August 25, 199526, 1996
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. 0-11399Corporation
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 also
transferred $125.00 for the filing fee.
Cintas plans to release these materials to security
holders on or about August 29, 1995.26, 1996.
If you have any questions, you may contact me at
513/573-4114(513)573-4016 or our outside securities counsel, Gary P.
Kreider at 513/(513)579-6411.
Sincerely,
Rhonda Fox
FieldJ. Michael Faust
Headquarters Controller
RF/ctb
PAGE
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 / /
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11 or
240.14a-12
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 (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:MF/tl
PAGE
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 WILLIAM C. GALE, 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 19, 199510, 1996 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 amendAuthority to establish the 1992 Stock Option Plan;number of Directors to be elected at the
Meeting at eight.
_ FOR _ AGAINST _ ABSTAIN
2. Authority to elect eight (8) nominees listed below.
_ FOR all nominees listed below _ WITHHOLD AUTHORITY
(except as marked to the contrary to vote for all nominees
below) 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_______________________FOR _______________________
WHOM AUTHORITY TO VOTE IS WITHHELD_______________________WITHHELD _______________________
(Continued on other side)
PAGE
BACK OF CARD
3. In their discretion the proxies are authorized to vote upon such
other business as may properly come before the meeting.Meeting.
THIS PROXY WHEN PROPERLY 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 andAND 2.
___________________________, 19951996 _______________________________
_______________________________
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
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Dear Shareholder:
We are pleased to invite you to attend our 19951996 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 19, 1995.10, 1996.
The purposes of this Annual Meeting are:
1. To amend the 1992 Stock Option Plan;
2. To establish the number of Directors to be elected at eight;
3.2. To elect eight Directors;
4.3. 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,
David T. Jeanmougin,
Secretary
Dated: August 25, 199523, 1996
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.
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 19, 199510, 1996
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 19, 1995,10, 1996, 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 25, 1995.23, 1996.
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 21, 1995,16, 1996, the record date for determining shareholders
entitled to notice of and to vote at the meeting, Cintas had 47,037,90547,376,432 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 21, 1995,16, 1996, 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
-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:
Name and Address of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership Class
Richard T. Farmer(1) 13,409,787(2) 28.5%13,261,783(2) 28.0 %
James J. Gardner (1) 3,849,919(3) 8.2%Gardner(1) 3,395,352(3) 7.2 %
Joan A. Gardner(1) 2,580,748(4) 5.5%
__________________________
(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 41,440 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 81,250 shares which may
be acquired pursuant to stock options which are
exercisable within 60 days.
(3) Includes 82,468 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 4,750 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 3,169,517 shares held by a family
partnership as to which Mr. Gardner indirectly
exercises voting power, of which 2,036,900 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 2,036,9002,457,486(4) 5.2 %
__________________________
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, OH 45262-5737.
2 Includes 16,780 shares owned by Mr. Farmer's wife, 1,365,260
shares held in trust for Mr. Farmer's children, 34,290 shares owned by a
corporation controlled by Mr. Farmer, and 12,500 shares which may be acquired
pursuant to stock options which are exercisable within 60 days.
3 Includes 77,022 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 500 shares which are exercisable within 60
days, and 32,791 shares held by a corporation that is controlled by Mr.
Gardner. Also includes 2,667,625 shares held by a family partnership as to
which Mr. Gardner indirectly exercises voting power, of which 1,913,638 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 1,913,638 shares contributed by Mrs. Gardner to a family
partnership. Excludes shares beneficially owned by her husband, James J.
Gardner.
-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, the named executive officers in the Summary
Compensation Table of the Proxy Statement and all directors and executive
officers as a group, as of August 21, 1995:16, 1996:
Amount and
Nature of
Beneficial Percent
Name of Beneficial Owner Ownership Of Class
Richard T. Farmer 13,409,787(1) 28.5%13,261,783(1) 28.0%
Robert J. Kohlhepp 1,308,473(2)1,305,093(2) 2.8%
Gerald V. Dirvin 3,400(3)5,150(3) *
James J. Gardner 3,849,919(1) 8.2%3,395,352(1) 7.2%
Roger L. Howe 347,978(4)349,728(4) *
Donald P. Klekamp 91,690(4)(5)90,300(5)(6) *
John S. Lillard 62,204(4)63,954(6) *
Scott D. Farmer 163,331(6)197,609(7) *
David T. Jeanmougin 2,110 *
John S. Kean III 45,550(7)7,330(8) *
Robert R. Buck 57,95260,569(9) *
William C. Gale 30 *
All Directors and Executive
Officers as a Group (13 persons) 19,352,725(8) 41.1%
*Less than 1%
(1) See Principal Shareholders.
