EXHIBIT 4.1
CINTAS CORPORATION
1999
Stock Option Plan
ARTICLE 1
OBJECTIVES
Cintas Corporation has established this Stock Option Plan effective October
20, 1999, as an incentive to attract, retain and motivate dedicated and loyal
employees of outstanding ability, to stimulate the efforts of such persons in
meeting Cintas Corporation's objectives and to encourage ownership of Cintas
Corporation Common Stock by employees.
ARTICLE 2
DEFINITIONS
2.1 For purposes of the Plan, the following terms shall have the definition
which is attributed to them, unless another definition is clearly indicated by a
particular usage and context.
2.1.1 "Code" means the Internal Revenue Code of 1986.
2.1.2 "Cintas" means Cintas Corporation and any subsidiary of Cintas
Corporation, as the term "subsidiary" is defined in Section
424(f) of the Code.
2.1.3 "Date of Exercise" means the date on which Cintas has received
a written notice of exercise of an Option, in such form as is
acceptable to the Committee, and full payment of the purchase
price or a copy of irrevocable directions to a broker-dealer to
deliver the Option Price to Cintas pursuant to Section 7.2
hereof.
2.1.4 "Date of Grant" means the date on which an Option is awarded.
2.1.5 "Eligible Employee" means any individual who performs services
for Cintas and is treated as an Employee for federal income tax
purposes.
2.1.6 "Effective Date" means October 20, 1999.
2.1.7 "Fair Market Value" means the last sale price reported on any
stock exchange or over-the-counter trading system on which
Shares are trading on a specified date. If no sale has been
made on the specified date, the prices on the last preceding
date shall be used. If the Shares are not so trading, the
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average of the closing bid and ask prices for a Share on the
specified date or the last previous date on which bid and
ask prices are available shall be utilized.
2.1.8 "Incentive Stock Option" shall have the same meaning as given
to that term by Section 422 of the Code.
2.1.9 "Nonqualified Stock Option" means any Option granted under the
Plan which is not considered an Incentive Stock Option.
2.1.10 "Option" means the right to purchase a stated number of Shares
at a specified price. The option may be granted to an Eligible
Employee subject to the terms of this Plan, and such other
conditions and restrictions as the Committee deems appropriate.
Each Option shall be designated by the Committee to be either
an Incentive Stock Option or a Nonqualified Stock Option.
2.1.11 "Option Price" means the purchase price per Share subject to an
Option and shall be fixed by the Committee, but shall not be
less than 100% of the Fair Market Value of a Share on the Date
of Grant.
2.1.12 "Permanent and Total Disability" shall mean any medically
determinable physical or mental impairment rendering an
individual unable to engage in any substantial gainful
activity, which disability can be expected to result in death
or which has lasted or can be expected to last for a continuous
period of not less than 12 months.
2.1.13 "Plan" means this 1999 Option Plan as it may be amended.
2.1.14 "Share" means one share of the Common Stock of Cintas.
ARTICLE 3
ADMINISTRATION
3.1 The Plan shall be administered by a committee designated by the Board
of Directors of Cintas. The Committee shall be comprised of two or more
directors each of whom shall be (i) a "Non-Employee Director" as defined in Rule
16b-3 of the Securities Exchange Act of 1934 (the "Act") and (ii) an "outside
director" to the extent required by Section 162(m) of the Code ("Section
162(m)"), as such Rule and Section may be amended, superseded or interpreted
hereafter.
3.2 Except as specifically limited by the provisions of the Plan, the
Committee in its discretion shall have the authority to:
3.2.1 Determine which Eligible Employees shall be granted Options;
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3.2.2 Determine the number of Shares which may be subject to each
Option;
3.2.3 Determine the Option Price;
3.2.4 Determine the term of each Option;
3.2.5 Determine whether each Option is an Incentive Stock Option or
Nonqualified Stock Option;
3.2.6 Interpret the provisions of the Plan and decide all questions
of fact arising in its application; and
3.2.7 Prescribe such rules and procedures for Plan administration as
from time to time it may deem advisable.
3.3 Any action, decision, interpretation or determination by the Committee
with respect to the application or administration of this Plan shall be final
and binding upon all persons, and need not be uniform with respect to its
determination of recipients, amount, timing, form, terms or provisions of
Options.
3.4 No member of the Committee shall be liable for any action or
determination taken or made in good faith with respect to the Plan or any Option
granted hereunder, and to the extent permitted by law, all members shall be
indemnified by Cintas for any liability and expenses which may occur from any
claim or cause of action.
