which the net operating loss or other item is carried
back and Spinco shall have sole right to contest such audit or proceeding and to
employ advisors of its choice under Section 5.01.


                                       13
<PAGE>

                  (b)  To the extent permitted by law, any member of the NSI-Del
Group shall be entitled, upon consent from Spinco (which consent shall not be
unreasonably delayed or withheld), to carry back any net operating loss or other
item from a taxable period ending after the Date of the Second Distribution to a
taxable period ending on or before the Date of the Second Distribution. NSI-Del
shall be responsible for filing any claim for refund relating to such carry
back, except that NSI-Del shall not file any claim without prior written
approval of such claim by Spinco (which approval shall not be unreasonably
delayed or withheld). Any refund of taxes resulting from any such carryback by a
member of the NSI-Del Group shall be payable to NSI-Del as provided in Section
4.01. NSI-Del shall indemnify and hold Spinco harmless for any tax liability
that results from any refund claim relating to a carryback under this Section
3.01(b). Notwithstanding any other provision of this Agreement to the contrary,
Spinco shall be considered the Controlling Party for purposes of Article V for
any tax audit or proceeding involving any period ending on or before the Date of
the Second Distribution to which the net operating loss or other item is carried
back and Spinco shall have sole right to contest such audit or proceeding and to
employ advisors of its choice under Section 5.01 provided, however, that Spinco
shall (i) permit NSI-Del to participate at its own expense in any proceedings
relating to any claim for refund pursuant to this Section 3.01(b); (ii) shall,
at NSI's request, contest any denial (in whole or in part) of any such claim for
refund, provided that NSI-Del shall agree to pay to Spinco on demand all
out-of-pocket costs, losses and expenses (including, but not limited to, legal
and accounting fees) paid or incurred by Spinco in connection with contesting
such claim; (iii) not settle any such claim for refund without NSI-Del's consent
(which consent shall not be unreasonably delayed or withheld); provided that if
Spinco wishes to settle such claim and NSI-Del does not consent, NSI-Del will
pay to Spinco on demand all out-of-pocket costs, losses and expenses (including,
but not limited to, legal and accounting fees) paid or incurred by Spinco in
connection with contesting such claim, regardless of whether NSI-Del requested
such claim to be contested; and (iv) to the extent NSI-Del is not participating,
shall keep NSI-Del informed as to all significant developments relating to any
such claim for refund or the contest of any denial thereof.

                  (c)  To the extent NSI-Del elects to carry back any net
operating loss or other item from a taxable period beginning after the Date of
the Second Distribution to a Stub Period (any refund resulting from which carry
back to be payable to NSI-Del as provided in Section 4.01), Spinco shall not be
liable (notwithstanding clause (i) of Section 2.03(a) to the contrary) for any
tax liability resulting from a claim of refund for such carry back.

         3.02     Distributions and Elections.

                  (a)  No member of the Spinco Group shall make any tax
election, pay or cause to be paid any distribution from an Affiliate or take any
other action that would cause an actual increase in the taxes for which the
NSI-Del Group is responsible or would cause an actual reduction in the amount of
any refund of taxes payable to the NSI-Del Group.

                  (b)  No member of the NSI-Del Group shall make any tax
election, pay or cause to be paid any distribution from an Affiliate or take any
other action that would cause an actual increase in the taxes for which the
Spinco Group is responsible or would cause an actual reduction in the amount of
any refund of taxes payable to the Spinco Group.



                                       14
<PAGE>

                  (c)  Neither Spinco nor NSI-Del shall be liable to the other
under Section 3.02(a) or Section 3.02(b) for any tax position on a Tax Return
that independent tax counsel selected by Spinco (in the case of a Tax Return
position desired to be taken by any member of the Spinco Group) or NSI-Del (in
the case of a Tax Return position desired to be taken by any member of the
NSI-Del Group), the identity of which is reasonably acceptable to the other
party, opines that such position is necessary and required to comply with the
Code, the regulations or other applicable law.

                  (d)  To the extent permitted by law, Spinco and NSI-Del will
file any Tax Return which such party is responsible to file for the Stub Period
or for any Period Before the Second Distribution consistent with the tax
principles and methods reflected in the NSI-Del fiscal year ending August 31,
2000 federal income tax return as filed.


