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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 10-K

(Mark One)


ý

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended May 31, 2002

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from                              to                             

Commission File No. 0-11399


CINTAS CORPORATION
(Exact name of registrant as specified in its charter)

Incorporated under
the Laws of Washington
(State or other jurisdiction of
incorporation or organization)
  31-1188630
IRS Employer ID No.

6800 Cintas Boulevard
P.O. Box 625737 Cincinnati, Ohio
(Address of principal executive offices)

 

45262-5737
(Zip Code)

 

 

 

Phone: (513) 459-1200
(Telephone number of principal executive offices)

Securities Registered Pursuant to Section 12(b) of the Act:

None

Securities Registered Pursuant to Section 12(g) of the Act:

Common Stock, No Par Value
(Title of class)


        Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes  ý     No  o

        Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained to the best of the Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to the Form 10-K.  o

        The aggregate market value of Common Stock held by nonaffiliates is $7,592,648,178 based on a closing price of $44.63 on August 15, 2002. As of August 15, 2002, 170,124,315 shares of no par value Common Stock were issued and outstanding.

Documents Incorporated by Reference

        Portions of the Registrant's Annual Report to Shareholders for 2002 furnished to the Commission pursuant to Rule 14a-3(b) and portions of the Registrant's Proxy Statement to be filed with the Commission for its 2002 annual meeting are incorporated by reference in Parts II and III as specified.





CINTAS CORPORATION
INDEX TO ANNUAL REPORT
ON FORM 10-K

 
   
   
  Page
Part I            

 

 

Item 1.


Business.

 

3
    Item 2. Properties.   4
    Item 3. Legal Proceedings.   4
    Item 4. Submission of Matters to a Vote of Security Holders.   5

Part II

 

 

 

 

 

 

 

 

Item 5.


Market for Registrant's Common Equity and Related Stockholder Matters.

 

6
    Item 6. Selected Financial Data.   6
    Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.   6
    Item 7A. Quantitative and Qualitative Disclosure About Market Risk.   6
    Item 8. Financial Statements and Supplementary Data.   6
    Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.   7

Part III

 

 

 

 

 

 

 

 

Item 10.


Directors and Executive Officers of the Registrant.

 

7
    Item 11. Executive Compensation.   7
    Item 12. Security Ownership of Certain Beneficial Owners and Management.   7
    Item 13. Certain Relationships and Related Transactions.   7

Part IV

 

 

 

 

 

 

 

 

Item 14.


Exhibits, Financial Statement Schedules and Reports on Form 8-K.

 

7

2



PART I

ITEM 1.  BUSINESS

        Cintas Corporation is a Washington corporation, and is primarily a corporate identity uniform company which also provides ancillary services as discussed below. Cintas was founded in 1968 by Richard T. Farmer, Chairman of the Board, when he left his family's industrial laundry business in order to develop uniform programs using an exclusive new fabric. In the early 1970's, Cintas acquired the family industrial laundry business.

        Cintas provides a highly specialized service to businesses of all types—from small service and manufacturing companies to major corporations that employ thousands of people. Cintas classifies its businesses into two operating segments: Rentals and Other Services. The Rentals operating segment designs and manufactures corporate identity uniforms which it rents, along with other items, to its customers. The Other Services operating segment involves the design, manufacture and direct sale of uniforms to its customers as well as the sale of ancillary services including sanitation supplies, first aid and safety products and services and cleanroom supplies.

        The rental markets served by Cintas are highly fragmented and competition for this business varies at each of Cintas' locations. There are other companies in the uniform rental business which have financial resources comparable to those of Cintas, although much of the competition consists of smaller local and regional firms. In certain instances, local competitors may also have financial resources comparable to those of Cintas in a particular market. Cintas believes that the primary competitive factors that affect its operations are quality, service, design and price, in that order.

        The service provided to the rental markets served by Cintas principally consists of the rental and cleaning of uniforms as well as providing on-going uniform replacements as required to each customer. Cintas also offers ancillary products which includes the rental or sale of entrance mats, fender covers, towels, mops, linen products and first aid and safety products and services.