3.5 The Chief Executive Officer may, without participation by the
Committee, grant options to purchase up to 2,000 shares per Eligible Employee
per year to Eligible Employees who are not executive officers of the Company. In
exercising such authority, the Chief Executive Officer shall have the authority
to:
3.5.1 Determine which Eligible Employees shall be granted Options;
3.5.2 Determine the number of Shares which may be subject to each
Option;
3.5.3 Determine the Option Price;
3.5.4 Determine the term of each Option; and
3.5.5 Determine whether each Option is an Incentive Stock Option or
Nonqualified Stock Option.
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ARTICLE 4
SHARES SUBJECT TO PLAN
4.1 The number of Shares that may be made subject to Options granted under
the Plan is 6,000,000. Except as provided in Section 4.2, upon lapse or
termination of any Option for any reason without being completely exercised, the
Shares which were subject to such Option may again be subject to other Options.
4.2 The maximum number of Shares with respect to which options may be
granted to any employee during each fiscal year of Cintas is 100,000. If an
Option is canceled, it continues to be counted against the maximum number of
Shares for which Options may be granted to an employee. If an Option is
repriced, the transaction is treated as a cancellation of the Option and a grant
of a new Option.
ARTICLE 5
GRANTING OF OPTIONS
The Committee may, from time to time, prior to October 19, 2009, grant
Options to Eligible Employees on such terms and conditions as the Committee may
determine. More than one Option may be granted to the same Eligible Employee.
ARTICLE 6
TERMS OF OPTIONS
6.1 Subject to specific provisions relating to Incentive Stock Options set
forth in Article 9 and as provided below, each Option shall be for a term of ten
years from the Date of Grant. Each option may be exercised for up to 20% of the
total Shares covered by the Option commencing on the fifth anniversary of the
Date of Grant with an additional 20% of the total Shares covered by the Option
becoming exercisable on each succeeding anniversary until the Option is
exercisable to its full extent. This right of exercise shall be cumulative and
shall be exercisable in whole or in part.
The Committee, at its sole discretion, may permit particular holders of
Options to exercise an Option to a greater extent than provided herein and may
establish different exercise schedules and impose other conditions upon exercise
for any particular Option or group of Options. The term of any Option shall not
be less than one or more than ten years from the date of grant and in no
circumstances exercisable during the first twelve months of the term of said
Option.
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6.2 Nothing contained in this Plan or in any Option granted pursuant to it
shall confer upon any employee the right to continue in the employ of the
Company or to interfere in any way with the right of the Company to terminate
employment at any time.
6.3 Nothing contained in this Plan or in any Option granted pursuant to
it shall confer upon any employee any right to continue in the employ of Cintas
or to interfere in any way with the right of Cintas to terminate employment at
anytime. So long as a holder of an Option shall continue to be an employee of
Cintas, the Option shall not be affected by any change of the employee*s duties
or position.
ARTICLE 7
EXERCISE OF OPTIONS
7.1 Any person entitled to exercise an Option in whole or in part, may do
so by delivering a written notice of exercise to Cintas Corporation, Attention
Corporate Secretary, at its principal office. The written notice shall specify
the number of Shares for which an Option is being exercised and the grant date
of the option being exercised and shall be accompanied by full payment of the
Option Price for the Shares being purchased and any withholding taxes.
7.2 An Option may also be exercised by delivering a written notice of
exercise to Cintas, Attention Corporate Secretary, accompanied by irrevocable
instructions to deliver shares to a broker-dealer acceptable to Cintas and a
copy of irrevocable instructions to the broker-dealer to deliver the Option
Price and any withholding taxes to Cintas.
ARTICLE 8
PAYMENT OF OPTION PRICE
In the sole discretion of the Committee, payment of the Option Price may be
made in cash, by the tender of Shares which have been owned at least six months
and which have a Fair Market Value equal to the purchase price or by any
combination of cash and such Shares.
ARTICLE 9
INCENTIVE STOCK OPTIONS AND NONQUALIFIED STOCK OPTIONS
9.1 The Committee in its discretion may designate whether an Option is to
be an Incentive Stock Option or a Nonqualified Stock Option. The Committee may
grant both an Incentive Stock Option and a Nonqualified Stock Option to the same
individual. However, where both an Incentive Stock Option and a Nonqualified
Stock Option are awarded at one time, such Options shall be deemed to have been
awarded in separate grants, shall be clearly identified, and in no event will
the exercise of one such Option affect the right to exercise the other such
Option.
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9.2 Any option designated by the Committee as an Incentive Stock Option
will be subject to the general provisions applicable to all Options granted
under the Plan plus the following specific provisions:
9.2.1 At the time the Incentive Stock Option is granted, if the
Eligible Employee owns, directly or indirectly, stock
representing more than 10% of (i) the total combined voting
power of all classes of stock of Cintas, or (ii) a corporation
that owns 50% or more of the total combined voting power of
all classes of stock of Cintas, then:
9.2.1.1 The Option Price must equal at least 110% of the
Fair Market Value on the Date of Grant; and
9.2.1.2 The term of the Option shall not be greater than
five years from the Date of Grant.
