INDEMNIFICATION
AGREEMENT
This Indemnification Agreement, dated as of
_____________, is made by and between Cintas Corporation, a
Washington corporation (the “Corporation”), and
_________________ (the “Indemnitee”).
RECITALS
A. Indemnitee
is an officer or director of the Corporation and in such capacity
is performing valuable services for the Corporation.
B. The
Corporation and Indemnitee recognize the difficulty in obtaining
directors’ and officers’ liability insurance, the
significant cost of such insurance and the general reduction in the
coverage of such insurance.
C. The
Corporation and Indemnitee further recognize the substantial
increase in litigation subjecting officers and directors to
expensive litigation risks at the same time that such liability
insurance has been severely limited.
D. Article
V of its Amended and Restated Bylaws (the “Bylaws”)
contains provisions for indemnification of the Corporation’s
directors and officers to the extent permitted by the Washington
Business Corporation Act (the “Statute”).
E. The
Bylaws and the Statute specifically provide that the
indemnification provisions set forth therein are not exclusive, and
thereby contemplate that contracts may be entered into between the
Corporation and the members of its Board of Directors and its
officers with respect to indemnification of such directors and
officers.
F. The
Bylaws provide that the Corporation may maintain, at its expense,
insurance to protect itself and any of its directors and officers
against liability asserted against such persons incurred in such
capacity whether or not the Corporation has the power to indemnify
such persons against the same liability under the
Statute.
G. Because
the exposure of directors and officers to litigation risks exceeds
the personal resources of such persons, the Corporation’s
policy has been to indemnify officers and directors to the fullest
extent permitted by law, and this Indemnification Agreement is not
only reasonable and prudent but also promotes the best interests of
the Corporation and its stockholders by allowing the Indemnitee to
continue to serve without undue concern for unwarranted claims for
damages arising out of their service to the Corporation.
H. In
order to induce Indemnitee to continue to serve as an officer
and/or director, as the case may be, of the Corporation, the
Corporation has agreed to enter into this Agreement with
Indemnitee.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual
covenants and agreements set forth below, and other good and
valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:
Section 1. Generally
. To the fullest extent permitted by the laws of the
State of Washington:
(a) The Corporation shall
indemnify and hold harmless Indemnitee if Indemnitee was or is a
party or is threatened to be made a party to or is involved in
(including, without limitation, as a witness) any pending,
threatened or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact
that Indemnitee is or was, or has agreed to serve as, a director of
the Corporation, or being or having been a director of the
Corporation, is or was serving or has agreed to serve at the
request of the Corporation as a director, officer, employee or
agent (which, for purposes hereof, shall include a trustee, partner
or manager or similar capacity) of the Corporation or another
corporation or of a partnership, joint venture, trust, other
enterprise including service with respect to employee benefit
plans, whether the basis of such proceeding is alleged action or
inaction in an official capacity or in any other capacity while
serving in an official capacity. For the avoidance of
doubt, the foregoing indemnification obligation includes, without
limitation, claims for monetary damages against Indemnitee in
respect of an alleged breach of fiduciary duties, to the fullest
extent permitted under the WBCA.
(b) The
indemnification provided by this Section 1 shall be from and
against all expenses, liabilities and losses (including
attorneys’ fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid in settlement), actually and reasonably
incurred by Indemnitee or on Indemnitee’s behalf in
connection with such action, suit or proceeding and any appeal
therefrom.
(c) Notwithstanding
any other provision in this Agreement to the contrary, the
Corporation’s obligation to indemnify Indemnitee is limited
as follows: indemnification under this Agreement shall only be
provided if (A) Indemnitee acted in good faith, and (B) the
Indemnitee reasonably believed (i) in the case of conduct in
Indemnitee’s official capacity with the Corporation, the
Indemnitee’s conduct was in the Corporation’s best
interest, and (ii) in all other cases, the Indemnitee’s
conduct was at least not opposed to the Corporation’s best
interest, and (C) in the case of any criminal proceeding, the
Indeminitee had no reasonable cause to believe that the
Indemnitee’s conduct was unlawful. A
Indemnitee’s conduct with respect to an employee benefit plan
for a purpose the Indemnitee reasonably believed to be in the
interests of the participants in and beneficiaries of the plan is
conduct that satisfies the requirements set forth in subclause
(B)(ii), above.