        Due to its diverse customer base and average account size, the loss of one account would not have a significant financial impact on Cintas.

        In its sale of customized uniforms, Cintas competes on a national basis with other uniform suppliers and manufacturers.

        Cintas operates fourteen manufacturing facilities, which provide for a substantial amount of its standard uniform needs. Additional products are purchased from several outside suppliers. Because of Cintas' ability to manufacture much of its own uniform needs, the loss of one vendor would not have a significant impact on Cintas. Cintas purchases fabric, used in its manufacturing process, from several suppliers. Cintas is not aware of any circumstances that would hinder its ability to obtain these materials.

        Cintas does not anticipate any material capital expenditures for environmental remediation that would have a material effect on its financial condition. Cintas is not aware of any material non-compliance with environmental laws.

        At May 31, 2002, Cintas employed approximately 27,000 employees of which approximately 703 were represented by labor unions. Cintas considers its relationship with its employees to be satisfactory.

3



        The table sets forth the revenues derived from each service provided by Cintas.

 
  Year Ended May 31
 
  2002
  2001
  2000
 
  (in thousands)

Rentals   $ 1,753,368   $ 1,610,606   $ 1,424,892
Other Services     517,684     550,094     477,099
   
 
 
    $ 2,271,052   $ 2,160,700   $ 1,901,991
   
 
 


ITEM 2.  PROPERTIES

        Cintas occupies 365 facilities located in 292 cities, of which 152 facilities are leased for various terms ranging from monthly to the year 2019. Cintas expects that it will be able to renew its leases on satisfactory terms. All other properties are owned. The corporate offices provide centrally located administrative functions including accounting, finance, marketing and computer system development and support. Cintas operates processing plants that house administrative, sales and service personnel and the necessary equipment involved in the cleaning of uniforms and bulk items. Branch operations provide administrative, sales and service functions. Cintas operates seven distribution facilities and has fourteen manufacturing plants. Cintas also operates facilities that distribute first aid products. Cintas considers the facilities it operates to be adequate for their intended use. Cintas owns or leases 8,510 vehicles.

        The following chart provides additional information concerning Cintas' facilities:

Type of Facility

  # of Facilities
Processing Plant   170

Branch

 

103

Cleanroom

 

10

First Aid Facility

 

36

Distribution Center

 

7

Manufacturing Facility

 

14

Direct Sales Office

 

25
   

Total

 

365
   


ITEM 3.  LEGAL PROCEEDINGS

        Cintas is subject to legal proceedings and claims arising from the ordinary course of its business, including personal injury, customer contract and employment claims. In the opinion of management, the aggregate liability, if any, with respect to such actions will not have a material adverse effect on the financial position or results of operations of Cintas. Cintas maintains insurance coverage against certain liabilities that it may incur in its operations from time to time.

        In acquiring Unitog in March 1999, Cintas became a potentially responsible party, and thus faces the possibility of joint and several liability under the Comprehensive Environmental Response, Compensation and Liability Act in connection with alleged environmental contamination in an area near a rental facility in Tempe, Arizona. This facility, located near the South Indian Bend Wash Federal Superfund site, has been tested for soil and groundwater contamination. Soil testing at Cintas' facility detected volatile organic compounds, and Cintas promptly took steps to remediate the contamination.

4



Groundwater testing in the area of Cintas' property has detected a very low level of volatile organic compound contamination. The United States Environmental Protection Agency in March 1999 issued a Record of Decision to the effect that groundwater contamination in the vicinity of Cintas' plant does not warrant remediation at this time. Instead, the low levels of groundwater contamination near Cintas' facility will be monitored and allowed to attenuate naturally. The Record of Decision requires active groundwater remediation in other parts of the site, which are believed to be unrelated to Cintas. According to the Record of Decision, the EPA estimates that the 30 year net present value of costs to be incurred to remediate and monitor groundwater contamination at the site is $22 million. It is possible that the EPA will attempt to recover from the potentially responsible parties the costs it has incurred to date with respect to the site as well as the costs it expects to incur going forward. To date, no specific claim has been asserted against Cintas. Thus it is not possible at this time to estimate Cintas' loss exposure, if any, with respect to this matter.

