<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/X/ Preliminary proxy statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
UNITOG COMPANY
- - - --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- - - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- - - --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- - - --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- - - --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- - - --------------------------------------------------------------------------------
(5) Total fee paid:
- - - --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
- - - --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- - - --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- - - --------------------------------------------------------------------------------
(3) Filing party:
- - - --------------------------------------------------------------------------------
(4) Date filed:
- - - --------------------------------------------------------------------------------
<PAGE> 2
PRELIMINARY COPY
UNITOG COMPANY
101 WEST 11TH STREET
KANSAS CITY, MISSOURI 64105
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 25, 1995
To All Stockholders:
The Annual Meeting of Stockholders of Unitog Company will be held on
Thursday, May 25, 1995, at 10:00 a.m., at the Kansas City Club, 1228 Baltimore,
Kansas City, Missouri for the following purposes:
(1) To elect three directors to serve three-year terms;
(2) To amend the Second Restated Certificate of Incorporation of Unitog
Company to increase the number of authorized shares of common stock
from 15 million shares to 30 million shares;
(3) To approve the Unitog Company Outside Director Fee/Stock Program;
(4) To approve the appointment of KPMG Peat Marwick LLP as independent
auditors for fiscal 1996; and
(5) To transact such other business as may properly come before the meeting
or any adjournments or postponements thereof.
Stockholders of record at the close of business on March 31, 1995 are
entitled to receive notice of, and to vote at, the meeting or any adjournments
or postponements thereof. A list of stockholders of the Company as of the close
of business on March 31, 1995 will be available for inspection during business
hours from May 12 through May 24, 1995 at 101 W. 11th Street, Kansas City,
Missouri and will also be available at the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Randolph K. Rolf
Chairman of the Board
Dated: April , 1995.
<PAGE> 3
IMPORTANT -- YOUR PROXY IS ENCLOSED
YOU ARE URGED TO SIGN, DATE AND MAIL YOUR PROXY EVEN THOUGH YOU MAY PLAN TO
ATTEND THE MEETING. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. IF
YOU ATTEND THE MEETING, YOU MAY VOTE BY PROXY OR YOU MAY WITHDRAW YOUR PROXY AND
VOTE IN PERSON.
<PAGE> 4
UNITOG COMPANY
101 WEST 11TH STREET
KANSAS CITY, MISSOURI 64105
------------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 25, 1995
------------------------
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Unitog Company (the "Company") for use at
the Annual Meeting of Stockholders of the Company. The meeting will be held on
Thursday, May 25, 1995, commencing at 10:00 a.m., at the Kansas City Club, 1228
Baltimore, Kansas City, Missouri. This Proxy Statement and the accompanying form
of proxy are being mailed on or about April , 1995.
Only stockholders of record at the close of business on March 31, 1995 will
be entitled to notice of, and to vote at, the annual meeting. On the record
date, the Company had 9,272,094 shares of common stock issued and outstanding
and entitled to vote. Unless otherwise indicated, all share numbers and other
share data have been adjusted to reflect a 3-for-2 stock split in the form of a
stock dividend paid on September 23, 1994 to holders of record on September 9,
1994.
All shares represented by proxies will be voted by the individuals
designated on the enclosed proxy card in accordance with the stockholders'
directions. If the proxy card is signed and returned without any direction
given, shares will be voted in accordance with the recommendations of the Board
of Directors as described below. Any stockholder giving a proxy may revoke it at
any time before such proxy is voted at the meeting by giving written notice of
revocation to the Secretary of the Company, by submitting a later dated proxy or
by attending the meeting and voting in person. The Chairman and Chief Executive
Officer will announce the closing of the polls during the meeting. All proxies
must be received prior to the closing of the polls to be counted.
The Company will bear all the costs of solicitation of proxies. Officers,
agents and employees of the Company may, by letter, by telephone or in person,
make additional requests for the return of proxies and may receive proxies on
behalf of the Company. Brokers, nominees, fiduciaries and other custodians will
be requested to forward soliciting materials to the beneficial owners of shares
and will be reimbursed for their expenses.
Stockholders representing a majority of the common stock outstanding and
entitled to vote must be present or represented by proxy in order to constitute
a quorum to conduct business at the meeting. The following proposals will be
submitted to the stockholders at the meeting: the election of three directors;
the approval of an amendment to the Second Restated Certificate of Incorporation
of the Company to increase the number of authorized shares of common stock from
15 million shares to 30 million shares; the approval of the Unitog Company
Outside Director Fee/Stock Program (the "Program"); and the approval of the
appointment of KPMG Peat Marwick LLP as independent auditors for fiscal 1996. If
any other matters are properly brought before the meeting, the enclosed proxy
permits the stockholder to give discretionary authority to the persons named in
the proxy to vote the shares in their best judgment.
Each share of common stock represented at the meeting is entitled to one
vote on each matter properly brought before the meeting. The three nominees for
director who receive the highest number of votes cast will be elected as
directors. Approval of the amendment to the Second Restated Certificate of
Incorporation and approval of the Program each require the affirmative vote of a
majority of the total number of shares
1
<PAGE> 5
represented and entitled to vote at the meeting. Therefore, an abstention with
respect to the amendment to the Second Restated Certificate of Incorporation or
with respect to the Program is in effect a vote against that proposal. In order
to be approved, the votes cast for the approval of auditors and for any other
proposal must exceed the votes cast against. Except for the vote on the adoption
of the amendment to the Second Restated Certificate of Incorporation and the
vote to approve the Program, shares represented by proxies which are marked
"withhold authority" with respect to the election of one or more nominees for
election as directors, proxies which are marked "abstain" on other proposals,
and proxies which are marked to deny discretionary authority on other matters
will be considered to be represented at the meeting, but will not be included in
determining the number of votes cast. In instances where brokers are prohibited
from exercising discretionary authority for beneficial owners who have not
returned proxies to the brokers, those shares will not be included in the vote
totals and, therefore, will have no effect on the vote.
2
<PAGE> 6
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Company's
common stock as of March 1, 1995 for: (i) each person known to be the beneficial
owner of more than 5% of the Company's common stock; (ii) each director and each
nominee for director; (iii) each executive officer listed in the charts under
Executive Compensation and Other Information; and (iv) all directors and
executive officers as a group.
