<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
- --------------------------------------------------------------------------------
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to [Section]240.14a-11(c) or
[Section]240.14a-12
UniFirst Corporation
(Name of Registrant as Specified In Its Charter)
UniFirst Corporation
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[ ] 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:
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
UNIFIRST CORPORATION
68 JONSPIN ROAD
WILMINGTON, MASSACHUSETTS 01887
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 14, 1997
The Annual Meeting of the Shareholders of UniFirst Corporation will be held
at the Bank of Boston, 2nd Floor Conference Center, 100 Federal Street, Boston,
MA 02110 on January 14, 1997 at 10:00 A.M. for the following purposes:
1. To elect two Class I Directors, each to serve for a term of three
years;
2. To consider and act upon a proposal to approve the Corporation's
1996 Stock Incentive Plan; and
3. To consider and act upon any other matters which may properly come
before the meeting or any adjournment thereof.
By Order of the Board of Directors
WILLIAM H. GORHAM, Clerk
December 5, 1996
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE COMPLETE AND
SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. NO
POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED STATES. YOUR PROXY MAY BE
REVOKED AT ANY TIME PRIOR TO ITS USE.
<PAGE> 3
UNIFIRST CORPORATION
68 JONSPIN ROAD
WILMINGTON, MASSACHUSETTS 01887
------------------------
PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 14, 1997
AT 10:00 A.M. AT THE BANK OF BOSTON,
2ND FLOOR CONFERENCE CENTER, 100 FEDERAL STREET, BOSTON, MA 02110
------------------------
GENERAL INFORMATION
The enclosed proxy is being solicited on behalf of the Board of Directors
of UniFirst Corporation (the "Company") for use at the 1997 Annual Meeting of
Shareholders on January 14, 1997 (the "Annual Meeting") and at any adjournment
thereof. This Proxy Statement, the enclosed proxy and the Company's 1996 Annual
Report to Shareholders are being mailed to shareholders on or about December 5,
1996. Any shareholder signing and returning the enclosed proxy has the power to
revoke it by giving notice of such revocation to the Company in writing or in
the open meeting before any vote with respect to the matters set forth therein
is taken. The shares represented by the enclosed proxy will be voted as
specified therein if said proxy is properly signed and received by the Company
prior to the time of the Annual Meeting and is not properly revoked. The expense
of this proxy solicitation will be borne by the Company. In addition to the
solicitation of proxies by mail, the directors, officers and employees of the
Company may also solicit proxies personally or by telephone without special
compensation for such activities. The Company may also request persons, firms
and corporations holding shares in their names or in the names of their
nominees, which are beneficially owned by others, to send proxy material to and
obtain proxies from such beneficial owners. The Company will reimburse such
holders for their reasonable expenses.
The Board of Directors has fixed the close of business on November 22, 1996
as the record date for the determination of the shareholders entitled to notice
of, and to vote at, this Annual Meeting and any adjournments thereof. As of the
close of business on that date, there were outstanding and entitled to vote
7,888,864 shares of Common Stock, par value $.10 per share ("Common Stock"), and
12,621,744 shares of Class B Common Stock, par value $.10 per share ("Class B
Common Stock"). Transferees after such date will not be entitled to vote at the
Annual Meeting. Each share of Common Stock is entitled to one vote per share.
Each share of Class B Common Stock is entitled to ten votes per share. All
actions submitted to a vote of shareholders are voted on by holders of Common
Stock and Class B Common Stock voting together as a single class, except for the
election of certain Directors and for the approval of matters requiring class
votes under the Business Corporations Law of the Commonwealth of Massachusetts.
<PAGE> 4
1. ELECTION OF DIRECTORS
The Board of Directors of the Company is currently composed of six members,
divided into three equal classes, with one class elected each year at the annual
meeting of shareholders. The Directors in each class serve for a term of three
years and until their successors are duly elected and qualified. As the term of
one class expires, a successor class is elected at each annual meeting of
shareholders.
At the 1997 Annual Meeting, two Class I Directors will be elected to serve
until the 2000 annual meeting and until their successors are duly elected and
qualified. The Board of Directors has nominated Albert Cohen to be elected by
holders of Common Stock, voting as a separate class, to serve as a Class I
Director and Aldo A. Croatti to be elected by holders of Common Stock and Class
B Common Stock, voting together as a single class, to serve as a Class I
Directors (collectively, the "Nominees").
Unless otherwise instructed, the persons named in the proxy will vote the
shares to which the proxy relates "FOR" the election of the Nominees to the
Board of Directors. While the Company has no reason to believe that either of
the Nominees will be unable to serve as a Director, in the event either or both
of the Nominees should become unavailable to serve at the time of the Annual
Meeting, it is the intention of the persons named in the enclosed proxy to vote
such proxy for such other person or persons as they may in their discretion
select. A plurality of the votes cast by holders of shares of Common Stock,
voting as a separate class and represented in person or by proxy at the Annual
Meeting and entitled to vote thereon, is necessary to elect Albert Cohen. A
plurality of the votes cast by holders of shares of Common Stock and Class B
Common Stock, voting together as a single class and represented in person or by
proxy at the Annual Meeting and entitled to vote thereon, is necessary to elect
Aldo Croatti. Consistent with applicable law, the Company intends to count
abstentions and broker non-votes only for the purpose of determining the
presence or absence of a quorum for the transaction of business. Any shares not
voted (whether by abstention, broker non-vote or otherwise) have no impact on
the election of Directors, except to the extent that the failure to vote for an
individual results in another individual receiving a larger percentage of votes.
<TABLE>
The following table sets forth certain information with respect to the
Nominees as well as the other Directors of the Company.
<CAPTION>
DIRECTOR
CLASS I DIRECTORS -- TERM EXPIRES IN 2000 (NOMINEES) AGE SINCE
- ---------------------------------------------------- ---- --------
<S> <C> <C>
Aldo A. Croatti (1)........................................................... 78 1950
Chairman of the Board. Prior to 1991, he had served as Chairman of the Board
and Chief Executive Officer of the Company since its incorporation in
1950 and of certain of its predecessors since 1940.
Albert Cohen (2).............................................................. 69 1988
Chairman of the Board and Chief Executive Officer of Electronic Space
Systems Corporation, a manufacturer of aerospace ground equipment, for
more than the past five years.
<CAPTION>
CLASS II DIRECTORS -- TERM EXPIRES IN 1999
- ------------------------------------------
<S> <C> <C>
Ronald D. Croatti (1)......................................................... 53 1982
Vice Chairman of the Board and Chief Executive Officer of the Company since
1991 and President of the Company since September 1995. Prior to 1991, he
had served as Vice Chairman of the Board and Chief Operating Officer of
the Company for more than the preceding five years.
Donald J. Evans............................................................... 70 1973
General Counsel and First Deputy Commissioner, Massachusetts Department of
Revenue, since November 1996. Prior to that, he was a partner in the law
firm of Goodwin, Procter & Hoar, the Company's general counsel, for more
than the preceding five years.
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
DIRECTOR
CLASS III DIRECTORS -- TERM EXPIRES IN 1998 AGE SINCE
- ------------------------------------------- ---- --------
<S> <C> <C>
Cynthia Croatti (1)........................................................... 41 1995
Treasurer of the Company for more than the past five years.
Reynold L. Hoover (2)......................................................... 69 1983
Environmental Consultant since September 1995. From 1991 to September 1995,
Manager of Environmental Affairs, The Stanley Works, a manufacturer of
hand tools. Prior to 1991, he was Corporate Director of Health, Safety
and Environmental Services at Asea Brown Boveri, Inc. for more than the
preceding five years.
<FN>
- ---------------
(1) Ronald Croatti and Cynthia Croatti are the son and daughter, respectively, of Aldo Croatti.
(2) The Company has designated Messrs. Cohen and Hoover as the Directors to be elected by the
holders of Common Stock voting separately as a single class.
</TABLE>
Officers, Directors and greater than 10% shareholders are required to
furnish the Company with copies of all forms they file with the Securities and
Exchange Commission pursuant to Section 16(a) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"). To the Company's knowledge, based solely
on review of the copies of such reports furnished to the Company and written
representations that no other reports were required during the 1996 fiscal year,
all Section 16(a) filing requirements applicable to its executive officers,
directors, and greater than 10% beneficial owners were satisfied.
MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors held four meetings and acted by unanimous written
consent two times during the Company's 1996 fiscal year. During the 1996 fiscal
year, the Audit Committee consisted of Albert Cohen and Reynold L. Hoover and
met on two occasions. The Audit Committee is responsible for reviewing the scope
of audit and other related services provided by the Company's independent public
accountants. During the 1996 fiscal year, the Compensation Committee consisted
of Aldo A. Croatti, Chairman, Albert Cohen and Donald J. Evans and met on one
occasion. The Compensation Committee is responsible for reviewing and approving
the Company's executive compensation program. The Company does not have a
standing nominating committee.
Each Director attended at least 75% of all of the meetings of the Board of
Directors and of the committees of which the Director was a member held during
the last fiscal year.
3
<PAGE> 6
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS
<TABLE>
The following table sets forth as of September 30, 1996 certain information
concerning shares of Common Stock and Class B Common Stock held by (i) each
Director and Nominee, (ii) each of the executive officers of the Company named
in the Summary Compensation Table, and (iii) all executive officers and
Directors as a group, in each case based on information furnished by such
individuals. Except as otherwise specified, the named beneficial owner has sole
voting and investment power. The information in the table reflects shares
outstanding of each class of common stock on September 30, 1996, and does not
take into account conversions after such date of shares of Class B Common Stock
into Common Stock. Subsequent conversions of Class B Common Stock into Common
Stock will increase the voting control of persons who retain shares of Class B
Common Stock.
