August 26, 1994
Securities and Exchange Commission
Proxy Filing Desk
Division of Corporation Finance
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: Cintas Corporation/File No. 0-11399
To whom it may concern:
We are transmitting the definitive filing of the
Notice, Proxy Statement and Form of Proxy to be
furnished to shareholders of Cintas Corporation
for its Annual Shareholders' Meeting. We have
previously transferred $125.00 for the filing
fee.
Cintas plans to release these materials to
security holders on or about August 31, 1994.
If you have any questions, you may contact me at
513/573-4114 or our outside securities counsel,
Gary P. Kreider at 513/579-6411.
Sincerely,
Rhonda Fox
Field Controller
RF/ctb
<PAGE> SCHEDULE 14A
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
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or
240.14a-12
Cintas Corporation
(Name of Registrant as Specified In Its Charter)
Cintas Corporation
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c) (1) (ii),
14a-6(i)(4)and 0-11.
/ / $500 per each party to the controversy pursuant
to Exchange Act Rules 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act
Rules 14a-6(i)(4)and 0-11.
1) Title of each class of securities to which
transaction applies:
2) Aggregate number of securities to which
transaction applies:
3) Per unit price or other underlying value of
transaction computed pursuant to Exchange
Act Rule 0-11:(1)
4) Proposed maximum aggregate value of
transaction:
(1) Set forth the amount on which the filing fee is
calculated and state how it was determined.
/ / Check box if any part of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2) and
identity 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>
PRELIMINARY COPY
FRONT OF CARD
CINTAS CORPORATION PROXY FOR ANNUAL
MEETING
6800 Cintas Blvd., P.O. Box 625737 - Cincinnati, Ohio
45262-5737
The undersigned hereby appoints RICHARD T. FARMER,
ROBERT J. KOHLHEPP, and DAVID T. JEANMOUGIN, or any of them,
proxies of the undersigned, each with the power of
substitution, to vote all shares of Common Stock which the
undersigned would be entitled to vote at the Annual Meeting of
Shareholders of Cintas Corporation to be held October 13, 1994
at 10:00 a.m. (Eastern Time) at the Company's Corporate
Headquarters, 6800 Cintas Boulevard, Cincinnati, Ohio 45262 and
at any adjournment of such Meeting as specified below.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING
PROPOSALS:
1. To amend the Articles of Incorporation concerning
Directors;
FOR AGAINST ABSTAIN
2. To amend the Articles of Incorporation to adopt the
Washington "Interested Shareholder" Statute;
FOR AGAINST ABSTAIN
3. To adopt the 1994 Directors' Stock Option Plan;
FOR AGAINST ABSTAIN
4. Authority to establish the number of Directors to be
elected at the meeting at eight (8);
FOR AGAINST ABSTAIN
5. Authority to elect eight (8) nominees listed below.
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the contrary to vote all
nominees listed below below)
Richard T. Farmer; Robert J. Kohlhepp; Gerald V. Dirvin;
Scott D. Farmer; James J. Gardner; Roger L. Howe; Donald P.
Klekamp; John S. Lillard
WRITE THE NAME OF ANY NOMINEE(S) FOR
_______________________
WHOM AUTHORITY TO VOTE IS WITHHELD
_______________________
(Continued on other side)
PAGE
<PAGE>
PRELIMINARY COPY
BACK OF CARD
6. In their discretion the proxies are authorized to vote
upon such other business as may properly come before the
meeting.
THIS PROXY WHEN PROPERY EXECUTED WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2,
3, 4 and 5..
___________________________, 1994
_______________________________
____________________________
Important: Please sign
exactly as name appears
hereon indicating,
where proper, official
position or
representative capacity.
In the case of joint
holders, all should
sign.
THIS PROXY IS SOLICITED
ON BEHALF OF THE BOARD OF DIRECTORS
<PAGE>
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Dear Shareholder:
We are pleased to invite you to attend our 1994
Annual Shareholders' Meeting. The meeting will be held at
10:00 a.m., Eastern Time, at the Company's Corporate
Headquarters, 6800 Cintas Boulevard, Cincinnati, Ohio 45262, on
Thursday, October 13, 1994.
The purposes of this Annual Meeting are:
1. To amend the Articles of Incorporation
concerning Directors;
2. To amend the Articles of Incorporation to adopt
the Washington Interested Shareholder Statute;
3. To adopt the 1994 Directors' Stock Option Plan;
4. To establish the number of Directors to be
elected at eight;
5. To elect eight Directors;
6. To transact such other business as may properly
come before the meeting or any adjournment thereof.
Following the formal meeting, we will discuss the
Company's operations during the last year and our plans for the
future and answer your questions regarding the Company. Board
members and other officers of the Company will also be
available to discuss the Company's business with you.
Yours truly,
Robert J. Kohlhepp,
President and Secretary
Dated: August 26, 1994
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE
VOTE, SIGN AND PROMPTLY RETURN YOUR PROXY CARD IN THE
ENCLOSED ENVELOPE. PROXIES MAY BE REVOKED AT ANY TIME
PRIOR TO THE MEETING BY WRITTEN NOTICE OF REVOCATION
DELIVERED TO THE COMPANY'S SECRETARY, THE SUBMISSION OF A
LATER PROXY OR BY ATTENDING THE MEETING AND VOTING IN
PERSON.
PAGE
<PAGE>
CINTAS CORPORATION
6800 Cintas Boulevard
P.O. Box 625737
Cincinnati, Ohio 45262-5737
Telephone (513) 459-1200
______________________________________
P R O X Y S T A T E M E N T
Annual Meeting of Shareholders
October 13, 1994
INTRODUCTION
The enclosed Proxy is solicited by the Board of
Directors of Cintas Corporation ("Cintas" or the "Company") for
use at the Annual Meeting of Shareholders to be held on October
13, 1994, and at any adjournment thereof, pursuant to the
foregoing Notice. The approximate mailing date of the Proxy
Statement and the accompanying proxy card is August 26, 1994.
VOTING AT ANNUAL MEETING
General
Shareholders may vote in person or by proxy at the
Shareholders' Meeting. Proxies given may be revoked at any
time prior to the meeting by filing with the Company's
Secretary either a written revocation or a duly executed proxy
bearing a later date, or by appearing at the meeting and voting
in person. All shares will be voted as specified on each
properly executed proxy. If no choice is specified, the shares
will be voted as recommended by the Board of Directors.
As of August 15, 1994, the record date for
determining shareholders entitled to notice of and to vote at
the meeting, Cintas had 46,855,514 shares of Common Stock
outstanding. Each share is entitled to one vote on each matter
to be presented at the meeting. Only shareholders of record at
the close of business on August 15, 1994, will be entitled to
vote at the meeting. A quorum consists of the presence in
person or by proxy of a majority of all shares entitled to vote
at the meeting.