<TABLE>
<CAPTION>
VOTING AND
INVESTMENT POWER
---------------------- PERCENT
NAME OF BENEFICIAL OWNER SOLE SHARED OTHER OF CLASS(1)
- - - ---------------------------------------------- --------- ------- ------- -----------
<S> <C> <C> <C> <C>
Stein Roe & Farnham Incorporated.............. -- -- 701,850(2) 7.4%
One South Wacker Drive
Chicago, Illinois 60606
William D. Thomas............................. 34,596 661,870(3) -- 7.3%
120 West 12th Street
Kansas City, Missouri 64105
G. Kenneth Baum............................... 483 661,870(3) -- 7.0%
120 West 12th Street
Kansas City, Missouri 64105
George K. Baum Group, Inc..................... 661,870(3) -- -- 7.0%
120 West 12th Street
Kansas City, Missouri 64105
Randolph K. Rolf.............................. 631,000 15,000 -- 6.8%
101 West 11th Street
Kansas City, Missouri 64105
William Blair & Company....................... 520,590(4) -- -- 5.5%
135 S. LaSalle Street
Chicago, Illinois 60603
SteinRoe Special Fund......................... -- -- 488,850(2) 5.2%
One South Wacker Drive
Chicago, Illinois 60606
Robert F. Hagans.............................. 155,250 -- -- 1.6%
J. Keith Schreiman............................ 40,869(5) 60,372 -- 1.1%
John W. Hall.................................. 64,750(5) -- -- *
J. Craig Peterson............................. 63,000(5) -- -- *
D. Patrick Curran............................. 24,000 750 -- *
Terence C. Shoreman........................... 16,500(5) -- -- *
John W. Caffry................................ 3,000 1,500 -- *
David B. Sharrock............................. 3,000 -- -- *
All executive officers and directors
as a group (14 persons)..................... 1,056,436(5) 740,242 -- 19.0%
</TABLE>
- - - -------------------------
* Denotes less than 1%.
(1) Based on the number of outstanding shares of common stock as of March 1,
1995 (9,272,094 shares), plus the maximum number of shares subject to
purchase within 60 days after March 1, 1995 upon the exercise of stock
options (203,637 shares).
(2) Information is as of December 31, 1994 based on a joint Schedule 13G, dated
February 13, 1995. Stein Roe & Farnham Incorporated has sole investment
power as to 701,850 shares and SteinRoe Special Fund has sole voting power
as to 488,850 of such shares.
(3) Shares are owned directly by George K. Baum Group, Inc., of which Mr. Baum
and Mr. Thomas are directors, officers and stockholders.
(4) Information is as of December 31, 1994 based on a Schedule 13G, dated
January 25, 1995.
(5) Includes maximum number of shares subject to purchase within 60 days after
March 1, 1995 upon the exercise of stock options as follows: Mr. Schreiman,
10,500 shares; Mr. Hall, 750 shares; Mr. Peterson, 61,500 shares; Mr.
Shoreman, 16,500 shares; all executive officers as a group, 99,938 shares.
3
<PAGE> 7
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of seven members,
one of whom is an executive officer of the Company.
The Company's Certificate of Incorporation and Bylaws provide for a
classified Board of Directors under which there are three classes of directors,
all of which are as equal in number as possible. The class to which each
director is assigned is designated as Class A, Class B or Class C. The term of
office of Class A Directors will expire at the 1996 Annual Meeting, Class B at
the 1997 Annual Meeting and Class C at the 1995 Annual Meeting. At its March 17,
1995 meeting, the Board of Directors nominated the three persons listed below
for election as Class C Directors for a three year term expiring at the 1998
Annual Meeting. Each director elected will continue in office until a successor
has been elected or until resignation or removal. The nominees for directors are
all currently Board members.
Shares represented by the accompanying form of proxy will be voted for the
election of the three nominees listed below, unless otherwise instructed on the
proxy card. If any nominee should at the time of the meeting be unavailable or
unable to serve as a director, the shares represented by the proxies will be
voted to elect the remaining nominees or any substitute nominee or nominees
designated by the Board. The Board knows of no reason why any of the nominees
would be unavailable or unable to serve.
NOMINEES FOR THREE-YEAR TERMS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE THREE
NOMINEES FOR CLASS C DIRECTOR NAMED BELOW:
<TABLE>
<CAPTION>
DIRECTOR PRINCIPAL OCCUPATION FOR
NAME OF NOMINEE FOR DIRECTOR AGE SINCE LAST FIVE YEARS AND DIRECTORSHIPS
- - - ---------------------------- --- -------- -------------------------------------------------
<S> <C> <C> <C>
G. Kenneth Baum............. 64 1984 Mr. Baum has served as Chairman of the Board of
George K. Baum Group, Inc., an investment
company, since May 1994. He served as Chairman of
the Board of George K. Baum & Company, an
investment banking firm, from April 1982 to May
1994. He is a member of the Compensation
Committee and Executive Committee. Mr. Baum also
serves on the Board of Directors of H & R Block,
Inc., Interstate Bakeries Corporation and
Sealright Co., Inc.
D. Patrick Curran........... 50 1984 Mr. Curran has served as Chairman and Chief
Executive Officer of Curran Companies, a company
engaged in the specialty chemicals business,
since August 1979. He is a member of the Audit
Committee. Mr. Curran also serves on the Board of
Directors of American Safety Razor Company,
Applebee's International, Inc. and Sealright Co.,
Inc.
Robert F. Hagans............ 68 1979 Mr. Hagans served as Chairman of the Board of the
Company from 1979 until his retirement in May
1991. He is a member of the Executive Committee.
Mr. Hagans also serves on the Board of Directors
of Sealright Co., Inc.
</TABLE>
4
<PAGE> 8
CONTINUING DIRECTORS
The following is information concerning the directors whose terms continue
after the annual meeting:
<TABLE>
<CAPTION>
DIRECTOR CURRENT PRINCIPAL OCCUPATION FOR
NAME AGE SINCE TERM LAST FIVE YEARS AND DIRECTORSHIPS
- - - --------------------- --- -------- ------- -------------------------------------------------
<S> <C> <C> <C> <C>
John W. Caffry....... 67 1989 1997 Mr. Caffry served as Executive Vice President,
Administration, for Northern Telecom, Inc., a
company engaged in the telecommunications
industry, from February 1991 until his retirement
in October 1991. Prior to that time he served as
Executive Vice President, Finance and
Administration, for Northern Telecom, Inc. He is
a member of the Compensation Committee.
Randolph K. Rolf..... 53 1986 1996 Mr. Rolf has served as Chairman of the Board of
the Company since May 1991 and President and
Chief Executive Officer since May 1988. He is a
member of the Executive Committee. Mr. Rolf also
serves on the Board of Directors of Central
Mortgage Bancshares, Inc.
David B. Sharrock.... 58 1994 1997 Mr. Sharrock served as Executive Vice President
and Chief Operating Officer of Marion Merrell Dow
Inc., a pharmaceutical manufacturer, from January
1990 until his retirement in December 1993. He is
a member of the Compensation Committee. Mr.