(2) Includes 155,000 shares held in trust for members
of Mr. Kohlhepp's family and options for 6,00018,799,156(10) 39.7%
*Less than 1%
(1) See Principal Shareholders.
(2) Includes 20,000 shares held in trust for members of Mr. Kohlhepp's
family, 696,347 shares held by businesses controlled by Mr. Kohlhepp, and
options for 11,000 shares which are exercisable within 60 days.
(3) Includes options for 2,750 shares which are exercisable within 60 days.
(4) Includes options for 500 shares which are exercisable within 60 days.
(5) Includes 59,690 shares owned by Mr. Klekamp's wife and 20,000 shares as
to which she is trustee.
-4-
(6) Includes options for 6,500 shares which are exercisable within 60 days.
(7) Includes 45,700 shares held in trust for members of Mr. Farmer's family,
10,539 shares owned by his immediate family and options for 35,300 shares
which are exercisable within 60 days.
(8) Includes options for 5,200 shares which are exercisable within 60 days.
(9) Includes options for 800 shares which are exercisable within 60 days.
(10) Includes options for 91,950 shares which are
exercisable within 60 days.
(3) Includes options for 1,000 shares which are
exercisable in 60 days.
(4) Includes options for 4,750 shares which are
exercisable within 60 days.
(5) Includes 59,690 shares owned by Mr. Klekamp's wife
and 20,000 shares as to which she is trustee.
-4-
(6) Includes 45,700 shares held in trust for members
of Mr. Farmer's family, 9,141 shares owned by his
immediate family and options for 37,000 shares
which are exercisable within 60 days.
(7) Includes options for 17,160 shares which are
exercisable within 60 days.
(8) Includes 161,410 shares which may be acquired
pursuant to stock options which are exercisable
within 60 days.
Proposal 1. PROPOSAL TO AMEND THE 1992 STOCK OPTION
PLAN
The Board of Directors is submitting for shareholder
approval amendments to the Company's 1992 Employee
Stock Option Plan, which was previously adopted by
shareholders. All directors, officers and employees of
the Company and its subsidiaries, other than members of
the committee administering the Plan, are eligible to
be considered by the committee for the grant of
options. The amendments are designed to preserve the
Company's federal income tax deduction for compensation
in excess of $1 million paid to the executives named in
the compensation table that results from the exercise
of non-qualified options granted under the Plan. The
Plan provides for the granting of both incentive and
non-qualified stock options.
The Plan provides that options may be granted on
such terms and conditions as the committee may
determine. Options may be granted with exercise prices
determined by the committee which may be below or above
the market price of Common Stock at the time of grant.
However, an incentive stock option may only be granted
with an exercise price equal to the market value of
Common Stock on the date of grant. In addition, in the
case of any person who beneficially owns more than 10%
of the Company's Common Stock, an incentive stock
option may be granted only if the option price is at
least 110% of the market value of the Common Stock on
the date of grant.
Commencing on the fifth anniversary of the date of
grant, an option may be exercised for up to 20% of the
total shares covered by the option 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. However, the
committee may establish a different exercise schedule
and impose other conditions upon exercise for any
particular option at the time of grant, but in no event
may an option be exercised during the first twelve
months of the term.
For federal income tax purposes, there are no tax
consequences to either the Company or the recipient of
an option upon the grant or exercise of an incentive
stock option. If a person sells or otherwise disposes
of stock acquired upon the exercise of an incentive
stock option within one year of the date of exercise or
two years from the date of grant, the gain equal to the
excess of the amount realized over the amount paid for
the stock will be taxed as ordinary income. The
Company will be entitled to an income tax deduction to
the same extent. If the shares are held for more than
one year following the date of exercise and two years
from the date of grant, any gain realized thereafter
will be taxed as a capital gain, in which case the
Company will not be entitled to any deduction.