<PAGE>
<PAGE>
-2-
Principal Shareholders
The following persons are the only shareholders known
by the Company to own beneficially 5% or more of its
outstanding Common Stock as of the record date:
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership Class
<S> <C> <C>
Richard T. Farmer(1) 13,427,456(2) 28.7%
James J. Gardner(1) 13,867,488(3) 8.3%
Joan A. Gardner(1) 12,644,892(4) 5.6%
__________________________
<FN>
(1) The address of Richard T. Farmer, James J. Gardner and
Joan A. Gardner is Cintas Corporation, 6800 Cintas Boulevard,
P.O. Box 625737, Cincinnati, Ohio 45262-5737.
(2) Includes 87,890 shares owned by Mr. Farmer's wife,
1,415,259 shares held in trust for Mr. Farmer's children,
34,290 shares owned by a corporation controlled by Mr. Farmer,
and 52,500 shares which may be acquired pursuant to stock
options which are exercisable within 60 days.
(3) Includes 92,168 shares held by a charitable trust
established by Mr. Gardner, 411,152 shares held in various
trusts for the benefit of Mr. Gardner's children, options for
3,000 shares which are exercisable within 60 days, and 32,791
shares held by a corporation that is controlled by Mr. Gardner.
This figure also includes 3,243,761 shares held by a family
partnership as to which Mr. Gardner indirectly exercises voting
power, of which 2,101,044 shares are also deemed to be owned
beneficially by Mr. Gardner's wife, Joan A. Gardner, and which
were contributed by her to the partnership. Excludes 543,848
shares held in trust for Mrs. Gardner's children.
(4) Includes 543,848 shares held in trust for Mrs.
Gardner's
children and 2,101,044 shares contributed by Mrs. Gardner to a
family partnership. Excludes shares beneficially owned by her
husband, James J. Gardner.
</TABLE>
<PAGE>
-3-
Security Ownership of Directors and Executive Officers
The following table sets forth the beneficial
ownership of the Company's Common Stock by its directors,
nominee for director, the named executive officers in the Proxy
Statement and all directors and executive officers as a group,
as of August 15, 1994:
<TABLE>
<CAPTION>
Amount and
Nature of
Beneficial Percent
Name of Beneficial Owner Ownership Of Class
<S> <C> <C>
Richard T. Farmer 13,427,456 (1) 28.7%
Robert J. Kohlhepp 1,315,240 (2) 2.8%
Gerald V. Dirvin 1,400 *
James J. Gardner 3,867,488 (1) 8.3%
Roger L. Howe 346,228 (3) *
Donald P. Klekamp 89,940 (3)(4) *
John S. Lillard 75,454 (3) *
Scott D. Farmer 161,368 (5) *
David T. Jeanmougin 2,083 *
John S. Kean III 31,961 (6) *
Robert R. Buck 58,988 (7) *
All Directors and Executive
Officers as a Group
(11 persons) 19,226,651 (8) 41.0%
*Less than 1%
<FN>
(1) See Principal Shareholders.
(2) Includes 155,000 shares held in trust for members
of Mr. Kohlhepp's family and options for 9,720 shares which are
exercisable within 60 days.
(3) Includes options for 3,000 shares which are
exercisable within 60 days.
(4) Includes 59,690 shares owned by Mr. Klekamp's wife
and 20,000 shares as to which he is trustee.
<PAGE>
-4-
(5) Includes 45,700 shares held in trust for members of
Mr. Farmer's family, 7,206 shares owned by his immediate family
and options for 37,000 shares which are exercisable within 60
days.
(6) Includes options for 3,600 shares which are
exercisable within 60 days.
(7) Includes options for 13,200 shares which are
exercisable within 60 days.
(8) Includes 92,220 shares which may be acquired
pursuant to stock options which are exercisable within 60 days.
</TABLE>
Proposal 1. AMENDMENT TO ARTICLES OF INCORPORATION
CONCERNING DIRECTORS
Under the laws of Washington, the Company's state of
incorporation, directors may be removed by shareholders without
ascribing cause. The Board of Directors is proposing to amend
the Articles of Incorporation to provide that shareholders may
remove directors during their terms of office only by
establishing cause for the removal. Cause is generally
interpreted under corporate law for these purposes to include
criminal conduct, fraud, incompetency and acts adverse to the
corporation. The amendment will also provide that it may
not be repealed without the affirmative vote of two-thirds of
the outstanding shares of Common Stock of the Company. For a
discussion of reasons for and the effects of this proposal, see
"Reasons For and Effects of Proposals 1 and 2" following
Proposal 2.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF
PROPOSAL NO.1.
Vote Required to Adopt the Amendment
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE OUTSTANDING
COMMON STOCK OF CINTAS IS REQUIRED TO APPROVE PROPOSAL
NO. 1. THEREFORE, ABSTENTIONS, BROKER NON-VOTES AND OTHER
SHARES NOT VOTED WILL HAVE THE SAME EFFECT AS IF VOTED
AGAINST THE PROPOSAL.
Proposal 2. AMENDMENT TO ARTICLES OF INCORPORATION TO
ADOPT THE WASHINGTON INTERESTED SHAREHOLDER
STATUTE
The corporation laws of Washington, under which
Cintas is organized, gives Washington corporations the ability
to elect to be governed by the Washington Interested
Shareholder Statute.
Washington's Interested Shareholder Statute applies to
certain transactions between a corporation or its subsidiary
and an interested shareholder or an affiliate of such person.
The transactions covered are those that are required to be
authorized pursuant to provisions of Washington law governing
mergers and share exchanges, sales of assets other than in the
regular course of business and dissolutions. An interested
shareholder
<PAGE>
-5-
includes any person or group of affiliated persons
who beneficially own 20% or more of the outstanding voting
shares of the corporation. Under the statute, a transaction
covered by the statute between the corporation and an
interested shareholder must be approved by two-thirds of the
votes entitled to be counted. Votes owned or under control of
interested shareholders are not counted for these purposes.
Application of this statute can be waived by a majority
of the Company's Board of Directors, not including those
directors elected within the two years prior to such vote or who are
themselves an interested shareholder or affiliated with such persons.
The amendment will also provide that it may not be
repealed without the affirmative vote of two-thirds of the outstanding
shares of Common Stock of the Company. The text of the Washington
Interested Shareholder Statute is attached as Appendix 1. For a
discussion of reasons for and the effects of this proposal, see "Reasons
For and Effects of Proposals 1 and 2" following this proposal.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF
PROPOSAL NO.2.
