Document:

QuickLinks
 -- Click here to rapidly navigate through this document

 
 

Exhibit 10.16    
  

$225,000,000
5.125% Senior Notes due 2007 

$225,000,000
6% Senior Notes due 2012

 

  

Cintas
Corporation No. 2

Issuer

 

  

Cintas
Corporation

Parent Guarantor

 

  

Affirmed
Medical, Inc.,

American First Aid Company,

Cintas Corporation No. 3,

Cintas Corp. No. 8, Inc.,

Cintas Corp. No. 15, Inc.,

Cintas—RUS, L.P.,

Cintas First Aid Holdings Corporation,

LLT, Inc.,

Respond Industries, Incorporated,

Xpect First Aid Corporation 

Subsidiary
Guarantors

 

  

PURCHASE AGREEMENT

  

Dated:  May 22, 2002 

 
 

TABLE OF CONTENTS    
  

	 
	 
	 
	 	Page

	SECTION 1.	Representations and Warranties	 	3
	(a)	    Representations and Warranties by the Issuer and the Guarantors Company	 	3
	 	    (i)	No Similar Offerings or General Solicitation	 	3
	 	    (ii)	Offering Memorandum	 	4
	 	    (iii)	Incorporated Documents	 	4
	 	    (iv)	Independent Accountants	 	4
	 	    (v)	Independent Accountants	 	4
	 	    (vi)	Parent Guarantor's Financial Statements	 	4
	 	    (vii)	Consolidating Financial Information	 	5
	 	    (viii)	No Material Adverse Change in Business	 	4
	 	    (ix)	Good Standing of the Issuer	 	5
	 	    (x)	Good Standing of the Guarantors	 	5
	 	    (xi)	Good Standing of the Parent Guarantor's Subsidiaries	 	5
	 	    (xii)	Capitalization	 	6
	 	    (xiii)	Authorization of Agreement	 	6
	 	    (xiv)	Authorization of Registration Rights Agreement	 	6
	 	    (xv)	Authorization of the Indenture	 	6
	 	    (xvi)	Authorization of the Notes	 	6
	 	    (xvii)	Authorization of Guarantees	 	7
	 	    (xviii)	Authorization of Exchange Notes	 	7
	 	    (xix)	Authorization of Exchange Guarantees	 	7
	 	    (xx)	Description of the Notes, the Exchange Notes, the Guarantees, the Exchange Guarantees, the Indenture and the Registration Rights Agreement	 	7
	 	    (xxi)	Absence of Defaults and Conflicts	 	7
	 	    (xxii)	Absence of Labor Dispute	 	8
	 	    (xxiii)	Absence of Proceedings	 	8
	 	    (xxiv)	Absence of Further Requirements	 	8
	 	    (xxv)	Possession of Intellectual Property	 	8
	 	    (xxvi)	Possession of Licenses and Permits	 	9
	 	    (xxvii)	Title to Property	 	9
	 	    (xxviii)	Taxes	 	9
	 	    (xxix)	Investment Company Act	 	9
	 	    (xxx)	Environmental Laws	 	9
	 	    (xxxi)	Registration Rights	 	10
	 	    (xxxii)	Rule 144A Eligibility	 	10
	 	    (xxxiii)	Regulation S Criteria	 	10
	 	    (xxxiv)	No Registration Required	 	10
	 	    (xxxv)	Business Relationships	 	10
	 	    (xxxvi)	Accuracy of Exhibits	 	11
	 	    (xxxvii)	Reporting Issuer	 	11
	 	    (xxxviii)	Stock Purchase Agreement	 	11
	(b)	    Officer's Certificates of the Issuer and the Guarantors	 	11
	

SECTION 2.	

Sale and Delivery to Initial Purchasers; Closing	
 	

11
	(a)	    Securities	 	11
	(b)	    Payment	 	11
	(c)	    Qualified Institutional Buyer	 	11
	(d)	    Denominations; Registration	 	11
	

SECTION 3.	

Covenants of the Issuer and the Guarantors	
 	

12
	(a)	    Offering Memorandum	 	12

 

	(b)	    Notice and Effect of Material Events	 	12
	(c)	    Amendment to Offering Memorandum and Supplements	 	12
	(d)	    Qualification of Securities for Offer and Sale	 	12
	(e)	    Rating of Securities	 	12
	(f)	    DTC, Euroclear and Clearstream Luxembourg	 	13
	(g)	    Use of Proceeds	 	13
	(h)	    Restriction on Sale of Securities	 	13
	

SECTION 4.	

Payment of Expenses	
 	

13
	(a)	    Expenses	 	13
	(b)	    Termination of Agreement	 	13
	

SECTION 5.	

Conditions of Initial Purchasers' Obligations	
 	

13
	(a)	    Opinion of Counsel for the Issuer and Guarantors	 	13
	(b)	    Opinion of Counsel for Initial Purchasers	 	14
	(c)	    Officers' Certificate of Issuer	 	14
	(d)	    Officers' Certificate of Guarantors	 	14
	(e)	    Accountant's Comfort Letters	 	14
	(f)	    Bring-down Comfort Letter	 	14
	(g)	    Maintenance of Rating	 	14
	(h)	    Registration Rights Agreement	 	15
	(i)	    Clearance and Settlement	 	15
	(j)	    Credit Agreements	 	15
	(k)	    Additional Documents	 	15
	(l)	    Termination of Agreement	 	15
	

SECTION 6.	

Subsequent Offers and Resales of the Securities	
 	

15
	(a)	    Offer and Sale Procedures	 	15
	 	    (i)	Offers and Sales in the United States or to U.S. Persons only to Qualified Institutional Buyers and outside the United States only to Non-U.S. Persons	 	15
	 	    (ii)	United Kingdom Selling Restrictions	 	16
	 	    (iii)	Sales Pursuant to Regulation S	 	16
	 	    (iv)	Minimum Principal Amount	 	16
	 	    (v)	No General Solicitation	 	17
	 	    (vi)	Purchases by Non-Bank Fiduciaries	 	17
	 	    (vii)	Subsequent Purchaser Notification	 	17
	 	    (viii)	Restrictions on Transfer	 	17
	 	    (ix)	Placement Completion Date	 	17
	(b)	    Covenants of the Issuer and the Guarantors	 	17
	 	    (i)	Inquiries	 	17
	 	    (ii)	Integration	 	18
	 	    (iii)	Rule 144A Information	 	18
	 	    (iv)	Restriction on Repurchases	 	18
	

SECTION 7.	

Indemnification	
 	

18
	(a)	    Indemnification of Initial Purchasers	 	18
	(b)	    Indemnification of Issuer, Guarantors, Directors and Officers	 	19
	(c)	    Actions Against Parties; Notification	 	19
	(d)	    Settlement Without Consent if Failure to Reimburse	 	19
	

SECTION 8.	

Contribution	
 	

20

ii

 

	

SECTION 9.	

Representations, Warranties and Agreements to Survive Delivery	
 	

21
	

SECTION 10.	

Termination of Agreement	
 	

21
	(a)	    Termination; General	 	21
	(b)	    Liabilities	 	21
	

SECTION 11.	

Default by One or More of the Initial Purchasers	
 	

21
	

SECTION 12.	

Notices	
 	

22
	

SECTION 13.	

Parties	
 	

22
	

SECTION 14.	

GOVERNING LAW AND TIME	
 	

22
	

SECTION 15.	

Effect of Headings	
 	

22

SCHEDULES

1—Pricing
Schedule

2—Parent Guarantor's non-Guarantor Significant Subsidiaries 

EXHIBITS

A—Form
of Registration Rights Agreement

B—Form of Opinion of Keating, Muething & Klekamp, P.L.L. 

iii

PURCHASE AGREEMENT 

CINTAS CORPORATION NO. 2
  (a Nevada corporation) 

$225,000,000
5.125% Senior Notes due 2007 

$225,000,000
6% Senior Notes due 2012 

Unconditionally
Guaranteed, jointly and severally as to Payment of Principal, Premium, if any, and Interest by 

CINTAS CORPORATION
  (a Washington corporation) 

Parent
Guarantor 

and

Affirmed Medical, Inc.,

American First Aid Company,

Cintas Corporation No. 3,

Cintas Corp. No. 8, Inc.

Cintas Corp. No. 15, Inc.'

Cintas—RUS, L.P.,

Cintas First Aid Holdings Corporation,

LLT, Inc.,

Respond Industries, Incorporated,

Xpect First Aid Corporation  

Subsidiary Guarantors 

May 22,
2002 

BANC
ONE CAPITAL MARKETS, INC.

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED

LEHMAN BROTHERS INC.

WILLIAM BLAIR & COMPANY, L.L.C.

MCDONALD INVESTMENTS INC.

U.S. BANCORP PIPER JAFFRAY INC.

FIRST UNION SECURITIES, INC.

MORGAN STANLEY & CO. INCORPORATED 

c/o
Banc One Capital Markets, Inc.

1 Bank One Plaza, Suite IL 1-0595

Chicago, Illinois 60670 

c/o
Merrill Lynch, Pierce, Fenner & Smith Incorporated 

 

Sears
Tower Building

233 South Wacker Drive

Suite 5500

Chicago, IL 60606 

Ladies
and Gentlemen: 

        Cintas
Corporation No. 2, a Nevada corporation (the "Issuer") confirms its agreement with Banc One Capital Markets, Inc.
("Banc One"), Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), Lehman Brothers Inc., William Blair & Company,
L.L.C., McDonald Investments Inc., U.S. Bancorp Piper Jaffray Inc., First Union Securities, Inc., and Morgan Stanley & Co. Incorporated (collectively, the
"Initial Purchasers"), with respect to the issue and sale by the Issuer and the purchase, severally and not jointly, by the Initial Purchasers of
$225,000,000 aggregate principal amount of the Issuer's 5.125% Senior Notes due 2007 (the "5.125% Notes") and $225,000,000 aggregate principal amount of the Issuer's 6% Senior Notes Due 2012 (the "6%
Notes" and together with the 5.125% Notes, the "Notes"). The Notes will be unconditionally guaranteed, jointly and severally, as to payment of principal, premium, if any, and interest (the
"Guarantees" and together with the Notes, the "Securities") by Cintas Corporation, a Washington corporation (the "Parent Guarantor"), and the wholly-owned domestic subsidiaries of the Parent
Guarantor, other than Cintas No.2, listed on the title page of this Agreement (collectively, the "Subsidiary Guarantors" and together with the Parent Guarantor, the "Guarantors"), and will be issued
pursuant to an indenture, dated as of May 28, 2002 (the "Indenture," which term, as used herein, includes the Officers' Certificate (as defined
in the Indenture)) establishing the form and terms of the Securities pursuant to Section 3.1 of the Indenture, among the Issuer, the Guarantors and Wachovia Bank, National Association, as
trustee (the "Trustee"). Securities issued in book-entry form will be issued to Cede & Co. as nominee of The Depository Trust Company
("DTC") pursuant to a letter agreement, to be dated as of or prior to the Closing Time (as defined in Section 2(b)) (the
"DTC Agreement"), among the Issuer, the Trustee and DTC. 

        The
Issuer and the Guarantors understand that the Initial Purchasers propose to make an offering of the Securities on the terms and in the manner set forth herein and agree that the
Initial Purchasers may resell, subject to the conditions set forth herein, all or a portion of the Securities to purchasers ("Subsequent Purchasers") at
any time after the date of this Agreement. The Securities are to be offered and sold through the Initial Purchasers without being registered under the Securities Act of 1933, as amended (the
"1933 Act"), in reliance upon exemptions therefrom. Pursuant to the terms of the Securities and the Indenture, investors that acquire Securities may
only resell or otherwise transfer such Securities if such Securities are hereafter registered under the 1933 Act or if an exemption from the registration requirements of the 1933 Act is available
(including the exemption afforded by Rule 144A ("Rule 144A") of the rules and regulations promulgated under the 1933 Act by the Securities
and Exchange Commission (the "Commission")). 

        The
Issuer and the Guarantors have prepared and delivered to the Initial Purchasers copies of a preliminary offering memorandum, dated May 21, 2002 (including documents
incorporated by reference therein, the "Preliminary Offering Memorandum"), and have prepared and will deliver to the Initial Purchasers, on the date
hereof or the next succeeding day, copies of a final offering memorandum, dated May 22, 2002 (including documents incorporated by reference therein, the "Final Offering
Memorandum"), each for use by the Initial Purchasers in connection with their solicitation of purchases of, or offering of, the Securities. "Offering
Memorandum" means, with respect to any date or time referred to in this Agreement, the most recent offering memorandum (whether the Preliminary Offering Memorandum or the Final
Offering Memorandum, or any amendment or supplement to either such document), including any exhibits thereto and any documents incorporated by reference therein, which has been prepared and delivered
by the Issuer and the Guarantors to the Initial Purchasers in connection with their solicitation of purchases of, or offering of, the Securities. 

2

 

        All
references in this Agreement to financial statements and schedules and other information which are "contained," "included" or "stated" in the Offering Memorandum (or other references
of like import) shall be deemed to mean and include all such financial statements and schedules and other information which are incorporated by reference in the Offering Memorandum; and all references
in this Agreement to amendments or supplements to the Offering Memorandum shall be deemed to mean and include the filing of any document under the Securities Exchange Act of 1934, as amended (the
"1934 Act"), which is incorporated by reference in the Offering Memorandum. 

        The
holders of the Notes will be entitled to the benefits of a Registration Rights Agreement, dated as of May 28, 2002, among the Issuer, the Guarantors and the Initial
Purchasers, in substantially the form attached hereto as Exhibit A with such changes as shall be agreed to by the parties hereto (the
"Registration Rights Agreement"), pursuant to which the Issuer and the Guarantors have agreed, among other things, to file a registration
statement (the "Registration Statement") with the Commission registering the Securities or the Exchange Securities referred to in the Registration
Rights Agreement under the 1933 Act. 

        SECTION
1.    Representations and Warranties.    