-5-
With respect to non-qualified stock options, there
are no federal income tax consequences upon the grant
of an option. A person exercising a non-qualified
stock option will recognize ordinary income to the
extent of the difference between the exercise price and
the fair market value of the Common Stock on the date
of exercise, and the Company will be entitled to a
corresponding deduction. Upon any sale of that stock,
the difference between the amount realized and the fair
market value on the date of the exercise will be
treated as a capital gain or loss.
Because of the unpredictability of stock prices, it
is possible that the exercise of a particular non-qualified
option could, together with other
compensation paid to the person exercising the option,
cause the $1 million figure to be exceeded, thereby
denying the Company an income tax deduction to that
extent. However, if certain conditions specified by
these Internal Revenue Code provisions are met, the
deduction can be preserved. Those conditions include
that the terms of the Plan be approved by shareholders
and that the Plan limit the amount of options that may
be granted to any one individual in any one year.
Therefore, the 1992 Stock Option Plan has been amended
by the Board of Directors to limit the amount of
options that may be granted to any one person in any
one year to 100,000 shares. Certain other technical
amendments have also been made to reflect tax and other
developments.
The Plan was first approved by shareholders in
October 1992. The Plan authorizes the issuance of
options for the purchase of up to 2,300,000 shares of
Common Stock and through August 21, 1995, options for
836,950 shares have been granted under the Plan. The
Amendments do not increase the number of shares
authorized for the Plan. The last closing sales price
for the Company's Common Stock in the NASDAQ National
Market on August 21, 1995, was $39.25 per share.
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 COMMON
STOCK VOTING AND ABSTAINING ON THIS PROPOSAL IS
REQUIRED TO APPROVE PROPOSAL NO.1. BROKER NON-VOTES
SHALL HAVE NO EFFECT ON THE VOTE.
Proposal 2.
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 eight
(8) Directors, and the Board is recommending that this number be retained.
The Board is nominating for reelection all current Directors, namely
Richard T. Farmer, Robert J. Kohlhepp, Gerald V. Dirvin, Scott D. Farmer,
James J.
Gardner,J.Gardner, Roger L. Howe, Donald P. Klekamp and John S. Lillard.
-6-
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.2NO.1 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.APPROVE PROPOSAL NO. 1. 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.
-5-
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 broker non-votes having no effect.
VOTING BY PROXY
All proxies properly signed will, unless a different choice is indicated,
be voted "FOR" proposal 1the establishment of the number of Directors at eight and "FOR"
the election of all eight nominees proposed by the Board unless authority is
withheld to vote for any or all of those nominees.
If any other 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
19961997 Shareholders' Meeting must submit their proposals in writing to Cintas at
its offices on or before April 28, 1996.25, 1997.
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors appointed Ernst & Young LLP as its certified public
accountants for fiscal 1996.1997. 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.
-7--6-
MANAGEMENT
Directors and Executive Officers
The Directors and Executive Officers of Cintas Corporation are:
Position
Name and Age Position Since
Richard T. Farmer(1) Chairman of the Board 1968
6061
Robert J. Kohlhepp(1) President, Chief Executive 51 Officer 1984
52 and Director 1984
Gerald V. Dirvin(3) Director 1993
5859
James J. Gardner(1)&(2)Gardner(1&2) Director 1969
6263
Roger L. Howe(2)&(3)Howe(2&3) Director 1979
6061
Donald P. Klekamp(2) Director 1984
6364
John S. Lillard(3) Director 1978
6566
Scott D. Farmer Vice President and Director 1987
3637
Robert R. Buck Senior Vice President 1991
4748
Karen L. Carnahan Treasurer 1992
4142
William C. Gale Vice President - Finance 1995
4344
David T. Jeanmougin Senior Vice President 54 and Secretary 1991Secretary1991
55
John S. Kean III Senior Vice President 1986
55
Ages are as of September 1, 1995.
1. Member of the Executive Committee of the Board of
Directors.
2. Member of the Audit Committee of the Board of
Directors.
3.56
Ages are as of September 1, 1996.
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.
-8--7-
Richard T. Farmer has been with the Company and its predecessors since
1957 and has served in his present position with the Company since 1968.
Prior to August 1, 1995, Mr. Farmer also served as CEO.Chief Executive Officer. He
is also a Director of Fifth Third Bancorp, Cincinnati, Ohio, a NASDAQ company,
and Safety Kleen Corp., Chicago, Illinois, a business service entity and a
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 elected President by the Board. In addition to serving as the
Company's President, on August 1, 1995,
Mr. Kohlhepp was elected Chief Executive Officer.Officer on
August 1, 1995.