                                   ARTICLE IV

                                    Payments

         4.01  Payments. Subject to the provisions of Section 2.03 and Section
5.03, and except as otherwise explicitly provided herein, all payments due
hereunder to a party shall be paid not later than twenty (20) days after the
receipt or crediting of a refund or the receipt of notice of a Final
Determination by reason of which a party is liable for an indemnified cost
pursuant to this Agreement, together with interest at a rate equal to the
Applicable Federal Rate from the date on which the indemnifying party receives
such receipt, credit or notice.

         4.02  Notice. Spinco and NSI-Del shall give each other prompt written
notice of any payment that may be due under this Agreement.

         4.03  Reimbursement. Any party hereto that is entitled to
indemnification, payment or reimbursement pursuant to the terms of this
agreement shall be reimbursed on an After Tax Basis for all reasonable expenses
(including, but not limited to, attorney's fees) incurred in connection with the
enforcement of its rights hereunder. The preceding sentence shall not be
construed to limit a party's entitlement to reimbursements or payments to which
it otherwise is entitled pursuant to the terms of this agreement.


                                    ARTICLE V

                                   Tax Audits

         5.01  General. Except as provided in Sections 3.01, 5.02 and 6.02
hereof, each of Spinco and NSI-Del shall have sole responsibility for all audits
or other proceedings with respect to Tax Returns that it is required to file
under Section 2.01 (the "Controlling Party"). Except as provided in Section 5.03
hereof, the Controlling Party shall have the sole right to contest the


                                       15
<PAGE>
audit or proceeding and to employ advisors of its choice. In addition, Spinco
shall be considered the Controlling Party of any audit or other proceeding with
respect to any Tax Return filed before the Date of the Second Distribution.


         5.02  Indemnified Claims in General. Spinco and NSI-Del shall promptly
notify the other in writing prior to the issuance of an actual notice of
assessment by the relevant Taxing Authority (for example, if by the IRS, prior
to the issuance of a Form 5701 Notice of Proposed Adjustment) of any proposed
adjustment to a Tax Return that may result in liability of the other party (the
"Indemnitor") under this Agreement. If there is no Indemnitor other than the
Controlling Party, Sections 5.02 and 5.03 are inapplicable and Section 5.01
shall govern the rights of the parties with respect to the audit or proceeding.
If the Indemnitor is not also the Controlling Party (as may be the case in the
Stub Period), the Controlling Party shall provide the Indemnitor with
information about the nature and amounts of the proposed adjustments and shall
permit the other party to participate in the proceeding at its own expense,
provided, however, that the failure of the Controlling Party to notify or
provide such information to the Indemnitor shall not affect the Indemnitor's
indemnity obligations hereunder unless and to the extent the Indemnitor is
materially prejudiced thereby. Upon a Final Determination of the assessment or
proposed adjustment, the Indemnitor shall pay its pro rata share (based on its
share of liability resulting from the Final Determination) of all reasonable
expenses (including, but not limited to, legal and accounting fees) incurred by
the Controlling Party in connection with the assessment or proposed adjustment
within seven (7) days after a written request by the Controlling Party.

         5.03  Certain Federal Income Tax Claims in the Stub Period. (a) Any
issues raised by the IRS in any tax inquiry, audit, examination, investigation,
dispute, litigation or other proceeding relating to the Stub Period which would
result in federal income tax liability to the Indemnitor is defined as a
"Claim". Except as provided in Sections 3.01(b), 5.03(d) and the second sentence
of Section 5.02 hereof, and notwithstanding any other provision of this
Agreement that may be construed to the contrary, the Controlling Party agrees to
contest any Claim and not to settle any Claim without the prior written consent
of the Indemnitor, provided that (i) the Controlling Party shall provide notice
to Indemnitor pursuant to Section 5.02 hereof of any Claim, (ii) within thirty
(30) days after notice by the Controlling Party to the Indemnitor of a Claim is
received by the Indemnitor, the Indemnitor shall request in writing that such
Claim be contested, (iii) within thirty (30) days after notice by the
Controlling Party to the Indemnitor of such Claim is received by the Indemnitor,
the Indemnitor shall have provided an opinion of independent tax counsel,
selected by the Indemnitor and reasonably acceptable to the Controlling Party,
to the effect that it is more likely than not that a Final Determination shall
be substantially consistent with the Indemnitor's position relating to such
Claim, (iv) the Indemnitor agrees to pay on demand all out-of-pocket costs,
losses and expenses (including, but not limited to, legal and accounting fees)
paid or incurred by the Controlling Party in connection with contesting such
Claim, except for a Claim where the expenses are shared pursuant to Section
2.04(a) hereof, and (v) the Controlling Party, after reasonable consultation
with the Indemnitor, shall determine in its sole discretion the nature of all
actions to be taken to contest such Claim, including (1) whether any action to
contest such Claim shall initially be by way of judicial or administrative
proceeding, or both, (2) whether any such Claim shall be contested by resisting
payment thereof or by paying the same and seeking a refund thereof, and (3) the
court or other judicial body