        (a)    Representations and Warranties by the Issuer and the Guarantors.    The Issuer and each of the Guarantors,
jointly and severally, represent and warrant to each Initial Purchaser as of the date hereof and as of the Closing Time referred to in Section 2(b) hereof and agree with each Initial Purchaser,
as follows: 

        (i)    No
Similar Offerings or General Solicitation. None of the Issuer, the Guarantors or any of their respective affiliates (as defined in Rule 501(b) under the 1933
Act, "Affiliates") or any person acting on its or their behalf (other than the Initial Purchasers, as to whom the Issuer and the Guarantors make no representation) has (A) within the
six-month period prior to the date hereof, offered or sold in the United States or to any U.S. person (as defined in Regulation S under the 1933 Act, "U.S.
Persons") the Securities or any security of the same class or series as either series of the Securities so as to cause such security to be integrated with the sale of the
Securities in a manner that would require the registration of the Securities under the 1933 Act or (B) offered or will offer to sell the Securities (1) in the United States or to U.S.
Persons, by means of any form of general solicitation or general advertising within the meaning of Rule 502(c) under the 1933 Act or (2) with respect to any Securities sold in reliance
on Rule 903 of Regulation S under the 1933 Act ("Regulation S"), by means of any directed selling efforts within the meaning of
Rule 902(b) of Regulation S; and each of the Issuer, the Guarantors and their respective Affiliates and any person acting on its or their behalf (other than the Initial Purchasers, as to
whom the Issuer and the Guarantors make no representation) has complied and will comply with the offering restrictions requirement of Regulation S. 

        (ii)  Offering
Memorandum. The Offering Memorandum does not, and at the Closing Time will not, include an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the circumstances under which they were made, not
misleading; provided that this representation, warranty and agreement shall not apply to statements in or omissions from the Offering Memorandum made in reliance upon and in conformity with
information furnished to the Issuer or the Guarantors in writing by Banc One and Merrill Lynch on behalf of the Initial Purchasers expressly for use in the Offering Memorandum. 

        (iii)  Incorporated
Documents. The documents incorporated or deemed to be incorporated by reference in the Offering Memorandum, at the time they were or hereafter are filed
with the Commission, complied and will comply in all material respects with the requirements, as applicable, of the 1934 Act and the rules and regulations of the Commission thereunder (the
"1934 Act Regulations"), and, when read together with the other information in the Offering Memorandum at the time the Offering Memorandum was issued
and at the Closing Time, did not 

3

 

and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. 

        (iv)  Independent
Accountants of the Parent Guarantor. Ernst & Young LLP, who have certified the consolidated financial statements of the Parent Guarantor and its
subsidiaries and supporting schedules included, or incorporated by reference, in the Offering Memorandum, are independent certified public accountants with respect to the Parent Guarantor and its
subsidiaries within the meaning of Regulation S-X promulgated under the 1933 Act. 

        (v)  Independent
Accountants of Omni Services, Inc. Arthur Andersen LLP, who have certified the financial statements of Omni Services, Inc., a Virginia
corporation ("Omni"), and its subsidiaries and supporting schedules included, or incorporated by reference, in the Offering Memorandum, are independent certified public accountants with respect to
Omni and its subsidiaries within the meaning of Regulation S-X promulgated under the 1933 Act. 

        (vi)  Parent
Guarantor's Financial Statements. The historical consolidated financial statements of the Parent Guarantor and its subsidiaries and the financial statements of
Omni, including the related notes and schedules thereto, included or incorporated by reference in the Offering Memorandum present fairly the financial position of the Parent Guarantor and its
subsidiaries and Omni, respectively, at the dates indicated and the results of operations of the Parent Guarantor and its subsidiaries and Omni, for the periods specified. Except as otherwise stated
in the Offering Memorandum, said historical consolidated financial statements of the Parent Guarantor and its subsidiaries and the financial statements of Omni have been prepared in conformity with
generally accepted accounting principles ("GAAP") applied on a consistent basis throughout the periods involved, and all adjustments necessary for a
fair presentation of results for such periods have been made. The supporting schedules, if any, included or incorporated by reference in the Offering Memorandum present fairly the information required
to be stated therein and have been prepared in accordance with GAAP; and the selected financial data and the summary financial information included in the Offering Memorandum present fairly the
information shown therein and have been compiled on a basis consistent with the audited financial statements incorporated by reference in the Offering Memorandum. The ratios of earnings to fixed
charges of the Parent Guarantor included in the Offering Memorandum have been calculated in
compliance with Item 503(d) of Regulation S-K of the Commission. The pro forma financial statements and the related notes thereto, if any, included in the Offering Memorandum
present fairly in all material respects the information shown therein, and have been properly compiled on the bases described therein, and the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give effect to the transactions and the circumstances referred to therein. 

        (vii) Consolidating
Financial Information. The consolidating financial information included or incorporated by reference in the Offering Memorandum (A) is based upon
the books and records of the Subsidiary Guarantors, the Issuer and the other subsidiaries of the Parent Guarantor, (B) is a fair and accurate presentation in all material respects of the
financial condition and operations of the respective entities, singly or on a combined basis, as the case may be, as set forth therein, and does not contain an untrue statement of a material fact or
omit to state a material fact where omission would make the information therein misleading in any material respect, (C) has been prepared in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods involved, and (D) conforms to and is in compliance with the requirements of Rule 3-10 of
Regulation S-X. 

        (viii)  No
Material Adverse Change in Business. Since the respective dates as of which information is given in the Offering Memorandum, except as otherwise
stated therein or contemplated thereby, (A) there has been no material adverse change in the condition, financial or 

4

 

otherwise, or in the earnings, business affairs or business prospects of the Issuer, the Guarantors or the Parent Guarantor and its subsidiaries, considered as one enterprise, whether or not arising
in the ordinary course of business (a "Material Adverse Effect"), (B) there have been no transactions entered into or acquisitions by the Issuer,
the Guarantors or any of the Parent Guarantor's subsidiaries, other than those in the ordinary course of business or disclosed in the Offering Memorandum, which are material with respect to the
Issuer, the Guarantors or the Parent Guarantor and its subsidiaries considered as one enterprise, and (C) there has been no dividend distributions of any kind declared, paid or made by the
Issuer or any Guarantor on any class of their respective capital stock, except for regular annual dividends on the Parent Guarantor's common stock in amounts that are consistent with past practice and
intercompany dividends in the ordinary course of business. 

        (ix)  Good
Standing of the Issuer. The Issuer has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Nevada with
corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Offering Memorandum and to enter into and perform its obligations under this
Agreement, the Indenture, the Registration Rights Agreement and the Notes; and the Issuer is duly qualified as a foreign corporation to transact business and is in good standing in each other
jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to so qualify or to be in good
standing would not have a Material Adverse Effect. 

        (x)  Good
Standing of the Guarantors. Each wholly-owned subsidiary of the Parent Guarantor (other than the Issuer) that is not organized under the laws of a jurisdiction
outside of the United States is a Subsidiary Guarantor and, in such capacity, has authorized, executed and delivered this Agreement and,
at or prior to Closing Time, will have authorized, executed and delivered each of the Registration Rights Agreement and the Indenture. The Parent Guarantor and each Subsidiary Guarantor has been duly
organized and is validly existing as a corporation, limited partnership or limited liability company, as the case may be, in good standing under the laws of the jurisdiction of its incorporation or
formation with full corporate or equivalent power and authority under such laws to own, lease and operate its properties and to conduct its business as now being conducted as described in the Offering
Memorandum and to enter into and perform its obligations under this Agreement, the Indenture, the Registration Rights Agreement and the Guarantees; and each Guarantor is duly qualified or registered
as a foreign corporation or entity and is in good standing in each jurisdiction in which such qualification or registration is required, whether by reason of the ownership or leasing of property or
the conduct of business, except where the failure to so qualify or register would not have a Material Adverse Effect. All of the outstanding shares of capital stock or membership or partnership
interests, as the case may be, of each Subsidiary Guarantor have been duly authorized and validly issued and are fully paid and non-assessable and are owned by the Parent Guarantor,
directly or through subsidiaries, free and clear of any pledge, lien, security interest, mortgage, charge, claim, equity or encumbrance of any kind. 

        (xi)  Good
Standing of the Parent Guarantor's Subsidiaries. The Parent Guarantor's subsidiaries (other than Subsidiary Guarantors) which are considered "Significant
Subsidiaries" as defined in Regulation S-X, as promulgated under the 1933 Act, are listed on Schedule 2 attached hereto
(collectively referred to herein as the "Subsidiaries"). Each Subsidiary is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation with corporate or equivalent power and authority under such laws to own, lease and operate its properties and conduct its business; and each Subsidiary
is duly qualified to transact business as a foreign entity and is in good standing in each other jurisdiction in which it owns or leases property of a nature, or transacts business of a type, that
would make such qualification necessary, except to the extent that the failure to so qualify would not have a Material Adverse 

5

 

Effect. All of the outstanding shares of capital stock (or other equity interests) of each Subsidiary have been duly authorized and validly issued and are fully paid and non-assessable
and are owned by the Parent Guarantor, directly or through subsidiaries, free and clear of any pledge, lien, security interest, mortgage, charge, claim, equity or encumbrance of any kind. 

        (xii) Capitalization.
The authorized, issued and outstanding capital stock of the Parent Guarantor is as set forth in the Offering Memorandum under the caption
"Capitalization"; and all of the issued and outstanding shares of capital stock of the Parent Guarantor have been duly authorized and validly issued and
are fully paid and non-assessable. 

        (xiii)  Authorization
of Agreement. This Agreement has been duly authorized, executed and delivered by each of the Issuer and the Guarantors. 

        (xiv) Authorization
of Registration Rights Agreement. The Registration Rights Agreement has been duly authorized, executed and delivered by each of the Issuer and the
Guarantors and, assuming the due authorization, execution and delivery thereof by or on behalf of the Initial Purchasers, will
constitute a valid and binding agreement of each of the Issuer and the Guarantors, enforceable against each of the Issuer and the Guarantors in accordance with its terms, except as enforcement thereof
may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or similar laws relating to or affecting enforcement of
creditors' rights generally, or by general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law), and except that rights to indemnification and
contribution thereunder may be limited by applicable law. 

        (xv) Authorization
of the Indenture. The Indenture has been duly authorized by each of the Issuer and the Guarantors and, at the Closing Time, will have been duly executed
and delivered by each of the Issuer and the Guarantors and, assuming the due authorization, execution and delivery thereof by the Trustee, will constitute a valid and binding agreement of each of the
Issuer and the Guarantors, enforceable against each of the Issuer and the Guarantors in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or other similar laws relating to or affecting enforcement of creditors' rights generally or by
general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law). 

        (xvi) Authorization
of the Notes. The Notes have been duly authorized and, at the Closing Time, will have been duly executed by the Issuer and, when authenticated, issued
and delivered in the manner provided for in the Indenture and delivered against payment of the purchase price therefor, will constitute valid and binding obligations of the Issuer, enforceable against
the Issuer in accordance with their terms, except as the enforcement thereof may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or other similar laws relating to or affecting enforcement of creditors' rights generally or by general principles of equity (regardless of whether enforcement is considered
in a proceeding in equity or at law), and will be in the form contemplated by, and entitled to the benefits of, the Indenture. 

        (xvii)  Authorization
of Guarantees. The Guarantees have been duly authorized and, at the Closing Time, will have been duly executed by the Guarantors; the
Guarantees, when issued and delivered in the manner provided for in the Indenture, will constitute legal, valid and binding obligations of the Guarantors, enforceable against the Guarantors in
accordance with their terms, except as enforcement thereof may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws relating to or affecting enforcement of creditors' rights generally, or by general principles of equity (regardless of whether enforcement is considered in a proceeding in
equity or at law); and the 

6

 

Guarantees will be in the form contemplated by the Indenture and will conform in all material respects to the description thereof in the Offering Memorandum. 

        (xviii)  Authorization
of Exchange Notes. The Exchange Notes (as defined in the Registration Rights Agreement) have been duly authorized and, when
authenticated, issued and delivered in the manner provided for in the Indenture and issued and delivered in exchange for the Notes in the manner contemplated in the Registration Rights Agreement, will
constitute valid and binding obligations of the
Issuer, enforceable against the Issuer in accordance with their terms, except as the enforcement thereof may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws affecting enforcement of creditors' rights generally, or by general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law), and will be in the form contemplated by, and entitled to the benefits of, the Indenture. 

        (xix) Authorization
of Exchange Guarantees. The Exchange Guarantees (as defined in the Registration Rights Agreement) have been duly authorized and, when authenticated,
issued and delivered in the manner provided for in the Indenture and issued and delivered in the manner contemplated in the Registration Rights Agreement, will constitute valid and binding obligations
of the Guarantors, enforceable against the Guarantors in accordance with their terms, except as the enforcement thereof may be limited by bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization, moratorium or similar laws affecting enforcement of creditors' rights generally, or by general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law, and will be in the form contemplated by, and entitled to the benefit of the Indenture). 

        (xx) Description
of the Notes, the Exchange Notes, the Guarantees, the Exchange Guarantees, the Indenture and the Registration Rights Agreement. The Notes, the Exchange
Notes, the Guarantees, the Exchange Guarantees, the Indenture and the Registration Rights Agreement will conform in all material respects to the respective statements relating thereto contained in the
Offering Memorandum at the date hereof and at the Closing Time, and will be in substantially the respective forms previously delivered to the Initial Purchasers. 