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 ana NYSE company, in 1959 and served in various management
positions. He retired as Executive Vice President and as a Director in 1995.
Mr. Dirvin is also a Director of Fifth Third Bancorp, Cincinnati, Ohio, a
NASDAQ company, and Northern Telecom Limited, Toronto, Canada, ana 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, ana NYSE company, and its subsidiary Star Bank,
National Association; Eagle-Picher Industries, Inc., a Cincinnati-based
diversified industrial products manufacturer; 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 Presidenta Founder
of JMB Institutional Realty Corporation, a registered investment advisor,
where he served as President from its
founding on April 1, 1979, until May1978 to 1991. In 1991, when he became
Chairman - Founder.Chairman-Founder until his retirement in June 1996. He is also a consultant to
JMB Realty; a Director of
Stryker Corporation, a medical equipment company;company, and a Director of Lake
Forest Bancorporation.Bancorporation and Wintrust Financial Corporation, bank holding
companies.
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. He was elected a Director of Cintas
in 1994.
Robert R. Buck joined Cintas in 1982. He is presently in charge of 20twenty
Cintas rental operations in the Midwestern United States. Prior to his
operational responsibilities, he served as Senior Vice President - Finance
from 1982 to 1991.
-9-
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.
-8-
William C. Gale joined Cintas in April 1995. He is presently responsible
for the areas of finance and accounting. Prior to joining Cintas, Mr. Gale
was associated with International Paper, a forest products, paper and
packaging company and ana NYSE company where he served as auditor since February
1994. Mr. Gale has also held various financial executive positions with
Occidental Petroleum Corporation, an oil products and chemical concern and ana
NYSE company.
David T. Jeanmougin joined Cintas in August 1991 as Senior Vice President -
Finance in which he was responsible for the areas of finance, accounting and
administration. He served in that capacity until April 1995, when he was
named Secretary of the Company and Senior Vice President. In this capacity he
is responsible for the areas of manufacturing, distribution, management
information systems, acquisitions and several other key administrative areas. 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, Arkansas and Tennessee.
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 1995.1996. 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 nineteensix occasions in fiscal 1995.1996.
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 1995.1996.
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.Company's stock option plans. This Committee
met on three occasionsone occasion and took action by written consent on fourten occasions in
fiscal 1995.1996.
The Company does not have a nominating committee.
Outside directors are paid an annual fee of $9,200 plus $1,625 for each
Board meeting attended and $900 for each Committee meeting attended.
Directors who are executive officers are not paid Director's fees nor do they
participate in the 1994 Directors' Stock Option Plan.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers, directors and persons who own more than ten percent of a registered
class of the Company's equity securities to file reports of ownership and
changes in ownership with the Securities and Exchange Commission. Officers,
directors and greater than ten-percent shareholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
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Based solely on its review of the copies of such forms received by it, or
written representation from certain reporting persons that no Form 5's were
required for those persons, the Company believes that during the period of
June 1, 1994,1995, through May 31, 1995,1996, all filing requirements were complied with
applicable to its officers, directors and greater than ten-percent beneficial
owners.
-9-
Executive Compensation
The following table summarizes the annual and long-term compensation of the
Company's Chief Executive Officer and each of the Company's other four most
highly compensated Executive Officers for the years ended May 31, 1996, 1995
1994 and 1993.1994.