Sharrock also serves on the Board of Directors of
Cincinnati Bell, Inc., Interneuron
Pharmaceuticals, Inc., Marion Merrell Dow Inc.,
Pharmaceutical Peptides, Inc. and Progenitor,
Inc.
William D. Thomas.... 51 1984 1996 Mr. Thomas has served as President of George K.
Baum Group, Inc., an investment company, since
May 1994. He served as Vice Chairman of George K.
Baum & Company, an investment banking firm, from
June 1991 to May 1994. From 1985 to June 1991 he
was Executive Vice President of George K. Baum &
Company. He is a member of the Audit Committee.
Mr. Thomas also serves on the Board of Directors
of Sealright Co., Inc.
</TABLE>
BOARD MEETINGS
The Board of Directors of the Company held five meetings during fiscal
1995. During fiscal 1995, all directors attended at least 75% of the total
number of meetings of the Board of Directors and Committees of which they were
members.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company receive annual retainers of
$11,000 and meeting fees of $600 for each Board of Directors meeting attended,
$300 for each telephonic Board of Directors meeting attended and $300 for each
Board of Directors committee meeting attended. The Program to be voted upon by
stockholders would permit non-employee directors to take all or a portion of
their retainer fees in Unitog stock. See "Proposal 3." The Company also provides
each non-employee director group term life insurance coverage of $50,000.
5
<PAGE> 9
COMMITTEES
The Board has established standing Audit, Compensation and Executive
Committees. The Board does not have a standing nominating committee. The
biographical information included in this Proxy Statement identifies committee
memberships held by each director.
The Audit Committee held two meetings during fiscal 1995. It consists of
two non-employee directors. The functions performed by the Audit Committee are
review of significant financial information of the Company, review of the
effectiveness of the Company's accounting and internal control system, oversight
of the audit function, and recommendation of the appointment of independent
auditors of the Company.
The Compensation Committee held three meetings during fiscal 1995. It
consists of three non-employee directors. The Compensation Committee establishes
the general compensation policies and specific compensation levels for executive
officers and key management of the Company. The Committee also administers the
Management Incentive Plan and the Unitog Company 1992 Stock Option Plan.
The Executive Committee did not meet during fiscal 1995. It consists of two
non-employee directors and one employee director. The Executive Committee has
authority to exercise, between Board meetings, all the powers and authority of
the Board, subject to certain restrictions.
RELATED PARTY TRANSACTION
The Company loaned Terence C. Shoreman, Senior Vice President - Rental
Operations, funds toward the purchase of a principal residence at an interest
rate equal to prime. The largest amount outstanding in fiscal 1995 was $159,968,
and the entire loan was repaid in fiscal 1995.
STOCK OWNERSHIP AND TRADING REPORTS
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors to file with the Securities and Exchange
Commission and Nasdaq reports of ownership and reports of changes in such
ownership of common stock and other equity securities of the Company. SEC
regulations require those persons to furnish the Company with copies of all
Section 16(a) reports they file. Based solely on a review of the copies of such
reports received by it, and written representations that no Forms 5 were
required, the Company believes that during fiscal 1995 its executive officers
and directors complied with all applicable filing requirements in a timely
manner.
6
<PAGE> 10
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
The following table provides information concerning compensation provided
to the Company's Chief Executive Officer and each of the four other most highly
compensated executive officers of the Company for the fiscal years ended January
29, 1995, January 30, 1994 and January 31, 1993.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
AWARDS
------------
ANNUAL COMPENSATION SECURITIES ALL OTHER
FISCAL ------------------- UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(#) ($)(1)
- - - ----------------------------------- ------ -------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Randolph K. Rolf................... 1995 $251,043 $99,780 -- $ 11,709
Chairman, President and 1994 236,608 73,629 -- 10,603
Chief Executive Officer 1993 210,808 55,464 -- 9,241
Terence C. Shoreman................ 1995 $140,601 $41,396 12,000 $ 4,564
Sr. Vice President -- 1994 105,462 12,359 9,000 672
Rental Operations 1993 87,923 5,400 12,000 567
J. Craig Peterson.................. 1995 $138,173 $41,456 6,000 $ 5,597
Sr. Vice President -- 1994 132,077 36,447 12,000 5,673
Finance and Administration 1993 124,577 26,297 12,000 3,498
J. Keith Schreiman................. 1995 $121,173 $39,210 6,000 $ 5,527
Sr. Vice President -- 1994 115,442 31,924 -- 5,167
Sales and Marketing 1993 108,923 29,875 12,000 4,867
John W. Hall....................... 1995 $118,904 $38,072 3,000 $ 5,411
Sr. Vice President -- 1994 115,538 28,715 -- 5,075
Human Resources 1993 111,269 22,284 -- 4,726
</TABLE>
- - - -------------------------
(1) All Other Compensation for fiscal 1995 includes the Company contribution
under the qualified thrift plan as follows: Mr. Rolf, $10,525; Mr. Shoreman,
$3,745; Mr. Peterson, $4,782; Mr. Schreiman, $4,812; and Mr. Hall, $4,709.
All other amounts reported for fiscal 1995 under this heading represent
premiums paid by the Company for term life insurance.
STOCK OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning the grant of stock
options during fiscal 1995 to the named executive officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1) POTENTIAL REALIZABLE
----------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM(2)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ----------------------
NAME GRANTED (#) FISCAL YEAR ($/SHARE) DATE 5%($) 10%($)
- - - ------------------------- ----------- --------------- ----------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Randolph K. Rolf......... -- -- -- -- -- --
Terence C. Shoreman...... 12,000 8.4% $ 17.00 3/18/04 $128,520 $324,360
J. Craig Peterson........ 6,000 4.2% 17.00 3/18/04 64,260 162,180
J. Keith Schreiman....... 6,000 4.2% 17.00 3/18/04 64,260 162,180
John W. Hall............. 3,000 2.1% 17.00 3/18/04 32,130 81,090
</TABLE>
- - - -------------------------
(1) The options were granted on March 18, 1994 and become exercisable in four
equal annual installments commencing one year from the date of grant. In
the event the employment of an option holder is terminated within one year
after a change of control, any unvested options which have been held for at
least six months immediately vest and are settled by the payment to the
option holder of an amount equal
7
<PAGE> 11
to the excess of the fair market value of the shares over the exercise
price of the option. Options become immediately exercisable upon the death
or, in some instances, the retirement of the option holder.