        (xxi) Absence
of Defaults and Conflicts. None of the Issuer, the Guarantors or any of their respective subsidiaries is in violation of its charter, by-laws or
other organizational documents or in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, loan agreement, note,
lease or other agreement or instrument to which the Issuer, the Guarantors or any of their respective subsidiaries, as the case may be, is a party or by which it or any of them may be bound, or to
which any of the property or assets of the Issuer, the Guarantors or any of their respective subsidiaries is subject, except for any such violation or default that would not have a Material Adverse
Effect, and the execution, delivery and performance of this Agreement, the Indenture, the Securities and the Registration Rights Agreement, and the consummation of the transactions contemplated herein
and therein (including the issuance and sale of the Securities and the use of the proceeds from the sale of the Securities as described in the Offering Memorandum under the caption "Use of Proceeds")
and compliance by the Issuer and the Guarantors with their obligations hereunder and thereunder have been duly authorized by all necessary action (corporate or otherwise), and do not and will not
conflict with or constitute a breach of, or default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Issuer, the Guarantors or the
Guarantors' subsidiaries pursuant to, any contract, indenture, mortgage, loan agreement, note, lease or other instrument to which the Issuer, the Guarantors or the Guarantors' subsidiaries is a party
or by which any of them may be bound, or to which any of the property or assets of the Issuer, the Guarantors or the Guarantors' subsidiaries is subject, except for any such violation or default that
would not have a Material Adverse Effect, nor will such action result in any violation 

7

 

of the charter, by-laws or other organizational documents of the Issuer, the Guarantors or the Guarantors' subsidiaries or any applicable law, rule or regulation, judgment, order or
decree of any government, governmental instrumentality or court, domestic or foreign, or any regulatory body or administrative agency or other governmental body having jurisdiction over the Issuer,
the Guarantors, any subsidiary of the Guarantors or any of their respective properties, except for such creation or imposition of any lien, charge or encumbrance that would not have a Material Adverse
Effect. 

        (xxii)  Absence
of Labor Dispute. No labor dispute with the employees of the Issuer, the Guarantors or any of the Guarantors' subsidiaries exists or, to the
knowledge of the Issuer or the Guarantors, is imminent, which, in either case, would reasonably be expected to result in a Material Adverse Effect. 

        (xxiii)  Absence
of Proceedings. Other than as disclosed in the Offering Memorandum, there is no action, suit or proceeding before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to the knowledge of the Issuer or any Guarantor, threatened, against or affecting the Issuer, any Guarantor or any of the Guarantors'
subsidiaries which would reasonably be expected to result in a Material Adverse Effect, or which would reasonably be expected to materially and adversely affect the properties and assets of the
Issuer, the Guarantors or the Parent Guarantor and its subsidiaries considered as one enterprise, or the consummation of the transactions contemplated by this Agreement or the Indenture or the
performance by the Issuer or any Guarantor of their respective obligations hereunder and thereunder (as applicable); and the aggregate of all pending legal or governmental proceedings to which the
Issuer, any Guarantor or any of the Guarantors' subsidiaries is a party or of which any of their respective properties or assets is the subject which are not disclosed in the Offering Memorandum,
including ordinary routine litigation incidental to the business of the Issuer, any Guarantor or any of the Guarantors' subsidiaries, would not have a Material Adverse Effect. 

        (xxiv)  Absence
of Further Requirements. No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any
court or governmental authority or agency (other than under state securities laws or the 1933 Act and the rules and regulations thereunder with respect to the Registration Rights Agreement and the
transactions contemplated thereunder or under the by-laws and rules of the National Association of Securities Dealers, Inc.) is necessary or required for the performance by the
Issuer or any Guarantor of their obligations hereunder, in connection with the offering, issuance or sale of the Securities hereunder or the consummation of the transactions contemplated by this
Agreement and the Offering Memorandum, except as have already been obtained. 

        (xxv)  Possession
of Intellectual Property. Each of the Issuer, the Parent Guarantor and its other subsidiaries owns or possesses, or can acquire on reasonable
terms, adequate patents, patent rights, licenses, inventions, copyrights, know how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other intellectual property (collectively, "Intellectual Property") presently employed by them in
connection with the business now operated by them or reasonably necessary in order to conduct such business, except where the failure to own, possess or acquire any such Intellectual Property would
not reasonably be expected to result in a Material Adverse Effect, and none
of the Issuer, the Parent Guarantor or any of its other subsidiaries has received any written notice or is otherwise aware of any infringement of or conflict with asserted rights of others with
respect to any Intellectual Property or of any facts or circumstances which would render any Intellectual Property invalid or inadequate to protect the interest of the Issuer, the Parent Guarantor or
any of its other subsidiaries therein, and which infringement or conflict (if the subject of any unfavorable decision, ruling or finding) or invalidity or inadequacy, singly or in the 

8

 

aggregate, in the reasonable judgment of the Issuer and the Guarantors, is likely to result in a Material Adverse Effect. 

        (xxvi)  Possession
of Licenses and Permits. Each of the Issuer, the Parent Guarantor and its other subsidiaries possesses or have made application for such
certificates, authorities or permits issued by the appropriate state, federal or foreign regulatory agencies or bodies necessary to conduct the businesses to be conducted by it, except where the
failure to possess any such certificate, authority or permit, singly or in the aggregate, would not have a Material Adverse Effect; each of the Issuer, the Parent Guarantor and its other subsidiaries
are in compliance with the terms and conditions of such certificates, authorities and permits, except where the failure to so comply would not, singly or in the aggregate, have a Material Adverse
Effect; all of such certificates, authorities and permits are valid and in full force and effect, except when the invalidity of any such certificates, authorities or permits or the failure of such
certificates, authorities or permits to be in full force and effect would not have a Material Adverse Effect; and none of the Issuer, the Parent Guarantor or any of its other subsidiaries has received
any written notice of proceedings relating to the revocation or modification of any such certificate, authority or permit which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would result in a Material Adverse Effect. 

        (xxvii)  Title
to Property. Each of the Issuer, the Parent Guarantor and its other subsidiaries has good and marketable title to all of their respective owned
real and personal properties, in each case free and clear of all liens, encumbrances and defects, except as stated in the Offering Memorandum, or such as do not materially affect the value of such
properties in the aggregate to the Issuer, the Guarantors or the Parent Guarantor and its other subsidiaries considered as one enterprise; and all of the leases and subleases material to the business
of the Issuer, the Guarantors or the Parent Guarantor and its other subsidiaries considered as one enterprise, and under which the Issuer, the Parent Guarantor or any of its subsidiaries holds
properties described in the Offering Memorandum, are in full force and effect and none of the Issuer, the Parent Guarantor or any of its subsidiaries has any written notice of any claim of any sort
that has been asserted by anyone adverse to the rights of the Issuer, the Parent Guarantor or any of its other subsidiaries under any of the leases or subleases mentioned above, or affecting or
questioning the rights of such entity to the continued possession of the leased or subleased premises under any such lease or sublease, except where such claims would not reasonably be expected to
have a Material Adverse Effect. 

        (xxviii)  Taxes.
Each of the Issuer, the Guarantors and the Guarantors' subsidiaries has filed all material federal, state and local tax returns and other
reports that have been required to be filed, which tax returns are complete and correct in all material respects, and have paid all taxes and fees indicated by said returns and reports and franchise
reports and all assessments received by them or any of them to the extent that such taxes and/or fees have become due, except where being contested in good faith and for which the Issuer, the
Guarantors or the affected subsidiary has established adequate reserves. 

        (xxix)  Investment
Company Act. Neither the Issuer nor any Guarantor is, or upon the issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Offering Memorandum will be, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended. 

        (xxx)  Environmental
Laws. Except as described in the Offering Memorandum and except for such matters as would not, singly or in the aggregate, result in a
Material Adverse Effect, (A) none of the Issuer, the Guarantors or any of the Guarantors' subsidiaries is in violation of any federal, state, local or foreign statute, law, rule, regulation,
ordinance, code, policy or rule of common law or any judicial or administrative interpretation thereof, including any judicial or administrative 

9

 

order, consent, decree or judgment, relating to pollution or protection of human health, the environment (including, without limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) or wildlife, including, without limitation, laws and regulations relating to the release or threatened release of chemicals, pollutants, contaminants, wastes, toxic substances,
hazardous substances, petroleum or petroleum products (collectively, "Hazardous Materials") or to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials (collectively, "Environmental Laws"), (B) each of the Issuer, the Guarantors and the Guarantors' subsidiaries has all
permits, authorizations and approvals required under any applicable Environmental Laws and are each in substantial compliance with their requirements, (C) there are no pending or, to the
knowledge of the Issuer and the Parent Guarantor, threatened administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against the Issuer, the Guarantors and the Guarantors' subsidiaries and (D) to the knowledge of the Issuer and the Parent
Guarantor, there are no events or circumstances that might reasonably be expected to form the basis of an order for clean-up or remediation, or an action, suit or proceeding by any private
party or governmental body or agency, against or affecting the Issuer, the Guarantors and the Guarantors' subsidiaries relating to Hazardous Materials or Environmental Laws. 

        (xxxi)  Registration
Rights. There are no persons or entities with registration rights or other similar rights to have securities registered pursuant to a
registration statement or otherwise registered by the Issuer or the Guarantors under the 1933 Act that have not been duly and validly waived. 

        (xxxii)  Rule 144A
Eligibility. The Securities are not, and, at the Closing Time, will not be, of the same class as securities listed on a national
securities exchange registered under Section 6 of the 1934 Act or quoted in a U.S. automated interdealer quotation system. 

        (xxxiii)  Regulation S
Criteria. The Parent Guarantor is a "reporting issuer" within the meaning of Regulation S. 

        (xxxiv)  No
Registration Required. Subject to compliance by the Initial Purchasers with the representations and warranties set forth in Section 2 and the
procedures set forth in Section 6 hereof, it is not necessary in connection with the offer, sale and delivery of the Securities to the Initial Purchasers and to each Subsequent Purchaser in the
manner contemplated by this Agreement and the Offering Memorandum to register the Securities under the 1933 Act or to qualify the Indenture under the Trust Indenture Act of 1939, as amended. 

        (xxxv)  Business
Relationships. There are no business relationships or related party transactions of the nature described in Item 404 of
Regulation S-K involving any Guarantor and any other persons referred to in said Item 404 that would be required to be described in a registration statement on
Form S-1 under the 1933 Act which have not been so described in the Offering Memorandum. 

10

  

        (xxxvi)  Accuracy
of Exhibits. All of the descriptions of contracts or other documents contained in the Offering Memorandum are accurate and complete
descriptions in all material respects of such contracts or other documents. 

        (xxxvii)  Reporting
Issuer. The Parent Guarantor is subject to the reporting requirements of Section 13 or Section 15(d) of the 1934 Act. 

        (xxxviii)  Stock
Purchase Agreement. The Stock Purchase Agreement, dated as of March 15, 2002, between the Parent Guarantor and Filuxel SA, has been duly
authorized, executed and delivered by, and is a valid and binding agreement of the Parent Guarantor, enforceable against the Parent Guarantor in accordance with its terms. 

        (b)    Officer's Certificates of the Issuer and the Guarantors.    Any certificate signed by any duly authorized
officer of the Issuer or any Guarantor and delivered to the Initial Purchasers or to counsel for the Initial Purchasers in connection with this Offering shall be deemed a representation and warranty
by each of the Issuer and the Guarantor to the Initial Purchasers as to the matters covered thereby. 

        SECTION
2.    Sale and Delivery to Initial Purchasers; Closing.    

        (a)    Securities.    On the basis of the representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Issuer agrees to sell to the Initial Purchasers, severally and not jointly, and each of the Initial Purchasers agrees to purchase, severally and not jointly, from the
Issuer at the price set forth on Schedule 1, that portion of the aggregate principal amount of Securities offered by the Issuer set forth
opposite the name of such Initial Purchaser on Schedule 1 plus any additional principal amount of Securities which such Initial Purchaser may
become obligated to purchase pursuant to the provisions of Section 11 hereof, subject to such adjustments among the Initial Purchasers as Banc One and Merrill Lynch, on behalf of the Initial
Purchasers, shall make to eliminate any sales or purchases of fractional Securities. 

        (b)    Payment.    Payment of the purchase price for, and delivery of certificates for, the Securities shall be made
at the office of Sidley Austin Brown & Wood llp, 875 Third Avenue, New York, New York 10022, or at such other place as shall be agreed upon by Banc One and Merrill Lynch on behalf of the
Initial
Purchasers and the Issuer, at 10:00 A.M., Eastern time, on the third business day after the date hereof, or such other time not later than ten business days after such date as shall be agreed
upon by Banc One and Merrill Lynch on behalf of the Initial Purchasers and the Issuer (such time and date of payment and delivery being herein called the "Closing
Time"). 

        Payment
shall be made to the Issuer by wire transfer of immediately available funds to a bank account designated by the Issuer, against delivery to the Initial Purchasers for the account
of the Initial Purchasers of the Securities to be purchased by them. The certificates representing the Securities shall be registered in the name of Cede & Co. pursuant to the DTC Agreement and
shall be made available for examination and packaging by the Initial Purchasers in The City of New York not later than 10:00 A.M. on the last business day prior to the Closing Time. 

        (c)    Qualified Institutional Buyer.    Each of the Initial Purchasers represents and warrants to, and agrees with,
the Issuer that it is a "qualified institutional buyer" within the meaning of Rule 144A under the 1933 Act (a "Qualified Institutional Buyer"). 

        (d)    Denominations; Registration.    Certificates for the Securities shall be in such denominations and registered
in such names as the Initial Purchasers may request in writing at least one full business day before the Closing Time. 

11

 

        SECTION
3.    Covenants of the Issuer and the Guarantors.    The Issuer and the Guarantors, jointly and severally,
covenant with the Initial Purchasers as follows: 

        (a)    Offering Memorandum.    The Issuer and the Guarantors, as promptly as possible, shall furnish to the Initial
Purchasers, without charge, such number of copies of the Preliminary Offering Memorandum, the Final Offering Memorandum and any amendments and supplements thereto and documents incorporated by
reference therein as the Initial Purchasers may reasonably request prior to the Placement Completion Date (as defined in subsection 6(a) hereof). 