SUMMARY COMPENSATION TABLE
Annual Long Term
Compensation Compensation
Shares
Underlying All
Name and All Other
Principal Salary Bonus Other Stock CompensationOption Other
Principal Position Year ($) ($) ($) Option Grants(#) ($Grants (#)Compensation($)(3)(1)
Richard T. Farmer 1996 278,512 207,813 61,061(2) 10,000shs 209,340
Chairman of the 1995 278,512 222,810 ---- 5,000 shs 220,568
Chairman of theBoard 1994 267,800 171,392 50,980(1)10,000 shs50,980(2) 10,000shs 220,505
Board 1993 260,000 221,000 ---- ---- 236,979
Robert J. Kohlhepp1995Kohlhepp 1996 267,370 174,202 ---- 50,000 shs 58,277
President, Chief 1995 222,809 155,966 69,215(2)69,215(3) 5,000 shs 60,319
President, ChiefExecutive Officer 1994 214,240 119,975 ---- 10,000shs10,000 shs 62,614
Executive Officer 1993 208,000 156,000 ---- ---- 65,847
and Director
Robert R. Buck 1996 200,000 161,869 ---- 5,000 shs 6,699
Senior Vice 1995 190,000 126,810 ---- ---- 5,987
Senior VicePresident 1994 175,000 97,259 ---- 5,000 shs 9,056
President 1993 165,000 53,388 ---- ---- 6,931
David T. Jeanmougin1995Jeanmougin 1996 214,000 69,715 ---- 5,000 shs 6,571
Senior Vice 1995 200,000 70,000 ---- 5,000 shs 6,044
Senior VicePresident 1994 175,000 52,400 ---- 5,000 shs 8,134
President 1993 162,404 57,750 ---- 4,000 shs 4,716
and Secretary
John S. Kean IIIWilliam C. Gale 1996 170,000 55,381 ---- 10,000 shs 46,918
Vice President- 1995 180,000 24,68021,538(4) ---- ---- 6,133
Senior Vice 1994 175,000 26,8055,000 shs ----
---- 8,795
President 1993 165,000 39,806 ---- ---- 7,815
---------
Finance
(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 amount indicated represents compensation associated
with the use of the Company's aircraft ($59,663) and the remainder
attributable to club dues and other expense reimbursements.
-11-
(3) 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 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 that is equal to the premiums paid by
the Company on that policy. The life insurance trust established by the
decedent 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, 1996, 1995 and 1994 is $202,007, $214,669 and $210,317,
respectively, for Mr.Farmer and $51,348, $54,357 and $52,859, respectively,
for Mr. Kohlhepp, which amounts are included above.
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The Company maintains the Cintas Partners' Plan, a non-contributory
employee stock ownership plan and profit sharing plan for the benefit of
Company employees who have completed one year of service. The Plan also
includes a 401(k)savings feature which covers substantially all employees.
The amount of contributions to the profit sharing plan and ESOP and the
matching contribution to the 401(k) are at the discretion of the Company.
Included above are responsible for a portion of the premiums and the
Company pays the remainder of the 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, 1995, 1994 and 1993 are $214,669,
$210,317 and $227,779, respectively for Mr. Farmer and $54,357,
$52,859 and $56,810 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.
Included for Mr. Gale in 1996 is a $45,862 reimbursement of moving
expenses and the resulting income tax liability.
(2) The amount indicated represents compensation associated with the use
of the Company's aircraft ($52,766 and $42,091 in 1996 and 1994,
respectively) and the remainder attributable to other expense
reimbursements.
(3) The amount indicated represents compensation associated with the use
of the Company's aircraft ($59,663) and the remainder attributable to
other expense reimbursements.
(4) Mr. Gale's employment with the Company began in April 1995.
Stock Options
The following table sets forth information regarding stock options granted
to the executives named executivesin the Summary Compensation Table under the Company's
1992 Stock Option Plan during the fiscal year ended May 31, 1995:1996:
OPTION GRANTS IN LAST FISCAL YEAR
Potential
Realizable
Name Number of Percent of Total Value at Assumed
TotalShares Options Annual Rates of
Stock
OptionsUnderlying Granted to Exercise Price Appreciation
GrantedStock
Options Employees in Price Expiration for Option Term
Name (#)Price Apprec.
Granted Fiscal 19951996 ($/Sh.) Date For Option Term
5%($) 10%($)
Richard T.
Farmer 5,000 1.9% 31.87510,000 3.2% 38.75 07/18/99 44,005 97,23324/00 106,950 236,763
Robert J.
Kohlhepp 5,000 1.9% 31.87550,000 15.9% 38.75 07/18/04 100,230 254,00324/05 1,218,688 3,088,375
Robert R.
Buck ---- ---- ---- ---- ---- ----5,000 1.6% 38.75 07/24/05 121,869 308,838
David T.
Jeanmougin 5,000 1.9% 31.8751.6% 38.75 07/18/04 100,230 254,003
John S.
Kean III ---- ---- ---- ---- ---- ----24/05 121,869 308,838
William C.