                                       16
<PAGE>
before which judicial action, if any, shall be commenced. To the extent the
Indemnitor is not participating, the Controlling Party shall keep the Indemnitor
and, upon request by the Indemnitor, its counsel, informed as to the progress of
the contest.

                  (b)      If the Indemnitor requests that the Controlling Party
accept a settlement of a Claim offered by the IRS and if such Claim may, in the
reasonable discretion of the Controlling Party, be settled without prejudicing
any claims the IRS may have with respect to matters other than the transactions
contemplated by the Distribution Agreement, the Controlling Party shall either
accept such settlement offer or agree with the Indemnitor that the Indemnitor's
liability with respect to such Claim shall be limited to the lesser of (i) an
amount calculated on the basis of such settlement offer or (ii) the amount
calculated on the basis of a Final Determination. After a settlement or a Final
Determination, the Controlling Party shall reimburse the Indemnitor in an amount
equal to the excess, if any, of the amount of expenses paid by the Indemnitor
pursuant to clause (iv) of Section 5.03(a) over the Indemnitor's pro rata
portion of such expenses based on the Indemnitor's share of the liability with
respect to such Claim as determined under the first sentence of this Section
5.03(b).

                  (c)      If the Controlling Party shall elect to pay the
Claim and seek a refund, the Indemnitor shall lend sufficient funds on an
interest-free basis to the Controlling Party, and with no net after-tax cost to
the Controlling Party, to cover any applicable indemnity obligations of the
Indemnitor. To the extent such refund claim is ultimately disallowed, the loan
or portion thereof equal to the amount of the refund claim so disallowed shall
be applied against the Indemnitor's obligation to make indemnity payments
pursuant to this Agreement. In addition if the refund is ultimately disallowed,
the Controlling Party shall reimburse the Indemnitor for the Controlling
Party's pro rata portion of the expenses paid by the Indemnitor under clause
(iv) of Section 5.03(a) based on the Controlling Party's share of the tax
previously paid. To the extent such refund claim is allowed, the Controlling
Party shall pay to the Indemnitor (i) the amounts loaned or advanced to the
Controlling Party with respect to the indemnity obligation (not to exceed the
Indemnitor's share of any refund), and (ii) the Controlling Party's pro rata
portion of the expenses paid by the Indemnitor under clause (iv) of Section
5.03(a) based on the Controlling Party's share of any refund, within ten (10)
days of the receipt of such refund (or if the Controlling Party would have
received such refund but for the existence of a counterclaim or other claim not
indemnified by the Indemnitor under this Agreement, within ten (10) days of the
final resolution of the contest), plus an amount equal to any interest received
(or that would have been received) from the IRS that is properly attributable
to such amount.

                  (d)      Except as provided below, the Controlling Party
shall not settle a Claim that Indemnitor is entitled to require the Controlling
Party to contest under Section 5.03(a) without the prior written consent of the
Indemnitor. At any time, whether before or after commencing to take any action
pursuant to this Section 5.03 with respect to any Claim, the Controlling Party
may decline to take action with respect to such Claim and may settle such Claim
without the prior written consent of the Indemnitor by notifying the Indemnitor
in writing that the Indemnitor is released from its obligations to indemnify
the Controlling Party with respect to such Claim (which notification shall
release the Indemnitor from such obligations except to the extent the
Indemnitor has agreed in writing that it would be willing to have its liability
calculated on the basis of a settlement offer, as provided in Section 5.03(b),
at that point