        (b)    Notice and Effect of Material Events.    The Issuer and the Guarantors will promptly notify the Initial
Purchasers, and confirm such notice in writing, of (x) any filing made by the Issuer or the Guarantors of information relating to the offering of the Securities with any securities exchange or
any other regulatory body in the United States or any other jurisdiction, and (y) prior to the Placement Completion Date, any material changes in or affecting the condition, financial or
otherwise, or the earnings or business affairs or business prospects of the Issuer or the Guarantors or the Guarantors' subsidiaries which (i) make any statement in the Final Offering
Memorandum materially false or misleading or (ii) are not disclosed in the Final Offering Memorandum. In such event or if during such time any event shall occur as a result of which it is
necessary, in the reasonable opinion of the Issuer,
the Guarantors, their counsel, the Initial Purchasers or counsel for the Initial Purchasers, to amend or supplement the Final Offering Memorandum in order that the Final Offering Memorandum not
include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading, in the light of the circumstances then existing, the
Issuer and the Guarantors will forthwith amend or supplement or cause to be amended or supplemented the Final Offering Memorandum by preparing and furnishing to the Initial Purchasers an amendment or
amendments of, or a supplement or supplements to, the Final Offering Memorandum (in form and substance satisfactory in the reasonable opinion of counsel for the Initial Purchasers) so that, as so
amended or supplemented, the Final Offering Memorandum will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in
the light of the circumstances existing at the time it is delivered to a Subsequent Purchaser, not misleading. 

        (c)    Amendment to Offering Memorandum and Supplements.    The Issuer and the Guarantors will advise the Initial
Purchasers promptly of any proposal to amend or supplement the Offering Memorandum and will not effect such amendment or supplement without the consent of the Initial Purchasers, which consent shall
not unreasonably be withheld. Neither the consent of the Initial Purchasers, nor the Initial Purchasers' delivery of any such amendment or supplement, shall constitute a waiver of any of the
conditions set forth in Section 5 hereof. 

        (d)    Qualification of Securities for Offer and Sale.    The Issuer and the Guarantor will use their best efforts, in
cooperation with the Initial Purchasers, to qualify the Securities for offering and sale under the applicable securities laws of such jurisdictions as the Initial Purchasers may designate and will
maintain such qualifications in effect as long as required for the sale of the Securities; provided, however, that neither the Issuer nor the Guarantors shall be obligated to file any general consent
to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. 

        (e)    Rating of Securities.    The Issuer and the Guarantors shall take all reasonable action necessary to enable
Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. ("S&P"), and Moody's Investors
Service, Inc. ("Moody's") to provide their respective credit ratings of the Securities. 

        (f)    DTC, Euroclear and Clearstream Luxembourg.    The Issuer and the Guarantors will cooperate with the Initial
Purchasers and use their best efforts to permit the Securities to be eligible for clearance 

12

 

and settlement through the facilities of DTC, Euroclear Bank S.A./N.V., as operator of the Euroclear System ("Euroclear"), and Clearstream Banking,
société anonyme ("Clearstream Luxembourg"). 

        (g)    Use of Proceeds.    The Issuer will use the proceeds received by it from the sale of the Securities in the
manner specified in the Offering Memorandum under "Use of Proceeds." 

        (h)    Restriction on Sale of Securities.    During a period of 30 days from the date of the Offering
Memorandum, neither the Issuer nor the Guarantors will, without the prior written consent of the Initial Purchasers, directly or indirectly, issue, sell, offer or agree to sell, grant any option for
the sale of, or otherwise dispose of, any other debt securities issued or guaranteed by the Issuer, the Guarantors or any of the Guarantors' subsidiaries or securities of the Issuer, the Guarantors or
any of the Guarantors' subsidiaries that are convertible into, or exchangeable for, the Securities or such other debt securities, other than commercial paper issued in the ordinary course of business. 

        SECTION
4.    Payment of Expenses.    

        (a)    Expenses.    The Issuer and the Guarantors, jointly and severally, will pay all expenses incident to the
performance of their obligations under this Agreement, including (i) the preparation, printing and any filing of the Offering Memorandum and of each amendment or supplement thereto,
(ii) the preparation, reproduction and delivery to the Initial Purchasers of this Agreement, the Registration Rights Agreement, the Indenture and such other documents as may be required in
connection with the offering, purchase, sale and delivery of the Securities, (iii) the preparation, issuance and delivery of the certificates for the Securities to the Initial Purchasers,
including any charges of DTC in connection therewith; (iv) the fees and disbursements of the Issuer's and the Guarantors' counsel, accountants and other advisors, (v) the qualification
of the Securities under securities laws in accordance with the provisions of Section 3(d) hereof, including filing fees and the reasonable fees and disbursements of counsel for the Initial
Purchasers in connection therewith and in connection with the preparation of the Blue Sky Survey, any supplement thereto and any legal investment survey in an amount not to exceed $7,500,
(vi) the fees and expenses of the Trustee, including the fees and disbursements of counsel for the Trustee in connection with the Indenture and the Securities, and (vii) any fees payable
in connection with the rating of the Securities in accordance with Section 3(e). 

        (b)    Termination of Agreement.    If this Agreement is terminated by the Initial Purchasers in accordance with the
provisions of Section 5 or Section 10(a)(i) hereof, the Issuer and the Guarantors shall reimburse the Initial Purchasers for all of their out-of-pocket
expenses, including the reasonable fees and disbursements of counsel for the Initial Purchasers. 

        SECTION
5.    Conditions of Initial Purchasers' Obligations.    The obligations of the Initial Purchasers hereunder
are subject to the accuracy of the representations and warranties of the Issuer and the Guarantors contained in Section 1(a) hereof and in certificates of the Issuer or the Guarantors executed
by any officer of the Issuer or the Guarantors or any officer of any of the Guarantors' subsidiaries delivered pursuant to the provisions hereof, to the performance by the Issuer and the Guarantors of
their respective covenants and other obligations hereunder, and to the following further conditions: 

        (a)    Opinion of Counsel for the Issuer and Guarantors.    At the Closing Time, the Initial Purchasers shall have
received the favorable opinions, dated as of the Closing Time, of Keating, Muething & Klekamp, P.L.L., counsel for the Issuer and Guarantors, in form and substance reasonably satisfactory to
counsel for the Initial Purchasers, together with signed or reproduced copies of such letter for the other Initial Purchasers, to the effect set forth in Exhibit B  hereto and to such further
effects as counsel to the Initial
Purchaser may reasonably request. Counsel may also state that, insofar as such opinion involves factual matters, such counsel has relied, to the extent it deems proper, upon certificates of officers
of the Issuer or the Guarantors and certificates of public officials. 

13

 

        (b)    Opinion of Counsel for Initial Purchasers.    At the Closing Time, the Initial Purchasers shall have received
the favorable opinion, dated as of the Closing Time, of Sidley Austin Brown & Wood llp, counsel for the Initial Purchasers, in form and substance satisfactory to the Initial Purchasers. In
giving such opinion such counsel may rely, as to all matters governed by the laws of jurisdictions other than the law of the State of New York and the federal law of the United States, upon the
opinions of counsel satisfactory to the Initial Purchasers. Such counsel may also state that, insofar as such opinion involves factual matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Issuer, the Guarantors and the Guarantor's subsidiaries and certificates of public officials. 

        (c)    Officers' Certificate of Issuer.    At the Closing Time, there shall not have been, since the date hereof or
since the respective dates as of which information is given in the Final Offering Memorandum, any Material Adverse Effect with respect to the Issuer, and the Initial Purchasers shall have received
from the Issuer a certificate signed on behalf of the Issuer by the Chief Executive Officer, President or a Vice President and the chief financial or chief accounting officer of the Issuer dated as of
the Closing Time, to the effect that (i) there has been no such Material Adverse Effect, (ii) the representations and warranties of the Issuer in Section 1(a) hereof were true and
correct when made and are true and correct with the same force and effect as though expressly made at and as of the Closing Time, and (iii) the Issuer has complied in all material respects with
all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to the Closing Time. 

        (d)    Officers' Certificate of Guarantors.    At the Closing Time, there shall not have been, since the date hereof
or since the respective dates as of which information is given in the Offering Memorandum, any Material Adverse Effect with respect to the Guarantors or the Guarantors' subsidiaries, and the Initial
Purchasers shall have received from each Guarantor a certificate signed on behalf of such Guarantor by the Chief Executive Officer, President or a Vice President and the chief financial or chief
accounting officer of the Guarantor dated as of the Closing Time, to the effect that (i) there has been no such Material Adverse Effect, (ii) the representations and warranties of the
Guarantor in Section 1(a) hereof were true and correct when made and are true and correct with the same force and effect as though expressly made at and as of the Closing Time, and
(iii) the Guarantor has complied in all material respects with all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to the Closing Time. 

        (e)    Accountant's Comfort Letters.    At the time of the execution of this Agreement, the Initial Purchasers shall
have received from Ernst & Young LLP one or more letters, dated such date, in form and substance reasonably satisfactory to the Initial Purchasers, containing statements and information of the
type ordinarily included in accountants' "comfort letters" to the Initial Purchasers with respect to the financial statements and certain financial information contained in the Final Offering
Memorandum or incorporated therein by reference. At or before the Closing Time, the Initial Purchasers shall have
received from Arthur Andersen LLP (or its successor) a letter with respect to the Omni financial statements included in the Offering Memorandum and related matters, and such assurances as the Initial
Purchasers may require with respect to the maintenance by Arthur Andersen LLP, through at least the date of the Omni acquisition, of the quality control system, standards and continuity of personnel
contemplated by Securities and Exchange Commission Release No. 33-8070. 

        (f)    Bring-down Comfort Letter.    At the Closing Time, the Initial Purchasers shall have received from
Ernst & Young LLP, one or more letters, dated as of the Closing Time, to the effect that they reaffirm the statements made in their letter or letters furnished pursuant to subsection
(e) of this Section, except that the specified date referred to shall be a date not more than three business days prior to the Closing Time. 

        (g)    Maintenance of Rating.    At the Closing Time, the Securities shall be rated at least Baa2 by Moody's and BBB
by S&P, and the Issuer shall have delivered to the Initial Purchasers a letter, dated the Closing Time, from each such rating agency, or other evidence reasonably satisfactory to the Initial 

14

 

Purchasers, confirming that the Securities have been assigned such ratings; and since the date of this Agreement, there shall not have occurred a downgrading or withdrawal in the rating assigned to
the Securities or any of the Issuer's or the Guarantors' other securities by any nationally recognized statistical rating agency, and no such rating agency shall have publicly announced that it has
under surveillance or review, with possible negative implications, its rating of the Securities or any of the Issuer's or the Guarantors' other securities. 

        (h)    Registration Rights Agreement.    At the Closing Time, the Registration Rights Agreement shall have been duly
authorized, executed and delivered by the Issuer and the Guarantors. 

        (i)    Clearance and Settlement.    At the Closing Time, the Notes shall be eligible for clearance and settlement
through the facilities of DTC, and, if sales are made pursuant to Regulation S, Euroclear and Clearstream Luxembourg. 

        (j)    Credit Agreements.    Prior to the Closing Time, each Subsidiary Guarantor shall have executed and delivered a
guaranty to the lenders under each of (i) the Amended and Restated 364-Day Credit Agreement, dated as of April 30, 2002, among the Issuer, the Parent Guarantor and the
lenders and the agent listed on the signature pages thereto and (ii) the Three-Year Credit Agreement, dated January 31, 2002, as amended, among the Issuer, the Parent
Guarantor and the lenders and agents listed on the signature pages thereto (the "Credit Agreements"), guaranteeing the Issuer's obligations under the Credit Agreements in compliance with the terms
thereof and either (x) each Subsidiary Guarantor shall have executed and delivered a guarantee (the "Bridge Facility Guarantee") under the Bridge Facility Credit Agreement (the "Bridge
Facility"), dated as of May 8, 2002, among the Issuer, the Parent Guarantor and the lenders and agents listed on the signature pages thereto, guaranteeing the Issuer's obligations under the
Bridge Facility in compliance with the terms thereof or (y) the lenders under the Bridge Facility shall have waived the requirement that each Subsidiary Guarantor execute and deliver
the Bridge Facility Guarantee, and, in each case, the Initial Purchasers shall have been provided reasonably satisfactory evidence thereof. 

        (k)    Additional Documents.    At the Closing Time, counsel for the Initial Purchasers shall have been furnished with
such documents and opinions as they may reasonably require for the purpose of enabling them to pass upon the issuance and sale of the Securities and the issuance of the Guarantees as herein
contemplated, or in order to evidence the accuracy of any of the representations or warranties, or the fulfillment of any of the conditions, herein contained; and all proceedings taken by the Issuer
and the Guarantors in connection with the issuance and sale of the Securities as herein contemplated shall be reasonably satisfactory in form and substance to the Initial Purchasers and counsel for
the Initial Purchasers. 

        (l)    Termination of Agreement.    If any condition specified in this Section shall not have been fulfilled when and
as required to be fulfilled, this Agreement may be terminated by the Initial Purchasers by notice to the Issuer and the Guarantors at any time at or prior to the Closing Time, and such termination
shall be without liability of any party to any other party except as provided in Section 4 and except that Sections 7, 8 and 9 shall survive any such termination and remain in full force and
effect. 

        SECTION
6.    Subsequent Offers and Resales of the Securities.    

        (a)    Offer and Sale Procedures.    The Initial Purchasers, the Issuer and the Guarantors hereby establish and agree
to observe the following procedures in connection with the offer and sale of the Securities: 

        (i)    Offers and Sales in the United States or to U.S. Persons only to Qualified Institutional Buyers and outside the United States only to
Non-U.S. Persons.    The Securities have not been registered under the 1933 Act and, until so registered, may not be offered or sold within the United
States or to, or for the account or benefit of, U.S. Persons except pursuant to an exemption from the 

15

 

registration requirements of the 1933 Act or pursuant to Regulation S. Accordingly, each offer or sale of Securities by the Initial Purchasers, (i) as part of their distribution at any
time and (ii) otherwise until 40 days after the later of the commencement of the offering of Securities and the Closing Time (the "Distribution Compliance Period"), will be only
(A) in accordance with Rule 903 of Regulation S, or (B) to purchasers that are reasonably believed to qualify as Qualified Institutional Buyers. 