Gale 10,000 3.2% 38.75 07/24/05 243,738 617,675
-12--11-
The following table sets forth information regarding stock options exercised
by the executives named executivesin the Summary Compensation Table during fiscal 19951996
and the value of in-the-money unexercised options held by the named executivesthem as of May 31,
1995:1996:
AGGREGATED OPTION EXERCISES IN FISCAL 19951996
AND FISCAL 19951996 YEAR END OPTION VALUES
Number of Shares Value of Unexercised
In-
ofUnderlying Unexercised In-the-Money Options
Name Shares Number of Unexercised the-Money Options at
Acquired Options at May 31, 199531,1996 at May 31, 1995($31,1996($)(1)
Acquired
on Value
Name ExerciseExercise(#) Realized($)Exercisable Unexercisable ExercisableUnexercisableUnexercis. Exercisable Unexercis.
Richard T.
Farmer ---- ---- 52,500 37,500 620,000 373,12575,000 1,968,750 6,250 18,750 162,031 363,594
Robert J.
Kohlhepp 6,720 211,995 3,000 37,000 67,000 481,125---- ---- 6,000 84,000 248,000 1,797,625
Robert
R. Buck 15,360 411,2002,160 85,140 ---- 11,16014,000 ---- 145,330332,750
David T.
Jeanmougin----Jeanmougin ---- ---- 40,000 ---- 405,375
John S.
Kean III45,000 ---- 1,239,125
William C.
Gale ---- ---- 13,560 31,860 346,480 757,830
(1) Value is calculated as the difference between the fair market value
of the Common Stock on May 31, 1995 ($34.50---- 15,000 ---- 223,125
(1) Value is calculated as the difference between the fair market value of
the Common Stock on May 31, 1996 ($53.50 per share), and the exercise
price of the options.
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 19951996 were Messrs. Dirvin, 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 19951996
followed the same pattern as fiscal 1994.1995.
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.
-13--12-
The Compensation Committee has established three primary components of the Company's
executive compensation plan. The three components are:
- base compensation
-
performance incentive compensation
-
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 performance-based and
approved by shareholders. This law was not considered by the Committee in
determining fiscal 1995 compensation.1996 compensation since compensation levels were not in
excess of the amounts deductible under the law.
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 is based in part upon
overall Company performance and is not based upon any specific objectives or
policies but reflects the subjective judgment 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 1995, the target bonus for Mr. Kohlhepp was
expressed as a percentage of his base pay. The program
wascertain executives 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
$1.12. The bonus potential ranged from 7% of base
salary if earnings per share increased by twelve cents
over the prior year up to a maximum of 80% of base
salary if earnings per share increased by twenty-eight
cents over the prior year.share. Cash bonuses paid to other executives wereare 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
plan, the number of shares to be granted and the option price and term. The
Committee has not established specific
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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 19951996 can be found on page 1110 under
the Option Grants Table.
Chairman of the Board
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Chief Executive Officer Compensation
The Chairman of the Board is eligible to participate
in the same executive compensation plans available to
other executive officers. The Compensation Committee establishes Mr. Farmer'sKohlhepp'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 Mr. FarmerKohlhepp as a percent of revenues and net
income to comparable companies in the industry, the Committee believes itshis
overall compensation level for him is in the middle of the range. The Committee also
establishes at the beginning of each year a performance incentive bonus
arrangement for Mr. Farmer.Kohlhepp. Based on the Company's belief that shareholders'shareholder
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
$1.12.$1.34. The bonus potential ranged from 10%7% of base salary if earnings per share
increased by twelvefourteen cents over the prior year up to a maximum of 90%80% if
earnings per share increased by twenty-eightthirty-four cents over the prior year.
John S. Lillard - Chairman
Gerald V. Dirvin
Roger L. Howe
-15--14-
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. 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 inconsidered by
the Compensation Committee
Report.
CINTAS CORPORATIONCommittee.