<CAPTION>
PERCENTAGE OF
NAME OF AMOUNT AND NATURE OF ALL OUTSTANDING PERCENTAGE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP SHARES(1) VOTING POWER(1)
---------------- -------------------- --------------- ---------------
<S> <C> <C> <C>
Aldo A. Croatti (2)............ 10,199,060 49.7% 76.1%
Ronald D. Croatti (3).......... 469,560 2.3% 3.5%
Cynthia Croatti (4)............ 358,120 1.7% 2.7%
Robert L. Croatti (5).......... 32,000 * *
John B. Bartlett (6)........... 7,700 * *
Dennis G. Assad(6)............. 4,000 * *
Albert Cohen................... 0 * *
Reynold L. Hoover (6).......... 400 * *
Donald J. Evans (6)............ 1,400 * *
All Directors and executive
officers as a group
(10 persons)................. 11,072,240 54.0% 82.3%
<FN>
- ---------------
* Less than 1%.
(1) The percentages have been determined in accordance with Rule 13d-3 under the Exchange Act. As
of September 30, 1996, a total of 20,510,608 shares ofcommon stock were outstanding, of which
7,888,864 were shares of Common Stock entitled to one vote per share and 12,621,744 were shares
of Class B Common Stock entitled to ten votes per share. Each share of Class B Common Stock is
convertible into one share of Common Stock.
(2) All shares shown are shares of Class B Common Stock, representing 80.8% of such class, owned by
The Aldo A. Croatti Trust - 1983, of which Aldo Croatti is the sole trustee and a beneficiary.
The information presented does not include any shares owned by Mr. Croatti's wife or children, as
to which shares Mr. Croatti disclaims any beneficial interest.
(3) Ronald Croatti owns shares of Class B Common Stock only, representing 3.7% of such class. The
information presented does not include 800 shares of Class B Common Stock held by Mr. Croatti as
custodian for Matthew Croatti, as to which shares Mr. Croatti disclaims any beneficial interest.
(4) Cynthia Croatti owns shares of Class B Common Stock only, representing 2.8% of such class. The
information presented does not include any shares owned by Ms. Croatti's children, as to which
shares Ms. Croatti disclaims any beneficial interest.
(5) Robert Croatti is the nephew of Aldo Croatti and the cousin of Ronald Croatti and Cynthia Croatti.
Robert Croatti owns shares of Common Stock only, representing less than 1% of such class.
(6) Each of Messrs. Bartlett, Assad, Hoover and Evans owns shares of Common Stock only, representing
less than 1% of such class.
</TABLE>
4
<PAGE> 7
<TABLE>
To the best knowledge of the Company, the following are the only beneficial
owners of more than 5% of the outstanding Common Stock or Class B Common Stock
of the Company as of September 30, 1996.
<CAPTION>
PERCENTAGE OF
NAME OF AMOUNT AND NATURE OF ALL OUTSTANDING PERCENTAGE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP SHARES(1) VOTING POWER(1)
---------------- -------------------- --------------- ---------------
<S> <C> <C> <C>
Aldo A. Croatti(2)............. 10,199,060 49.7% 76.1%
Marie Croatti(3)............... 1,460,132 7.1% 10.3%
William Blair & Company(4)..... 971,124 4.7% .7%
<FN>
- ---------------
* Less than 1%.
(1) The percentages have been determined in accordance with Rule 13d-3 under the
Exchange Act. As of September 30, 1996, a total of 20,510,608 shares of
common stock were outstanding, of which 7,888,864 were shares of Common
Stock entitled to one vote per share and 12,621,744 were shares of Class B
Common Stock entitled to ten votes per share. Each share of Class B Common
Stock is convertible into one share of Common Stock.
(2) All shares shown are shares of Class B Common Stock, representing 80.8% of
such class, owned by The Aldo A. Croatti Trust - 1983, of which Aldo Croatti
is the sole trustee and a beneficiary. The information presented does not
include any shares owned by Mr. Croatti's wife or children, as to which such
shares Mr. Croatti disclaims any beneficial interest.
(3) Includes 435,168 shares of Class B Common Stock and 84,792 shares of Common
Stock owned of record by Marie Croatti, as Trustee under several trusts, the
beneficiaries of which are the grandchildren of Aldo Croatti, as to which
such shares Mrs. Croatti disclaims any beneficial interest. Mrs. Croatti
individually owns 940,172 shares of Class B Common Stock, representing 7.4%
of such class.
(4) The address of William Blair & Company is 135 South LaSalle St., Chicago, IL
60603. William Blair & Company owns shares of Common Stock only,
representing 12.3% of such class. The Company has relied solely upon the
information set forth in Schedule 13G, dated March 8, 1996, filed with the
Securities and Exchange Commission.
</TABLE>
Marie Croatti is the wife of Aldo Croatti. Their address is c/o UniFirst
Corporation, 68 Jonspin Road, Wilmington, Massachusetts 01887. Because of his
stock holdings and his executive position with the Company, Aldo Croatti may be
deemed to be a "parent" of the Company within the meaning of the Securities Act
of 1933, as amended.
5
<PAGE> 8
SUMMARY COMPENSATION TABLE
<TABLE>
The following table sets forth compensation paid to the Chief Executive
Officer of the Company and the four other most highly compensated executive
officers of the Company during 1996 for each of the three fiscal years ended
August 31, 1996, for services rendered in all capacities to the Company.
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG TERM COMPENSATION
---------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------------ --------------------- -------
OTHER ANNUAL RESTRICTED ALL OTHER
NAME AND COMPENSATION STOCK OPTIONS/ LTIP COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) (1) ($) AWARDS($) SARS(#) PAYOUTS($) (2)
------------------ ---- --------- -------- ------------ ---------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ronald D. Croatti(3)........ 1996 $268,710 $58,050 -- -- -- -- $ 9,382
Vice Chairman of the 1995 245,071 42,875 -- -- -- -- 10,369
Board, Chief Executive 1994 225,077 24,752 -- -- -- -- 17,768
Officer and President
Aldo A. Croatti............. 1996 204,713 44,187 -- -- -- -- 9,382
Chairman of the Board 1995 200,850 35,149 -- -- -- -- 10,369
1994 200,850 22,094 -- -- -- -- 17,768
Robert L. Croatti........... 1996 204,509 44,175 -- -- -- -- 9,382
Executive Vice 1995 189,288 33,118 -- -- -- -- 10,369
President 1994 179,328 19,724 -- -- -- -- 15,703
John B. Bartlett............ 1996 171,131 36,968 -- -- -- -- 9,382
Senior Vice President 1995 157,533 27,562 -- -- -- -- 10,369
and Chief Financial 1994 148,197 16,299 -- -- -- -- 12,453
Officer
Dennis G. Assad (4)......... 1996 137,310 29,655 -- -- -- -- 8,387
Vice President of 1995 109,173 19,102 -- -- -- -- 7,793
Sales and Marketing 1994 104,672 13,083 -- -- -- -- 7,999
<FN>
- ---------------
(1) Perquisites and other personal benefits paid to each named executive officer in each instance aggregated less than $50,000
or 10% of the total annual salary and bonus set forth in the columns entitled "Salary" and "Bonus" for each named executive
officer.
(2) Amount shown represents Company's contribution to the named executive's account under the Company's Profit Sharing Plan.
(3) Ronald Croatti was elected President of the Company as of the beginning of the 1996 fiscal year.
(4) Dennis G. Assad was elected Vice President of Sales and Marketing in January 1996. Prior to that time, he had served as a
Regional General Manager of the Company for more than the preceding five years.
</TABLE>
6
<PAGE> 9
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
<TABLE>
The Company maintains the UniFirst Unfunded Supplemental Executive
Retirement Plan (the "SERP") available to certain eligible employees of the
Company and its affiliates. Retirement benefits available under the SERP are
based on a participant's average annual base earnings for the last three years
of employment prior to his retirement date ("Final Average Earnings"). Upon the
retirement of a participant on his social security retirement date, the
participant will be paid two times his Final Average Earnings over a twelve year
period. Upon the death of a participant, the participant's designated
beneficiary will be paid retirement benefits as above (determined as of the date
of death if pre-retirement). Additionally, the designated beneficiary will
receive a lump sum benefit equal to 40% of the participant's Final Average
Earnings. The SERP provides that, upon any change of control, retirement
benefits of participants who are age 50 or over and whose employment is
terminated within three years of the change of control will become vested and
payable, subject to certain years of service requirements.
<CAPTION>
AVERAGE ANNUAL RETIREMENT
COMPENSATION(1) BENEFIT(2)
--------------- -----------------
<S> <C>
$125,000....................................... $20,833
$150,000....................................... $25,000
$175,000....................................... $29,167
$200,000....................................... $33,333
$225,000....................................... $37,500
$250,000....................................... $41,667
$275,000....................................... $45,833
$300,000....................................... $50,000
<FN>
- ---------------
(1) Average Compensation for purposes of this table is based on the
participant's average base salary for the last three years of full-time
employment preceding retirement.
(2) The Annual Retirement Benefit is payable for twelve years beginning at the
participant's social security retirement age. There is no deduction for
Social Security or other offset amounts.
</TABLE>
REPORT OF COMPENSATION COMMITTEE
The Compensation Committee currently consists of Albert Cohen and Donald J.
Evans, two Directors who are not employees of the Company, and Aldo Croatti,
Chairman. The Compensation Committee reviews and approves the Company's
executive compensation program.
COMPENSATION PHILOSOPHY
The Company seeks to attract and retain executive officers who, in the
judgment of the Company's Board of Directors, possess the skill, experience and
motivation to contribute significantly to the long-term success of the Company
and to long-term stock price appreciation. With this philosophy in mind, the
Compensation Committee follows an executive officer compensation program
designed to foster the mutuality of interest between the Company's executive
officers and the Company's shareholders and to provide senior management
additional incentive to enhance the sales growth and profitability of the
Company, and thus shareholder value.
The Compensation Committee currently reviews its compensation policy
annually. Compensation of executive officers currently consists of a base salary
and, based on the achievement of predetermined corporate performance objectives,
a cash bonus. Although the Company's fiscal year ends in August, compensation
decisions generally are made on a calendar year basis.