                                       17
<PAGE>

in the contest) and with respect to any Claim the resolution of which is based
on the outcome of such Claim. If the Controlling Party settles any Claim without
the consent of the Indemnitor or otherwise takes or declines to take any action
pursuant to this paragraph, the Controlling Party shall (i) reimburse the
Indemnitor for all the expenses paid by the Indemnitor pursuant to clause (iv)
of Section 5.03(a), and (ii) pay to the Indemnitor any other amounts paid or
advanced by the Indemnitor with respect to such Claim (other than amounts
payable by the Indemnitor in connection with a settlement offer pursuant to
Section 5.03(b)), plus interest at a rate equal to the Applicable Federal Rate
from the date on which the amounts were advanced.


                                   ARTICLE VI

                                   Cooperation

         6.01     General. NSI-Del and Spinco shall cooperate with each other
in the filing of any Tax Returns and the conduct of any audit or other
proceeding and each shall execute and deliver such powers of attorney and make
available such other documents as are reasonably necessary to carry out the
intent of this Agreement. Each party agrees to notify the other party in
writing of any audit adjustments which do not result in tax liability but can
be reasonably expected to affect Tax Returns of the other party, or any of its
Subsidiaries, for the Stub Period or a Period After the Second Distribution.
Each party agrees to treat the First and Second Distribution for all income tax
purposes as not causing the recognition of any gain or loss.

         6.02     Cooperation With Respect to Tax Return Filings, Examinations
and Tax Related Controversies.

                  (a)      NSI-Del's Obligations. In addition to any obligations
imposed pursuant to the Distribution Agreement, NSI-Del and each other member of
the NSI-Del Group shall fully cooperate with Spinco and its representatives, in
a prompt and timely manner, in connection with (i) the preparation and filing of
and (ii) any inquiry, audit, examination, investigation, dispute, or litigation
involving, any Tax Return filed or required to be filed by or for any member of
the Spinco Group for any taxable period ending on or before the Date of the
Second Distribution. Such cooperation shall include, but not be limited to, (x)
the execution and delivery to Spinco by the appropriate NSI-Del Group member of
any power of attorney required to allow Spinco and its counsel to participate on
behalf of NSI-Del or such other NSI-Del Group member in any inquiry, audit or
other administrative proceeding and to assume the defense or prosecution, as the
case may be, of any suit, action or proceeding for which Spinco is the
Controlling Party, (y) making available to Spinco, during normal business hours,
and within thirty (30) days of any written request therefor, all books, records
and information, and the assistance of all appropriate officers and employees,
reasonably necessary or useful in connection with any tax inquiry, audit,
examination, investigation, dispute, litigation or any other matter, and (z) use
of its commercially reasonable best efforts in defending Spinco's interests in
any tax inquiry, audit, examination, investigation, dispute, litigation or any
other matter for which NSI-Del is the Controlling Party.


                                       18
<PAGE>
                  (b)      Spinco's Obligations. In addition to any obligations
imposed pursuant to the Distribution Agreement, Spinco shall fully cooperate
with NSI-Del and its representatives, in a prompt and timely manner, in
connection with (i) the preparation and filing of and (ii) any inquiry, audit,
examination, investigation, dispute, or litigation involving, any Tax Return
filed or required to be filed by or for any member of the NSI-Del Group which
includes Spinco or any other member of the Spinco Group. Such cooperation shall
include, but not be limited to, (x) the execution and delivery to NSI-Del by the
appropriate Spinco Group member of any power of attorney required to allow
NSI-Del and its counsel to participate on behalf of Spinco or such other Spinco
Group member in any inquiry, audit or other administrative proceeding and to
assume the defense or prosecution, as the case may be, of any suit, action or
proceeding for which NSI-Del is the Controlling Party, (y) making available to
NSI-Del, during normal business hours, and within thirty (30) days of any
written request therefor, all books, records and information, and the assistance
of all appropriate officers and employees, reasonably necessary or useful in
connection with any tax inquiry, audit, examination, investigation, dispute,
litigation or any other matter, and (z) the use of its commercially reasonable
best efforts in defending NSI-Del's interests in any tax inquiry, audit,
examination, investigation, dispute, litigation or other matter for which Spinco
is the Controlling Party.