Vote Required to Adopt the Amendment
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE OUTSTANDING
COMMON STOCK OF CINTAS IS REQUIRED TO APPROVE PROPOSAL
NO. 2. THEREFORE, ABSTENTIONS, BROKER NON-VOTES AND OTHER
SHARES NOT VOTED WILL HAVE THE SAME EFFECT AS IF VOTED
AGAINST THE PROPOSAL.
"REASONS FOR AND EFFECTS OF PROPOSALS 1 AND 2"
Presently, management of the Company owns sufficient
Common Stock to exercise practical control of the Company through
the election of directors. The Board of Directors believes, however,
that the Company's operating success is largely due to its
management's stability and the freedom management has to concentrate on
business matters without the distractions of reacting to stock market
conditions, possible takeovers or the necessity of directing operations
to the short-term as opposed to long-term objectives. The situation
could change, however, in the future through future stock issuances for
acquisitions or for cash or through substantial sales of stock by major
shareholders, although no such transactions are currently anticipated.
The Board believes that amendment of the Articles to adopt the proposals
relating to the removal of directors and to adopt Washington's Interested
Shareholder Statute will promote stability in management which it
believes important through discouraging hostile takeovers which, in many
cases, lead to restructurings, management changes, payment of premiums to
corporate raiders and similar transactions.
<PAGE>
-6-
The first of the proposals to amend the Articles of
Incorporation is designed to make it more difficult for shareholders to
remove directors during their regular term of office. Directors of
Cintas are elected at annual shareholder meetings for one year terms.
Currently, a majority of shareholders could call a meeting and remove all
directors without cause. If the proposed amendment is adopted, removal
would be more difficult since it would be necessary for such
shareholders to establish cause for removal. Cause is not defined in the
statute, but is generally held to involve serious matters such as
criminal conduct, fraud, incompetency and acts adverse to the
corporation.
Washington's Interested Shareholder Statute is intended
to make it more difficult for a potential acquirer to engage in
transactions with the Company such as mergers, share exchanges, sales of
assets or to force dissolution of the Company even though such
shareholder or group may own a majority of the voting power of the
Company. By requiring a special two-thirds vote and not counting the
votes of the interested shareholder, the statute requires a person
seeking to acquire control of the Company with the view of pursuing any
of the transactions outlined above, to either convince the holders of
two-thirds of the remaining shares of such transaction or to negotiate
the transaction in advance with the Board of Directors to secure a Waiver
of application of statute. Cintas' Articles of Incorporation have since
1988 contained provisions similar to the Washington Interested
Shareholder Statute but the Board of Directors has determined that it may
be advantageous for the Company to have the benefit of the precise
statutory protection provided by the Washington law in addition to the
current provisions in the Articles of Incorporation. In addition, the
Articles have since 1988 also contained provisions requiring any person
acquiring more than 15% of the outstanding Common Stock to offer to
purchase all remaining Common Stock. Existing provisions of Cintas'
Articles of Incorporation require action by the shareholders to enable
the Washington Statute to apply to Cintas.
While the Board of Directors in making these proposals
believes that they are in the best interests of the Company and its
shareholders, shareholders should be aware that their adoption could
potentially be disadvantageous to them because the overall effect of
these proposals as well as provisions currently in the Articles of
Incorporation may be to render more difficult or discourage the removal
of incumbent management or the assumption of effective control by other
persons.
Proposal 3. PROPOSAL TO ADOPT THE 1994 DIRECTORS'
STOCK OPTION PLAN
The Board of Directors believes that the interests of
Cintas and its shareholders are enhanced by providing a method
whereby outside Directors of Cintas are encouraged to invest in shares of
Cintas Common Stock and acquire a proprietary interest in Cintas'
progress and growth. Because Cintas' existing stock option plan is
restricted to employees, in July 1994, the Board of Directors adopted,
subject to shareholder approval, the 1994 Directors' Stock Option Plan
(the "Directors' Plan"). The following is a summary of the Directors'
Plan to be considered at the 1994 Annual Meeting of Shareholders. The
full text of that plan is attached hereto as Appendix 2.
Pursuant to the provisions of the Directors' Plan, each
non-employee Director of Cintas ("Eligible Director") elected
at the 1994 Annual Meeting of Shareholders will be
<PAGE>
-7-
granted an option to purchase 1,000 shares of Cintas Common Stock, and,
upon each subsequent election as a director, another option for 1,000
shares. The total number of shares of Cintas Common Stock for which
options may be granted under the Plan is 30,000 shares. The exercise
price of each option will be the last closing sale price reported on the
date of grant. The number of shares issuable pursuant to an option and
the exercise price are subject to adjustment in the event of stock
splits, stock dividends and other changes in Cintas Common Stock. Each
option is for a term of ten years and becomes exercisable with respect to
250 shares on each of the first, second, third and fourth anniversary of
the date of grant.
A person must be an Eligible Director at the time an
option is exercised. An optionee who ceases to be an Eligible
Director for any reason other than death, disability, retirement or
removal for cause may exercise his option at any time within three months
after the date of such
cessation, but only during the option period and only to
the extent that
the option holder was entitled to exercise the option on
the date of such
cessation. An option held by an Eligible Director who is
removed for
cause will terminate immediately upon removal. If an
optionee ceases to
be an Eligible Director as a result of death, disability
or pursuant to the
Company's mandatory retirement policy, the option may be
exercised at
any time within the option period from the date of such
cessation, but
only to the extent the option holder was entitled to
exercise the option
at the date of such cessation and only during the option
period.
The Directors' Plan is administered by a committee of two
or
more Directors. In the absence of this committee, the
Compensation
Committee of the Board of Directors will administer the
Directors' Plan.
Options granted under the Directors' Plan will be
"non-qualified"
stock options and are not intended to qualify as incentive
stock options
under Section 422 of the Internal Revenue Code. An
Eligible Director will
realize no income upon the grant of an option. Ordinary
income will be
recognized when an option is exercised. The amount of
such income will
be equal to the excess of the fair market value on the
exercise date of
the shares of Common Stock issued upon exercise over the
option price.
The optionee's holding period with respect to the shares
acquired will
begin on the date of exercise. Cintas will be entitled to
a deduction for
federal income tax purposes at the same time and in the
same amount as
the optionee is considered to have recognized ordinary
income in
connection with the exercise of the option.
The tax basis of the stock acquired upon the exercise of
any
option will be equal to the exercise price of such option,
plus the amount
included in ordinary income with respect to exercise of
the option. Any
gain or loss on a subsequent sale of the stock will be
either long-term or
short-term capital gain or loss, depending on the
optionee's holding
period for the stock disposed of by the optionee.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR
OF PROPOSAL NO.3.
<PAGE>
-8-
Vote Required to Adopt the Amendment
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE COMMON
STOCK VOTING AND ABSTAINING ON THIS PROPOSAL IS REQUIRED
TO APPROVE PROPOSAL NO.3.