        As part of the Agreement and Plan of Merger between Unitog Company and Cintas, Cintas performed environmental testing at nine previously untested Unitog laundry facilities. The testing resulted in the discovery of soil and groundwater contamination at certain of these sites. As a result of all of the environmental matters noted above, Cintas recorded a charge to operating expense of $5 million during the third quarter of fiscal 1999 to reflect its current estimate of the additional costs to be incurred relative to these sites. At May 31, 2002, Cintas has an undiscounted liability of $3.97 million for these environmental matters.

        As part of the acquisition of Omni, Cintas performed environmental testing at ten previously untested Omni laundry facilities. The testing resulted in the discovery of soil and groundwater contamination at certain of these sites. Cintas estimated that remedial action would cost approximately $9 million to clean up these sites, which Cintas has accrued as a liability as of the date of the acquisition of Omni. Under its agreement to acquire Omni, Cintas has agreed to pay for any remedial action, up to the first $5 million, and the parties agreed that remedial costs of $3 million would be treated as a purchase price adjustment and credited to Cintas.

        Cintas is party to additional litigation, none of which is expected to have a material impact on operating results. This litigation includes lawsuits challenging the legality of certain ancillary charges on invoices. The estimated liability, if any, relating to these lawsuits has not been determined but is not expected to have a material adverse effect on results. In addition, a class action suit was filed in the State of California alleging that Cintas violated the California overtime pay laws applicable to its service sales representatives, which Cintas believed to be exempt employees. Management of Cintas has established estimated accruals to the extent that liabilities exist for such matters and believes that any liability in excess of amounts accrued will not have a material impact on the financial statements.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        None in the fourth quarter of fiscal 2002.

5



PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

        "Market for Registrant's Common Stock and Security Holder Information" on page 55 of the Registrant's Annual Report to Shareholders for 2002 is incorporated herein by reference. Dividend information is incorporated by reference to the Consolidated Statements of Shareholders' Equity on page 26. Dividends on the outstanding Common Stock are paid annually and amounted to $.25 and $.22 per share in fiscal 2002 and 2001, respectively.

Equity Compensation Plan Information

Plan category

  Number of shares
to be issued
upon exercise of
outstanding options

  Weighted average
exercise price of
outstanding options

  Number of shares
remaining available
for future issuance
under equity
compensation plans

*Equity compensation plans approved by shareholders   5,861,097   $ 28.31   7,528,050

Equity compensation plans not approved by shareholders

 


 

 


 

   
 
 
 
Total

 

5,861,097

 

$

28.31

 

7,528,050
   
 
 

*
This amount includes a stock option plan assumed through the acquisition of Unitog Company in March 1999. Options outstanding under this plan at May 31, 2002, were 16,828, at an average of $26.17 per share. There are no options available for future issuance under the Unitog plan.


ITEM 6.  SELECTED FINANCIAL DATA

        The "Eleven Year Financial Summary" on page 23 of the Registrant's Annual Report to Shareholders for 2002 is incorporated herein by reference.


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
                 OF OPERATIONS

        "Management's Discussion and Analysis of Financial Condition and Results of Operations" commencing on page 48 of the Registrant's Annual Report to Shareholders for 2002 is incorporated herein by reference.


ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

        "Quantitative and Qualitative Disclosure About Market Risk" on page 50 of the Registrant's Annual Report to Shareholders for 2002 is incorporated herein by reference.


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

        The following Financial Statements of the Registrant shown on pages 24 through 47 of its Annual Report to Shareholders for 2002 are incorporated herein by reference:

    Consolidated Statements of Income for the years ended May 31, 2002, 2001 and 2000
    Consolidated Balance Sheets as of May 31, 2002 and 2001
    Consolidated Statements of Shareholders' Equity for the years ended May 31, 2002, 2001 and 2000
    Consolidated Statements of Cash Flows for the years ended May 31, 2002, 2001 and 2000
    Notes to Consolidated Financial Statements
    Report of Independent Auditors

6



ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
                 FINANCIAL DISCLOSURE

        None.