On November 6, 1996 the Board of Directors adopted the Company's 1996 Stock
Incentive Plan. No options or awards have been granted to date under this Plan.
7
<PAGE> 10
BASE SALARY
Each year, the Compensation Committee consults with the Chief Executive
Officer with respect to setting the base salaries of its executive officers,
other than the Chief Executive Officer, for the ensuing year. Annual salary
adjustments are determined by evaluating the financial performance of the
Company during the prior year, each executive officer's contribution to the
profitability, sales growth, return on equity and market share of the Company
during the prior year and the compensation programs and levels paid to
executives at other companies generally.
INCENTIVE COMPENSATION PLAN
Annual cash bonuses for executive officers of the Company are determined in
accordance with the Company's incentive compensation plan, the philosophy and
substantive requirements of which are reviewed by the Compensation Committee
each year. Cash bonuses are determined with reference to the Company's financial
performance as measured by growth in revenues and earnings per share and by the
Company's customer retention levels.
Each year, the Compensation Committee confers with the Chief Executive
Officer and establishes performance goals for revenues, earnings per share and
customer retention. In its determination of the amount of cash bonuses, the
Compensation Committee places primary emphasis on growth in earnings per share
and lesser emphasis on revenue growth and customer retention. The cash bonuses
awarded depend on the extent to which the performance of the Company meets or
exceeds the budgeted amounts. In addition, the Compensation Committee
establishes minimum achievement thresholds and maximum bonus levels for each of
these performance criteria which apply uniformly to the Company's executive
officers. Bonuses are determined and paid annually after the end of each fiscal
year.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
The Compensation Committee established the compensation of Ronald D.
Croatti, the Chief Executive Officer, for 1996 using the same criteria
applicable to determining compensation levels and bonuses for other executive
officers as noted in this report. Based on the financial performance of the
Company during the 1995 fiscal year, the compensation levels paid to executives
of other companies generally and Mr. Croatti's contribution to the
profitability, sales growth, return on equity and market share of the Company
during the 1995 fiscal year and his leadership of the Company, Mr. Croatti's
1996 base salary was established at $269,630, an increase of 7.0% over the prior
year.
Aldo A. Croatti (Chairman)
Albert Cohen
Donald J. Evans
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Aldo Croatti, Chairman of the Board of Directors and formerly Chief
Executive Officer of the Company, is, and was during fiscal 1996, a member of
the Compensation Committee. The Company is not aware of any compensation
committee interlocks.
8
<PAGE> 11
STOCK PERFORMANCE GRAPH
<TABLE>
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder return on the Company's Common Stock, based on
the market price of the Common Stock and assuming reinvestment of dividends,
with the total return of companies within the Standard & Poor's 500 Stock Index,
the Standard & Poor's Services (Commercial and Consumer) Index and with a peer
group. The peer group is composed of Cintas Corporation, G & K Services, Inc.,
Unitog Co., National Service Industries, Inc. and Angelica Corporation. The
calculation of total cumulative return assumes a $100 investment in the
Company's Common Stock, the S&P 500 Stock Index, the S&P Services (Commercial
and Consumer) Index, and the peer group on August 31, 1991.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG UNIFIRST CORPORATION, THE S & P 500 INDEX,
THE S & P SERVICES (COMMERCIAL & CONSUMER) INDEX AND A PEER GROUP
[CHART]
<CAPTION>
S & P
Services
Measurement Period Unifirst (Commercial
(Fiscal Year Covered) Corporation Peer Group S & P 500 & Consumer)
<S> <C> <C> <C> <C>
8/91 100 100 100 100
8/92 142 98 108 93
8/93 192 112 124 89
8/94 162 126 131 90
8/95 168 147 159 103
8/96 249 200 189 110
<FN>
* $100 INVESTED ON 08/31/91 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In September 1995, the Company made a $125,000 bridge loan to Dennis Assad,
Vice President of Sales and Marketing, in connection with his relocation to the
corporate headquarters in Wilmington, Massachusetts. Mr. Assad's loan was repaid
in full on June 25, 1996.
9
<PAGE> 12
In April 1994, the Company made a $60,000 loan to Robert L. Croatti,
Executive Vice President of the Company. Mr. Croatti's loan was repaid in full
on May 22, 1996.
The Company retained during the 1996 fiscal year and proposes to retain
during the 1997 fiscal year the law firm of Goodwin, Procter & Hoar. Donald J.
Evans, a Director of the Company, was formerly a partner of the law firm of
Goodwin, Procter & Hoar, and William H. Gorham, the Secretary and Clerk of the
Company, is a partner in the law firm of Goodwin, Procter & Hoar.
DIRECTOR COMPENSATION
Each Director who is not an employee of the Company receives a director's
fee of $9,000 per year and $1,000 per directors' meeting attended and $250 per
telephone directors' meeting and committee meeting attended. A Director who is
also an employee of the Company receives no director's fee.
2. PROPOSAL TO APPROVE THE UNIFIRST CORPORATION
1996 STOCK INCENTIVE PLAN
PROPOSAL
The Corporation historically has used stock options as part of its overall
program of compensation and had granted options pursuant to its 1983 Stock
Option Plan (the "1983 Plan"). However, the 1983 Plan expired in 1993.
Accordingly, the Board of Directors has adopted the 1996 Stock Incentive Plan
(the "1996 Plan") for officers and other employees of the Company and its
subsidiaries, subject to the approval of the 1996 Plan by the stockholders.
The 1996 Plan is administered by the Board of Directors or a committee
thereof appointed by the Board of Directors (such committee, or the Board acting
in such capacity, is hereinafter referred to as the "Committee"). The Committee,
at its discretion, may grant a variety of stock incentive awards based on the
Common Stock of the Company. Awards under the 1996 Plan include stock options
(both Incentive Stock Options and Non-Qualified Stock Options), Stock
Appreciation Rights, Restricted Stock Awards, Performance Share Awards and
Unrestricted Stock Awards. These awards are described in greater detail below.
Subject to adjustment for stock splits, stock dividends and similar events,
the total number of shares of Common Stock that can be issued under the 1996
Plan is 150,000 shares. Based solely upon the closing price of the Common Stock
as reported by the New York Stock Exchange on November 22, 1996, the maximum
aggregate market value of the securities to be issued under the 1996 Plan would
be $3,075,000. Under certain circumstances, awards which are forfeited,
canceled, reacquired by the Company, satisfied without the issuance of Common
Stock or otherwise terminated will be added back to the shares available for
issuance under the 1996 Plan. The shares issued by the Company under the 1996
Plan may be authorized but unissued shares, or shares reacquired by the Company.
RECOMMENDATION
The Board of Directors believes that stock options and other stock-based
incentive awards can play an important role in the success of the Company by
encouraging and enabling the officers and other employees of the Company and its
Subsidiaries upon whose judgment, initiative and efforts the Company largely
depends for the successful conduct of its business to acquire a proprietary
interest in the Company. The Board of Directors anticipates that providing such
persons with a direct stake in the Company will assure a closer identification
of the interests of participants in the 1996 Plan with those of the Company,
thereby stimulating their efforts on the Company's behalf and strengthening
their desire to remain with the Company.
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The Board of Directors believes that the proposed 1996 Plan will help the
Company to achieve its goals by keeping the Company's incentive compensation
program dynamic and competitive with those of other companies. Accordingly, the
Board of Directors believes that the 1996 Plan is in the best interests of the
Company and its stockholders and recommends that the stockholders approve the
1996 Plan. The Plan will not take effect unless it is approved by the
affirmative vote of the holders of at least a majority of the votes cast by the
holders of the shares of Common Stock and Class B Common Stock, voting as a
single class, represented and entitled to vote at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE 1996 PLAN BE APPROVED, AND
THEREFORE RECOMMENDS A VOTE FOR THIS PROPOSAL.
SUMMARY OF THE 1996 PLAN
The following description of certain features of the 1996 Plan is intended
to be a summary only. The summary is qualified in its entirety by the full text
of the 1996 Plan, which is attached hereto as Appendix A.
Plan Administration; Eligibility. The Committee has full power to select,
from among the persons eligible for awards, the individuals to whom awards will
be granted, to make any combination of awards to participants, and to determine
the specific terms and conditions of each award, subject to the provisions of
the 1996 Plan.
Persons eligible to participate in the 1996 Plan will be such officers and
other employees of the Company and its subsidiaries who are responsible for or
contribute to the management, growth or profitability of the Company and its
subsidiaries, as selected from time to time by the Committee.
Stock Options. The 1996 Plan permits the granting of both (i) options to
purchase common stock intended to qualify as incentive stock options ("Incentive
Stock Options") under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code") and (ii) options that do not so qualify ("Non-Qualified
Options") to officers or other employees of the Company or any subsidiary. The
option exercise price of each option will be determined by the Committee but may
not be less than 100% of the fair market value of the Common Stock on the date
of grant in the case of Incentive Stock Options.
The term of each option will be fixed by the Committee and may not exceed
ten years from date of grant in the case of an Incentive Stock Option. The
Committee will determine at what time or times each option may be exercised and,
subject to the provisions of the 1996 Plan, the period of time, if any, after
retirement, death, disability or termination of employment during which options
may be exercised. Options may be made exercisable in installments, and the
exercisability of options may be accelerated by the Committee.
Upon exercise of options, the option exercise price must be paid in full
either in cash or by certified or bank check or other instrument acceptable to
the Committee or, if the Committee so permits, by delivery of shares of Common
Stock that are not then subject to restrictions under any Company Plan and that
have been beneficially owned by the optionee for at least six months. Such
shares will be valued at their fair market value on the exercise date. The
exercise price may also be delivered to the Company by a broker pursuant to
irrevocable instructions to the broker from the optionee.
At the discretion of the Committee, stock options granted under the 1996
Plan may include a "re-load" feature pursuant to which an optionee exercising an
option by the delivery of shares of Common Stock would automatically be granted
an additional stock option (with an exercise price equal to the fair market
value of the Common Stock on the date the additional stock option is granted) to
purchase that number of shares of Common Stock equal to the number delivered to
exercise the original stock option. The purpose of this feature is to enable
participants to maintain any equity interest in the Company without dilution.