Cintas Corporation
5 Year Cumulative Total
Shareholder Return
Measurement Period
(Quarter End) Cintas Corp. S&P Quarterly Cintas500 Index Peer 500
Data Covered Corporation Group Index
Measurement Point 5/31/90 100.0 100.0 100.0
8/31/90 89.1 84.6 89.3
11/30/90 99.2 82.8 89.2
2/Point: May, 91 126.1 91.9 101.6
5/$100 $100 $100
August, 91 155.5 102.5 107.9
8/109 102 95
November, 91 169.4 90.7 109.5
11/91 144.0 80.0 103.9
2/93 98 89
February, 92 198.0 115.2 114.2
5/127 108 107
May, 92 187.3 94.0 115.1
8/120 110 97
August, 92 164.3 94.8 114.6
11/106 110 98
November, 92 184.0 101.0 119.4
2/118 116 101
February, 93 182.4 122.2 122.7
5/117 120 111
May, 93 181.6 122.3 124.6
8/117 123 111
August, 93 193.2 126.5 128.3
11/124 127 112
November, 93 189.9 126.9 127.8
2/122 128 112
February, 94 209.7 154.0 129.3
5/135 130 124
May, 94 207.1 139.8 126.4
8/133 128 119
August, 94 210.9 148.2 131.6
11/136 134 123
November, 94 229.1 134.2 125.6
2/147 129 117
February, 95 250.7 143.0 134.9
5/162 139 122
May, 95 230.5 167.7 147.7148 154 132
August, 95 162 163 140
November, 95 197 177 154
February, 96 208 188 168
May, 96 231 197 191
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 do
they participate in the 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.
David T. Jeanmougin
Secretary
-16-
Appendix 1.
CINTAS CORPORATION
Amended and Restated 1992 Stock Option Plan
Article 1
OBJECTIVES
1.1 Cintas Corporation, a Washington corporation
("Cintas"), has established this 1992 Stock Option Plan
(as amended and restated July 26, 1995) (the "Plan") as
an incentive to attract, retain and motivate dedicated
and loyal employees and directors of outstanding
ability, to stimulate the efforts of such persons in
meeting Cintas' objectives and to encourage ownership
of Cintas 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.
A. "Code" means the Internal Revenue Code of 1986.
B. The "Company" means Cintas and any subsidiary of
Cintas, as the term "subsidiary" is defined in Section
424(f) of the Code.
C. "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.
D. "Date of Grant" means the date on which the
Committee makes an award of an Option.
E. "Eligible Employee" means any individual who
performs services for the Company and is treated as an
employee for federal income tax purposes.
F. "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, prices on the last preceding day shall
be used. If the Shares are not so trading, the average
of the closing bid and asked prices for a Share on the
specified date, or the last previous date upon which
bid and ask prices are available shall be utilized.
G. "Incentive Stock Options" shall have the same
meaning as given to that term by Section 422 of the
Code and any regulations or rulings promulgated
thereunder.
H. "Nonqualified Stock Option" means any Option
granted under the Plan which is not considered as
Incentive Stock Option.
I. "Option" means the rights to purchase from
Cintas 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.
-17-
J. "Option Price" means the purchase price per
Share determined by the Committee provided, however,
that in the case of an Incentive Stock Option, such
price shall be no less than 100% of the Fair Market
Value of a Share on the Date of Grant.
K. "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.
L. "Plan" means this 1992 Stock Option Plan as it
may be amended from time to time.
M. "Share" means one Share of Common Stock, no par
value, of Cintas.
Article 3
ADMINISTRATION
3.1 The Plan shall be administered by a committee
(the "Committee") designated by the Board of Directors
of Cintas. The Committee shall be comprised solely of
two or more directors each of whom shall be (i) a
"disinterested person" as defined under Rule 16b-3 of
the Securities and Exchange Act of 1934 (the "Act") and
(ii) and "outside director" to the extent required by
Section 162(m) of the Internal Revenue Code ("Section
162(m)").
Actions shall be taken by a majority of the
Committee.
3.2 Except as specifically limited by the provisions
of the Plan, the Committee in it discretion shall have
the authority to:
A. Determine which Eligible Employees shall be
granted Options;
B. Determine the number of Shares which may be
subject to each Option;
C. Determine the Option Price;
D. Determine the term of each Option;
E. Determine whether each Option is an Incentive
Stock Option or Nonqualified Stock Option;
F. Interpret the provisions of the Plan and decide
all questions of fact arising in its application; and
G. 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.
-18-
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 through any
claims or cause of action.