                  (c)      Remedy for Failure to Comply. If Spinco reasonably
determines that NSI-Del is not for any reason fulfilling its obligations under
Section 6.02(a) hereof, or if NSI-Del reasonably determines that Spinco is not
for any reason fulfilling its obligations under Section 6.02(b) hereof, then
NSI-Del or Spinco, as the case may be, shall have the right to appoint an
independent nationally-recognized public accounting or law firm to assist the
other in meeting its obligations under this Section 6.02. Such entity shall have
complete access, during normal business hours to all books, records and
information, and the reasonable cooperation of all appropriate officers and
employees, of NSI-Del or Spinco, as the case may be. In addition, the
non-fulfilling party shall be responsible for any additional tax liability
caused by the non-fulfillment of its obligations under Section 6.02(a) or (b).
Anything in the preceding provisions of this Section 6.02(c) to the contrary
notwithstanding, if the party alleged not to have fulfilled or be fulfilling its
obligations under Section 6.02(a) or 6.02(b), as applicable, shall maintain that
it fulfilled its obligations under Section 6.02(a) or Section 6.02(b), as
applicable, and/or that no additional liability resulted from any
non-fulfillment with respect to Section 6.02(a) or Section 6.02(b), as
applicable, such matter or matters shall be determined by independent counsel
agreed to by both the allegedly non-fulfilling party and the party alleging
non-fulfillment (which determination shall be final and binding). If such
independent counsel shall determine that the allegedly non-fulfilling party in
fact fulfilled its obligations under Section 6.02(a) or Section 6.02(b), as
applicable: (i) the fees and expenses of the accounting or law firm appointed
pursuant to the first sentence of this Section 6.02(c) as well as the fees and
expenses of the independent counsel making such determination shall be paid by
the party alleging non-fulfillment, and (ii) liability for taxes alleged to have
resulted from such non-fulfillment shall be borne by Spinco or NSI-Del without
regard to this Section 6.02(c). If such independent tax counsel shall determine
that the alleged non-fulfilling party did not fulfill its obligations under
Section 6.02(a) or 6.02(b), as applicable: (i) the fees and expenses referred to
in clause (i) of the preceding sentence shall be borne by the party determined
not to have fulfilled such obligations, and (ii) the additional tax liability
alleged to have been caused by such non-fulfillment shall be borne by the
non-fulfilling party, unless and to the extent that such independent counsel
determines that such taxes were not caused by such non-fulfillment, in which
case and to which extent liability for taxes alleged to


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<PAGE>

have resulted from such non-fulfillment shall be borne by Spinco or NSI-Del
without regard to this Section 6.02(c).


                                   ARTICLE VII

                          Retention of Records; Access

         The NSI-Del Group and the Spinco Group shall (a) in accordance with
their then current record retention policy, retain records, documents,
accounting data and other information (including computer data) necessary for
the preparation and filing of all Tax Returns in respect of taxes of the NSI-Del
Group or the Spinco Group for any Period Before the Second Distribution or any
Stub Period for the audit of such Tax Returns; and (b) give to the other
reasonable access to such records, documents, accounting data and other
information (including computer data) and to its personnel (insuring their
cooperation) and premises, for the purpose of the review or audit of such Tax
Returns to the extent relevant to an obligation or liability of a party under
this Agreement. At any time after the Date of the Second Distribution that
either the NSI-Del Group or the Spinco proposes to destroy such material or
information, it shall first notify the other Group in writing, and the other
Group shall be entitled to receive such materials or information proposed to be
destroyed.


                                  ARTICLE VIII

                                    Disputes

         If NSI-Del and Spinco cannot agree on the calculation of any
liabilities under this Agreement, such calculation shall be made by any
independent public accounting firm acceptable to both NSI-Del and Spinco. The
decision of such firm shall be final and binding. The fees and expenses incurred
in connection with such calculation shall be allocated between and borne by the
parties based upon the independent public accounting firm's determination with
respect to the disputed calculation. Any accounting firm engaged pursuant to
this Article VIII shall be empowered to make determinations with respect to
matters of calculation only and not with regard to the proper interpretation of
this Agreement.