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To qualify as Incentive Stock Options, options must meet additional Federal
tax requirements, including limits on the value of shares subject to Incentive
Stock Options which first become exercisable in any one calendar year, and a
shorter term and higher minimum exercise price in the case of certain large
stockholders.
Stock Appreciation Rights. The Committee may also grant stock appreciation
rights ("SARs") entitling the recipient, upon exercise, to receive an amount in
cash or shares of Common Stock, or a combination thereof, having a value equal
to the excess of the fair market value on the date of exercise of one share of
Common Stock over the exercise price per share set by the Committee at the time
of grant (or over the option exercise price per share if the SAR was granted in
tandem with a Stock Option) times the number of shares of Common Stock with
respect to which the SAR is exercised. This amount may be paid in cash, Common
Stock, or a combination thereof, as determined by the Committee.
SARs may be granted independently or in tandem with the grant of a stock
option. If the SAR is granted in tandem with a stock option, exercise of the SAR
cancels the related option to the extent of such exercise.
Restricted Stock. The Committee may also award shares of Common Stock to
officers and other employees subject to such conditions and restrictions as the
Committee may determine ("Restricted Stock"). These conditions and restrictions
may include the achievement of certain performance goals and/or continued
employment with the Company through a specified restricted period. The purchase
price, if any, of shares of Restricted Stock will be determined by the
Committee.
Recipients of Restricted Stock must enter into a Restricted Stock Award
Agreement with the Company, in such form as the Committee determines. The
Committee at the time of grant shall specify the restrictions to which the
shares are subject and the date or dates on which the restrictions will lapse
and the shares become vested. The Committee may at any time waive such
restrictions or accelerate such dates. If a participant who holds shares of
Restricted Stock terminates employment for any reason (including death) prior to
the vesting of such Restricted Stock, the Company shall have the right to
repurchase the shares or to require their forfeiture if acquired at no cost,
from the participant or participant's legal representative. Prior to the vesting
of Restricted Stock, the participant will have all rights of a stockholder with
respect to the shares, including voting and dividend rights, subject only to the
conditions and restrictions set forth in the Plan or in the Restricted Stock
award agreement.
Unrestricted Stock. The Committee may also grant shares to any officers or
other employees of the Company or any subsidiary (at no cost or for a purchase
price determined by the Committee) which are free from any restrictions under
the 1996 Plan ("Unrestricted Stock").
Performance Share Awards. The Committee may also grant awards to officers
or other employees entitling the recipient to receive shares of Common Stock
upon the achievement of specified performance goals and such other conditions as
the Committee shall determine ("Performance Share Awards"). Except as otherwise
determined by the Committee, rights under a Performance Share Award will
terminate upon a participant's termination of employment. Performance Shares may
be awarded independently or in connection with stock options or other awards
under the 1996 Plan.
Adjustments for Stock Dividends, Mergers, Etc. The Committee will make
appropriate adjustments in outstanding awards to reflect stock dividends, stock
splits and similar events. In the event of a merger, liquidation, sale of the
Company or similar event, the Committee, in its discretion, may provide for
substitution or adjustments or may (subject to the provisions described below
under "Change of Control Provisions") accelerate or, upon payment or other
consideration for the vested portion of any awards as the Committee deems
equitable in the circumstances, terminate such awards.
Tax Withholding. Plan participants are responsible for the payment of any
Federal, state or local taxes which the Company is required by law to withhold
from the value of any award. The Company may deduct
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any such taxes from any payment otherwise due to the participant. Participants
may elect to have such tax obligations satisfied either by authorizing the
Company to withhold shares of stock to be issued pursuant to an award under the
Plan or by transferring to the Company shares of Common Stock having a value
equal to the amount of such taxes.
Amendments and Termination. The Board of Directors may at any time amend
or discontinue the 1996 Plan and the Committee may at any time amend or cancel
outstanding awards (or provide substitute awards at the same or a reduced
exercise price, or with no exercise or purchase price) for the purpose of
satisfying changes in the law or for any other lawful purpose. However, no such
action may be taken which adversely affects any rights under outstanding awards
without the holder's consent. Further, Plan amendments shall be subject to
approval by the Company's stockholders if and to the extent required by the Code
to ensure that Incentive Stock Options are qualified under Section 422 of the
Code.
Change of Control Provisions. The 1996 Plan provides that in the event of
a "Change of Control" (as defined in the 1996 Plan) of the Company, all stock
options SARs and Performance Share Awards shall automatically become fully
exercisable. Restrictions and conditions on awards of Restricted Stock shall
automatically be deemed waived. In addition, at any time prior to or after a
Change of Control, the Committee may accelerate awards and waive conditions and
restrictions on any awards to the extent it may determine appropriate.
EFFECTIVE DATE OF 1996 PLAN
The 1996 Plan was adopted by the Board of Directors on November 6, 1996 and
will become effective upon approval by a majority of votes cast by the holders
of the shares of Common Stock and Class B Common Stock, voting together as a
single class, present or represented and entitled to vote at the Annual Meeting,
provided a quorum is present. For purposes of the vote on the 1996 Plan,
abstentions will have the same effect as votes against the 1996 Plan and broker
non-votes will have no effect on the results of the vote. Both abstentions and
broker-non votes will count towards the presence of a quorum. Awards of
Incentive Stock Options may be granted under the 1996 Plan until November 5,
2006. As of the date of this Proxy Statement, the Committee has granted no
options or awards under the 1996 Plan.
TAX ASPECTS UNDER THE U.S. INTERNAL REVENUE CODE
The following is a summary of the principal Federal income tax consequences
of option grants under the 1996 Plan. It does not describe all Federal tax
consequences under the 1996 Plan, nor does it describe state or local tax
consequences.
Incentive Options. Under the Code, an employee will not realize taxable
income by reason of the grant or the exercise of an Incentive Option. If an
employee exercises an Incentive Option and does not dispose of the shares until
the later of (a) two years from the date the option was granted or (b) one year
from the date the shares were transferred to the employee, the entire gain, if
any, realized upon disposition of such shares will be taxable to the employee as
long-term capital gain, and the Company will not be entitled to any deduction.
If an employee disposes of the shares within such one-year or two-year period in
a manner so as to violate the holding period requirements (a "disqualifying
disposition"), the employee generally will realize ordinary income in the year
of disposition, and, provided the Company complies with applicable withholding
requirements, the Company will receive a corresponding deduction, in an amount
equal to the excess of (1) the lesser of (x) the amount, if any, realized on the
disposition and (y) the fair market value of the shares on the date the option
was exercised over (2) the option price. Any additional gain realized on the
disposition of the shares acquired upon exercise of the option will be long-term
or short-term capital gain and any loss will be long-term or short-term capital
loss depending upon the holding period for such shares. The employee will be
considered to have disposed of his shares if he sells, exchanges, makes a gift
of or transfers legal title to the
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shares (except by pledge or by transfer on death). If the disposition of shares
is by gift and violates the holding period requirements, the amount of the
employee's ordinary income (and the Company's deduction) is equal to the fair
market value of the shares on the date of exercise less the option price. If the
disposition is by sale or exchange, the employee's tax basis will equal the
amount paid for the shares plus any ordinary income realized as a result of the
disqualifying distribution. The exercise of an Incentive Option may subject the
employee to the alternative minimum tax.
Special rules apply if an employee surrenders shares of Common Stock in
payment of the exercise price of his Incentive Option.
An Incentive Option that is exercised in accordance with its terms by an
employee more than three months after an employee's employment terminates will
be treated as a Non-Qualified Option for Federal income tax purposes. In the
case of an employee who is disabled, the three-month period is extended to one
year and in the case of an employee who dies, the three-month employment rule
does not apply.
Non-Qualified Options. There are no Federal income tax consequences to
either the optionee, or the Company on the grant of a Non-Qualified Option. On
the exercise of a Non-Qualified Option, the optionee (except as described below)
has taxable ordinary income equal to the excess of the fair market value of the
Common Stock received on the exercise date over the option price of the shares.
The optionee's tax basis for the shares acquired upon exercise of a
Non-Qualified Option is increased by the amount of such taxable income. The
Company will be entitled to a Federal income tax deduction in an amount equal to
such excess, provided the Company complies with applicable withholding rules.
Upon the sale of the shares acquired by exercise of a Non-Qualified Option, the
optionee will realize long-term or short-term capital gain or loss depending
upon his or her holding period for such shares.
Section 83 of the Code and the regulations thereunder provide that the date
for recognition of ordinary income (and the Company's equivalent deduction) upon
exercise of a Non-Qualified Option and for the commencement of the holding
period of the shares thereby acquired by a person who is subject to Section 16
of the 1934 Act will be delayed until the date that is the earlier of (i) six
months after the date of the exercise and (ii) such time as the shares received
upon exercise could be sold at a gain without the person being subject to such
potential liability.
Special rules apply if an optionee surrenders shares of Common Stock in
payment of the exercise price of a Non-Qualified Option.
Parachute Payments. The exercise of any portion of any option that is
accelerated due to the occurrence of a change of control may cause a portion of
the payments with respect to such accelerated options to be treated as
"parachute payments" as defined in the Code. Any such parachute payments may be
non-deductible to the Company, in whole or in part, and may subject the
recipient to a non-deductible 20% federal excise tax on all or portion of such
payment (in addition to other taxes ordinarily payable).
Limitation on Company's Deductions. As a result of Section 162(m) of the
Code, the Company's deduction for certain awards under the Plan may be limited
to the extent that the Chief Executive Officer or other executive officer whose
compensation is required to be reported in the summary compensation table
receives compensation (other than performance-based compensation) in excess of
$1 million a year.