        (ii)    United Kingdom Selling Restrictions.    Each Initial Purchaser severally and not jointly represents and agrees
that it (A) has not offered or sold and, prior to the expiration of the period of six months from the Closing Time, will not offer or sell any Securities to persons in the United Kingdom except
to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances
which have not resulted and will not result in an offer to the public in the United Kingdom within the
meaning of the Public Offers of Securities Regulations 1995, as amended; (B) has only communicated or caused to be communicated and will only communicate or cause to be communicated any
invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 (the "FSMA")) received by it in connection with the
issue or sale of any Securities in circumstances which Section 21(1) of the FSMA does not apply to the Issuer or the Guarantors; and (C) has complied with and will comply with all
applicable provisions of the FSMA with respect to anything done by it in relation to the Securities in, from or otherwise involving the United Kingdom. 

        (iii)    Sales Pursuant to Regulation S.    In connection with the offer and sale of Securities in reliance on
Regulation S, each Initial Purchaser, severally and not jointly, represents, warrants and agrees that (A) the Initial Purchaser has and will comply with all applicable laws and
regulations in each jurisdiction where it acquires, offers, sells or delivers Securities or has in its possession or distributes any Offering Memorandum or any such other material, in all cases, at
its own expense, (B) such Initial Purchaser has not offered and sold the Securities, and will not offer and sell the Securities, (1) as part of its distribution at any time and
(2) otherwise until 40 days after the later of the commencement of the offering of the Securities and the Closing Date, except in accordance with Regulation S or Rule 144A
or any other available exemption from registration under the Securities Act, (C) none of such Initial Purchaser or any of its affiliates or any other person acting on its or their behalf has
engaged or will engage in any directed selling efforts with respect to the Securities, and all such persons have complied and will comply with the offering restrictions requirement of
Regulation S and (D) at or prior to the confirmation of sale of any Securities sold in reliance on Regulation S, it will have sent to each distributor, dealer or other person
receiving a selling concession, fee or other remuneration that purchase Securities from it during the Distribution Compliance Period a confirmation or notice to substantially the following effect: 

"The
Securities covered hereby have not been registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold within the United States or to, or for
the account or benefit of U.S. persons (i) as part of their distribution at any time or (ii) otherwise until 40 days after the later of the commencement of the offering of the
Securities and the date of original issuance of the Securities, except in accordance with Regulation S or Rule 144A or any other available exemption from registration under the
Securities Act. Terms used above have the meanings given to them by Regulation S." 

        Terms
used in this Section 6(iii) have the meanings given to them by Regulation S. 

        (iv)    Minimum Principal Amount.    No sale of the Securities to any Subsequent Purchaser shall be for less than
$1,000 principal amount, and no Security will be issued in a smaller principal amount. 

16

 

        (v)    No General Solicitation.    The Securities will be offered by approaching prospective Subsequent Purchasers on
an individual basis. No general solicitation or general advertising (within the meaning of Rule 502(c) under the 1933 Act) will be used in the United States in connection with the offering or
sale of the Securities. 

        (vi)    Purchases by Non-Bank Fiduciaries.    In the case of a non-bank Subsequent Purchaser
of a Security in the United States or who is a U.S. Person that is acting as a fiduciary for one or more third parties, each such third party shall, in the judgment of the Initial Purchasers, be a
Qualified Institutional Buyer. 

        (vii)    Subsequent Purchaser Notification.    The Initial Purchasers will take reasonable steps to inform persons
acquiring Securities from the Initial Purchasers that the Securities (A) have not been and, except as provided under the terms of the Registration Rights Agreement, will not be registered under
the 1933 Act, (B) are being sold to them without registration under the 1933 Act in reliance on Rule 144A or in accordance with another exemption from registration under the 1933 Act, as
the case may be, and (C) may not be offered, sold or otherwise transferred prior to the earlier of (x) the date when such Securities can be sold pursuant to Rule 144 under the
1933 Act without any limitations under clauses (c), (e), (f) and (h) of Rule 144 and (y) the date which is two years after the later of the original issuance date thereof
and the last date on which the Issuer or the Guarantors or any "affiliate" of the Issuer or the Guarantors was the owner of such Securities (or any predecessor Securities), except (1) to the
Issuer or the Parent Guarantor or any subsidiary thereof, (2) to the Initial Purchasers, (3) pursuant to a registration statement which has been declared effective under the 1933 Act,
(4) as long as the Securities are eligible for resale pursuant to Rule 144A, to a person whom the seller reasonably believes is a Qualified Institutional Buyer that is purchasing such
Securities for its own account or for the account of another Qualified Institutional Buyer to whom notice is given that the offer, sale or transfer is being made in reliance on Rule 144A,
(5) to an institutional "accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the 1933 Act ("Institutional Accredited Investor") for investment
and not with a view to, or for offer or sale in connection with the distribution thereof within the meaning of the 1933 Act (no sale or transfer of Securities to any Institutional Accredited Investor
shall be for less than $250,000 principal amount), (6) to a non-U.S. Person in an offshore transaction in accordance with Rule 903 or 904 or Regulation S or
(7) pursuant to any other available exemption from the registration requirements of the 1933 Act. 

        (viii)    Restrictions on Transfer.    The transfer restrictions and the other provisions set forth in the Officers'
Certificate (as defined in the Indenture) establishing the form and terms of the Securities pursuant to Section 3.1 of the Indenture, including the legend required thereby, shall apply to the
Securities except as otherwise agreed by the Issuer, the Guarantors and the Initial Purchasers. Following the sale of the Securities by the Initial Purchasers to Subsequent Purchasers pursuant to the
terms hereof, the Initial Purchasers shall not be liable or responsible to the Issuer or the Guarantors for any losses, damages or liabilities suffered or incurred by the Issuer or the Guarantors,
including any losses, damages or liabilities under the 1933 Act, arising from or relating to any resale or transfer of any Security. 

        (ix)    Placement Completion Date.    Banc One on behalf of the Initial Purchasers will notify the Issuer and the
Guarantors in writing as soon as possible, but in any event within five business days, after the Initial Purchasers have completed the placement of the Securities (the
"Placement Completion Date"). 

        (b)    Covenants of the Issuer and the Guarantors.    The Issuer and the Guarantors, jointly and severally, covenant
with the Initial Purchasers as follows: 

        (i)    Inquiries.    In connection with the original distribution of the Securities, the Issuer and the Guarantors
agree that, prior to any offer or resale of the Securities by the Initial Purchasers, 

17

 

the Initial Purchasers and counsel for the Initial Purchasers shall have the right to make reasonable inquiries into the business of the Issuer and the Guarantors and the Guarantors' subsidiaries.
The Issuer and the Guarantors also agree to provide answers to each prospective Subsequent Purchaser of Securities who so requests concerning the Issuer and the Guarantors and the Guarantors'
subsidiaries (to the extent that such information is available or can be acquired and made available to prospective Subsequent Purchasers without unreasonable effort or expense and to the extent the
provision thereof is not prohibited by applicable law) and the terms and conditions of the offering of the Securities, as provided in the Final Offering Memorandum. 

        (ii)    Integration.    Except following the effectiveness of the Registration Statement, the Issuer and the
Guarantors agree that they will not and will cause their respective Affiliates not to make any offer or sale of securities of the Issuer of any class if, as a result of the doctrine of "integration"
referred to in Rule 502 under the 1933 Act, such offer or sale would render invalid (for the purpose of (A) the sale of the Securities by the Issuer to the Initial Purchasers,
(B) the resale of the Securities by the Initial Purchasers to Subsequent Purchasers or (C) the resale of the Securities by such Subsequent Purchasers to others) the exemption from the
registration requirements of the 1933 Act provided by Section 4(2) thereof or by Rule 144A thereunder or Regulation S or otherwise. 

        (iii)    Rule 144A Information.    The Issuer and the Guarantors agree that, in order to render the Securities
eligible for resale pursuant to Rule 144A under the 1933 Act, while any of the Securities are "restricted securities" within the meaning of the 1933 Act, to make available, upon request, to any
holder or owner of Securities or prospective purchasers of Securities the information specified in Rule 144A(d)(4), unless the Issuer or the Guarantors furnish information to the Commission
pursuant to Section 13 or 15(d) of the 1934 Act (such information, whether made available to holders or prospective purchasers or furnished to the Commission, is referred to herein as
"Additional Information"). 

        (iv)    Restriction on Repurchases.    Until the expiration of two years after the original issuance of the
Securities, the Issuer and the Guarantors will not, and will cause their respective Affiliates not to, purchase or agree to purchase or otherwise acquire any Securities which are "restricted
securities" (as such term is defined under Rule 144(a)(3) under the 1933 Act), whether as beneficial owner or otherwise (except as agent acting as a securities broker on behalf of and for the
account of customers in the ordinary course of business in unsolicited broker's transactions) unless, immediately upon any such purchase, the Issuer, the Guarantors or any Affiliate shall submit such
Securities to the Trustee for cancellation. 

        SECTION
7.    Indemnification.    

        (a)    Indemnification of Initial Purchasers.    The Issuer and the Guarantors, jointly and severally, agree to
indemnify and hold harmless the Initial Purchasers and each person, if any, who controls any of the Initial Purchasers within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act as follows: 

        (i)    against
any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of any untrue statement or alleged untrue statement of a material
fact contained in any Preliminary Offering Memorandum or the Final Offering Memorandum (or any amendment or supplement thereto) or in any Additional Information, or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; 

        (ii)  against
any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or
any investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim 

18

 

whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission; provided that (subject to Section 7(d) below) any such settlement is effected
with the written consent of the Issuer and the Guarantors; and 

        (iii)  against
any and all expense whatsoever, as incurred (including the fees and disbursements of counsel chosen by the Initial Purchasers), reasonably incurred in
investigating, preparing to defend or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based
upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under (i) or (ii) above; 

provided, however, that this indemnity agreement shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Issuer or the Guarantors by the Initial
Purchasers expressly for use in the Offering Memorandum (or any amendment or supplement thereto); 

        (b)    Indemnification of Issuer, Guarantors, Directors and Officers.    Each Initial Purchaser severally agrees to
indemnify and hold harmless the Issuer, the Guarantors, their respective directors and officers, and each person, if any, who controls the Issuer or any Guarantor within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act against any and all loss, liability, claim, damage and expense described in the indemnity contained in subsection (a) of
this Section, as incurred, but only with respect
to untrue statements or omissions, or alleged untrue statements or omissions, made in the Offering Memorandum in reliance upon and in conformity with written information furnished to the Issuer or the
Guarantors by the Initial Purchasers expressly for use in the Offering Memorandum (or any amendment or supplement thereto). 

        (c)    Actions Against Parties; Notification.    Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not materially prejudiced as a result thereof and in any event shall not relieve it from any liability which it may have otherwise
than on account of this indemnity agreement. In the case of parties indemnified pursuant to Section 7(a) above, counsel to the indemnified parties shall be selected by Banc One on behalf of the
Initial Purchasers, and, in the case of parties indemnified pursuant to Section 7(b) above, counsel to the indemnified parties shall be selected by the Issuer and the Guarantors. An
indemnifying party may participate at its own expense in the defense of any such action; provided, however, that counsel to the indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. In no event shall the indemnifying parties be liable for fees and expenses of more than one counsel (in addition to any local counsel) separate from
their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or
circumstances. No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any litigation,
or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this
Section 7 or Section 8 hereof (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim and (ii) does not include a statement as to or an admission
of fault, culpability or a failure to act by or on behalf of any indemnified party. 

        (d)    Settlement Without Consent if Failure to Reimburse.    If at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees and expenses of 

19

 

counsel in accordance with the provisions hereof, such indemnifying party agrees that it shall be liable for any settlement of the nature contemplated by Section 7(a)(ii) effected
without its written consent if (i) such settlement is entered into more than 45 days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying
party shall have received notice of the terms of such settlement at least 30 days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed
such indemnified party in accordance with such request prior to the date of such settlement. 

        SECTION
8.    Contribution.    If the indemnification provided for in Section 7 hereof is for any reason
unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such indemnified party, as incurred, (i) in such proportion as is appropriate to reflect
the relative benefits received by the Issuer and the Guarantors on the one hand and the Initial Purchasers on the other hand from the
offering of the Securities pursuant to this Agreement or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the relative fault of the Issuer and the Guarantors on the one hand and of the Initial Purchasers on the other hand in
connection with the statements or omissions which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations. 

        The
relative benefits received by the Issuer and the Guarantors on the one hand and the Initial Purchasers on the other hand in connection with the offering of the Securities pursuant to
this Agreement shall be deemed to be in the same respective proportions as the total net proceeds from the offering of the Securities pursuant to this Agreement (before deducting expenses) received by
the Issuer and the total underwriting discount received by the Initial Purchasers bear to the aggregate initial offering price of the Securities. 

        The
relative fault of the Issuer and the Guarantors on the one hand and the Initial Purchasers on the other hand shall be determined by reference to, among other things, whether any such
untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Issuer or the Guarantors or by the Initial
Purchasers and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. 

        The
Issuer, the Guarantors and the Initial Purchasers agree that it would not be just and equitable if contribution pursuant to this Section 8 were determined by pro rata
allocation or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 8. The aggregate amount of losses, liabilities,
claims, damages and expenses incurred by an indemnified party and referred to above in this Section 8 shall be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing to defend or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue or alleged untrue statement or omission or alleged omission. 

        Notwithstanding
the provisions of this Section 8, no Initial Purchaser shall be required to contribute any amount in excess of the amount by which the total price at which the
Securities purchased by it and sold to a Subsequent Purchaser were sold to such Subsequent Purchaser exceeds the amount of any damages which such Initial Purchaser has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged omission. 

        No
person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. 

20

 

        For
purposes of this Section 8, each person, if any, who controls an Initial Purchaser within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
shall have the same rights to contribution as such Initial Purchaser, and each director of the Issuer and Guarantors, and each person, if any, who controls the Issuer or the Guarantors within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as the Issuer and the Guarantors. The Initial Purchasers' respective
obligations to contribute pursuant to this Section 8 are several in proportion to the principal amount of Securities set forth opposite their respective names in Schedule A hereto and
not joint. 