ELECTION OF DIRECTORS
The By-laws of the Company call for the Board of
Directors to
have at least three members with the specific number to be
elected at the
meeting established by shareholders. At the present time,
the Board
consists of seven (7) Directors, and the Board is
recommending that this
number be increased to eight (8).
The Board is nominating for reelection all current
Directors,
namely Richard T. Farmer, Robert J. Kohlhepp, Gerald V.
Dirvin, James
J. Gardner, Roger L. Howe, Donald P. Klekamp and John S.
Lillard and
the addition of an eighth director, Scott D. Farmer.
Proxies solicited by the Board will be voted for the
election of the
eight (8) nominees shown above. All Directors elected at
the Annual
Shareholders' Meeting will be elected to hold office until
the next Annual
Meeting or until their successors are elected and
qualified.
Should any of the nominees become unable to serve,
proxies will
be voted for any substitute nominee designated by the
Board. The
Company has no reason to believe that any nominee for
election will be
unable or unwilling to serve if elected.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR
OF PROPOSAL NO.4 AND THE ELECTION OF THE EIGHT (8)
NOMINEES PROPOSED BY THE BOARD.
Vote Required
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE SHARES
VOTING AT THE MEETING IS REQUIRED TO SET THE NUMBER OF
DIRECTORS. ABSTENTIONS AND BROKER NON-VOTES WILL HAVE NO
EFFECT ON THIS VOTE. THE EIGHT (8) NOMINEES RECEIVING THE
HIGHEST NUMBER OF VOTES CAST FOR THE POSITIONS TO BE
FILLED WILL BE ELECTED.
OTHER MATTERS
Any other matters considered at the meeting including
adjournment will require the affirmative vote of the
majority of shares
voting with abstentions and broken non-votes having no
effect.
VOTING BY PROXY
All proxies properly signed will, unless a different
choice is
indicated, be voted "FOR" proposals 1, 2, 3 and 4 and
"FOR" the
election of all eight nominees proposed by
<PAGE>
-9-
the Board unless authority is
withheld to vote for any or all of those nominees.
If any matters come before the meeting or any
adjournment,
each proxy card will be voted in the discretion of the
proxies named
therein.
SHAREHOLDER PROPOSALS
Shareholders who desire to have proposals included in the
Notice
for the 1995 Shareholders' Meeting must submit their
proposals to Cintas
at its offices on or before April 29, 1995.
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors appointed Ernst & Young LLP as its
certified public accountants for fiscal 1995. Ernst &
Young LLP has
served as certified public accountants for the Company in
the past. A
member of Ernst & Young LLP will be present at the meeting
to make a
statement if desired and to answer questions of
shareholders.
<PAGE>
<PAGE>
-10-
MANAGEMENT
Directors and Executive Officers
The Directors, nominee for Director and Executive
Officers of Cintas Corporation are:
<TABLE>
<CAPTION>
Position
Name and Age Position Since
<S> <C> <C>
Richard T. Farmer (1) Chairman of the Board and 1968
59 Chief Executive Officer
Robert J. Kohlhepp(1) President, Secretary and Director 1984
50
Gerald V. Dirvin(2) Director 1993
57
James J. Gardner(1)&(2) Director 1969
61
Roger L. Howe(2)&(3) Director 1979
59
Donald P. Klekamp(3) Director 1984
62
John S. Lillard(3) Director 1978
64
Scott D. Farmer Vice President 1987
35 Nominee for Director
Robert R. Buck Senior Vice President 1991
46
Karen L. Carnahan Treasurer 1992
40
David T. Jeanmougin Senior Vice President-Finance 1991
53
John S. Kean III Senior Vice President 1986
54
Ages are as of September 1, 1994.
<FN>
1 Member of the Executive Committee of the Board of
Directors.
2 Member of the Audit Committee of the Board of Directors.
3 Member of the Compensation Committee of the Board of
Directors.
</TABLE>
<PAGE>
-11-
Richard T. Farmer has been with the Company and its
predecessors
since 1957 and has served in his present positions with
the Company
since 1968. He is also a Director of Fifth Third Bancorp,
Cincinnati,
Ohio, an OTC company, and Safety Kleen Corp., Chicago,
Illinois, a
business service entity and NYSE company.
Robert J. Kohlhepp has been a Director of the
Company since 1979.
He has been employed by the Company since 1967 serving in
various
executive capacities including Vice President - Finance
until 1979 when
he became Executive Vice President. He served in that
capacity until
October 23, 1984, when he was appointed President by the
Board.
Gerald V. Dirvin was elected a Director of
Cintas in 1993. Mr.
Dirvin joined The Procter & Gamble Company, a
Cincinnati-based
consumer goods marketing company and an NYSE company, in
1959 and
served in various management positions. He retired as
Executive Vice
President and as a Director in 1994. Mr. Dirvin is also a
Director of Fifth
Third Bancorp, Cincinnati, Ohio, an OTC company, and
Northern Telecom
Limited, Toronto, Canada, an NYSE company.
James J. Gardner served in various management
positions with
Cintas from 1956 until his retirement in 1988. Mr.
Gardner has served
as a Director of the Company since 1969.
Roger L. Howe has been a Director of Cintas
since 1979. He is the
Chairman of the Board of U.S. Precision Lens, Inc., a
manufacturer of
optics for the instrument, photographic and television
industries, and has
held that position in the firm for over five years. Mr.
Howe is a Director
of Star Banc Corporation, Cincinnati, Ohio, an NYSE
company, and its
subsidiary Star Bank, National Association; Eagle-Picher
Industries, Inc.,
a Cincinnati-based diversified industrial products
manufacturer; U.S. Shoe
Corporation, a Cincinnati-based company specializing in
women's apparel
retailing, optical products and footwear, and a NYSE
company; and
Baldwin Piano and Organ Company, a Loveland, Ohio, based
company
which is the largest domestic manufacturer of keyboard
musical
instruments, and a NASDAQ company.
Donald P. Klekamp was elected a Director of
Cintas in 1984. Mr.
Klekamp is a senior partner in the Cincinnati law firm of
Keating,
Muething & Klekamp. Keating, Muething & Klekamp serves as
counsel
for the Company.
John S. Lillard has been a Director of Cintas
since 1978. He was
President of JMB Institutional Realty Corporation, a
registered investment
advisor from its founding on April 1, 1979, until May
1991, and is
currently Chairman - Founder. He is also a Director of
The Mathers Fund,
a no-load mutual fund; a Director of Stryker Corporation,
a medical
equipment company; and a Director of Lake Forest
Bancorporation.
Scott D. Farmer joined Cintas in 1981. He has
served in various
management positions including Vice President - National
Account
Division, Vice President - Marketing and Merchandising and
is President
of Cintas Sales Corporation, a wholly-owned subsidiary of
the Company.