(2) The price of Unitog Company common stock at the end of the 10-year option
term would be as follows: assuming 5% annual appreciation, $27.71 per
share, and assuming 10% annual appreciation, $44.03 per share. The assumed
annual rates of stock price appreciation of 5% and 10% are set by the
Securities and Exchange Commission and are not intended as a forecast of
possible future appreciation in stock prices.
FISCAL YEAR END STOCK OPTION VALUES
The following table provides information concerning unexercised options
held as of the end of fiscal 1995 by the named executive officers. None of the
named executive officers exercised any stock options during fiscal 1995.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT FISCAL
YEAR END(#)(1) YEAR END($)(2)
------------------------------- -------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - - -------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Randolph K. Rolf...................... -- -- -- --
Terence C. Shoreman................... 8,250 24,750 $ 51,045 $ 83,175
J. Craig Peterson..................... 54,000 36,000 541,230 251,670
J. Keith Schreiman.................... 6,000 12,000 39,840 44,700
John W. Hall.......................... -- 3,000 -- 2,430
</TABLE>
- - - -------------------------
(1) All outstanding options are non-qualified stock options.
(2) Based on the closing market price of the Company's common stock at fiscal
year end ($17.81) per share.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
In July 1991, the Company entered into a five year employment agreement
with J. Craig Peterson, the Company's Senior Vice President - Finance and
Administration. Under the agreement, Mr. Peterson's compensation is as follows:
a minimum base salary of $120,000, an automobile allowance of $10,000 and the
right to participate in all benefit programs and incentive compensation plans
that the Company generally makes available to its executive officers. In
addition, Mr. Peterson was granted a 10-year option to purchase 60,000 shares of
common stock at $7.00 per share, the fair market value of the Company's common
stock on the date of grant. The option vests in four equal annual installments,
commencing July 1, 1992, subject to accelerated vesting (and a reduction in
exercise price to $1.00 per share) in the event of a change of control of the
Company during the term of the employment agreement.
Under the terms of the Unitog Company 1992 Stock Option Plan, in the event
the employment of an option holder is terminated within one year after a change
of control of the Company, any unvested options then outstanding which have been
held for at least six months immediately vest and are settled by the payment to
the option holder of an amount equal to the excess of the fair market value of
the shares subject to outstanding options over the exercise price of the
options.
Under Mr. Peterson's employment agreement and under the Stock Option Plan,
a "change of control" is deemed to have occurred in the event: (i) any person
acquires more than 25% of the common stock through a tender offer, exchange
offer or otherwise; or (ii) the Company is liquidated or dissolved following the
sale of all or substantially all of its assets; or (iii) the Company is not the
surviving parent corporation resulting from any merger or consolidation to which
it is a party.
8
<PAGE> 12
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors establishes the
general compensation policies and specific compensation levels for executive
officers and key management of the Company and administers the Management
Incentive Plan and the Unitog Company 1992 Stock Option Plan. The Compensation
Committee is composed of three members, each of whom is a non-employee director.
All decisions by the Compensation Committee relating to the compensation of the
Company's executive officers and key management are ratified by the entire
Board, except for decisions about awards under the Stock Option Plan which are
made solely by the Compensation Committee. The Compensation Committee has
furnished the following report on executive compensation:
The Company's executive compensation policies are designed to integrate
compensation with the Company's financial performance and long-term stock
appreciation, to provide competitive levels of compensation to assist the
Company in attracting and retaining qualified executives and to recognize
individual initiatives and achievements. There are three principal elements in
the Company's executive compensation program.
- Base Salary Compensation
- Annual Incentive Compensation
- Stock-Based Performance Compensation through Stock Option Grants
Base Salary
Base salary ranges are established each year for each executive position
based primarily on a review of salaries offered by other industrial companies
with revenues comparable to Unitog's for positions with comparable
responsibilities. The Compensation Committee believes that the Company's base
salary structure should approximate the 50th percentile of companies with
revenues comparable to Unitog's. The Compensation Committee sets executive
salaries within the applicable ranges each year after reviewing the following
criteria for each executive: job performance and results achieved, potential for
future responsibilities, the overall financial performance (primarily revenues
and operating income) of the Company or, for those executives who work primarily
in a particular operating segment, a combination of financial performance of the
Company and of the executive's business segment, and the experience of the
executive, in roughly that order of importance.
Annual Incentive Compensation
The purpose of the Company's Management Incentive Plan is to provide a
direct financial incentive in the form of an annual cash bonus for achievement
of Company and major business segment goals. At least 60% of an executive's
annual bonus is based on actual versus targeted operating income performance,
either as to the Company as a whole or, for those executives who work primarily
in a particular operating segment, a combination of operating income of the
Company and of the executive's business segment. Bonuses are not paid unless the
Company attains a minimum operating income goal for the year. The Plan utilizes
operating income as the key performance measure because of the Company's belief
that operating income most accurately measures management performance. Up to 20%
of an executive's bonus may be based on objective criteria applicable to the
executive's area of responsibility, such as revenues and expense control, which
are set by the executive's supervisor, and up to 20% of the bonus may be
discretionary based on a subjective evaluation of whether individual goals
applicable to the executive were attained. The specific operating income goals
for the major business segments and the Company as a whole are approved by the
Compensation Committee at the beginning of each fiscal year based on financial
plans for the year. To the extent the financial and individual goals are met, an
executive receives a cash bonus equivalent to a pre-determined percentage of
base salary that is based on the executive's level of responsibility within the
Company.
9
<PAGE> 13
Stock Option Grants
Stock-based performance compensation is provided through stock options
granted under the Stock Option Plan. The purpose of the Stock Option Plan is to
align executive and stockholder long-term interests by creating a direct link
between executive compensation and stockholder return. The selection of the
participants, allotment of shares, exercise price (which may not be less than
the fair market value on the date of grant), determination of the vesting
schedule and other conditions are established by the Compensation Committee.
Although there is no explicit formula for deciding specific stock option grants,
in awarding options the Committee evaluates the recipient's ability to influence
the Company's long-term growth and profitability and to a lesser extent the
recipient's prior contributions to the Company. The Committee also considers the
number of options previously granted the recipient and, in certain cases, the
number of shares of common stock held by the recipient.