(d) Notwithstanding
the foregoing provisions of this Section 1, in the case of any
threatened, pending or completed action or suit by or in the right
of the Corporation to procure a judgment in its favor by reason of
the fact that Indemnitee is or was a director, officer, employee or
agent of the Corporation, or while serving as a director or officer
of the Corporation, is or was serving or has agreed to
serve at the
request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, no indemnification shall
be made in respect of any claim, issue or matter as to which
Indemnitee shall be adjudged to be liable to the Corporation
unless, and only to the extent that, the Washington Court or the
court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view
of all of the circumstances of the case, Indemnitee is fairly and
reasonably entitled to indemnity for such expenses as the
Washington Court or such other court shall deem proper.
(e) Notwithstanding
the foregoing provisions of this Section 1, the Corporation shall
not indemnify any person from or on account of any acts or
omissions of such person finally adjudged to be intentional
misconduct or knowing violation of the law by such person, from
conduct of the person in violation of Section 23B.08.310 of the
WBCA or from or on account of any transaction with respect to which
it is finally adjudged that such person personally received a
benefit in money, property or services to which such person was not
legally entitled. In addition, except as provided in
Section 8 hereof with respect to proceedings seeking
indemnification, the Corporation shall not indemnify any person
with respect to an action, suit or proceeding initiated by that
person unless such action, claim or proceeding was authorized by
the Board of Directors of the Corporation.
(f) Indemnification
under this Agreement shall be made by the Corporation only upon a
determination that indemnification of the Indemnitee is proper in
the circumstances because Indemnitee has met the qualifications
required under Section 1(a), above, and the applicable standard of
conduct set forth in Section 1(c)(1), above (the
“indemnification standards”).
(g) Without
limiting the situations in which a person shall be considered to be
serving at the request of the Corporation, a director who serves as
a director, officer, employee or agent of the Corporation or
another corporation or other enterprise that is a subsidiary of the
Corporation shall be deemed to be serving at the request of the
Corporation, where “subsidiary” means (i) a corporation
or other enterprise in which a majority of the voting stock or
other voting power is owned or controlled by the Corporation
directly or though one or more subsidiaries or (ii) a corporation
or other enterprise which is consolidated on the
Corporation’s financial statements or is reported using the
equity method.
(h) The
termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that
Indemnitee did not satisfy the indemnification
standards.
Section 2. Successful Defense:
Partial Indemnification . To the extent that
Indemnitee has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in Section 1
hereof or in defense of any claim, issue or matter therein,
Indemnitee shall be indemnified against expenses (including
attorneys’ fees) actually and reasonably incurred in
connection therewith. For purposes of this Agreement and
without limiting the foregoing, if any action, suit or proceeding
is disposed of, on the merits or otherwise (including a disposition
without prejudice), without (i) the disposition being adverse to
Indemnitee, (ii) an adjudication that Indemnitee was
liable to the
Corporation, (iii) a plea of guilty or nolo contendere by
Indemnitee, (iv) an adjudication that Indemnitee did not act in
good faith and in a manner Indemnitee reasonably believed to be in,
or not opposed to, the best interest of the Corporation, and (v)
with respect to any criminal proceeding, an adjudication that
Indemnitee had reasonable cause to believe Indemnitee’s
conduct was unlawful, Indemnitee shall be considered for the
purposes hereof to have been wholly successful with respect
thereto. If Indemnitee is entitled under any provision
of this Agreement to indemnification by the Corporation for some or
a portion of the expenses, liabilities or losses (including
attorneys’ fees, judgments, fines or amounts paid in
settlement) actually and reasonably incurred by Indemnitee or on
Indemnitee’s behalf in connection with any action, suit,
proceeding or investigation, or in defense of any claim, issue or
matter therein, and any appeal therefrom but not, however, for the
total amount thereof, the Corporation shall nevertheless indemnify
Indemnitee for the portion of such expenses, liabilities or losses
(including attorneys’ fees, judgments, fines or amounts paid
in settlement) to which Indemnitee is entitled.
Section 3. Determination That
Indemnification Is Proper: Authorization .