<PAGE>
-12-
Robert R. Buck joined Cintas in 1982. He is
presently in charge of 19 Cintas rental
operations in the Midwestern United States. Prior to his
operational responsibilities, he served
as Senior Vice President - Finance from 1982 to 1991.
Karen L. Carnahan joined Cintas in 1979. She has held
various accounting and finance
positions with the Company. In March 1992, she was elected
Treasurer of the Company.
David T. Jeanmougin joined Cintas in August 1991. He is
presently responsible for the
areas of finance, accounting and administration. Prior to
joining Cintas, Mr. Jeanmougin was
associated with Philips Industries, Inc., a Dayton-based
manufacturer of building and industrial
products and an NYSE company for at least five years where he
most recently served as Vice
President - Administration.
John S. Kean III joined Cintas in August 1986 upon the
acquisition of Red Stick Services
where he served as President. He was appointed Senior Vice
President in 1986 and is
responsible for operations in Louisiana, Mississippi, Alabama
and Arkansas.
James J. Gardner is the brother-in-law of Richard T. Farmer.
Scott D. Farmer is the son
of Richard T. Farmer. None of the other Executive Officers and
Directors are related.
Board Actions and Compliance with Section 16 of the Exchange
Act
The Board of Directors met on four occasions in fiscal 1994.
The Executive Committee
is entitled through authorization by the Board of Directors and
by Washington law to perform
substantially all of the functions of the Board of Directors
between meetings of the Board. The
Executive Committee took action by written consent on eight
occasions in fiscal 1994.
The Audit Committee reviews the Company's internal accounting
operations, monitors
relationships between the Company and its independent
accountants and recommends the
employment of independent auditors. The Audit Committee met on
two occasions in fiscal
1994.
The Compensation Committee establishes compensation levels
for all executives and
administers the Incentive Stock Option Plan, the 1992 Stock
Option Plan and the 1990
Directors' Stock Option Plan. This Committee met once and took
action by written consent on
four occasions in fiscal 1994.
The Company does not have a nominating committee.
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's officers,
directors and persons who own more than ten percent of a
registered class of the Company's
equity securities to file reports of ownership and changes in
ownership with the Securities and
Exchange Commission. Officers, directors and greater than
ten-percent shareholders are
required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they
file.
<PAGE>
-13-
<PAGE>
Based solely on its review of the copies of such forms
received by it, or written
representation from certain reporting persons that no Form 5's
were required for those persons,
the Company believes that during the period of June 1, 1993,
through May 31, 1994, all filing
requirements applicable to its officers, directors and greater
than ten percent beneficial owners
were complied with except for one late filing each by David T.
Jeanmougin and Scott D.
Farmer.
Executive Compensation
The following table summarizes the annual and long-term
compensation of the Company's
Chief Executive Officer and each of the Company's other four
most highly compensated
Executive Officers for the years ended May 31, 1994, 1993 and
1992.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Long Term
Compensation Compensation
Name and All Other
Principal Salary Bonus Other Stock Option Compensation
Position Year ($) ($) ($)(1) Grants (#) ($)(2)
<S> <C> <C> <C> <C> <C> <C>
Richard T. Farmer
Chairman of the 1994 267,800 171,392 50,980 10,000 shs 220,505
Board and Chief 1993 260,000 221,000 ---- ---- 236,979
Executive Officer 1992 250,000 100,000 ---- 100,000 shs 244,279
Robert J. Kohlhepp 1994 214,240 119,975 10,000 shs 62,614
President,
Secretary 1993 208,000 156,000 ---- 65,847
and Director 1992 200,000 100,000 10,000 shs 67,759
Robert R. Buck 1994 175,000 97,259 5,000 shs 9,056
Senior Vice
President 1993 165,000 53,388 ---- 6,931
1992 160,000 14,452 4,000 shs 7,352
David T. Jeanmougin 1994 175,000 52,400 5,000 shs 8,134
Senior Vice
President 1993 162,404 57,750 4,000 shs 4,716
-Finance 1992 121,154(3) 20,000(3) 26,000 shs ----
John S. Kean III 1994 175,000 26,805 ---- 8,795
Senior Vice
President 1993 165,000 39,806 ---- 7,815
1992 155,000 33,620 ---- 8,360
<FN>
(1) The amount indicated represents
compensation associated with the use of the Company's
aircraft ($42,091) and the remainder
attributable to club dues and other expense
reimbursements.
(2) The Company maintains a split-dollar life insurance program
for Messrs. Farmer and
Kohlhepp. Under this program, the Company has purchased
insurance policies on the lives of Mr.
Farmer and his wife and Mr. Kohlhepp and his wife. Messrs.
Farmer and Kohlhepp are
responsible for a portion of the premiums and the Company pays
the remainder of the
<PAGE>
-14-
premiums
on the life insurance policies. Upon the death of Messrs.
Farmer or Kohlhepp and their
spouses, the Company will be entitled to receive that portion
of the benefits paid under the life
insurance policy as is equal to the premiums paid by the
Company on that policy. The life
insurance trust established by the descendent will receive the
remainder of the death
benefits. The actuarially projected current dollar value of
the benefit to Messrs. Farmer
and Kohlhepp of the premiums paid to the insurer under these
policies for the fiscal years
ended May 31, 1994, 1993 and 1992 are $210,317, $227,779 and
$234,616,
respectively for Mr. Farmer and $52,859, $56,810 and $58,268
for Mr. Kohlhepp,
respectively, which are reflected in the Summary Compensation
Table.
Effective June 1, 1991, the Company's employee stock
ownership plan and profit sharing
plan were combined to form the Cintas Partners' Plan.
The Plan is for the benefit of the
Company's employees who have completed one year of
service. Effective June 1, 1993,
the Company added a defined contribution feature to
the Plan which covers substantially
all of its employees. The Plan provides that the
Company may match employee
contributions up to a maximum match of twenty percent.
The amounts in the Summary
Compensation Table represent the dollars contributed
by the Company pursuant to the
Company's Partners' Plan.
(3) Represents a partial year's compensation
for the year of hire.
</TABLE>
Stock Options
The following table sets forth information regarding stock
options granted to the named
executives under the Company's 1992 Stock Option Plan during
the fiscal year ended May 31,
1994:
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
Potential Realizable
Percent of Value at Assumed
Total Options Anual Rates of Stock
Options Granted to Exercise Price Appreciation
Granted Employees in Price Expiration for Option Term
Name (#) Fiscal 1994 ($/Sh.) Date 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C>
Richard T.
Farmer 10,000 4.7% 26.50 07/12/98 73,169 161,674
Robert J.
Kohlhepp 10,000 4.7% 26.50 07/12/03 166,600 422,162
Robert R.