9.2.2 The aggregate Fair Market Value of Shares (determined at the
Date of Grant) with respect to which Incentive Stock Options
are exercisable by an Eligible Employee for the first time
during any calendar year under this Plan or any other plan
maintained by Cintas shall not exceed $100,000.
9.3 If any Option is not granted, exercised, or held pursuant to the
provisions noted immediately above, it will be considered to be a Nonqualified
Stock Option to the extent that the grant is in conflict with these
restrictions.
ARTICLE 10
TRANSFERABILITY OF OPTIONS
During the lifetime of an Eligible Employee to whom an Option has been
granted, such Option is not transferable voluntarily or by operation of law and
may be exercised only by such individual. Upon the death of an Eligible Employee
to whom an Option has been granted, the Option may be transferred to the
beneficiaries or heirs of the holder of the Option by will or by the laws of
descent and distribution.
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ARTICLE 11
TERMINATION OF OPTIONS
11.1 An Option will terminate as follows:
11.1.1 Upon exercise or expiration by its terms.
11.1.2 Upon termination of employment for reasons other than cause,
the then-exercisable portion of any Option will terminate on the 60th day
after the date of termination. The portion not exercisable will terminate
on the date of termination of employment. For purposes of the Plan, a leave
of absence approved by the Company shall not be deemed to be termination of
employment.
11.1.3 If an Eligible Employee holding an Option dies or becomes
subject to Permanent and Total Disability while employed by the Company, or
within sixty days after termination of employment for any reason other than
cause, or retires after age 50 through a plan of retirement acceptable to
the Company, then in each such case, such an Option may be exercised to the
extent exercisable on the date of termination of employment at any time
within one year after the date of such death, occurrence of Permanent and
Total Disability or retirement. The Option may be exercised by such person
or that person*s estate or guardian, or by those persons to whom the Option
may have been transferred by will or by the laws of descent and
distribution.
11.1.4 Options shall terminate immediately if employment is
terminated for cause. Cause is defined as including, but not limited to,
theft of or intentional damage to Company property, excessive use of
alcohol, the use of illegal drugs, the commission of a criminal act, or
willful violation of Cintas policy prohibiting employees from disposing of
Shares for personal gain based on knowledge of Cintas* activities or
results when such information is not available to the general public.
11.1.5 If an Eligible Employee holding an Option violates any term
of any written employment or noncompetition agreement between the Company
and the Eligible Employee, all existing Options held by such Employee will
terminate. In addition, if at the time of such violation the Employee has
exercised Options but has not received certificates for the Shares to be
issued, Cintas may void the Option and its exercise. Any such actions by
Cintas shall be in addition to any other rights or remedies available to
Cintas in such circumstances.
11.2 Except as provided in Articles 11 and 12 hereof, in no event will
the continuation of the term of an Option beyond the date of termination of
employment allow the grantee, or his beneficiaries, heirs or assigns, to
accrue additional rights under the Plan, or to purchase more Shares through
the
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exercise of an Option than could have been purchased on the day that employment
was terminated. In addition, notwithstanding anything contained herein, no
option may be exercised in any event after the expiration of ten years from the
date of grant of such option.
11.3 The Committee, in its discretion, may as to any particular
outstanding Nonqualified Stock Option or upon the grant of any Nonqualified
Stock Option, establish terms and conditions which are different from those
otherwise contained in this Article 11, by, without limitation, providing that
upon termination of employment for any designated reason, vesting may occur in
whole or in part at such time and that such Option may be exercised for any
period during the remaining term of the Option, not to exceed ten years from the
Date of Grant.
ARTICLE 12
ADJUSTMENTS TO SHARES AND OPTION PRICE
12.1 In the event of changes in the outstanding Common Stock of Cintas as
a result of stock dividends, stock splits, reclassifications, reorganizations,
redesignations, mergers, consolidations, recapitalizations, combinations or
exchanges of Shares, or other such changes, the number and class of Shares for
all purposes covered by the Plan and number and class of Shares and price per
Share for each outstanding Option covered by the Plan shall be appropriately
adjusted by the Committee.
12.2 The Committee shall make appropriate adjustments in the Option Price
to reflect any spin-off of assets, extraordinary dividends or other
distributions to shareholders.
12.3 In the event of the dissolution or liquidation of Cintas or any
merger, consolidation, combination, exchange or other transaction in which
Cintas is not the surviving corporation or in which the outstanding Shares of
Cintas are converted into cash, other securities or other property, each
outstanding Option shall terminate as of a date fixed by the Committee. The
Committee shall give not less than 20 days written notice of the date of
expiration to each holder of an Option. Each such holder shall have the right
during such period following notice to exercise the Option as to all or any part
of the Shares for which it is exercisable at the time of such notice.