(a) Any
indemnification hereunder shall (unless otherwise ordered by a
court) be made by the Corporation unless a determination is made
that indemnification of such person is not proper in the
circumstances because he or she has not met the applicable standard
of conduct set forth in Section 1(c) hereof. Any such
determination may be made (i) by a majority vote of a quorum
consisting of the directors not at the time parties to the action,
suit or proceeding in question (“disinterested
directors”), (ii) if a quorum cannot be obtained under
subclause (i) by a majority vote of a committee consisting solely
of two or more disinterested directors designated by the Board of
Directors, in which designation directors who are parties may
participate, (iii) by special legal counsel or other persons (A)
selected by the Board of Directors or its committee in the manner
described in clauses (i) or (ii) of this sentence or (B) if a
quorum of the Board of Directors cannot be attained under clause
(i) and a committee cannot be designated under clause (ii),
selected by majority vote of the full Board of Directors, in which
selection directors who are parties may participate, (iv) by the
shareholders, but shares owned by or voted under the control of
directors who are at the time not disinterested directors may not
be voted on the determination, or (v) by a court of competent
jurisdiction.
(b) If
a Change in Control (as defined below) occurs and results in
individuals who were directors prior to the circumstances giving
rise to the Change in Control for any reason ceasing to constitute
a majority of the Board of Directors of the Corporation, the
determination set forth above in Section 3 whether to provide
indemnification shall be made by independent legal counsel and not
by the then-Board of Directors. Under such
circumstances, the independent legal counsel shall be selected
jointly by counsel for the Corporation and counsel for the
Indemnitee whose request for indemnification is to be
determined. If the parties’ counsel cannot agree
upon the selection of independent legal counsel within 14 calendar
days of the request by Indemnitee for indemnification, the
Indeminitee’s counsel may request that the presiding judge
for the United States District Court for the Southern District of
Ohio select such independent counsel and both the Corporation and
Indemnitee agree to be bound by such selection. The
Corporation agrees to pay the reasonable fees of the independent
legal counsel and fully indemnify such counsel against any and all
expenses (including attorneys’ fees), claims, liabilities and
damages arising out of or relating to this Agreement or the
independent legal counsel’s engagement pursuant to this
Agreement. For
purposes of
this Agreement, a “Change in Control” of the
Corporation shall be deemed to have occurred if (a) any
“person,” as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, other than a trustee
or other fiduciary holding securities under an employee benefit
plan of the Corporation and other than Richard T. Farmer and James
J. Gardner and their respective heirs, lineal descendants, legatees
and legal representatives of any of the foregoing and the trustee
of any bona fide trust of which one or more of the foregoing are
the sole beneficiaries or the grantors thereof, becomes the
“beneficial owner,” as such term is defined in Rule
13d-3 under that Act, directly or indirectly, of securities of the
Corporation representing 25% or more of the combined voting power
of the Corporation’s 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 Directors or nomination for
election by the Corporation’s shareholders was approved by a
vote of at least two-thirds of the directors then still in office
who were either 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.
Section 4. Advance Payment of
Expenses: Notification and Defense of Claim .
(a) Expenses
(including attorneys’ fees) incurred by Indemnitee in
defending a threatened or pending civil, criminal, administrative
or investigative action, suit or proceeding, or in connection with
an enforcement action pursuant to Section 5(b), shall be paid by
the Corporation in advance of the final disposition of such action,
suit or proceeding within twenty (20) days after receipt by the
Corporation of (i) a statement or statements from Indemnitee
requesting such advance or advances from time to time, (ii) a
written affirmation of the Indemnitee’s good faith belief
that Indemnitee has met the standard of conduct described in WBCA
Section 23B.08.510, and (iii) an undertaking by or on behalf of
Indemnitee to repay such amount or amounts, only if, and to the
extent that, it shall ultimately be determined that Indemnitee is
not entitled to be indemnified by the Corporation as authorized by
this Agreement or otherwise. Such undertaking shall be
accepted without reference to the financial ability of Indemnitee
to make such repayment. Advances shall be unsecured and
interest-free.
(b) Promptly
after receipt by Indemnitee of notice of the commencement of any
action, suit or proceeding, Indemnitee shall, if a claim thereof is
to be made against the Corporation hereunder, notify the
Corporation of the commencement thereof. The failure to
promptly notify the Corporation of the commencement of the action,
suit or proceeding, or Indemnitee’s requ
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