Buck 5,000 2.4% 26.50 07/12/03 83,300 211,081
David T.
Jeanmougin 5,000 2.4% 26.50 07/12/03 83,300 211,081
John S.
Kean III ---- ---- ---- ---- ---- ----
</TABLE>
<PAGE>
-15-
The following table sets forth information regarding stock
options exercised by the named
executives during fiscal 1994 and the value of in-the-money
unexercised options held by the
named executives as of May 31, 1994:
<TABLE>
AGGREGATED OPTION EXERCISES IN FISCAL 1994
AND FISCAL 1994 YEAR END OPTION VALUES
<CAPTION>
Number Value of Unexercised In-
of Shares Number of Unexercised the-Money Options at
Acquired Options at May 31, 1994 May 31, 1994($)(1)
on Value
Name Exercise Realized($) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Richard T.
Farmer ---- ---- 25,000 60,000 217,188 481,250
Robert J.
Kohlhepp 5,400 143,325 3,360 38,360 84,910 503,973
Robert R.
Buck 8,760 197,965 9,840 16,680 235,435 243,448
David T.
Jeanmougin ---- ---- ---- 35,000 ---- 276,313
John S.
Kean III 29,880 600,480 ---- 45,420 ---- 953,856
<FN>
(1) Value is calculated as the difference between the fair
market value of the Common
Stock on May 31, 1994 ($31.19 per share), and the
exercise price of the options.
</TABLE>
Report of the Compensation Committee
The Compensation Committee of the Board of Directors (the
"Committee") is composed of
three independent, outside directors. The members of the
Committee for fiscal 1994 were
Messrs. Gardner, Howe and Lillard. The Committee has the
overall responsibility of reviewing
and recommending specific compensation levels for executive
officers and key management to
the full Board of Directors. The Committee is also charged
with the responsibility of reviewing
the performance of the executive officers and overall Company
performance. The Company's
stock option plans are also administered by the Compensation
Committee. Compensation
decisions for fiscal 1994 followed the same pattern as fiscal
1993.
The Company's executive compensation policies are designed to
support the corporate
objective of maximizing the long term value of the Company to
its shareholders and employees.
To achieve this objective, the Committee believes it is
important to provide competitive levels
of compensation to attract and retain the most qualified
executives, to recognize individuals who
exceed expectations and to link closely overall corporate
performance and executive pay. The
methods by which the Committee believes the Company's long term
objectives can be achieved
are through incentive compensation plans and the issuance of
options to purchase the
Company's common stock.
<PAGE>
-16-
The Compensation Committee has established three primary
components of the Company's
executive compensation plan. The three components are:
1. base compensation
2. performance incentive compensation
3. stock-based performance compensation through stock option
grants
The Omnibus Budget Reconciliation Act of 1993 provides that
compensation in excess of
$1,000,000 per year paid to the chief executive officer of a
company as well as the other
executive officers listed in the compensation table will no
longer be deductible unless the
compensation is approved by shareholders. This law was not
considered by the Committee in
determining fiscal 1994 compensation.
Base Compensation
The Committee annually reviews base salaries of executive
officers. Factors which influence
decisions made by the Committee regarding base salaries are
levels of responsibility and potential
for future responsibilities, salary levels offered by
competitors and overall performance of the
Company. The Committee's practice in establishing its salary
levels in part upon overall
Company performance is not based upon any specific objectives
or policies but reflects the
subjective judgement of the Committee. However, specific
annual performance goals are
established for each executive officer. Based on the
Committee's comparison of the Company's
overall compensation levels as a percent of revenues and net
income to comparable companies
in the industry, the Committee believes its overall
compensation levels are in the middle of the
range.
Performance Incentive Compensation
The performance incentive compensation, which is paid out in
the form of an annual cash
bonus, was established by the Committee to provide a direct
financial incentive to achieve
corporate and operating goals. The basis for determining
performance incentive compensation
is strictly quantitative in nature. At the beginning of each
fiscal year, the Committee establishes
a target bonus for each executive. For fiscal 1994, the target
bonus for the President was
expressed as a percentage of his base pay. The program was
based on target levels of increases
in earnings per share and provided for no bonus if earnings per
share did not exceed a minimum
threshold of a 10% increase over the prior year's earnings per
share which was ninety-seven
cents. The bonus potential ranged from 7% of base salary if
earnings per share increased by ten
cents over the prior year up to a maximum of 80% of base salary
if earnings per share increased
by twenty-four cents over the prior year. Cash bonuses paid to
other executives were based on
a percentage of operating profits of the particular division
served by that officer. Those
percentages are not disclosed because they could be used to
determine divisional operating
profits which are otherwise not publicly available.
Stock Option Grants
Executive compensation to reward past performance and to
motivate future performance is
also provided through stock options granted under the 1992
Stock Option Plan. The purpose
of the plan is to encourage executive officers to maintain a
long-term stock ownership position
in the Company in order that their interests are aligned with
those of the Company's
shareholders. The Committee in its discretion has the
authority to determine participants in the
<PAGE>
-17-
plan, the number of shares to be granted and the option price
and term. The Committee has not
established specific stock option target awards for
participants. Consideration for stock option
awards are evaluated on a subjective basis and granted to
participants until an ownership
position exists which is consistent with the participant's
current responsibilities. Options granted
to executive officers in 1994 can be found on page 14 under the
Option Grants Table.
CEO Compensation
The CEO is eligible to participate in the same executive
compensation plans available to other
executive officers. The Compensation Committee establishes the
CEO's base salary based
primarily on a subjective evaluation of the Company's prior
year's financial results, past salary
levels and compensation paid to other chief executive officers
in the Company's industry. Based
on the Committee's comparison of the Company's overall
compensation level for the CEO as a
percent of revenues and net income to comparable companies in
the industry, the Committee
believes its overall compensation level for the CEO is in the
middle of the range. The Committee
also establishes at the beginning of each year, a performance
incentive bonus arrangement for
the CEO. Based on the Company's belief that shareholders' value
is best enhanced by increases
in earnings per share, the Committee based this arrangement on
target levels of increases in
earning per share. The program provided for no bonus if
earnings per share did not exceed a
minimum threshold of a 10% increase over the prior year's
earnings per share which was ninety-
seven cents. The bonus potential ranged from 8% of base salary
if earnings per share increased
by ten cents over the prior year up to a maximum of 90% if
earnings per share increased by
twenty-four cents over the prior year.