3. OTHER MATTERS
Management is not aware of any other matters which may come before the
Annual Meeting; however, if any matters other than those set forth in the
attached Notice of Annual Meeting should be properly presented
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at the Annual Meeting, the persons named in the enclosed proxy intend to take
such action as will be, in their discretion, consistent with the best interest
of the Company.
INDEPENDENT PUBLIC ACCOUNTANTS
Management has selected the firm of Arthur Andersen LLP, independent public
accountants, to serve as auditors for the fiscal year ending August 30, 1997.
Arthur Andersen LLP has served as the Company's auditors since 1972.
A representative of Arthur Andersen LLP is expected to be present at the
Annual Meeting. He or she will have an opportunity to make a statement, if he or
she desires to do so, and will be available to respond to appropriate questions.
SHAREHOLDER PROPOSALS
Any shareholder desiring to present a proposal for inclusion in the
Company's Proxy Statement in connection with the Company's 1998 Annual Meeting
of Shareholders must submit the proposal so as to be received by the Clerk of
the Company at the principal executive offices of the Company, 68 Jonspin Road,
Wilmington, Massachusetts 01887, not later than August 8, 1997. In addition, in
order to be included in the proxy statement, such a proposal must comply with
the requirements as to form and substance established by applicable laws and
regulations.
Shareholders wishing to present business for action, other than proposals
to be included in the Company's Proxy Statement, or to nominate candidates for
election as directors at a meeting of the Company's shareholders must do so in
accordance with the Company's By-laws. The By-laws provide, among other
requirements, that in order to be presented at the 1998 Annual Meeting, such
shareholder proposals or nominations may be made only by a stockholder of record
who shall have given notice of the proposal or nomination and the related
required information to the Company no earlier than September 11, 1997 and no
later than October 26, 1997.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE FILL IN AND
SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU
DESIRE TO VOTE YOUR STOCK IN PERSON AT THE MEETING, YOUR PROXY MAY BE REVOKED.
December 5, 1996
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APPENDIX A
UNIFIRST CORPORATION
1996 STOCK INCENTIVE PLAN
SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS.
The name of the plan is the UniFirst Corporation 1996 Stock Incentive Plan
(the "Plan"). The purpose of the Plan is to encourage and enable the personnel
of UniFirst Corporation (the "Company") and its Subsidiaries upon whose
judgment, initiative and efforts the Company largely depends for the successful
conduct of its business, to acquire a proprietary interest in the Company. It is
anticipated that providing such persons with a direct stake in the Company's
welfare will assure a closer identification of their interests with those of the
Company, thereby stimulating their efforts on the Company's behalf and
strengthening their desire to remain with the Company.
The following terms shall be defined as set forth below:
"Act" means the Securities Exchange Act of 1934, as amended.
"Award" or "Awards", except where referring to a particular category
of grant under the Plan, shall include Incentive Stock Options,
Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock
Awards, Unrestricted Stock Awards and Performance Share Awards.
"Award Agreement" means the agreement executed and delivered by the
Company and the recipient of an Award.
"Board" means the Board of Directors of the Company.
"Cause" means for purposes of the Plan a determination of the Board
that the employee should be dismissed as a result of (i) serious and
willful misconduct that is injurious to the Company; (ii) the employee's
conviction of (whether or not such conviction is subject to appeal), or
entry of a plea of guilty or nolo contendere to, any crime or offense
involving fraud, personal dishonesty or moral turpitude or which
constitutes a felony in the jurisdiction involved; or (iii) the employee's
continuing repeated willful failure or refusal to perform such employee's
duties to the Company.
"Change of Control" is defined in Section 14.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor Code, and related rules, regulations and interpretations.
"Committee" means a Committee of the Board referred to in Section 2 if
one shall have been appointed to administer the Plan; otherwise "Committee"
means the Board.
"Disability" means disability as set forth in Section 22(e)(3) of the
Code.
"Effective Date" is defined in Section 16.
"Fair Market Value" on any given date means the last sale price at
which Stock is traded on such date or, if no Stock is traded on such date,
the most recent date on which Stock was traded, as reflected on the New
York Stock Exchange or, if applicable, any other national stock exchange on
which the Stock is traded.
"Incentive Stock Option" means any Stock Option designated and
qualified as an "incentive stock option" as defined in Section 422 of the
Code.
"Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
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"Normal Retirement" means retirement from active employment with the
Company and its Subsidiaries in accordance with the retirement policies of
the Company and its Subsidiaries then in effect.
"Option" or "Stock Option" means any option to purchase shares of
Stock granted pursuant to Section 5.
"Performance Share Award" means an Award granted pursuant to Section
9(a).
"Restricted Stock Award" means an Award granted pursuant to Section
7(a).
"Stock" means the Common Stock, $0.10 par value, of the Company,
subject to adjustment pursuant to Section 3.
"Stock Appreciation Right" means an Award granted pursuant to Section
6(a).
"Subsidiary" means any corporation or other entity (other than the
Company) in any unbroken chain of corporations or other entities, beginning
with the Company if each of the corporations or entities (other than the
last corporation or entity in the unbroken chain) owns stock or other
interests possessing 50% or more of the total combined voting power of all
classes of stock or other interests in one of the other corporations or
entities in the chain.
"Unrestricted Stock Award" means an Award granted pursuant to Section
8.
SECTION 2. ADMINISTRATION OF PLAN; COMMITTEE AUTHORITY TO SELECT PARTICIPANTS
AND DETERMINE AWARDS, ETC.
(a) Committee. The Plan shall be administered by the Board, unless the
Board shall have appointed the Compensation Committee to administer the Plan. It
is presently contemplated that the Board, and not the Compensation Committee,
will administer the Plan.
(b) Powers of Committee. The Committee shall have the authority to grant
Awards consistent with the terms of the Plan, including the authority at any
time:
(i) to select the officers and other employees of the Company and its
Subsidiaries to whom Awards may from time to time be granted (collectively
the "participants" and individually a "participant");
(ii) to determine the time or times of grant, and the extent, if any,
of Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation
Rights, Restricted Stock, Unrestricted Stock and Performance Shares, or any
combination of the foregoing, granted to any one or more participants;
(iii) to determine the number of shares to be covered by any Award;
(iv) to determine and modify the terms and conditions, including
restrictions, not inconsistent with the terms of the Plan, of any Award,
which terms and conditions may differ among individual Awards and
participants, and to approve the form of Award Agreements;
(v) to determine whether, to what extent, and under what circumstances
Stock and other amounts payable with respect to an Award shall be deferred
either automatically or at the election of the participant and whether and
to what extent the Company shall pay or credit amounts equal to interest
(at rates determined by the Committee) or dividends or deemed dividends on
such deferrals;
(vi) to accelerate the exercisability or vesting of all or any portion
of any Award;
(vii) subject to the provisions of Section 5(a)(ii), to extend the
period in which Stock Options may be exercised; and
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(viii) to adopt, alter and repeal such rules, guidelines and practices
for administration of the Plan and for its own acts and proceedings as it
shall deem advisable; to interpret the terms and provisions of the Plan and
any Award (including related Award Agreements); to make all determinations
it deems advisable for the administration of the Plan; to decide all
disputes arising in connection with the Plan; and to otherwise supervise
the administration of the Plan.
All decisions and interpretations of the Committee shall be binding on all
persons, including the Company and Plan participants.
SECTION 3. SHARES ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION.
(a) Shares Issuable. The maximum number of shares of Stock reserved and
available for issuance under the Plan shall be 150,000. For purposes of this
limitation, the shares of Stock underlying any Awards which are forfeited,
canceled, reacquired by the Company, satisfied without the issuance of Stock or
otherwise terminated (other than by exercise) shall be added back to the shares
of Stock available for issuance under the Plan. Subject to such overall
limitation, shares may be issued up to such maximum number pursuant to any type
or types of Award, including Incentive Stock Options. Shares issued under the
Plan may be authorized but unissued shares or shares reacquired by the Company.
Upon the exercise of a Stock Appreciation Right settled in stock, the right to
purchase an equal number of shares of Stock covered by a related Stock Option,
if any, shall be deemed to have been surrendered and will no longer be
exercisable, and said number of shares shall no longer be available under the
Plan.
(b) Recapitalizations. If, through or as a result of any merger,
consolidation, sale of all or substantially all of the assets of the Company,
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split or other similar transaction, the outstanding shares of
Stock are increased or decreased or are exchanged for a different number or kind
of shares or other securities of the Company, or additional shares or new or
different shares or other securities of the Company or other non-cash assets are
distributed with respect to such shares of Stock or other securities, the
Committee shall make an appropriate or proportionate adjustment in (i) the
maximum number of shares reserved for issuance under the Plan, (ii) the number
of Stock Options or Stock Appreciation Rights that can be granted to any one
individual participant, (iii) the number and kind of shares or other securities
subject to any then outstanding Awards under the Plan, and (iv) the price for
each share subject to any then outstanding Stock Options and Stock Appreciation
Rights under the Plan, without changing the aggregate exercise price (i.e., the
exercise price multiplied by the number of Stock Options and Stock Appreciation
Rights) as to which such Stock Options and Stock Appreciation Rights remain
exercisable. The adjustment by the Committee shall be final, binding and
conclusive. No fractional shares of Stock shall be issued under the Plan
resulting from any such adjustment, but the Committee in its discretion may make
a cash payment in lieu of fractional shares.