Chief Executive Compensation
Mr. Rolf is eligible to participate in the same executive compensation
plans available to other executive officers. Mr. Rolf's base salary is
determined each year by the Compensation Committee based on a review of the
Company's prior year financial performance (revenues, operating income and net
earnings), salaries paid to chief executive officers of companies with revenues
comparable to Unitog's and salaries paid by companies included in the peer
group, in that order of importance. As with other executives, it is the
Committee's belief that the base salary for the chief executive officer should
be set within a range that approximates the 50th percentile of companies with
revenues comparable to Unitog's. In fiscal 1995, Mr. Rolf received a base salary
of $251,000, an increase of $14,000, or 6%, over fiscal 1994 base salary. The
Compensation Committee determined that the increase in base salary was
appropriate in consideration of the 5% increase in revenues, the 14% increase in
operating income and the 32% increase in net earnings from fiscal 1993 to fiscal
1994. The amount of Mr. Rolf's bonus for fiscal 1995 under the Management
Incentive Plan was $99,780, or 40% of his base salary, and was based solely on
the Company's operating income performance. Mr. Rolf declined stock options in
fiscal 1995 because of his desire that available stock options be granted to
executives with a less significant ownership stake in the Company.
Deductibility of Compensation Expenses
Under the Omnibus Budget Reconciliation Act of 1993, the Company is not
allowed a tax deduction for compensation paid in excess of $1 million to any
officer listed in the Summary Compensation Table, except to the extent such
excess constitutes performance-based compensation. The Committee did not
consider this restriction in setting executive compensation because in no case
does compensation paid to any executive approach the $1 million limit.
John W. Caffry, Chairman
G. Kenneth Baum
David B. Sharrock
10
<PAGE> 14
TOTAL MARKET RETURN
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG UNITOG COMPANY, THE S&P 500 INDEX AND A PEER GROUP
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) UNITOG COMPANY PEER GROUP S&P 500 INDEX
<S> <C> <C> <C>
1/26/90 100 100 100
1/27/91 57 100 103
1/26/92 126 134 128
1/31/93 159 139 135
1/30/94 193 157 147
1/29/95 211 160 145
</TABLE>
Assumes $100 invested on January 26, 1990 in the Company's common stock, in
the S&P 500 Index and in a peer group of companies comprised of Angelica
Corporation, Cintas Corporation, G & K Services, Inc., National Service
Industries, Inc. and Unifirst Corporation.
- - - -------------------------
* Total return equals price appreciation plus dividends and assumes reinvestment
of dividends.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is comprised of G. Kenneth Baum, John W. Caffry
and David B. Sharrock. None of these individuals is or has ever been an officer
or employee of the Company. During fiscal 1995, no executive officer of the
Company served as a director of any corporation for which any of these
individuals served as an executive officer, and there were no other compensation
committee interlocks with the companies with which these individuals or the
Company's other directors are affiliated.
PROPOSAL NO. 2
APPROVAL OF AMENDMENT TO SECOND RESTATED CERTIFICATE OF
INCORPORATION OF THE COMPANY
The Board of Directors has approved an amendment to Article Fourth of the
Second Restated Certificate of Incorporation of the Company to increase the
total number of authorized shares of stock of the Company from 15,100,000 shares
to 30,100,000 shares and to increase the number of authorized shares of common
stock from 15,000,000 shares to 30,000,000 shares.
The Board of Directors recommends that stockholders consider and approve a
proposal to amend Article Fourth of the Second Restated Certificate of
Incorporation of the Company. The text of the proposed amendment is set forth in
Exhibit A hereto and should be read in its entirety.
11
<PAGE> 15
The Company is now authorized to issue a total of 15,100,000 shares,
consisting of 15,000,000 shares of common stock and 100,000 shares of serial
preferred stock. As of March 31, 1995, 9,272,094 shares of common stock were
issued and outstanding.
The Company has no present plans or commitments to issue the additional
shares of common stock authorized by this proposed amendment. However, the
additional authorized shares of common stock will be available for general
corporate purposes, including financings, acquisitions and employee benefit
plans. Having such additional authorized shares available for issuance in the
future would give the Company flexibility and allow shares of common stock to be
issued without the expense and delay of a special meeting of stockholders,
unless such action is required by applicable law or under the rules of any stock
exchange on which the Company's securities may then be listed.
If the proposed amendment is approved, the additional shares, when issued,
will have the same rights as the currently authorized common stock. The holders
of common stock do not have preemptive rights to subscribe for additional shares
of common stock.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSED AMENDMENT TO THE
SECOND RESTATED CERTIFICATE OF INCORPORATION OF THE COMPANY INCREASING THE TOTAL
NUMBER OF AUTHORIZED SHARES AND THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK.
PROPOSAL NO. 3
APPROVAL OF OUTSIDE DIRECTOR FEE/STOCK PROGRAM
The Board of Directors of Unitog Company has adopted, subject to the
approval of its stockholders, the Unitog Company Outside Director Fee/Stock
Program. The Program is intended to assist the Company in continuing to attract
and retain quality members of the Board of Directors, and permits outside
directors to receive all or a portion of their director fees in Unitog's common
stock. A copy of the Program is set forth as Exhibit B to this Proxy Statement.
DESCRIPTION OF THE PROGRAM
The Program allows directors who are not employees of Unitog or its
subsidiaries (currently, six persons) to receive directors' fees in shares of
Unitog Company common stock, rather than in cash. Subject to stockholder
approval, the Program will become effective on May 25, 1995.
An outside director may, during specified periods, elect to apply all or
any portion of director fees to the purchase of common stock. The purchase price
for the shares will be a specified percentage of the fair market value (the last
sale price on the Nasdaq stock market) of Unitog common stock on the price
determination date.
A director may make an election each quarter between the period beginning
two business days after the date the Company releases earnings information to
the public and continuing for 21 days after the announcement date. A quarterly
election applies to director fees payable during the next calendar quarter.
Unitog will issue shares for a quarterly election as soon as possible after the
cash fees otherwise would have been paid.
A director may instead make an annual election between May 1 and June 30 of
each year for fees to be received during the next calendar year. Shares for that
calendar year will be issued after the end of the year. If a director makes an
annual election, that director also may choose to defer receipt of the stock
until a later date. In that case, the shares will be delivered on the date
specified by the director.
Shares issued for director fees payable before January 1, 1997, will be
issued for 91% of the fair market value as of the date the director fees would
otherwise be payable. After that time, the Compensation Committee will establish
a percentage of fair market value for each calendar year, at a level between 67%
and 91%. The Compensation Committee may not select a percentage lower than the
lowest percentage which permits outside directors to remain "disinterested
persons" for purposes of administering other employee
12
<PAGE> 16
benefit plans of Unitog and ensuring that transactions under those other plans
are exempt from the short-swing profit provisions of Section 16 of the
Securities Exchange Act of 1934. The Committee bases its determination of the
lowest permissible percentage upon the advice of outside legal counsel as to the
interpretation of the Section 16 rules governing a determination of who is a
"disinterested person."
A maximum of 50,000 shares of common stock may be issued under the Program.