John S. Lillard - Chairman
James J. Gardner
Roger L. Howe
PAGE
<PAGE>
- - -18-
Common Stock Performance Graph
The following graph summarizes cumulative return on
$100 invested in the Company's
Common Stock, the S & P 500 Stock Index and the common stocks
of a representative group
of companies in the uniform related industry (the "Peer
Index"). The companies included in the
Peer Index are Angelica Corporation, G & K Services, Inc.,
National Service Industries, Inc.,
Unifirst Corporation and Unitog Company. The Peer Index has
been revised from the prior year
to include Unitog Company. Unitog was excluded from the Common
Stock Performance Graph
in the prior year since it was not a publicly-held company for
the time period presented in the
graph. Total shareholder return was based on the increase in
the price of the stock and assumed
reinvestment of all dividends. Further, total return was
weighted according to market
capitalization of each company. The companies included in the
Peer Index are not the same as
those referred to in the Compensation Committee Report.
<TABLE>
CINTAS CORPORATION
5 Year Cumulative Total Shareholder Return
<CAPTION>
Measurement Peer
Period S&P Group
Quarterly Cintas 500 Peer Without
Data Covered Corporation Index Group Unitog
<S> <C> <C> <C> <C>
Measurement Point 5/31/89 $100 $100 $100 $100
8/89 104.3 110.2 118.2 116.4
11/89 116.6 108.4 133.9 131.2
2/90 116.6 104.0 119.8 120.8
5/90 122.4 113.2 128.5 128.6
8/90 109.1 101.1 107.8 107.4
11/90 121.4 101.0 105.4 107.5
2/91 154.3 115.1 118.3 120.0
5/91 190.3 122.2 133.8 134.9
8/91 207.4 123.9 117.7 118.4
11/91 176.3 117.6 104.7 104.0
2/92 242.4 129.3 149.5 148.3
5/92 229.3 130.3 120.8 118.3
8/92 201.1 129.8 121.1 119.5
11/92 225.3 135.2 128.7 127.0
2/93 223.2 139.0 155.2 152.5
5/93 222.4 141.1 154.8 147.5
8/93 236.5 145.3 161.2 156.5
11/93 232.5 144.7 162.2 154.5
2/94 256.7 146.4 195.4 185.2
5/94 253.6 143.1 177.4 165.7
</TABLE>
Outside directors are paid an annual fee of $8,000 plus
$1,425 for each Board meeting
attended and $800 for each Committee meeting attended.
Directors who are executive officers
are not paid Director's fees nor will they participate in the
proposed 1994 Directors' Stock Option
Plan.
OTHER MATTERS
Cintas knows of no other matters to be presented at the
meeting other than those
specified in the Notice.
By order of the Board of Directors.
Robert J. Kohlhepp
Secretary
<PAGE>
- - -19-
Appendix 1.
CINTAS CORPORATION
23B.17.020 Transactions Involving Interested
Shareholders
(1.) For purposes of this section:
(a) An interested shareholder transaction means any
transaction between a
corporation, or any subsidiary thereof, and an interested
shareholder of such corporation or an
affiliated person of an interested shareholder that must be
authorized pursuant to the provisions
of chapters 23B.11 and 23B.14 RCW, or RCW 23B.12.020;
(b) An interested shareholder:
(i) Includes any person or group of affiliated
persons who beneficially own
twenty percent or more of the outstanding voting shares of a
corporation. An affiliated person
is any person who either acts jointly or in concert with, or
directly or indirectly controls, is
controlled by, or is under common control with another person;
and
(ii) Excludes any person who, in good faith and not
for the purpose of
circumventing this section, is an agent, bank, broker, nominee,
or trustee for another person, if
such other person is not an interested shareholder under (b)(i)
of this subsection.
(2.) Except as provided in subsection (3) of this section,
an interested shareholder
transaction must be approved by each voting group
entitled to vote separately on the
transaction by two-thirds of the votes entitled to be
counted under this subsection for
that voting group. The votes of all outstanding
shares entitled to vote under this title
or the articles of incorporation shall be entitled to
be counted under this subsection
except that the votes of shares owned by or voted
under the control of an interested
shareholder may not be counted to determine whether
shareholders have approved
a transaction for purposes of this subsection. The
votes of shares owned by or voted
under the control of an interested shareholder,
however, shall be counted in
determining whether a transaction is approved under
other sections of this title and
for purposes of determining a quorum.
(3.) This section shall not apply to a transaction:
(a) Unless the articles of incorporation provide
otherwise, by a corporation with
fewer than three hundred holders of record of its shares;
(b) Approved by a majority vote of the corporation's
board of directors. For such
purpose, the votes of directors who are directors or officers
of, or have a material financial
interest in an interested shareholder, or who were nominated
for election as a director as a result
of an arrangement with an interested shareholder and first
elected as a director within twenty-
four months of the proposed transaction, shall not be counted
in determining whether the
transaction is approved by such directors;
(c) In which a majority of directors whose votes are
entitled to be counted under
(3)(b) of this section determines that the fair market value of
the consideration to be received by
noninterested shareholders for shares of any class of which
shares are owned by any interested
shareholder is not less than the highest fair market value of
the consideration paid by any
<PAGE>
-20-
interested shareholder in acquiring shares of the same class
within twenty-four months of the
proposed transaction; or
(d) By a corporation whose original articles of
incorporation have a provision, or
whose shareholders adopt an amendment to the articles of
incorporation by two-thirds of the
votes entitled to be counted under this subsection, expressly
electing not to be covered by this
section. The votes of all outstanding shares entitled to vote
under this title or the articles of
incorporation shall be entitled to be counted under this
subsection except that the votes of
shares owned by or voted under the control of an interested
shareholder may not be counted to
determine whether shareholders have voted to approve the
amendment. The votes of shares
owned by or voted under the control of an interested
shareholder, however, shall be counted in
determining whether the amendment is approved under other
sections of this title and for
purposes of determining a quorum.
4. The requirements imposed by this section are in addition
to, and not in lieu of,
requirements imposed on any transaction by any other provision
in this title, the articles of
incorporation, or the bylaws of the corporation, or otherwise.
<PAGE>
-21-
<PAGE>
Appendix 2.
CINTAS CORPORATION
1994 Directors' Stock Option Plan
The purpose of this 1994 Directors' Stock Option Plan is to
advance the interests of Cintas
Corporation and its shareholders by affording non-employee
members of the Company's Board
of Directors an opportunity to increase their proprietary
interest in the Company through the
grant of options to purchase Common Stock of Cintas. Cintas
believes that this Plan will benefit
Cintas by serving as an incentive to the attraction, retention
and motivation of its non-employee
directors.
1. Effective Date of the Plan. This Plan shall become
effective at such time as it is
approved by shareholders at the 1994 Annual Meeting of
Shareholders of the Company.
2. Shares Subject to the Plan. The shares to be issued upon
the exercise of the options
granted under the Plan shall be shares of Common Stock, no par
value, of the Company. Either
treasury or authorized and unissued shares of Common Stock, or
both, as the Board of Directors
shall from time to time determine, may be so issued. No shares
of Common Stock which are the
subject of any lapsed, expired or terminated options may be
made available for reoffering under
the Plan.