12.4 All outstanding Options shall become immediately exercisable in full
if a change in control of Cintas occurs. For purposes of this Agreement, a
"change in control of Cintas" shall be deemed to have occurred if (a) any
"person", as such term is used in Sections 13(d) and 14(d) of the Act, other
than (i) a trustee or other fiduciary holding securities under an employee
benefit plan of Cintas or (ii) a member of the Farmer Family or a group
comprised solely of members of the Farmer Family becomes the "beneficial owner,"
as defined in Rule 13d-3 under the Act, directly or indirectly, of securities of
Cintas representing 30% or more of the combined voting power of Cintas then
outstanding securities; or (b) during any period of one year (not including any
period prior to the execution of this Agreement), individuals who at the
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beginning of such period constitute the Board of Directors and any new director
whose election by the Board or nomination for election by Cintas* Shareholders
was approved by a vote of at least two-thirds (2/3) of the Directors then still
in office who either were Directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for any
reason to constitute a majority thereof. For purposes of this provision, the
term "Farmer Family" shall include Richard T. Farmer and Joyce E. Farmer, their
respective lineal descendants, spouses of their lineal descendants, the estate
of any person falling within the scope of any of the preceding categories and an
inter vivos or testamentary trust whose beneficiaries consist solely of persons
falling within the scope of any of the previous categories.
ARTICLE 13
OPTION AGREEMENTS
13.1 All Options granted under the Plan shall be evidenced by a written
agreement in such form or forms as the Committee in its sole discretion may
determine.
13.2 Each optionee, by acceptance of an Option under this Plan, shall be
deemed to have consented to be bound, on the optionee*s own behalf and on behalf
of the optionee*s heirs, assigns and legal representatives, by all terms and
conditions of this Plan.
ARTICLE 14
AMENDMENT OR DISCONTINUANCE OF PLAN
14.1 The Board of Directors of Cintas may at any time amend, suspend, or
discontinue the Plan; provided, however, that no amendments by the Board of
Directors of Cintas shall, without further approval of the shareholders of
Cintas:
14.1.1 Change the definition of Eligible Employees;
14.1.2 Except as provided in Articles 4 and 12 hereof, increase the
number of Shares which may be subject to Options granted under the Plan; or
increase the maximum number of Shares with respect to which Options may be
granted to any eligible Employee of Cintas during any fiscal year;
14.1.3 Cause the Plan or any Option granted under the Plan to fail
to meet the conditions for exclusion of application of the $1 million
deduction limitation imposed by Section 162(m) of the Code; or
14.1.4 Cause any Option granted as an Incentive Stock Option to fail
to qualify as an "Incentive Stock Option" as defined by Section 422 of the
Code.
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14.2 No amendment or termination of the Plan shall impair any Option
granted under the Plan without the consent of the holder thereof.
14.3 This Plan shall continue in effect until the expiration of all
Options granted under the Plan unless terminated earlier in accordance with this
Article 14; provided, however, that it shall otherwise terminate and no options
shall be granted ten years after the Effective Date.
ARTICLE 15
EFFECTIVE DATE
This Plan shall become effective as of October 20, 1999.
ARTICLE 16
MISCELLANEOUS
16.1 Nothing contained in this Plan or in any action taken by the Board
of Directors or Shareholders of Cintas shall constitute the granting of an
Option. An Option shall be granted only at such time as a written agreement
shall have been executed and delivered to the respective employee and the
employee shall have executed such agreement respecting the Option in conformance
with the provisions of the Plan.
16.2 Certificates for Shares purchased through exercise of Options will
be issued on or about the 60th day after exercise of the Option and payment
therefore as called for by the terms of the Option. Cintas shall not be required
to issue certificates to any person exercising Options more often than once each
quarter of each fiscal year. No persons holding an Option or entitled to
exercise an Option granted under this Plan shall have any rights or privileges
of a Shareholder of Cintas with respect to any Shares issuable upon exercise of
such Option until certificates representing such Shares shall have been issued
and delivered. No Shares shall be issued and delivered upon exercise of an
Option unless and until Cintas, in the opinion of its counsel, has complied with
all applicable registration requirements of the Securities Act of 1933 and any
applicable state securities laws and with any applicable listing requirements of
any national securities exchange on which Cintas securities may then be listed
as well as any other requirements of law.
16.3 This Plan shall continue in effect until the expiration of all
Options granted under the Plan unless terminated earlier in accordance with
Article 14; provided, however, that it shall otherwise terminate ten years after
the Effective Date of October 20, 1999.