        SECTION
9.    Representations, Warranties and Agreements to Survive Delivery.    All representations, warranties and
agreements contained in this Agreement or in certificates of the Issuer or the Guarantors submitted pursuant hereto shall remain operative and in full force and effect, regardless of any investigation
made by or on behalf of the Initial Purchasers or controlling person, or by or on behalf of the Issuer or the Guarantors, and shall survive delivery of the Securities to the Initial Purchasers. 

        SECTION
10.    Termination of Agreement.    

        (a)    Termination; General.    The Initial Purchasers may terminate this Agreement, by notice to the Issuer and the
Guarantors, at any time at or prior to the Closing Time (i) if there has been, since the time of execution of this Agreement or since the respective dates as of which information is given in
the Offering Memorandum, any Material Adverse Effect, or (ii) if there has occurred any material adverse change in the financial markets in the United States or the international financial
markets, any outbreak of hostilities or escalation thereof or other calamity or crisis or any change or development involving a prospective change in national or international political, financial or
economic conditions, in each case the effect of which is such as to make it, in the judgment of Banc One on behalf of the Initial Purchasers, impracticable or inadvisable to market the Securities or
to enforce contracts for the sale of the Securities, or (iii) if trading in any securities of the Issuer or any Guarantor has been suspended or materially limited by the Commission or the
Nasdaq Stock Market, or if trading generally on the American Stock Exchange or the New York Stock Exchange or in the Nasdaq Stock Market has been suspended or materially limited or minimum or maximum
prices for trading have been fixed, or maximum ranges for prices have been required, by any of said exchanges or by such system or by order of the Commission, the National Association of Securities
Dealers, Inc. or any other governmental authority, or a material disruption has occurred in commercial banking or securities settlement or clearance services in the United States or in Europe,
or (iv) if a banking moratorium has been declared by either Federal, Nevada, New York or Washington authorities. 

        (b)    Liabilities.    If this Agreement is terminated pursuant to this Section, such termination shall be without
liability of any party to any other party except as provided in Section 4 hereof, and provided further that Sections 7, 8 and 9 shall survive such termination and remain in full force and
effect. 

        SECTION
11.    Default by One or More of the Initial Purchasers.    If one or more of the Initial Purchasers shall
fail at the Closing Time to purchase the Securities which it or they are obligated to purchase under this Agreement (the "Defaulted Securities"), the
Initial Purchasers shall have the right, but not the obligation, within 24 hours thereafter, to make arrangements for one or more of the non-defaulting Initial Purchasers, or any
other initial purchasers, to purchase all, but not less than all, of the Defaulted Securities in such amounts as may be agreed upon and upon the terms herein set forth; if, however, the Initial
Purchasers shall not have completed such arrangements within such 24-hour period, then: 

        (a)  if
the number of Defaulted Securities does not exceed 10% of the aggregate principal amount of the Securities, each of the non-defaulting Initial Purchasers
shall be obligated, severally and not jointly, to purchase the full amount thereof in the proportions that their respective 

21

 

obligations to purchase hereunder bear to the obligations of all non-defaulting Initial Purchasers, or 

        (b)  if
the number of Defaulted Securities exceeds 10% of the aggregate principal amount of the Securities, this Agreement shall terminate without liability on the part of
any non-defaulting Initial Purchaser. 

        No
action taken pursuant to this Section 11 shall relieve any defaulting Initial Purchaser from liability in respect of its default under this Agreement. 

        In
the event of any such default which does not result in a termination of this Agreement, either the Initial Purchasers or the Issuer and the Guarantors shall have the right to postpone
the Closing Time for a period not exceeding seven days in order to effect any required changes in the Offering Memorandum or in any other documents or arrangements. 

        SECTION
12.    Notices.    All notices and other communications hereunder shall be in writing and shall be deemed to
have been duly given if mailed or transmitted by any standard form of telecommunication. Notices to the Initial Purchasers shall be directed to Banc One Capital Markets, Inc. 1 Bank One Plaza,
Chicago, Illinois 60670, attention Investment Grade Securities; notices to the Issuer and the Guarantors shall be given to each of them at 6800 Cintas Blvd., P.O. Box 625737, Cincinnati, Ohio
45262-5737, attention President. 

        SECTION
13.    Parties.    This Agreement shall inure to the benefit of and be binding upon the Initial Purchasers,
the Issuer and the Guarantors and their respective successors. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, firm or corporation, other than
the Initial Purchasers, the Issuer and the Guarantors and their respective successors and the controlling persons and officers and directors referred to in Sections 7 and 8 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained. This Agreement and all conditions and provisions hereof are
intended
to be for the sole and exclusive benefit of the Initial Purchasers, the Issuer and the Guarantors and their respective successors, and said controlling persons and officers and directors and their
heirs and legal representatives, and for the benefit of no other person, firm or corporation. No purchaser of Securities from the Initial Purchasers shall be deemed to be a successor by reason merely
of such purchase. 

        SECTION
14.    GOVERNING LAW AND TIME.    THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK. EXCEPT AS OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME. 

        SECTION
15.    Effect of Headings.    The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof. 

22

   
        If the foregoing is in accordance with your understanding of our agreement, please sign counterparts hereof. 

	 	Very truly yours,
	

 	
CINTAS CORPORATION NO. 2

as Issuer

  
	

 	

By:	

/s/  ROBERT J. KOHLHEPP      
 Name:  Robert J. Kohlhepp

Title:    Chief Executive Officer
	

 	
CINTAS CORPORATION

as Parent Guarantor

  
	

 	

By:	

/s/  ROBERT J. KOHLHEPP      
 Name:  Robert J. Kohlhepp

Title:    Chief Executive Officer
	

 	

Subsidiary Guarantors
	

 	
AFFIRMED MEDICAL, INC.,

AMERICAN FIRST AID COMPANY,

CINTAS CORPORATION NO. 3,

CINTAS CORP. NO. 8, INC.,

CINTAS CORP. NO. 15, INC.,

CINTAS FIRST AID HOLDINGS CORPORATION, LLT, INC.,

RESPOND INDUSTRIES, INCORPORATED,

XPECT FIRST AID CORPORATION

  
	

 	

By:	

/s/  ROBERT J. KOHLHEPP      
 Name:  Robert J. Kohlhepp

Title:    Chief Executive Officer
	

 	
CINTAS—RUS, L.P.
	

 	

By:	
CINTAS CORP. NO. 8, INC., its General Partner

  
	

 	

By:	

/s/  ROBERT J. KOHLHEPP      
 Name:  Robert J. Kohlhepp

Title:    Chief Executive Officer

S-1

 

	CONFIRMED AND ACCEPTED,

    as of the date first above written:	 	 
	
BANC ONE CAPITAL MARKETS, INC.

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED

LEHMAN BROTHERS INC.

WILLIAM BLAIR & COMPANY, L.L.C.

MCDONALD INVESTMENTS INC.

U.S. BANCORP PIPER JAFFRAY INC.

FIRST UNION SECURITIES, INC.

MORGAN STANLEY & CO. INCORPORATED
	

By:	
BANC ONE CAPITAL MARKETS, INC.

  	
 	

 
	

By:	

/s/  ROBERT NORDLINGER      
 Name:  Robert Nordlinger

Title:    Director	
 	

 
	

By:	
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED

  
	

By:	

/s/  BRIT BARTTER      
 Name:  Britt Barter

Title:    Managing Director	
 	

 
	

Acting severally on behalf of themselves and as representatives of the Initial Purchasers named above.	
 	

 

S-2

  

 
 

Schedule 1    
  

	Initial Purchaser
 
	 	Principal Amount

of 5.125% Notes

due 2007
	 	Principal Amount

of 6% Notes

due 2012

	Banc One Capital Markets, Inc.	 	$	81,000,000	 	$	81,000,000
	Merrill Lynch, Pierce, Fenner & Smith

Incorporated	 	 	81,000,000	 	 	81,000,000
	Lehman Brothers Inc.	 	 	22,500,000	 	 	22,500,000
	William Blair & Company, L.L.C	 	 	9,000,000	 	 	9,000,000
	McDonald Investments Inc	 	 	9,000,000	 	 	9,000,000
	U.S. Bancorp Piper Jaffray Inc.	 	 	9,000,000	]	 	9,000,000
	First Union Securities, Inc.	 	 	9,000,000	 	 	9,000,000
	Morgan Stanley & Co. Incorporated	 	 	4,500,000	]	 	4,500,000
	 	 	
	 	

	 	Total	 	$	225,000,000	 	$	225,000,000
	 	 	
	 	

        1.    The
initial offering price of the Notes due 2007 and the Notes due 2012 shall be 99.655% and 99.340%, respectively, of the principal amount thereof, plus accrued
interest, if any, from the date of issuance. 

        2.    The
purchase price to be paid by the Initial Purchasers for the Notes due 2007 and the Notes due 2012 shall be 99.055% and 98.690%, respectively, of the principal amount
thereof. 

        3.    The
interest rate on the Notes due 2007 and the Notes due 2012 shall be 5.125% and 6%, respectively, per annum. 

Sch 1-1

  

 
 

Schedule 2    
  

Parent
Guarantor's non-Guarantor Significant Subsidiaries

  

None. 

Sch 2-1

  

 
 

Exhibit A    
  

FORM OF REGISTRATION RIGHTS AGREEMENT  

[TO FOLLOW] 

Exh-A-1

  

 
 

Exhibit B    
  

 
 

FORM OF OPINION KEATING, MUETHING & KLEKAMP, P.L.L.    
    
    [TO FOLLOW]    

Exh-B-1

QuickLinks

Exhibit 10.16

TABLE OF CONTENTS

Schedule 1

Schedule 2

Exhibit A

Exhibit B

FORM OF OPINION KEATING, MUETHING & KLEKAMP, P.L.L. [TO FOLLOW]<PAGE>

                                                                   EXHIBIT 10.15

                                                               EXECUTION VERSION

                              EMPLOYMENT AGREEMENT

         AGREEMENT, made this 28th day of May, 2002, by an among L.S. Wholesale,
Inc., a Massachusetts corporation with its main office in St. Thomas, U.S.V.I.
("Employer"), Little Switzerland, Inc., a Delaware corporation with its main
office in St. Thomas, U.S.V.I ("Little Switzerland"), and Robert L. Baumgardner
("Executive").

         WHEREAS, Employer and Little Switzerland wish to continue to employ
Executive as president and chief executive officer of Little Switzerland and
Employer and in various other capacities with respect to Little Switzerland and
the various companies, including Employer, that are controlled, directly or
indirectly, by Little Switzerland (Little Switzerland and such companies are
herein referred to, all and singularly as "Affiliates"); and

         WHEREAS, Executive wishes to be so employed;

         NOW THEREFORE, in consideration of the foregoing and the mutual
promises hereinafter set forth, Employer, Little Switzerland and Executive
mutually agree between and among themselves as follows:

1.       EMPLOYMENT

         Employer agrees to employ Executive, and Executive hereby agrees to be
         employed, on the terms and conditions hereinafter set forth.

2.       TERM

         Subject to the provisions of Section 5 hereof, the term of Executive's
         employment hereunder shall expire on August 18, 2004, which date is
         sometimes referred to herein as the "Expiration Date."

3.       COMPENSATION AND BENEFITS

         The compensation and benefits payable to Executive under this Agreement
shall be as follows:

         (A)      SALARY

                  For all services rendered by Executive under this Agreement,
                  including services rendered in all capacities to any
                  Affiliate, whether as employee, officer or director, Employer
                  shall pay Executive at an annual rate (the "Base Salary") of
                  Three Hundred Thousand Dollars ($300,000) for the fiscal year
                  ending in 2002 and Three Hundred Seven Thousand Two Hundred
                  ($307,200) for fiscal years ending thereafter. The Base Salary
                  shall be payable in periodic installments in accordance with
                  Employer's usual practice for payment of compensation to its
                  senior executives.

<PAGE>

         (B)      BONUS

                  For each of Little Switzerland's fiscal years ending in 2002,
                  2003 and 2004, the Executive shall be eligible to earn a
                  bonus. For the fiscal year ending in 2002 a bonus of $100,000
                  will be paid unless a higher bonus is determined to be
                  appropriate by the Compensation Committee, as defined below.
                  The amount of said bonus for subsequent fiscal years shall be
                  determined on the basis of performance criteria established by
                  the Compensation Committee of the Board of Directors of Little
                  Switzerland (the "Compensation Committee"). Executive's annual
                  target bonus is seventy-five percent (75%) of Base Salary.
                  Payment of the target bonus is contingent upon achievement of
                  all of the performance criteria, but, in the discretion of the
                  Compensation Committee, may be prorated if such performance
                  criteria are not fully satisfied. In the discretion of the
                  Compensation Committee, a higher bonus may be paid if the
                  performance criteria are exceeded. Nothing in this section
                  shall constitute an entitlement to a bonus should the
                  performance criteria not be met. The Compensation Committee
                  shall establish performance criteria for the fiscal years
                  ending in 2003 and 2004 no later than July 30, 2002 and 2003,
                  respectively, which criteria shall be based upon the
                  consolidated financial performance of Little Switzerland and
                  its Affiliates and other objectively measurable criteria for
                  Executive's performance as may be determined by said
                  Compensation Committee. For each such fiscal year, the
                  Compensation Committee shall determine whether the performance
                  criteria have been met and the amount of the bonus, if any,
                  payable. Such determination shall be binding and conclusive on
                  the parties hereto. The Compensation Committee shall make such
                  determination no later than ninety (90) days after the end of
                  the fiscal year in question and the bonus, if any, shall be
                  paid within ten (10) days after such determination.

         (C)      SPECIAL BENEFITS

                  (1)      MONTHLY COMMUTE

                           Executive shall be entitled to reimbursement for
                           reasonable expenses actually incurred in connection
                           with one round trip commute per month between his
                           place of residence in Boca Raton, Florida and his
                           place of residence in St. Thomas, U.S.V.I. for so
                           long as the corporate headquarters of Little
                           Switzerland and its Affiliates is located in St.
                           Thomas, U.S.V.I. Executive shall account promptly for
                           such expenses to Employer in the manner reasonably
                           prescribed from time to time by the Employer and in
                           compliance with Employer's policy.