Subject to the provisions of Section 4, the aggregate number
of shares of Common Stock
for which options may be granted under the Plan shall be 30,000
shares.
3. Administration. The Plan shall be administered by a
committee appointed in
accordance with Article III, Section 6 of the By-Laws and
consisting of two or more directors
who may also be eligible to participate in the Plan.
Subject to the express provisions of the Plan, the Committee
shall have the authority to
establish the terms and conditions of such option agreements
consistent with this Plan. Such
agreements need not be uniform.
4. Adjustments to Common Stock and Option Price.
4.1 In the event of changes in the outstanding Common
Stock of the Company as a result
of stock dividends, split-ups, recapitalizations, combinations
or exchanges, the number and class
of shares of Common Stock authorized to be the subject of
options under this Plan and the
number and class of shares of Common Stock and option price for
each option which is
outstanding under the Plan shall be correspondingly adjusted by
the Committee.
4.2 The Committee shall make appropriate adjustments in
the Option Price to reflect any
spin-off of assets, extraordinary dividends or other
distributions to shareholders.
4.3 In the event of the dissolution or liquidation of the
Company or any merger,
consolidation, exchange, combination or other transaction in
which the Company is not the
surviving corporation or in which the outstanding shares of
Common Stock of the Company are
converted into cash, other securities or other property, each
outstanding option issued hereunder
shall terminate as of a date fixed by the Committee provided
that not less than 20 days' written
notice of the date of expiration shall be given to each holder
of an option. Each such holder shall
<PAGE>
-22-
have the right during such period following notice to exercise
the option as to all or any part of
the option for which it is exercisable at the time of such
notice.
5. Eligible Directors; Grant of Options. An Eligible
Director shall be each director of the
Company, now serving as a director or elected hereafter, who is
not also an employee of the
Company.
Each Eligible Director elected as such at the 1994 Annual
Meeting of Shareholders shall be
granted an option for the purchase of 1,000 shares of Common
Stock and, upon each
subsequent election as a director, another option for 1,000
shares. Persons who become Eligible
Directors after the effective date of the Plan shall be granted
an option for 1,000 shares as a
result of their election, whether by shareholders or directors,
and upon each subsequent election
as a director, another option for 1,000 shares. All grants
shall be made on the date of the event
giving rise to the option. Such grants shall continue until
the number of shares provided for in
this Plan in Section 2 are exhausted.
6. Price. The purchase price of the shares of Common Stock
which may be acquired
pursuant to the exercise of any option granted pursuant to the
Plan shall be the last closing sale
price reported on the date of grant ("Option Price").
7. Period of Option. The term of each option shall be ten
years from the date of grant.
Subject to the provisions of Section 3, each option shall
become exercisable in four equal annual
installments commencing on the first anniversary of the date of
grant of the option. This right
of exercise shall be cumulative and shall be exercisable in
whole or in part.
8. Exercise of Options. An option may be exercised by an
Eligible Director as to all or
part of the shares covered thereby by giving written notice to
the Company at its principal office,
directed to the attention of its Chief Financial Officer,
accompanied by payment of the Option
Price in full for shares being purchased. The payment of the
Option Price shall be either in cash
or, subject to any conditions set forth in the option
agreement, by delivery of shares of Common
Stock of the Company having a fair market value equal to the
purchase price on the date of
exercise of the option, or by any combination of cash and such
shares.
Unless there is in effect at the time of exercise a
registration statement under the Securities
Act of 1933 permitting the resale to the public of shares
acquired under the Plan, the holder of
the option shall, except to the extent determined by the
Committee that such is not required, (i)
represent and warrant in writing to the Company that the shares
acquired are begin acquired for
investment and not with a view of the distribution thereof,
(ii) acknowledge that the shares
acquired may not be sold unless registered for sale under said
Act or pursuant to an exemption
from such registration, and (iii) agree that the certificates
evidencing such shares shall bear a
legend to the effect of clauses (i) and (ii).
9. Conditions of Exercise. Except as provided below, the
holder of an option must be
serving as an Eligible Director at the time the option is
exercised. An optionee who ceases to
be an Eligible Director for any reason other than death,
disability, retirement or removal for cause,
may exercise the option at any time within three months after
the date of cessation, but only
during the ten year option period and only to the extent that
the option holder was entitled to
exercise the option at the time of such cessation.
Options may be exercised at any time during their ten year
option period by a director who
<PAGE>
-23-
retires pursuant to the Company's mandatory retirement policy
for directors or who dies or who
ceases to be an Eligible Director by reason of disability, but,
in any such case, only to the extent
that the optionee was entitled to exercise the option at the
date of cessation of service as a
director. "Disability" shall have the meaning ascribed to it
in Section 105(d) (4) of the Internal
Revenue Code of 1986, as amended.
An option held by an Eligible Director who is removed for
cause shall terminate immediately
upon removal as a director.
The Committee, at its sole discretion, may permit particular
holders of options to exercise
an option to a greater extent than provided herein.
10. Nontransferability of Options. No option granted
under the Plan shall be transferable
otherwise than by will or by the laws of descent and
distribution, and an option may be exercised
during the lifetime of the holder only by him.
11. Rights as a Stockholder. The holder of an option
shall not have any of the rights of
a stockholder of the Company with respect to the shares subject
to an option until a certificate
or certificates for such shares shall have been issued upon the
exercise of the option.
12. Amendment and Termination.
12.1 The Plan shall terminate ten years after its
effective date and thereafter no options
shall be granted hereunder. All options outstanding at the
time of termination of the Plan shall
continue in full force and effect in accordance with and
subject to the terms and conditions of
the Plan. The Board of Directors of the Company at any time
prior to that date may terminate
the Plan or make such amendments to it as the Board of
Directors shall deem advisable;
provided, however, that except as provided in Section 4, the
Board of Directors may not, without
shareholder approval, increase the maximum number of shares as
to which options may be
granted under the Plan, change the class of persons eligible to
receive options under the Plan or
change the number of options to be granted to each eligible
person under the Plan. No
termination or amendment of the Plan may, without the consent
of the holder of an option then
existing, terminate his or her option or materially and
adversely affect rights under the option.
12.2 This Plan may not be amended more than once every six
months other than to
conform with changes in the Internal Revenue Code, the Employee
Retirement Income Security
Act, or the rules thereunder.
13. Automatic Termination of Option. Notwithstanding
anything contained herein to the
contrary, if at any time a holder of an option granted under
this Plan becomes an employee,
officer or director of or a consultant to an entity which the
Committee determines is a competitor
of the Company, such option shall automatically terminate as of
the date such conflicting
relationship was established regardless of whether such option
is exercisable in whole or in part
at such time.