(c) Mergers. Upon consummation of a consolidation or merger or sale of
all or substantially all of the assets of the Company in which outstanding
shares of Stock are exchanged for securities, cash or other property of an
unrelated corporation or business entity or in the event of a liquidation of the
Company (in each case, a "Transaction"), the Board, or the board of directors of
any corporation assuming the obligations of the Company, may, in its discretion,
take any one or more of the following actions, as to outstanding Stock Options
and Stock Appreciation Rights: (i) provide that such Stock Options and Stock
Appreciation Rights shall be assumed or equivalent options shall be substituted,
by the acquiring or succeeding corporation (or an affiliate thereof), (ii) upon
written notice to the optionees, provide that all unexercised Stock Options and
Stock Appreciation Rights will terminate immediately prior to the consummation
of the Transaction unless exercised by the optionee within a specified period
following the date of such notice, and/or (iii) in the event of a business
combination under the terms of which holders of the Stock of the Company will
receive upon consummation thereof a cash payment for each share surrendered in
the business combination, make or
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provide for a cash payment equal to the difference between (A) the value (as
determined by the Committee) of the consideration payable per share of Stock
pursuant to the business combination (the "Merger Price") times the number of
shares of Stock subject to such outstanding Stock Options and Stock Appreciation
Rights (to the extent then exercisable at prices not in excess of the Merger
Price) and (B) the aggregate exercise price of all such outstanding Stock
Options and Stock Appreciation Rights in exchange for the termination of such
Stock Options and Stock Appreciation Rights. In the event Stock Options and
Stock Appreciation Rights will terminate upon the consummation of the
Transaction, each optionee shall be permitted, within a specified period
determined by the Committee, to exercise all non-vested Stock Options and Stock
Appreciation Rights, subject to the consummation of the Transaction.
(d) Substitute Awards. The Committee may grant Awards under the Plan in
substitution for stock and stock based awards held by employees of another
corporation who become employees of the Company or a Subsidiary as the result of
a merger or consolidation of the employing corporation with the Company or a
Subsidiary or the acquisition by the Company or a Subsidiary of property or
stock of the employing corporation. The Committee may direct that the substitute
awards be granted on such terms and conditions as the Committee considers
appropriate in the circumstances.
SECTION 4. ELIGIBILITY.
Participants in the Plan may be such officers and other employees of the
Company and its Subsidiaries who are responsible for or contribute to the
management, growth or profitability of the Company and its Subsidiaries and who
are selected from time to time by the Committee, in its sole discretion.
SECTION 5. STOCK OPTIONS.
Any Stock Option granted under the Plan shall be in such form as the
Committee may from time to time approve.
Stock Options granted under the Plan may be either Incentive Stock Options
or Non-Qualified Stock Options. To the extent that any option does not qualify
as an Incentive Stock Option, it shall constitute a Non-Qualified Stock Option.
No Incentive Stock Option shall be granted under the Plan after November 5,
2006.
(a) Stock Options Granted to Officers and Other Employees. The Committee,
in its discretion, may grant Stock Options to officers and other employees of
the Company or any Subsidiary. Stock Options granted to such participants
pursuant to this Section 6(a) shall be subject to the following terms and
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable:
(i) Exercise Price. The per share exercise price of a Stock Option
shall be determined by the Committee at the time of grant but shall be, in
the case of Incentive Stock Options, not less than 100% of Fair Market
Value on the date of grant. If a participant owns or is deemed to own (by
reason of the attribution rules applicable under Section 424(d) of the
Code) more than 10% of the combined voting power of all classes of stock of
the Company or any Subsidiary or parent corporation and an Incentive Stock
Option is granted to such participant, the option price shall be not less
than 110% of Fair Market Value on the grant date.
(ii) Option Term. The term of each Stock Option shall be fixed by
the Committee, but no Incentive Stock Option shall be exercisable more than
ten years after the date the option is granted. If a participant owns or is
deemed to own (by reason of the attribution rules of Section 424(d) of the
Code) more than 10% of the combined voting power of all classes of stock of
the Company or any Subsidiary or
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parent corporation and an Incentive Stock Option is granted to such
participant, the term of such option shall be no more than five years from
the date of grant.
(iii) Exercisability; Rights of a Shareholder. Stock Options shall
become vested and exercisable at such time or times, whether or not in
installments, as shall be determined by the Committee at or after the grant
date. An optionee shall have the rights of a shareholder only as to shares
acquired upon the exercise of a Stock Option and not as to unexercised
Stock Options.
(iv) Method of Exercise. Stock Options may be exercised in whole or
in part, by giving written notice of exercise to the Company, specifying
the number of shares to be purchased. Payment of the purchase price may be
made by one or more of the following methods:
(A) In cash, by certified or bank check or other instrument
acceptable to the Committee;
(B) In the form of shares of Stock that are not then subject to
restrictions under any Company plan, if permitted by the Committee, in
its discretion and that have been beneficially owned by the optionee for
at least six months. Such surrendered shares shall be valued at Fair
Market Value on the exercise date; or
(C) By the optionee delivering to the Company a properly executed
exercise notice together with irrevocable instructions to a broker to
promptly deliver to the Company cash or a check payable and acceptable
to the Company to pay the option purchase price; provided that in the
event the optionee chooses to pay the option purchase price as so
provided, the optionee and the broker shall comply with such procedures
and enter into such agreements of indemnity and other agreements as the
Committee shall prescribe as a condition of such payment procedure.
Payment instruments will be received subject to collection. The delivery of
certificates representing shares of Stock to be purchased pursuant to the
exercise of a Stock Option will be contingent upon receipt from the
optionee (or a purchaser acting in his stead in accordance with the
provisions of the Stock Option) by the Company of the full purchase price
for such shares and the fulfillment of any other requirements contained in
the Stock Option or applicable provisions of laws.
(v) Non-transferability of Options. No Stock Option shall be
transferable by the optionee otherwise than by will or by the laws of
descent and distribution and all Stock Options shall be exercisable, during
the optionee's lifetime, only by the optionee. Notwithstanding the
foregoing, the Committee may permit the optionee to transfer, without
consideration for the transfer, his Non-Qualified Stock Options to members,
of his immediate family, or to trusts for the benefit of such family
members, and to partnerships in which such family members are the only
partners, provided that the transferee agrees in writing with the Company
to be bound by all of the terms and conditions of this Plan and the
applicable option agreement.
(vi) Termination by Death. If any optionee's employment by the
Company and its Subsidiaries terminates by reason of death, the Stock
Option may thereafter be exercised, to the extent exercisable at the date
of death, by the legal representative or legatee of the optionee, for a
period of one year (or such shorter period as the Committee shall specify
at the time of grant or such longer period as the Committee shall specify
at any time) from the date of death, or until the expiration of the stated
term of the Option, if earlier.
(vii) Termination by Reason of Disability or Normal Retirement.
(A) Any Stock Option held by an optionee whose employment by the
Company and its Subsidiaries has terminated by reason of Disability may
thereafter be exercised, to the extent it was exercisable at the time of
such termination, for a period of one year (or such shorter period as
the
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<PAGE> 23
Committee shall specify at the time of grant or such longer period as
the Committee shall specify at any time) from the date of such
termination of employment, or until the expiration of the stated term of
the Option, if earlier.
(B) (1) Any Non-Qualified Stock Option held by an optionee whose
employment by the Company and its Subsidiaries has terminated by reason
of Normal Retirement may thereafter be exercised, to the extent it was
exercisable at the time of such termination, for a period of one year
(or such shorter period as the Committee shall specify at the time of
grant or such longer period as the Committee shall specify at any time)
from the date of such termination of employment, or until the expiration
of the stated term of the Option, if earlier.
(2) Any Incentive Stock Option held by an optionee whose employment
by the Company and its Subsidiaries has terminated by reason of Normal
Retirement may thereafter be exercised, to the extent it was exercisable
at the time of such termination, for a period of three months (or such
shorter period as the Committee shall specify at the time of grant or
such longer period as the Committee shall specify at any time) from the
date of such termination of employment, or until the expiration of the
stated term of the Option, if earlier.
(C) The Committee shall have sole authority and discretion to
determine whether a participant's employment has been terminated by
reason of Disability or Normal Retirement.
(D) Except as otherwise provided by the Committee at the time of
grant, the death of an optionee during a period provided in this Section
5(a)(vii) for the exercise of a Non-Qualified Stock Option (or during
the final year of such period if longer than one year), shall extend
such period for one year following death, subject to termination on the
expiration of the stated term of the Option, if earlier.
(viii) Termination for Cause. If any optionee's employment by the
Company and its Subsidiaries has been terminated for Cause, any Stock
Option held by such optionee shall immediately terminate and be of no
further force and effect; provided, however, that the Committee may, in its
sole discretion, provide that such stock option can be exercised for a
period of up to three months from the date of termination of employment or
until the expiration of the stated term of the Option, if earlier.
(ix) Other Termination. Unless otherwise determined by the
Committee, if an optionee's employment by the Company and its Subsidiaries
terminates for any reason other than death, Disability, Normal Retirement
or for Cause, any Stock Option held by such optionee may thereafter be
exercised, to the extent it was exercisable on the date of termination of
employment, for a period of three months (or such shorter period as the
Committee shall specify at the time of grant or such longer period as the
Committee shall specify at any time) from the date of termination of
employment or until the expiration of the stated term of the Option, if
earlier.
(x) Annual Limit on Incentive Stock Options. To the extent required
for "incentive stock option" treatment under Section 422 of the Code, the
aggregate Fair Market Value (determined as of the time of grant) of the
Stock with respect to which Incentive Stock Options granted under this Plan
and any other plan of the Company or its Subsidiaries become exercisable
for the first time by an optionee during any calendar year shall not exceed
$100,000.
(xi) No Restrictions on Shares Issued Upon Exercise. Shares of Stock
issued upon exercise of a Stock Option shall be free of all restrictions
under the Plan, except as otherwise provided in this Plan.
(b) Reload Options. At the discretion of the Committee, Options granted
under Section 5(a) may include a so-called "reload" feature pursuant to which an
optionee exercising an Option and paying the
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<PAGE> 24
purchase price by the delivery of a number of shares of Stock in accordance with
Section 5(a)(iv)(B) hereof would automatically be granted an additional Option
(with an exercise price equal to the Fair Market Value of the Stock on the date
the additional Option is granted and with the same expiration date as the
original Option being exercised, and with such other terms as the Committee may
provide) to purchase that number of shares of Stock equal to the number
delivered to pay the purchase price in connection with the exercise of the
original Option.
SECTION 6. STOCK APPRECIATION RIGHTS; DISCRETIONARY PAYMENTS.