                  (2)      AUTOMOBILE

                                        2
<PAGE>

                           Employer shall provide the Executive with the use, in
                           St. Thomas, U.S.V.I. (or the location of the
                           principal executive office of Little Switzerland and
                           its Affiliates), of an automobile owned or leased by
                           the Employer, and Employer shall be responsible for
                           all reasonable maintenance and operation costs of
                           such automobile.

                  (3)      APARTMENT

                           Employer shall provide Executive with use of an
                           apartment in St. Thomas, U.S.V.I., (for so
                           long as the corporate headquarters of Little
                           Switzerland and its Affiliates is located in
                           St. Thomas, U.S.V.I.) which is leased by
                           Employer and Employer shall pay the costs of
                           rent and utilities for such apartment.

                  (4)      TERM LIFE INSURANCE POLICY

                           Employer shall procure and pay all premiums necessary
                           to keep in force until the Expiration Date or any
                           earlier termination of Executive's employment a term
                           life insurance policy underwritten on the life of
                           Executive by an insurance company rated A+ or better
                           by A.M. Best and payable to a beneficiary named by
                           Executive with a death benefit of One Million Five
                           Hundred Thousand Dollars ($1,500,000), such policy to
                           be owned by Employee, provided, however, that
                           Employer's obligation to procure such a policy shall
                           be contingent upon Executive's submission to any
                           health exam and of any application required by the
                           insurer and an insurer's willingness to underwrite
                           such a policy at such insurer's standard rates for a
                           male of Executive's age. At such time as Employer's
                           obligation to pay premiums ceases, Employee shall be
                           assigned all of Employer's rights in such policy, if
                           any, and shall be free to maintain such policy in
                           force at his own cost and expense.

                  (5)      DISABILITY INCOME POLICY

                           Employer shall procure and pay all premiums necessary
                           to keep in force until the Expiration Date or any
                           earlier termination of Executive's employment a long
                           term disability income insurance policy for the
                           benefit of Executive underwritten by an insurance
                           company rated A+ or better by A.M. Best; such policy
                           shall provide a benefit equal to 60% of covered
                           compensation (Base Salary plus Target Bonus) to a
                           maximum benefit of $18,000 per month provided,
                           however, that Employer's obligation to procure such a
                           policy shall be contingent upon Executive's
                           submission to any health exam and of any application
                           required by the insurer and an insurer's willingness
                           to underwrite such a policy at such insurer's
                           standard rates for a male of Executive's age. Such
                           policy shall have a six-month qualifying period and
                           shall define a

                                       3
<PAGE>

                           qualifying disability in substantially the following
                           manner: an injury or sickness that requires the
                           insured to be under the regular care and attendance
                           of a doctor and prevents the insured from performing
                           the material duties of his regular occupation.

         (d)      REGULAR BENEFITS

                  Executive shall be entitled to four (4) weeks of vacation time
                  per year. Executive's entitlement to vacation shall, in all
                  other respects, be subject to Employer's vacation policies in
                  force from time to time for senior executive employees in
                  general. Executive shall be entitled to participate in any and
                  all employee benefit plans, medical insurance plans, life
                  insurance plans, disability income plans and other benefit
                  plans (including, without limitation, any 401(k) plans) from
                  time to time in effect for senior executives of the Employer.
                  Executive's participation in such plans shall be subject to
                  the terms of the applicable plan documents, generally
                  applicable policies of the Employer, applicable law and the
                  discretion of the Compensation Committee, Little Switzerland's
                  Board of Directors and any administrative or other committee
                  provided for in or contemplated by any such plan. Nothing
                  contained in this Agreement shall be construed to create any
                  obligation on the part of Employer to establish any such plan
                  or to maintain the effectiveness of any such plan which may be
                  in effect from time to time, nor shall Executive be deemed to
                  have any special or continuing rights to any benefit under any
                  such plan or plans (whether or not vested) by virtue of this
                  Agreement should the plan or plans in question be amended,
                  limited, discontinued, merged or terminated.

                  Executive also shall be entitled to reimbursement for all
                  ordinary and necessary business expenses incurred by Executive
                  in connection with the advancement of the Affiliates'
                  interests and the discharge of his duties and responsibilities
                  hereunder, including without limitation, all travel and
                  lodging expenses; provided however, that Executive accounts
                  promptly for such expenses to the Employer in the manner
                  reasonably prescribed from time to time by the Employer and in
                  compliance with Employer's policy.

         (e)      EXCLUSIVITY OF SALARY AND BENEFITS.

                  Executive shall not be entitled to any payments or benefits
                  from any Affiliate other than those expressly provided for
                  under this Agreement or under stock option plans, grants
                  and/or agreements which have been or may be established or
                  granted.

4.       CAPACITY AND EXTENT OF SERVICE

         (a)      Executive shall serve Little Switzerland and Employer as
                  President and Chief Executive Officer until the Expiration
                  Date and, without further compensation except as expressly
                  provided for herein, shall serve the

                                       4

<PAGE>

                  Affiliates in such other or additional offices in which he
                  may be reasonably requested to serve.

         (b)      Executive shall continue to serve as a member of the Board of
                  Directors of Little Switzerland until his successor is duly
                  elected and qualified; provided, however, that upon
                  termination of Executive's employment with Employer for any
                  reason, Executive agrees to promptly resign as a director of
                  Little Switzerland (if he is then serving in such position)
                  and to resign from such other positions of director or officer
                  of any Affiliate he then holds. Executive shall not vote in
                  his capacity as a director of Little Switzerland on any
                  matters related to this Agreement on which the Board of
                  Directors of Little Switzerland or any committee thereof shall
                  vote, including, without limitation, any termination pursuant
                  to Section 5 below; provided, however, if he participates in a
                  meeting of said Board of Directors then he may be included for
                  purposes of determining whether a quorum for such meeting
                  exists if he would otherwise be included for such purpose
                  under applicable law. Executive hereby agrees that he shall
                  not be entitled to, and hereby waives, any right to any salary
                  or compensation for his service as a director or officer of
                  Employer, Little Switzerland or any Affiliate, except as
                  expressly provided for in this Agreement.

         (c)      During his employment hereunder, Executive shall, subject to
                  the direction and supervision of Little Switzerland's Board of
                  Directors, devote his full business time, best efforts and
                  business judgment, skill and knowledge to the advancement of
                  the Affiliates' interests and to the discharge of his duties
                  and responsibilities hereunder. In accordance with the
                  foregoing, Executive shall not engage in any other business
                  activity, except as may be approved by said Board of
                  Directors; provided, however, that nothing herein shall be
                  construed as preventing Executive from:

                  (1)      investing his assets in a manner not otherwise
                           prohibited by this Agreement, and in such form or
                           manner as shall not require any material services on
                           his part in the operations or affairs of the
                           companies or other entities in which such investments
                           are made;

                  (2)      serving on the board of directors of any company
                           (other than a company that competes with any
                           Affiliate), provided that he shall not be required to
                           render any material services with respect to the
                           operations or affairs of any such company; or

                  (3)      engaging in religious, charitable or other community
                           or nonprofit activities which do not impair his
                           ability to fulfill his duties and responsibilities
                           under this Agreement.

                                       5
<PAGE>

5.       TERMINATION

         Notwithstanding the provisions of Section 2 hereof, Executive's
         employment shall terminate or may be terminated as hereinafter
         provided, without liability on the part of Employer, Little Switzerland
         or any other Affiliate except as specifically provided below:

         (A)      DEATH

                  In the event of Executive's death, Executive's employment
                  shall terminate on the date of his death.

         (B)      BY EMPLOYER FOR CAUSE

                  Executive's employment may be terminated for cause (as defined
                  below) by written notice to Executive setting forth in
                  reasonable detail the nature of such cause, such termination
                  to be effective upon delivery of such notice, provided that
                  the determination that cause for termination exists and that
                  said notice should be sent, shall have been made by vote or
                  written consent of at least two-thirds of the members of the
                  Board of Directors of Little Switzerland (the "Requisite
                  Directors") . Only the following shall constitute "cause" for
                  termination pursuant to this Section 5(b):

                  (1)      deliberate dishonesty of the Executive with respect
                           to the Employer, Little Switzerland or any Affiliate;

                  (2)      conviction of Executive of (A) a felony or (B) any
                           crime involving moral turpitude, deceit, dishonesty
                           or fraud;

                  (3)      gross negligence or willful misconduct of Executive
                           with respect to Employer, Little Switzerland or any
                           Affiliate;

                  (4)      failure to perform, to the reasonable satisfaction of
                           the Requisite Directors, a substantial portion of
                           Executive's duties and responsibilities, which
                           failure continues for more than thirty (30) days
                           after written notice of failure given to Executive by
                           person acting on behalf of the Requisite Directors;
                           or

                  (5)      material breach of Executive of any Executive's
                           obligations under this Agreement.

         (C)      TERMINATION BY THE EMPLOYER WITHOUT CAUSE

                  Executive's employment may be terminated without cause by
                  Little Switzerland upon the vote or written consent of the
                  Requisite Directors, such termination to be effective thirty
                  (30) days (or such lesser number of

                                       6

<PAGE>

                  days as may be determined by the Requisite Directors in
                  light of the then existing facts and circumstances)
                  following the giving of written notice to such
                  effect, provided, however, that Executive shall be
                  entitled to the "Severance Benefit" and "Bonus
                  Entitlement" provided for in Section 5(f) below
                  should his employment be terminated in reliance upon
                  this provision 5(c).

         (D)      TERMINATION BY EXECUTIVE WITH CAUSE

                  Executive may terminate his employment for material breach of
                  Employer's obligations under this Agreement on written notice
                  to the Secretary of Little Switzerland effective on not less
                  than thirty (30) nor more than ninety (90) days after the
                  giving of such notice, as determined by the Requisite
                  Directors.

         (E)      DISABILITY

                  If, due to a physical or mental injury, illness or condition,
                  Executive shall be disabled so as to be unable to perform
                  substantially all of his duties and responsibilities hereunder
                  (a "Substantial Disability"), Employer may designate another
                  person to act in place of Executive during the period of such
                  disability. For a period of up to six (6) months subsequent to
                  the commencement of a Substantial Disability, Employer shall
                  continue to pay to Executive his salary and benefits in
                  accordance with Section 3 hereof. If, at the end of the two
                  (2) month period following onset of a Substantial Disability
                  Executive shall continue to have a Substantial Disability,
                  Executive's employment may be terminated by vote or written
                  consent of the Requisite Directors but the obligation set
                  forth in the prior sentence shall continue. If any question
                  shall arise as to whether the Executive has or had a
                  Substantial Disability, or the period of same, Executive may,
                  or at the request of Little Switzerland will, submit to the
                  Secretary of Little Switzerland a certification in reasonable
                  detail as to whether Executive was or is subject to a
                  Substantial Disability and the period of same signed by a
                  licensed physician or psychiatrist, board-certified in a
                  relevant specialty (which shall not be general or family
                  practice) selected by Executive or Executive's guardian, to
                  which physician Employer has no reasonable objections, and
                  such certification shall for the purposes of this Agreement be
                  conclusive of the issue. If such question shall arise and
                  Executive shall fail to submit such certification, the
                  determination by vote or written consent of the Requisite
                  Directors shall be binding on Executive.

         (F)      SEVERANCE BENEFIT AND BONUS ENTITLEMENT

                  If Executive's employment is terminated pursuant to Section
                  5(c) hereof, on the effective date of such termination
                  Executive shall be paid, in addition to any sums then owed by
                  Employer to Executive, the following benefit by Employer: a
                  lump sum payment equal to Executive's Base

                                       7

<Page>

                  Salary payable for twelve (12) months plus Executive's
                  target bonus for one year (the "Severance Benefit").

                  In addition to the Severance Benefit, but not in duplication
                  of sums then owed Executive by Employer, Executive's
                  entitlement to a bonus for fiscal years of employment
                  completed or partially completed at the time of termination
                  pursuant to Section 5(c) shall be determined as follows:

                  (1)      for fiscal years completed as of such effective date,
                           but for which Executive's bonus has not been paid,

                           for the fiscal year ending in 2002, $100,000, or

                           for subsequent fiscal years, Executive's target
                           bonus referenced in Section 3(b) above; and

                  (2)      for fiscal years partially completed as of the time
                           of such termination pursuant to Section 5(c),
                           Executive's annual target bonus multiplied by a
                           fraction, the numerator of which is the number of
                           months in the fiscal year completed as of the
                           effective date of termination and the denominator of
                           which is 12 (the "Bonus Entitlement").

                  It is hereby agreed that the Severance Benefit determined
                  under this Section 5(f) shall be in the nature of liquidated
                  damages for any claim by Executive that his termination was in
                  violation of any statute or principle of tort, contract law or
                  equity which would provide him with damages in the event that
                  a court were to rule that his termination violated any right
                  on his part to be terminated only for just cause. No severance
                  benefit shall be paid for any termination effected pursuant to
                  Sections 5(a), 5(b), 5(d) or 5(e) above.

         (G)      ACTION BY DIRECTORS

                  In determining whether a two-thirds vote or action by written
                  consent has been obtained for the purposes of Sections 5(b) or
                  5(e) above, Executive shall not be deemed to be a member of
                  said Board, although his presence at a meeting may be counted
                  in the determination of whether a quorum existed at the start
                  of the meeting.

6.       TERMINATION SUBSEQUENT TO A CHANGE IN CONTROL

         (a)      In the event of a Terminating Event (as defined below) within
                  one (1) year from the date of a Change in Control (as defined
                  below), as of the date of such Terminating Event, Executive
                  shall be entitled to receive the following: the Severance
                  Benefit and the Bonus Entitlement, plus, without duplication,
                  any sums then owed Executive by his employer.

                                       8
<PAGE>

         (b)      For purposes of this Agreement, a "Terminating Event" shall
                  mean termination of Executive's employment by Executive for
                  Good Reason, as defined below, or termination of Executive's
                  employment by the Employer, Little Switzerland or their
                  respective successor entities for any reason other than death,
                  cause or disability pursuant to Sections 5(a), 5(b) or 5(e)
                  above.