The number of shares subject to the Program will be adjusted in the event of any
stock dividend, stock split, recapitalization, merger, consolidation,
reorganization or similar change in the common stock. As of March 31, 1995, the
market value of Unitog's common stock (the last sale price on the Nasdaq stock
market) was $18.00.
The Program is administered by the Compensation Committee of the Board of
Directors. The Program may be amended or repealed by Unitog's Board of
Directors, but any amendment that would materially increase the benefits
accruing to participants in the Program, increase the number of shares of common
stock which may be issued under the Program or materially modify requirements as
to eligibility for participation in the Program must be approved by Unitog
stockholders. The Program may not be amended more often than once every six
months, except to conform the Program to changes in the Internal Revenue Code,
the Employee Retirement Income Security Act of 1974 or the rules under either of
those statutes.
No rights under the Program are transferable except by will or the laws of
descent or distribution or pursuant to a qualified domestic relations order, as
that term is defined in the Internal Revenue Code and the Employee Retirement
Income Security Act. The dollar value and other terms of the benefits to be
received by the outside directors cannot be determined due to the voluntary
nature of participation in the Program and the discretion of the director as to
the portion of fees to be received in stock. Participation in the Program is
voluntary, but an annual election under the Program, once made, is irrevocable.
The Program is being submitted to the stockholders at the meeting for their
approval. The affirmative vote of a majority of the shares of common stock
present or represented, and entitled to vote, at the annual meeting is required.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE PROGRAM.
PROPOSAL NO. 4:
APPROVAL OF INDEPENDENT AUDITORS
For fiscal 1995, KPMG Peat Marwick LLP examined the consolidated financial
statements of the Company and its subsidiaries, including reports to the
Securities and Exchange Commission and others. Representatives of KPMG Peat
Marwick LLP will attend the meeting, will have an opportunity to make a
statement if they desire and will be available to respond to questions by
stockholders.
The Board of Directors, upon recommendation of the Audit Committee, has
selected KPMG Peat Marwick LLP as independent auditors of the Company for fiscal
1996 and is therefore asking the stockholders to approve the appointment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE APPOINTMENT OF
KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS.
MISCELLANEOUS
STOCKHOLDER PROPOSALS. In the event any stockholder intends to present a
proposal at the annual meeting of stockholders to be held in 1996, such proposal
must be received by the Company, in writing, on or before December , 1995 to
be considered for inclusion in the Company's next Proxy Statement.
VOTING PROXIES AND OTHER MATTERS. Proxies will be voted in accordance with
the choices specified on the form of Proxy. If no choice is specified, shares
will be voted "FOR" the nominees listed on the Proxy and in this Proxy
Statement, "FOR" approval of the Amendment to the Second Restated Certificate of
Incorporation to increase the number of authorized shares of common stock from
15 million to 30 million shares,
13
<PAGE> 17
"FOR" approval of the Outside Director Fee/Stock Program and "FOR" approval of
the appointment of KPMG Peat Marwick LLP as independent auditors for the Company
for fiscal 1996.
Management of the Company does not intend to present any business at the
meeting except as indicated herein and presently knows of no other business to
be presented at the meeting. Should any other business come before the meeting,
the persons named in the accompanying form of Proxy will vote the Proxy in
accordance with their best judgment.
ANNUAL REPORT. A copy of the Company's Annual Report accompanies this Proxy
Statement. The Annual Report is not part of the proxy solicitation materials. A
copy of the Company's Annual Report to the Securities and Exchange Commission on
Form 10-K for fiscal 1995 may be obtained without charge upon written request to
the Secretary, Unitog Company, 101 W. 11th Street, Kansas City, Missouri 64105.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE COMPLETE,
SIGN, DATE AND MAIL THE ACCOMPANYING PROXY. IF YOU ARE PRESENT AT THE MEETING,
YOU MAY WITHDRAW YOUR PROXY AND VOTE YOUR SHARES IN PERSON.
BY ORDER OF THE BOARD OF DIRECTORS
Randolph K. Rolf
Chairman of the Board
April , 1995
14
<PAGE> 18
EXHIBIT A
The provisions of present Article FOURTH of the Second Restated Certificate
of Incorporation of the Company are amended by
(i) deleting on the third line thereof "fifteen million one hundred
fifty thousand (15,150,000)" and inserting in lieu thereof "thirty million
one hundred fifty thousand (30,150,000)"; and
(ii) deleting on the sixth line thereof "fifteen million (15,000,000)"
and inserting in lieu thereof "thirty million (30,000,000)";
thereby causing the first paragraph of Article FOURTH to read as follows:
FOURTH: The total number of shares of capital stock of all classes of stock
which the Corporation shall have authority to issue is thirty million one
hundred fifty thousand (30,150,000) shares of stock, of which one hundred fifty
thousand (150,000) shares shall be serial preferred stock, with a par value of
one cent ($.01) per share, and thirty million (30,000,000) shares shall be
common stock, with a par value of one cent ($.01) per share.
A-1
<PAGE> 19
EXHIBIT B
UNITOG COMPANY
OUTSIDE DIRECTOR FEE/STOCK PROGRAM
1. Purpose. The purpose of this Outside Director Fee/Stock Program (the
"Program") is to enable Unitog Company ("Unitog") to continue to attract and
retain persons of outstanding competence to serve on its Board of Directors. The
Program is designed to enable outside Directors to share in Unitog's growth and
to strengthen the link between the Directors and Unitog stockholders by
permitting the Outside Directors to receive all or a portion of their
compensation in Unitog common stock.
2. Definitions.
a. The term "Annual Election Period" shall mean, for any calendar
year, the period from May 1 through June 30 of the previous calendar year.
b. A "Change of Control" shall be deemed to occur in the event that
(i) any person, other than Unitog, shall acquire more than 25% of Unitog's
common stock through a tender offer, exchange offer or otherwise; or (ii)
Unitog shall be liquidated or dissolved following a sale of all or
substantially all of its assets; or (iii) Unitog shall not be the surviving
parent corporation resulting from any merger or consolidation to which it
is a party.
c. The term "Code" shall mean the Internal Revenue Code of 1986, as
amended.
d. The term "Committee" shall mean the Compensation Committee of the
Unitog Board of Directors.
e. The term "Disinterested Person" shall mean a disinterested person
for purposes of administering other employee benefit plans of Unitog and
ensuring that transactions under such plans are exempt from the short-swing
profit provisions of Section 16 of the Exchange Act.
f. The term "Dividend Equivalent Award" shall mean the amount
determined by multiplying the number of Share Units credited to a
Participant's account on a dividend record date by the amount of the
regular or special dividend declared on one share of Unitog common stock.