                                   ARTICLE IX

                           Termination of Liabilities

         Notwithstanding any other provision in this Agreement, any liabilities
determined under this Agreement shall not terminate any earlier than the
expiration of the applicable statute of limitation for such liability. All other
covenants under this Agreement shall survive indefinitely.


                                       20
<PAGE>

                                    ARTICLE X

                            Miscellaneous Provisions

         10.01    Complete Agreement; Construction. This Agreement, together
with the Ancillary Agreements, shall constitute the entire agreement between the
parties with respect to the subject matter hereof and shall supersede all
previous negotiations, commitments and writings with respect to such subject
matter.

         10.02    Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more such counterparts have been signed by
each of the parties and delivered to the other parties.

         10.03    Survival of Agreements. Except as otherwise contemplated by
this Agreement, all covenants and agreements of the parties contained in this
Agreement shall survive the Date of the Second Distribution.

         10.04    Notices. All notices and other communications hereunder shall
be in writing, shall reference this Agreement and shall be hand delivered or
mailed by registered or certified mail (return receipt requested) or sent by any
means of electronic message transmission with delivery confirmed (by voice or
otherwise) to the parties at the following addresses (or at such other addresses
for a party as shall be specified by like notice) and will be deemed given on
the date on which such notice is received:

         To NSI-Del:

                           National Service Industries, Inc.
                           1420 Peachtree Street, N.E.
                           Atlanta, Georgia 30309-3002
                           Attention:  Carol Ellis Morgan


         To Spinco:

                           Acuity Brands, Inc.
                           1420 Peachtree Street, N.E.
                           Atlanta, Georgia 30309-3002
                           Attention:  Kenyon W. Murphy


         10.05    Waivers. The failure of any party to require strict
performance by any other party of any provision in this Agreement shall not
waive or diminish that party's right to demand strict performance thereafter of
that or any other provision hereof.

         10.06    Amendments. This Agreement may not be modified or amended
except by an agreement in writing signed by each of the parties hereto.


                                       21
<PAGE>
         10.07    Successors and Assigns. The provisions to this Agreement shall
be binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.

         10.08    Subsidiaries. Each of the parties hereto shall cause to be
performed, and hereby guarantees the performance of, all actions, agreements and
obligations set forth herein to be performed by any Subsidiary of such party or
by any entity that is contemplated to be a Subsidiary of such party on and after
the Distribution Date.

         10.09    Third-Party Beneficiaries. This Agreement is solely for the
benefit of the parties hereto and their respective Subsidiaries and Affiliates
and should not be deemed to confer upon third parties any remedy, claim,
liability, reimbursement, claim of action or other right in excess of those
existing without reference to this Agreement.

         10.10    Title and Headings. Titles and headings to Sections herein are
inserted for convenience of reference only and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.

         10.11    GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF DELAWARE.

         10.12    Dispute Resolution. Any dispute arising out of or relating to
the performance, breach or interpretation of this Agreement shall be handled in
accordance with Article VIII of this Agreement (solely with respect to matters
of computation) and Article V of the Distribution Agreement.

         10.13    Severability. In the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein and therein shall not in any way be affected or
impaired thereby. The parties shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions,
the economic or operational effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.



                                       22
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.

                                           ACUITY BRANDS, INC.

                                           By     /s/ James S. Balloun
                                             ----------------------------------
                                           James S. Balloun
                                           President and Chief Executive Officer


                                           Witness:   /s/ Kenyon W. Murphy
                                                   ----------------------------
                                                    Kenyon W. Murphy



                                           NATIONAL SERVICE INDUSTRIES, INC.,
                                           a Delaware corporation

                                           By: /s/ Brock A. Hattox
                                               --------------------------------
                                                    Brock A. Hattox
                                                    Executive Vice President and
                                                    Chief Financial Officer


                                           Witness:   /s/ Carol Morgan
                                                   ----------------------------
                                                    Carol Morgan


                                           NATIONAL SERVICE INDUSTRIES, INC., a
                                           California corporation

                                           By: /s/ Brock A. Hattox
                                               --------------------------------
                                                   Brock A. Hattox
                                                   Executive Vice President and
                                                   Chief Financial Officer


                                           Witness: /s/ Carol Morgan
                                                   ----------------------------
                                                   Carol Morgan





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