         (c)      For purposes of this Agreement, "Change in Control" shall be
                  deemed to have occurred in the following instances: (i) when
                  any "person" (as such term is used in Sections 13(d) and
                  14(d)(2) of the Securities Exchange Act of 1934, as amended
                  (the "1934 Act")) becomes a "beneficial owner" (as such term
                  is defined in Rule 13d-3 promulgated under the 1934 Act),
                  directly or indirectly, of securities of Little Switzerland
                  representing fifty percent (50%) or more of the combined
                  voting power of Little Switzerland's then outstanding
                  securities; (ii) the sale, transfer or other disposition of
                  all or substantially all of the assets of Little Switzerland
                  to another person or entity; (iii) the stockholders of Little
                  Switzerland approve a plan of complete liquidation of Little
                  Switzerland; (iv) the merger, consolidation or other business
                  combination of Little Switzerland with any other corporation
                  or entity, other than (1) a merger or consolidation which
                  would result in the voting securities of Little Switzerland
                  outstanding immediately prior thereto continuing to represent
                  (either by remaining outstanding or by being converted into
                  voting securities of the surviving entity) more than fifty
                  percent (50%) of the combined voting power of the voting
                  securities of Little Switzerland or such surviving entity
                  outstanding immediately after such merger or consolidation or
                  (2) a merger or consolidation effected to implement a
                  recapitalization of Little Switzerland (or similar
                  transaction) in which no "person" (as hereinabove defined)
                  acquires more than fifty person (50%) of the combined voting
                  power of Little Switzerland's then outstanding securities; or
                  (v) the signing of an agreement, contract or other arrangement
                  providing for any of the transactions described above in this
                  definition of Change in Control.

         (d)      For purposes of this Agreement, "Good Reason" shall be deemed
                  to include the following:

                  (i)      a reduction of the Executive's salary or benefits; or

                  (ii)     a significant change in the Executive's
                           responsibilities and/or duties which constitutes,
                           when compared to the Executive's responsibilities
                           and/or duties before the Change of Control, a
                           demotion; or

                  (iii)    a material loss of title or office.

         (e)      The Executive shall provide the Employer with notice and an
                  opportunity to cure any of the events listed in Section 6.d.
                  above and shall not be

                                       9

<PAGE>

                  entitled to compensation pursuant to this Section 6 unless the
                  Employer fails to cure within ten (10) days of such notice.

7.       NONCOMPETITION AND CONFIDENTIAL INFORMATION

         (A)      NONCOMPETITION

                  During the period of the Executive's employment by the
                  Employer (whether such employment terminates before, on or
                  after the Expiration Date), and for a period of up to eight
                  (8) months thereafter (the "Noncompetition Period"), the
                  Executive will not, directly or indirectly, whether as owner,
                  partner, shareholder, consultant, agent, employee, co-venturer
                  or otherwise, or through any Person (as defined in Section 9
                  hereof), compete in the jewelry or watch business in any
                  Affiliate's market area in any country or other jurisdiction
                  (excluding the contiguous 48 states of the United States and
                  Hawaii but including Alaska) in which any Affiliate conducts
                  business as of the effective date of termination) with the
                  business conducted by any Affiliate during the period of his
                  employment hereunder (any or the foregoing, "Prohibited
                  Employment"). For the purposes of illustration and not by way
                  of limitation, Prohibited Employment would not include
                  employment with a jeweler or watch seller in the State of
                  Florida . In the event Executive contemplates engaging in any
                  activity which might reasonably be considered Prohibited
                  Employment, he shall provide, Employer, by notice to the
                  Secretary of Little Switzerland, with an accurate description
                  of the nature and scope of such activity. On receipt of such
                  description, Employer may elect as follows: to enforce this
                  covenant with respect to the notified activity for the balance
                  of the Noncompetition Period, in which case Employer shall pay
                  Executive $6,000 per month for each consecutive month during
                  the Noncompetition Period (up to eight) that it wishes to keep
                  the foregoing covenant in force; or to waive enforcement of
                  the covenant in respect of the notified activity, in which
                  case the Executive shall be free to engage in the notified
                  activity for the balance of the Noncompetition Period. During
                  the Noncompetition Period Executive shall not attempt to hire
                  any employee of Little Switzerland or the Employer, assist in
                  such hiring by any other Person, encourage any such employee
                  to terminate his or her relationship with Little Switzerland
                  or the Employer, or solicit or encourage any customer of
                  Little Switzerland or the Employer to terminate its
                  relationship with Little Switzerland or the Employer or to
                  conduct with any other Person any business or activity which
                  such customer conducts or could conduct with Little
                  Switzerland or the Employer.

         (B)      CONFIDENTIAL INFORMATION

                  The Executive will not disclose to any other Person (except as
                  required by applicable law or in connection with the
                  performance of his duties and responsibilities hereunder), or
                  use for his own benefit or gain, any

                                       10
<PAGE>

                  confidential information of Little Switzerland or the Employer
                  obtained by him incident to his employment with the
                  Employer. The term "confidential information"
                  includes, without limitation, financial information,
                  business plans, customer, mailing and vendor lists,
                  employee lists and in-house telephone directories,
                  leases and lease data, merchandise standards, pricing
                  and commission structures, merchandise cost or
                  discount information, prospects and opportunities
                  (such as lending relationships financial product
                  developments, or possible acquisitions or
                  dispositions of business or facilities) of any
                  Affiliate but does not include any information which
                  has become part of the public domain by means other
                  than the Executive's non-observance of his
                  obligations hereunder.

         (C)      RELIEF; INTERPRETATION

                  The Executive agrees that any Affiliate shall be entitled to
                  injunctive relief for any breach by him of the covenants
                  contained in this Section 7. In the event that any provision
                  of this Section 7 shall be determined by any court of
                  competent jurisdiction to be unenforceable by reason of its
                  being extended over to great a period of time, too large a
                  geographic area, or too great a range of activities, it shall
                  be interpreted to extend only over the maximum period of time,
                  geographic area, or range of activities as to which it may be
                  enforceable.

8.       NO CONFLICTING AGREEMENTS

         The Executive hereby represents and warrants that the execution of
         this Agreement and the performance of his obligations
         hereunder will not breach nor be in conflict with any other
         agreement to which he is a party or is bound, and that he is
         not now subject to any covenants against competition or
         similar covenants which would affect the performance of his
         obligations hereunder.

9.       DEFINITION OF "PERSON"

         For purpose of this Agreement: the term "Person" shall mean an
         individual, a corporation, an association, a partnership, a limited
         liability company, an estate, a trust and any other entity or
         organization.

10.      TAXATION OF PAYMENTS

         The Employer all undertake to make deductions, withholdings
         and tax reports with respect to payments and benefits under
         this Agreement to the extent that it reasonably and in good
         faith believes that it is required to make such deductions,
         withholdings and tax reports. All payments made by the
         Employer under this Agreement shall be net of any tax or other
         amounts required to be withheld by the Employer under
         applicable law. Nothing in this Agreement shall be construed
         to require the Employer to make any payments to compensate the
         Executive for any adverse tax

                                       11
<PAGE>

         effect associated with any payments or benefits or for any
         deduction or withholding from any payment or benefit.

11.      ARBITRATION OF DISPUTES

         Any controversy of claim arising out of or relating to this Agreement
         or the breach thereof or otherwise arising out of the Executive's
         employment or the termination of that employment (including, without
         limitation, any claims of unlawful employment discrimination whether
         based on age or otherwise) shall, to the fullest extent permitted by
         law, be settled by arbitration in any forum and form agreed upon by the
         parties or, in the absence of such an agreement, under the auspices of
         the American Arbitration Association ("AAA") in Wilmington, Delaware in
         accordance with the Employment Dispute Resolution Rules of the AAA,
         including, but not limited to, the rules and procedures applicable to
         the selection of arbitrators. In the event that any person or entity
         other than a party to this Agreement may be a party with regard to any
         such controversy or claim shall be submitted to arbitration subject to
         such other person or entity's agreement. Judgment upon the award
         rendered by the arbitrator may be entered in any court having
         jurisdiction thereof. This Section 11 shall be specifically
         enforceable. Notwithstanding the foregoing, this Section 11 shall not
         preclude either party from pursuing a court action for the sole purpose
         of obtaining a temporary retraining order or a preliminary injunction
         in circumstances in which such relief is appropriate; PROVIDED,
         HOWEVER, that any other relief shall be pursued through an arbitration
         proceeding pursuant to this Section 11.

12.      ASSIGNMENT; SUCCESSORS AND ASSIGNS; SURVIVAL OF CERTAIN PROVISIONS

          Neither the Employer nor the Executive may make any assignment
          of this Agreement or any interest herein, by operation of law
          or otherwise, without the prior written consent of the other
          party; PROVIDED, HOWEVER, that the Employer may assign its
          rights under this Agreement without the consent of the
          Executive in the event that the Employer shall hereinafter
          effect a reorganization, consolidate with or merge into any
          other Person, or transfer all or substantially all of its
          properties or assets to any other Person. This Agreement shall
          inure to the benefit of and be binding upon the Employer,
          Little Switzerland and the Executive, their respective
          successors, executors, administrators, heirs and permitted
          assigns. The provisions of Sections 5(c), 5(f), 6 and 7 shall
          survive the Expiration Date and any earlier termination of
          employment.

13.      ENFORCEABILITY

         If any portion or provision of this Agreement shall to any
         extent be declared illegal or unenforceable by a court of
         competent jurisdiction, then the remainder of this Agreement,
         or the application of such portion or provision in
         circumstances other than those as to which it is so declared

                                       12

<PAGE>

         illegal or unenforceable, shall not be affected thereby, and
         each portion and provision of this Agreement shall be valid
         and enforceable to the fullest extent permitted by law.

14.      WAIVER

         No waiver of any provision hereof shall be effective unless
         made in writing and signed by the waiving party. The failure
         of any party to require the performance of any term or
         obligation of this Agreement, or the waiver by any party of
         any breach of this Agreement, shall not prevent any subsequent
         enforcement of such term or obligation or be deemed a waiver
         of any subsequent breach.

15.      NOTICES

         All notices, requests, demands and other communications
         provided for by this Agreement shall be sufficient if in
         writing and delivered in person or sent by registered or
         certified mail, postage prepaid, to the Executive at the last
         address the Executive has filed in writing with the Employer
         or, in the case of the Employer or Little Switzerland, to the
         attention of the corporate Secretary of Little Switzerland.
         Any such notice shall be deemed to be effective and therefore
         given upon the following dates; (i) if such notice is
         delivered in person the date on which such delivery is done;
         or (ii) if such notice is sent by registered or certified
         mail, postage prepaid, the date which is six (6) days
         subsequent to the date on which such notice is mailed.

16.      AMENDMENT

         This Agreement may be amended or modified only by a written
         instrument signed by the Executive and by a duly authorized
         representative of the Employer and Little Switzerland.

17.      GOVERNING LAW; CONSENT TO JURISDICTION

         It is the parties' intention that the terms of employment
         under this Agreement shall be construed under and be governed
         in all respects by the laws of the state of Delaware. To the
         extent that any court action is permitted consistent with or
         to enforce Section 11 of this Agreement, the parties hereby
         consent to the jurisdiction of the courts of Delaware.
         Accordingly, with respect to any such court action, the
         Executive (a) submits to the personal jurisdiction of such
         courts; (b) consents to service of process; and (c) waives any
         other requirement (whether imposed by statute, rule of court,
         or otherwise) with respect to personal jurisdiction or service
         of process.

18.      CONTINUATION OF EMPLOYMENT

                                       13
<PAGE>

         If, following the Expiration Date, Executive remains employed
         by Employer, or continues in any office with any Affiliate,
         such employment or continuation shall not result in nor be
         construed as an extension of the Expiration Date nor a renewal
         of any term of employment or right hereunder. If, following
         the Expiration Date, Executive remains employed, such
         employment shall be on an "at-will" basis meaning the either
         Executive or Employer may terminate such employment with or
         without cause and without payment of any severance benefit
         except as expressly provided in Section 6 above.

19.      TIME FOR PAYMENT; INTEREST ON LATE PAYMENTS

         If any payment to Executive is required hereunder and such
         payment is required to be made subsequent to the termination
         of Executive's employment with Employer, such payment shall be
         made no later than thirty (30) days following the later of the
         date the obligation to make such payment has arisen or the
         amount of such payment can be determined. Failing that,
         interest at the rate of eight percent (8%) per annum shall be
         payable on any late payment and Executive shall be entitled to
         recover reasonable attorneys fees and costs necessary to
         recover same.

20.      COUNTERPARTS

         This Agreement may be executed in any number of counterparts,
         each of which when so executed and delivered shall be taken to
         be an original, but such counterparts shall together
         constitute one and the same document.

21.      COMPLETE AGREEMENT

         This Agreement contains the entire understanding of the
         parties with respect to the transactions contemplated hereby
         and supersedes all prior agreements, arrangements or
         understandings with respect thereto. There are no
         restrictions, agreements, promises, representations,
         warranties, covenants or undertakings by or on behalf of any
         party hereto with respect to the transactions contemplated
         hereby or thereby, other than those expressly set forth herein
         or therein; notwithstanding the foregoing, nothing stated
         herein shall be deemed to modify or negate prior stock option
         grants made by Little Switzerland to Executive or to modify or
         negate the terms of Employer's employee benefit plans in
         respect of Executive's participation therein.

       IN WITNESS WHEREOF, this Agreement, has been executed as a sealed
instrument by each of the Employer and Little Switzerland, by their duly
authorized officers and/or directors, and by the Executive, as of the date first
above written.

                           L.S. WHOLESALE, INC.

                                       14

<PAGE>

                           By:_____________________
                           Name:  Patrick Hopper
                           Title: Chief Financial Officer

                           LITTLE SWITZERLAND, INC.

                           By______________________
                           Name:  Patrick Hopper
                           Title: Chief Financial Officer

                           EXECUTIVE:

                           -----------------------
                           Robert L. Baumgardner

                                       15

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00042-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00042-of-00352.parquet"}]]