(a) Nature of Stock Appreciation Right. A Stock Appreciation Right is an
Award entitling the recipient to receive an amount in cash or shares of Stock
(or in a form of payment permitted under Section 6(e) below) or a combination
thereof having a value equal to (or if the Committee shall so determine at time
of grant, less than) the excess of the Fair Market Value of a share of Stock on
the date of exercise over the exercise price per share set by the Committee at
the time of grant (or over the option exercise price per share, if the Stock
Appreciation Right was granted in tandem with a Stock Option) multiplied by the
number of shares with respect to which the Stock Appreciation Right shall have
been exercised, with the Committee having the right to determine the form of
payment.
(b) Grant and Exercise of Stock Appreciation Rights. The Committee, in
its discretion, may grant Stock Appreciation Rights to any officers or other
employees of the Company or any Subsidiary in tandem with, or independently of,
any Stock Option granted pursuant to Section 5(a) of the Plan. In the case of a
Stock Appreciation Right granted in tandem with a Non-Qualified Stock Option,
such Stock Appreciation Right may be granted either at or after the time of the
grant of such Option. In the case of a Stock Appreciation Right granted in
tandem with an Incentive Stock Option, such Stock Appreciation Right may be
granted only at the time of the grant of the Option.
A Stock Appreciation Right or applicable portion thereof granted in tandem
with a Stock Option shall terminate and no longer be exercisable upon the
termination or exercise of the related Stock Option, except that, at the
Committee's discretion, a Stock Appreciation Right granted with respect to less
than the full number of shares covered by a related Stock Option shall only so
terminate if and to the extent that the number of shares covered by the exercise
or termination of the related Stock Option exceeds the number of shares not
covered by such Stock Appreciation Right.
(c) Terms and Conditions of Stock Appreciation Rights. Stock Appreciation
Rights shall be subject to such terms and conditions as shall be determined from
time to time by the Committee, subject to the following:
(i) Stock Appreciation Rights granted in tandem with Stock Options
shall be exercisable at such time or times and to the extent that the
related Stock Options shall be exercisable.
(ii) Upon exercise of a Stock Appreciation Right, the applicable
portion of any related Stock Option shall be surrendered.
(iii) Stock Appreciation Rights granted in tandem with a Stock Option
shall be transferable only when and to the extent that the underlying Stock
Option would be transferable. Stock Appreciation Rights not granted in
tandem with a Stock Option shall not be transferable otherwise than by will
or the laws of descent or distribution. All Stock Appreciation Rights shall
be exercisable during the participant's lifetime only by the participant or
the participant's legal representative.
(d) No Restrictions on Shares Issued Upon Exercise. Shares of Stock
issued upon exercise of a Stock Appreciation Right shall be free of all
restrictions under the Plan, except as otherwise provided in this Plan.
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SECTION 7. RESTRICTED STOCK AWARDS.
(a) Nature of Restricted Stock Award. The Committee, in its discretion,
may grant Restricted Stock Awards to any officers or other employees of the
Company or any Subsidiary. A Restricted Stock Award is an Award entitling the
recipient to acquire, at no cost or for a purchase price determined by the
Committee, shares of Stock subject to such restrictions and conditions as the
Committee may determine at the time of grant ("Restricted Stock"). Conditions
may be based on continuing employment and/or achievement of pre-established
performance goals and objectives. With the consent of an employee, a Restricted
Stock Award may be granted to such employee by the Committee in lieu of any
compensation otherwise due to such employee.
(b) Award Agreement. A participant who is granted a Restricted Stock
Award shall have no rights with respect to such Award unless the participant
shall have accepted the Award within 60 days (or such shorter date as the
Committee may specify) following the award date by making payment to the Company
by certified or bank check or other instrument or form of payment acceptable to
the Committee in an amount equal to the specified purchase price, if any, of the
shares covered by the Award and by executing and delivering to the Company a
Restricted Stock Award Agreement in such form as the Committee shall determine.
(c) Rights as a Shareholder. Upon complying with Section 7(b) above, such
participant shall have all the rights of a shareholder with respect to the
Restricted Stock including voting and dividend rights, subject to
non-transferability restrictions and Company repurchase or forfeiture rights
described in this Section 7 and subject to such other conditions contained in
the Restricted Stock Award Agreement. Unless the Committee shall otherwise
determine, certificates evidencing shares of Restricted Stock shall remain in
the possession of the Company until such shares are vested as provided in
Section 7(e) below.
(d) Restrictions. Shares of Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of except as
specifically provided herein. In the event of termination of employment by the
Company and its Subsidiaries for any reason (including death, Disability, Normal
Retirement and for Cause), the Company shall have the right, at the discretion
of the Committee, to repurchase shares of Restricted Stock with respect to which
conditions have not lapsed at their purchase price, or to require forfeiture of
such shares to the Company if acquired at no cost, from the participant or the
participant's legal representative. The Company must exercise such right of
repurchase or forfeiture not later than the 90th day following such termination
of employment (unless otherwise specified in the Restricted Stock Award
Agreement).
(e) Vesting of Restricted Stock. The Committee at the time of grant shall
specify the date or dates and/or the attainment of performance goals, objectives
and other conditions on which the non-transferability of the Restricted Stock
and the Company's right of repurchase or forfeiture shall lapse. Subsequent to
such date or dates and/or the attainment of such pre-established goals,
objectives and other conditions, the shares on which all restrictions have
lapsed shall no longer be Restricted Stock and shall be deemed vested. The
Committee at any time may accelerate such date or dates and otherwise waive or,
subject to Section 12, amend any conditions of the Award.
(f) Waiver, Deferral and Reinvestment of Dividends. The Restricted Stock
Award Agreement may require or permit the immediate payment, waiver, deferral or
investment of dividends paid on the Restricted Stock.
A-8
<PAGE> 26
SECTION 8. UNRESTRICTED STOCK AWARDS.
(a) Grant or Sale of Unrestricted Stock. The Committee may, in its
discretion, grant (or sell at a purchase price determined by the Committee) to
any officers or other employees of the Company or any Subsidiary shares of Stock
free of any restrictions under the Plan ("Unrestricted Stock").
(b) Restrictions on Transfers. The right to receive Unrestricted Stock
may not be sold, assigned, transferred, pledged or otherwise encumbered, other
than by will or the laws of descent and distribution.
SECTION 9. PERFORMANCE SHARE AWARDS.
(a) Nature of Performance Shares. A Performance Share Award is an award
entitling the recipient to acquire shares of Stock upon the attainment of
specified performance goals. The Committee, in its discretion, may grant
Performance Share Awards to any officers or other employees of the Company or
any Subsidiary, including those who qualify for awards under other performance
plans of the Company. The Committee shall determine whether and to whom
Performance Share Awards shall be made, the performance goals applicable under
each such Award, the periods during which performance is to be measured, and all
other limitations and conditions applicable to such Award; provided, however,
that the Committee may rely on the performance goals and other standards
applicable to other performance-based plans of the Company in setting the
standards for Performance Share Awards under the Plan. The Committee may make
Performance Share Awards independently of or in connection with the granting of
any other Award under the Plan.
(b) Restrictions on Transfer. Performance Share Awards and all rights
with respect to such Awards may not be sold, assigned, transferred, pledged or
otherwise encumbered.
(c) Rights as a Shareholder. A participant receiving a Performance Share
Award shall have the rights of a shareholder only as to shares actually received
by the participant under the Plan and not with respect to shares subject to the
Award but not actually received by the participant. A participant shall be
entitled to receive a stock certificate evidencing the acquisition of shares of
Stock under a Performance Share Award only upon satisfaction of all conditions
specified in the written instrument evidencing the Performance Share Award (or
in the performance plan adopted by the Committee).
(d) Termination. Except as may otherwise be provided by the Committee at
any time prior to termination of employment, a participant's rights in all
Performance Share Awards shall automatically terminate upon the participant's
termination of employment by the Company and its Subsidiaries for any reason
(including death, Disability, Normal Retirement and for Cause or without Cause).
(e) Acceleration, Waiver, Etc. At any time prior to the participant's
termination of employment by the Company and its Subsidiaries, the Committee may
in its sole discretion accelerate, waive or, subject to Section 12, amend any or
all of the goals, restrictions or conditions imposed under any Performance Share
Award.
SECTION 10. TAX WITHHOLDING.
(a) Payment by Participant. Each participant shall, no later than the
date as of which the value of an Award or of any Stock or other amounts received
thereunder first becomes includable in the gross income of the participant for
Federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Committee regarding payment of, all Federal, state, or local
taxes of any kind required by law to be withheld with respect to such income.
The Company and its Subsidiaries shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind otherwise due to the
participant.
(b) Payment in Shares. Subject to the approval of the Committee, a
participant may elect to have such tax withholding obligation satisfied, in
whole or in part, by (i) authorizing the Company to withhold from
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<PAGE> 27
shares of Stock to be issued pursuant to any Award a number of shares with an
aggregate Fair Market Value (as of the date the withholding is effected) that
would satisfy the withholding amount due, or (ii) transferring to the Company
shares of Stock owned by the participant with an aggregate Fair Market Value (as
of the date the withholding is effected) that would satisfy the withholding
amount due.
SECTION 11. TRANSFER, LEAVE OF ABSENCE, ETC.
For purposes of the Plan, the following events shall not be deemed a
termination of employment:
(a) a transfer to the employment of the Company from a Subsidiary or
from the Company to a Subsidiary, or from one Subsidiary to another;
(b) an approved leave of absence for military service or sickness, or
for any other purpose approved by the Company, if the employee's right to
re-employment is guaranteed either by a statute or by contract or under the
policy pursuant to which the leave of absence was granted or if the
Committee otherwise so provides in writing.
SECTION 12. AMENDMENTS AND TERMINATION.