g. The term "Election" shall mean a Director's election to receive all
or a portion of his/her Director fees in Shares rather than in cash,
pursuant to the Program, and shall include an "Annual Election" and a
"Quarterly Election" as defined in Section 6.
h. The term "ERISA" shall mean the Employee Retirement Income Security
Act of 1974.
i. The term "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
j. The term "fair market value" shall mean the last sale price for
Unitog common stock on the Nasdaq National Market, or, if Unitog common
stock was not traded on that day, on the next preceding day on which common
stock of Unitog was so traded.
k. The term "Formula Price" shall have the meaning set forth in
Section 5.
l. The terms "Outside Director" or "Participant" shall mean a member
of the Board of Directors of Unitog who is not an employee (within the
meaning of ERISA) of Unitog or any of its Subsidiaries. A Director of
Unitog who is also an employee of Unitog or any of its Subsidiaries shall
become eligible to participate in the Program upon the termination of such
employment.
m. The term "Quarterly Election Period" shall mean each quarterly
period commencing with the date that is two business days after the date
Unitog publicly announces its earnings information for the previous fiscal
quarter and ending on the date that is twenty-one days after the date of
such announcement.
B-1
<PAGE> 20
n. The term "Share Unit" shall mean a measure of participation under
the Program representing one share of common stock of Unitog and having the
other characteristics specified in the Program.
o. The term "Subsidiary" shall mean any corporation 50% or more of the
outstanding common stock of which is owned, directly or indirectly, by
Unitog.
p. The term "Shares" shall mean shares of Unitog's common stock, $.01
par value, available for issuance under the Program.
3. Eligibility. All Outside Directors of Unitog shall be eligible to
participate in the Program. In the event a Participant no longer meets the
requirements for participation in the Program, he/she shall become an inactive
Participant, retaining all the rights described under the Program, except the
right to make any further Elections unless he/she again becomes an active
Participant.
4. Shares Subject to the Program. Subject to adjustment in accordance with
Section 15 hereof, the total number of Shares which may be issued under the
Program is 50,000. The Shares may be either previously authorized and unissued
shares or treasury shares.
5. Formula Price.
Prior to January 1, 1997, the Formula Price shall be an amount equal to 91%
of the fair market value of one Share on the date on which the reduced Director
fees otherwise would be payable. Thereafter, the Formula Price shall be an
amount equal to a percentage (determined annually by the Committee) of the fair
market value of one Share on the date on which the Director fees otherwise would
be payable.
The percentage for the Formula Price for each calendar year shall be
established by the Committee on or before the last day of April of the preceding
calendar year, which percentage shall be no less than 67% and no more than 91%,
but shall be no less than the lowest percentage which shall permit the Outside
Directors to remain Disinterested Persons. The Committee shall base its
determination of such lowest permitted percentage upon the advice of outside
legal counsel to Unitog as to the interpretation of the rules governing a
determination of Disinterested Persons.
6. Stock Elections.
During each Annual Election Period, each Participant shall be given the
opportunity to elect, in writing, to reduce the amount of Director fees
otherwise payable to such Participant during the next calendar year (an "Annual
Election"), in exchange for the issuance of Shares as soon as practicable after
the end of the calendar year in which the fees would otherwise have been
payable, or as of a later date selected by the Participant. Any Outside Director
who does not make such an Annual Election for a calendar year may elect in
writing to reduce the amount of Director fees otherwise payable to such
Participant during any calendar quarter of such calendar year, in exchange for
the issuance of Shares as soon as practicable after the date the fees would
otherwise have been payable (a "Quarterly Election"). Any such Quarterly
Election for a calendar quarter shall be made during the immediately preceding
Quarterly Election Period.
An Annual Election shall be irrevocable. Participation in the Program is
voluntary, and an Outside Director shall not be considered to be a Participant
for a given calendar year unless such person has made an Election with respect
to such calendar year.
7. Deferral Election. At the time of an Annual Election, a Participant
irrevocably may elect in the written notice to Unitog to defer the issuance of
the Shares which otherwise would be deliverable to him/her in lieu of cash
Director fees. The Participant irrevocably shall select the deferral period for
each separate deferral. The deferral period may be for a specified number of
years or until a specified date.
8. Share Unit Accounts.
The Company shall establish and maintain an individual bookkeeping account
for each separate Annual Election made by a Participant. This account shall be
credited with Share Units as of the date the cash compensation otherwise would
have become due and payable.
B-2
<PAGE> 21
All amounts payable under an Annual Election shall be converted to Share
Units. The number of Share Units to which cash compensation subject to an Annual
Election will be converted shall be determined by dividing the amount of such
cash compensation by the Formula Price on the date on which the cash
compensation would have been paid, but for the Annual Election.
9. Dividend Equivalent Award. A Dividend Equivalent Award shall be paid in
cash to a Participant who has made an Annual Election at the same time as the
dividend on common stock is paid to stockholders, based on the number of Share
Units credited to such Participant's account as of the dividend record date.
10. Delivery of Shares.
With respect to Quarterly Elections, Unitog shall issue the Participant a
number of Shares equal to the fee reduction amount divided by the Formula Price,
as soon as practicable after the later of (i) the date the reduced fees were
otherwise payable, or (ii) the Participant's execution of an Agreement relating
to the Election.
With respect to each Annual Election for which no deferral election is
made, Unitog shall issue the Participant a number of Shares equal to the number
of Share Units in such Participant's account relating to such Annual Election as
soon as practicable after the later of (i) the end of the calendar year in which
the reduced fees were otherwise payable, or (ii) the Participant's execution of
an Agreement relating to the Annual Election.
With respect to each Annual Election for which a deferral election is made,
Unitog shall issue the Participant a number of Shares equal to the number of
Share Units in such Participant's account relating to such Annual Election as
soon as practicable after the later of (i) the deferral date selected by the
Participant, or (ii) the Participant's execution of an Agreement relating to the
Annual Election.
Notwithstanding the deferral period specified by the Participant or the
provisions of the foregoing paragraphs, the Shares shall be delivered as soon as
practicable following the earliest to occur of:
(i) the Participant's death;
(ii) the Participant's total and permanent disability; or
(iii) a Change of Control.
Unitog shall not issue any fractional shares and shall instead pay the
Participant a pro rata portion of the Formula Price in lieu of any such
fractional share.
11. Beneficiary Designation.
A Participant shall designate a beneficiary or beneficiaries who, upon the
Participant's death, shall receive the Shares that otherwise would have been
delivered to the Participant. All designations shall be in writing and signed by
the Participant. The designation shall be effective only if and when delivered
to the Company during the lifetime of the Participant. The Participant also may
change beneficiaries by a signed, written instrument delivered to Unitog. The
delivery of Shares shall be in accordance with the last unrevoked written
designation of beneficiary that has been signed and delivered to the Secretary
of Unitog.