Article 4
SHARES SUBJECT TO PLAN
4.1 The Shares that may be made subject to Options
granted under the Plan shall not exceed 2,300,000
Shares in the aggregate. 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 the Company is 100,000. If an
Option is cancelled, it continues to be counted against
the maximum number of Shares for which Options may be
granted to any employee. If any 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
Subject to the terms and conditions of the Plan, the
Committee may, from time to time, prior to July 29,
2002, 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 at the time of grant of such Option or
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.
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.
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Article 7
EXERCISE OF OPTIONS
Any person entitled to exercise an Option in whole or
in part, may do so by delivering a written notice of
exercise to Cintas, attention Chief Financial Officer,
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.
Article 8
PAYMENT OF OPTION PRICE
8.1 Payment of the Option Price may be made in cash,
by the tender of Shares, or both. Shares tendered
shall be valued at their Fair Market Value on the Date
of Exercise.
8.2 Payment through tender of Shares may also be made
by instruction from the Optionee to Cintas to withhold
from the Shares issuable upon exercise of the Options
that number of Shares which have a Fair Market Value
equal to the Option Price for the Option or portion
thereof being exercised.
Article 9
INCENTIVE STOCK OPTIONS AND NONQUALIFIED STOCK OPTIONS
9.1 The Committee shall 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 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.
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. In addition, the Incentive Stock Option shall be
subject to the following specific provisions:
A. 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 the Company, then:
(i) The Option Price must equal at least 110% of
the Fair Market Value on the Date of Grant; and
(ii) The term of the Option shall not be greater
than five years from the Date of Grant.
B. 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 the
Company 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.
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Article 10
TRANSFERABILITY OF OPTION
During the lifetime of an Eligible Employee to whom an
Option has been granted, such Option is not
transferrable 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.
Article 11
TERMINATION OF OPTIONS
11.1 An Option will terminate as follows:
A. Upon exercise or expiration by its terms.
B. 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.
C. If an Eligible Employee holding an Option dies
or becomes subject to a Permanent and Total Disability
while employed by the Company, or within 60 days after
termination of employment, such Option may be
exercised, to the extent exercisable on the date of the
occurrence of the event which triggers the operation of
this paragraph, at any time within one year after the
date of such death or occurrence of Permanent and Total
Disability by the estate or guardian of such person or
by those persons to whom the Option may have been
transferred by the will or by the laws of descent and
distribution.
D. 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 violations 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.
E. If an Eligible Employee holding an Option
violates any terms 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 Article 12 hereof, in no
event will the continuation of the term of an Option
beyond the date of termination of employment allow the
Eligible Employee, or his beneficiaries or heirs, to
accrue additional rights under the Plan, or to purchase
more Shares through the exercise of an Option than
could have been purchased on the day that employment or
service as a director was terminated. In addition, not
withstanding anything contained herein, no Option may
be exercised in any event after the expiration of 10
years from the Date of Grant of such Option.
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Article 12
ADJUSTMENT 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,
splitups, recapitalizations, combinations of Shares or
exchanges of Shares, the number and class of Shares
authorized by this Plan and the number and class of
Shares and price per Share for each Option covered
under the Plan and each outstanding Option shall be
correspondingly 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 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 personal 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 AGREEMENT
13.1 All Options granted under the Plan may 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.
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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:
A. Change the class of Eligible Employees;
B. Except as provided in Articles 4 and 12 hereof,
increase the number of Shares which may be subject to
Options granted under the Plan.
C. Cause the Plan or any Option granted under the
Plan to fail to (i) qualify for exemption from Section
16(b) of the Act, (ii) be excluded from the $1 million
deduction limitation imposed by Section 162(m), or
(iii) qualify as an "Incentive Stock Option" as defined
by Section 422 of the Internal Revenue Code.
14.2 No amendment or discontinuance of the Plan shall
alter or impair any Option granted under the Plan
without the consent of the holder thereof.
Article 15
EFFECTIVE DATE
The 1992 Stock Option Plan originally became effective
July 29, 1992, and was approved and adopted by a
majority of the Company's Shareholders at its 1992
Annual Meeting of Shareholders. This Plan, as amended,
shall become effective on July 26, 1995, having been
adopted by the Board of Directors of Cintas subject to
approval by the affirmative vote of the holders of a
majority of the outstanding Shares voting on the issue.
If Shareholder approval is not received within 12
months of the effective date, Options granted pursuant
to the Plan shall be null and void.
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 requirement of law.
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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 10
years after the original Effective Date.