The Board may at any time amend or discontinue the Plan and the Committee
may at any time amend or cancel any outstanding Award (or provide substitute
Awards at the same or reduced exercise or purchase price or with no exercise or
purchase price, but such price, if any, must satisfy the requirements which
would apply to the substitute or amended Award if it were then initially granted
under this Plan) for the purpose of satisfying changes in law or for any other
lawful purpose, but no such action shall adversely affect rights under any
outstanding Award without the holder's consent. If and to the extent determined
by the Committee to be required by the Code to ensure that Incentive Stock
Options granted under the Plan are qualified under Section 422 of the Code, Plan
amendments shall be subject to approval by the Company stockholders entitled to
vote at a meeting of stockholders.
SECTION 13. STATUS OF PLAN.
With respect to the portion of any Award which has not been exercised and
any payments in cash, stock or other consideration not received by a
participant, a participant shall have no rights greater than those of a general
creditor of the Company unless the Committee shall otherwise expressly determine
in connection with any Award or Awards. In its sole discretion, the Committee
may authorize the creation of trusts or other arrangements to meet the Company's
obligations to deliver Stock or make payments with respect to Awards hereunder,
provided that the existence of such trusts or other arrangements is consistent
with the provision of the foregoing sentence.
SECTION 14. CHANGE OF CONTROL PROVISIONS.
Upon the occurrence of a Change of Control as defined in this Section 14:
(a) Each Stock Option, Stock Appreciation Right and Performance Share
Award shall automatically become fully exercisable, unless the Committee
shall otherwise expressly provide at the time of grant.
(b) Restrictions and conditions on Awards of Restricted Stock shall
automatically be deemed waived, and the recipients of such Awards shall
become entitled to receipt of the Stock subject to such Awards.
(c) To the extent Section 14(a) hereof is not applicable to any Stock
Options, Stock Appreciation Rights or Performance Share Awards, the
Committee may at any time prior to or after a Change of Control accelerate
the exercisability of any Stock Options, Stock Appreciation Rights and
Performance Share Awards to the extent it shall in its sole discretion
determine.
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<PAGE> 28
(d) "Change of Control" shall mean the occurrence of any one of the
following events:
(i) persons who, as of the date hereof, constitute the Company's
Board of Directors (the "Incumbent Directors") cease for any reason,
including, without limitation, as a result of a tender offer, proxy
contest, merger or similar transaction, to constitute at least a
majority of the Board, provided that any person becoming a director of
the Company subsequent to the date hereof whose election or nomination
for election was approved by a vote of at least a majority of the
Incumbent Directors shall, for purposes of this Plan, be considered an
Incumbent Director; or
(ii) the stockholders of the Company shall approve (A) any
consolidation or merger of the Company or any Subsidiary where the
stockholders of the Company, immediately prior to the consolidation or
merger, would not, immediately after the consolidation or merger,
beneficially own (as such term is defined in Rule 13d-3 under the Act),
directly or indirectly, shares representing in the aggregate 50% of the
voting stock of the corporation issuing cash or securities in the
consolidation or merger (or of its ultimate parent corporation, if any),
(B) any sale, lease, exchange or other transfer (in one transaction or a
series of transactions contemplated or arranged by any party as a single
plan) of all or substantially all of the assets of the Company or (C)
any plan or proposal for the liquidation or dissolution of the Company;
SECTION 15. GENERAL PROVISIONS.
(a) No Distribution, Compliance with Legal Requirements. The Committee
may require each person acquiring shares pursuant to an Award to represent to
and agree with the Company in writing that such person is acquiring the shares
without a view to distribution thereof. No shares of Stock shall be issued
pursuant to an Award until all applicable securities laws and other legal and
stock exchange requirements have been satisfied. The Committee may require the
placing of such stop-orders and restrictive legends on certificates for Stock
and Awards as it deems appropriate.
(b) Delivery of Stock Certificates. Delivery of Stock certificates to
participants under this Plan shall be deemed effected for all purposes when the
Company or a stock transfer agent of the Company shall have delivered such
certificates in the United States mail, addressed to the participant, at the
participant's last known address on file with the Company.
(c) Other Compensation Arrangements; No Employment Rights. Nothing
contained in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, subject to stockholder approval if such approval is
required; and such arrangements may be either generally applicable or applicable
only in specific cases. Neither the adoption of the Plan nor the grant of any
Award to any employee shall confer upon any employee any right to continued
employment with the Company or any Subsidiary.
SECTION 16. EFFECTIVE DATE OF PLAN.
The Plan shall become effective upon approval by a majority of votes cast
by the holders of the shares of the Common Stock and Class B Common Stock of the
Company, voting together as a single class, at a meeting of stockholders at
which a quorum is present. Subject to such approval by the stockholders, and to
the requirement that no Stock may be issued hereunder prior to such approval,
Stock Options and other Awards may be granted hereunder on and after adoption of
the Plan by the Board.
SECTION 17. GOVERNING LAW.
This Plan shall be governed by Massachusetts law except to the extent such
law is preempted by federal law.
A-11
<PAGE> 29
UNIFIRST CORPORATION
P The undersigned holder of shares of Common Stock of UniFirst
Corporation hereby appoints ALDO A. CROATTI, RONALD D. CROATTI and
R DONALD J. EVANS, and each of them, proxies with power of substitution
to vote on behalf of the undersigned at the Annual Meeting of
O Shareholders of UniFirst Corporation to be held at the offices of
the Bank of Boston, 2nd Floor Conference Center, 100 Federal Street,
X Boston, Massachusetts 02110, on Tuesday, January 14, 1997 at 10:00
o'clock in the forenoon, and at any adjournment thereof, hereby
Y granting full power and authority to act on behalf of the undersigned
at this meeting and at any adjournment thereof. In their discretion,
the proxies are authorized to vote upon such other business as may
properly come before the meeting or any adjournment thereof. The
undersigned hereby revokes any proxy previously given and acknowledges
receipt of the Notice of Annual Meeting and Proxy Statement and a copy
of the Annual Report for the fiscal year ended August 31, 1996.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS
GIVEN, THIS PROXY WILL BE VOTED FOR THE NOMINEES LISTED IN PROPOSAL 1
AND FOR THE APPROVAL OF THE PLAN LISTED IN PROPOSAL 2, SO THAT A
SHAREHOLDER WISHING TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS'
RECOMMENDATIONS NEED ONLY SIGN AND DATE THIS PROXY ON THE REVERSE
SIDE AND RETURN IT IN THE ENCLOSED ENVELOPE.
-----------
(Please sign on the reverse side and return promptly SEE REVERSE
in the enclosed envelope.) SIDE
-----------
<PAGE> 30
/X/ PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES SET FORTH IN
PROPOSAL 1 BELOW.
<TABLE>
<S> <C>
1. ELECTION OF TWO CLASS I DIRECTORS.
NOMINEES: Aldo A. Croatti and Albert Cohen
/ / FOR / / WITHHELD
BOTH FROM BOTH
NOMINEES NOMINEES
/ /___________________________________________
For both nominees except as noted above.
MARK HERE MARK HERE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ADDRESS / / IF YOU PLAN / /
FOR THE APPROVAL OF THE UNIFIRST 1996 CHANGE AND TO ATTEND
STOCK INCENTIVE PLAN NOTE AT LEFT THE MEETING
2. APPROVAL OF THE UNIFIRST 1996 STOCK
INCENTIVE PLAN
For joint accounts, each owner should sign. Executors, Administrators,
/ / FOR / / AGAINST Trustees, etc. should give full title.
Signature: _________________________________________ Date ___________
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Signature: _________________________________________ Date ___________
</TABLE>
<PAGE> 31
UNIFIRST CORPORATION
P The undersigned holder of shares of Class B Common Stock of
UniFirst Corporation hereby appoints ALDO A. CROATTI, RONALD D.
R CROATTI and DONALD J. EVANS and each of them, proxies with power of
substitution to vote on behalf of the undersigned at the Annual
O Meeting of Shareholders of UniFirst Corporation to be held at the
offices of the Bank of Boston, 2nd Floor Conference Center,
X 100 Federal Street, Boston, Massachusetts 02110, on Tuesday, January
14, 1997 at 10:00 o'clock in the forenoon, and at any adjournment
Y thereof, hereby granting full power and authority to act on behalf of
the undersigned at this meeting and at any adjournment thereof. In
their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment
thereof. The undersigned hereby revokes any proxy previously given
and acknowledges receipt of the Notice of Annual Meeting and Proxy
Statement and a copy of the Annual Report for the fiscal year ended
August 31, 1996.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS
GIVEN, THIS PROXY WILL BE VOTED FOR THE NOMINEE LISTED IN PROPOSAL 1
AND FOR THE APPROVAL OF THE PLAN LISTED IN PROPOSAL 2, SO THAT A
SHAREHOLDER WISHING TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS'
RECOMMENDATIONS NEED ONLY SIGN AND DATE THIS PROXY ON THE REVERSE
SIDE AND RETURN IT IN THE ENCLOSED ENVELOPE.
-----------
(Please sign on the reverse side and return promptly SEE REVERSE
in the enclosed envelope.) SIDE
-----------
<PAGE> 32
/X/ PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEE SET FORTH IN
PROPOSAL 1 BELOW.
1. ELECTION OF ONE CLASS I DIRECTOR.
NOMINEES: Aldo A. Croatti
/ / FOR / / WITHHELD
THE FROM THE
NOMINEE NOMINEE
<TABLE>
<S> <C>
/ /___________________________________________
For both nominees except as noted above. MARK HERE MARK HERE
FOR ADDRESS / / IF YOU PLAN / /
THE BOARD OF DIRECTORS RECOMMENDS A VOTE CHANGE AND TO ATTEND
FOR THE APPROVAL OF THE UNIFIRST 1996 NOTE AT LEFT THE MEETING
STOCK INCENTIVE PLAN
2. APPROVAL OF THE UNIFIRST 1996 STOCK
INCENTIVE PLAN
/ / FOR / / AGAINST For joint accounts, each owner should sign. Executors, Administrators,
Trustees, etc. should give full title.
Signature: _________________________________________ Date ___________
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Signature: _________________________________________ Date ___________
</TABLE>