In the event the Participant does not designate a beneficiary, in the event
that all of the beneficiaries named pursuant to this section predecease the
Participant, or if for any reason such designation is ineffective in whole or in
part, the Shares that otherwise would have been delivered to the Participant
shall be delivered to the Participant's estate, and in such event, the term
"beneficiary" shall include such estate.
12. Election Agreement.
Each Election shall be evidenced by a written agreement ("Agreement")
executed on behalf of Unitog and the Participant. Each Agreement shall specify
the amount of Director fees to be applied to the purchase of Shares and the
deferral date, if any, and shall comply with and be subject to the terms and
conditions of the Program. Any Agreement may contain such other terms,
provisions and conditions not inconsistent with the Program as may be determined
by the Committee.
B-3
<PAGE> 22
If requested by Unitog, each Participant shall, in the Agreement, represent
and warrant to and agree with Unitog that he or she (i) takes any Shares for
investment only and not for purposes of sale or other disposition and will also
take for investment only and not for purposes of sale or other disposition any
rights or securities which may be issued on account of ownership of such Shares,
and (ii) will not sell or transfer any such Shares or any rights or securities
issued on account of the Shares, except in accordance with (A) an effective
registration statement under the Securities Act of 1933 or (B) an opinion of
counsel for Unitog (or of other counsel acceptable to Unitog) that such Shares,
rights or other securities may be disposed of without registration under the
Securities Act of 1933.
13. Transferability. During a Participant's lifetime, an Election may be
made only by the Participant or the Participant's legal representative. The
rights and privileges conferred under the Program shall not be subject to
execution, attachment or similar process and may not be transferred, assigned,
pledged or hypothecated in any manner (whether by operation of law or otherwise)
other than by will or the laws of descent and distribution or a "qualified
domestic relations order" as defined in the Code.
14. Limitation As To Directorship. Neither the Program nor any Election nor
any other action taken pursuant to the Program shall constitute or be evidence
of any agreement or understanding, express or implied, that a Participant has a
right to continue as a Director for any period of time.
15. Recapitalizations. If as a result of a stock dividend, stock split,
recapitalization (or other adjustment in the stated capital of Unitog), or as
the result of a merger, consolidation, or other reorganization, the common stock
of Unitog is increased, reduced, or otherwise changed, the appropriate number of
Shares available, and the aggregate number of Shares, or Share Units, as the
case may be, for which Elections have been made shall be appropriately adjusted.
16. Committee. The Committee shall have full power and authority to
construe and administer the Program. Any action taken under the provisions of
the Program by the Committee arising out of or in connection with the
administration, construction, or effect of the Program or any rules adopted
thereunder shall, in each case, lie within the discretion of the Committee and
shall be conclusive and binding upon Unitog and upon all Participants, and all
persons claiming under or through any of them.
17. Approval; Effective Date. The Program is subject to the approval of a
majority of the holders of Unitog's common stock present and entitled to vote at
a meeting of stockholders. Subject to the receipt of such approval, the Program
shall be effective May 25, 1995.
18. Amendment. The Program may be amended or repealed by the Board of
Directors of Unitog, except that any amendment which would materially increase
the benefits accruing to Participants, increase the number of Shares which may
be issued under the Program, or materially modify the requirements as to
eligibility for participation in the Program shall require the approval of the
holders of Unitog's common stock, and, provided further, that any such action
shall not adversely affect any Participant's rights under the Program with
respect to Elections made prior to such action. In no event shall the provisions
of the Program be amended more than once every six months, other than to comport
with changes in the Code, ERISA, or the rules thereunder.
19. Expenses of the Program. All costs and expenses of the adoption and
administration of the Program shall be borne by Unitog and none of such expenses
shall be charged to any Participant.
20. Compliance with Rule 16b-3. It is the intention of Unitog that Annual
Elections under the Program comply in all respects with Rule 16b-3 under Section
16(b) of the Exchange Act and that all Participants remain Disinterested
Persons. Accordingly, if any Program provision is later found to cause such an
Annual Election to fail to comply with Rule 16b-3 or if any Program provision
would disqualify Participants from remaining Disinterested Persons, that
provision shall be deemed null and void, and in all events the Program shall be
construed in favor of its meeting the requirements of Rule 16b-3.
B-4
<PAGE> 23
UNITOG COMPANY
ANNUAL MEETING OF STOCKHOLDERS
MAY 25, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints G. Kenneth Baum, Robert F. Hagans and
Randolph K. Rolf, jointly and individually, as Proxies, each with full power of
substitution, and hereby authorizes them to represent and to vote, as
designated below, all the shares of common stock of Unitog Company which the
undersigned would be entitled to vote if personally present at the Annual
Meeting of Stockholders to be held on May 25, 1995, or any adjournments or
postponements thereof.
<TABLE>
<S><C>
1. ELECTION OF CLASS C DIRECTORS
/ / FOR ALL NOMINEES LISTED BELOW / / WITHHOLD AUTHORITY
(except as marked to the contrary below). to vote for all nominees listed below.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME.)
G. Kenneth Baum D. Patrick Curran Robert F. Hagans
2. APPROVAL OF THE AMENDMENT TO THE SECOND RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE AUTHORIZED SHARES OF
COMMON STOCK FROM 15 MILLION SHARES TO 30 MILLION SHARES.
/ / FOR / / AGAINST / / ABSTAIN
3. APPROVAL OF THE UNITOG COMPANY OUTSIDE DIRECTOR FEE/STOCK PROGRAM.
/ / FOR / / AGAINST / / ABSTAIN
4. APPROVAL OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS OF THE COMPANY FOR FISCAL 1996.
/ / FOR / / AGAINST / / ABSTAIN
5. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the
Annual Meeting.
</TABLE>
PLEASE SEE REVERSE SIDE
<PAGE> 24
PLEASE SEE REVERSE SIDE FOR MATTERS TO BE VOTED ON
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR ALL NOMINEES FOR CLASS C DIRECTOR AND FOR PROPOSAL 2, FOR PROPOSAL 3
AND FOR PROPOSAL 4.
Please mark, date, sign and return this Proxy card by mail in the enclosed
postage prepaid envelope.
DATED:______________________________, 1995
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Signature
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Signature
(Please sign exactly as name appears on
stock certificate. Where stock is
registered jointly, all owners must sign.
Corporate owners should sign full
corporate name by an authorized person.
Executors, administrators, trustees or
guardians should indicate their status when
signing.)