PART III

        Items 10., 11., 12., and 13. of Part III are incorporated by reference to the Registrant's Proxy Statement for its 2002 Annual Shareholders' Meeting to be filed with the Commission pursuant to Regulation 14A.


PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORT ON FORM 8-K

    (a)(1) Financial Statements. All financial statements required to be filed by Item 8 of this Form and included in this report are listed in Item 8. No additional financial statements are filed because the requirements for paragraph (d) under Item 14 are not applicable to Cintas.

    (a)(2) Financial Statement Schedule:

    For each of the three years in the period ended May 31, 2002.

    Schedule II: Valuation and Qualifying Accounts and Reserves.

    All other schedules are omitted because they are not applicable, or not required, or because the required information is included in the Consolidated Financial Statements or Notes thereto.

    (a)(3) Exhibits.

Exhibit
Number

  Description of Exhibit

  Filing
Status

3.1   Restated Articles of Incorporation   (1)

3.2

 

By-laws

 

(1)

3.3

 

Amendments to the Articles of Incorporation of Cintas Corporation

 

(2)

4.1

 

Indenture dated as of May 28, 2002 among Cintas Corporation No. 2, as issuer, Cintas Corporation, as parent guarantor, the subsidiary guarantors thereto and Wachovia Bank, National Association, as trustee

 

filed herewith

4.2

 

Form of 5 1 / 8 % Senior Note due 2007

 

filed herewith

4.3

 

Form of 6% Senior Note due 2012

 

filed herewith

4.4

 

Registration Rights Agreement dated as of May 28, 2002 among Cintas Corporation No. 2, as issuer, Cintas Corporation, as parent guarantor, the subsidiary guarantors named therein and the initial purchasers named therein

 

filed herewith

* Management Compensatory Contracts

 

 

10.1*

 

Incentive Stock Option Plan

 

(3)

10.2*

 

Partners' Plan, as Amended

 

(4)

10.3*

 

1990 Directors' Stock Option Plan

 

(5)

10.4*

 

1994 Directors' Stock Option Plan

 

(6)

 

 

 

 

 

7



10.5

 

Agreement and Plan of Merger and Reorganization dated January 12, 1998 by and among Uniforms To You and Company, Cintas Merger Sub, Inc. —Illinois, other acquired companies, certain shareholders and Cintas Corporation

 

(7)

10.6

 

Agreement and Plan of Merger dated January 9,1999 by and among Unitog Company, Cintas Image Acquisition Company and Cintas Corporation

 

(8)

10.7

 

Amendment No. 1 to Agreement and Plan of Merger dated March 23, 1999 by and among Unitog Company, Cintas Image Acquisition Company and Cintas Corporation

 

(9)

10.8*

 

Unitog Company 1992 Stock Option Plan

 

(10)

10.9*

 

Amendment No. 1 to Unitog Company 1992 Stock Option Plan

 

(11)

10.10*

 

Unitog Company 1997 Stock Option Plan

 

(12)

10.11*

 

1999 Cintas Corporation Stock Option Plan

 

(13)

10.12*

 

Director's Deferred Compensation Plan

 

(14)

10.14

 

Stock purchase agreement between Cintas Corporation and Filuxel SA dated as of March 15, 2002

 

(15)

10.15

 

Bridge loan agreement dated May 8, 2002 among Cintas Corporation No. 2, as borrower, Cintas Corporation as a guarantor, the lenders, Bank One, NA, as agent, and Merrill Lynch Bank USA, as syndication agent

 

(16)

10.16

 

Purchase Agreement dated as of May 28, 2002 among Cintas Corporation No. 2, as issuer, Cintas Corporation, as parent guarantor, the subsidiary guarantors named therein and the initial purchasers named therein

 

filed herewith

13

 

2002 Annual Report to Shareholders (a)

 

filed herewith

21

 

Subsidiaries of the Registrant

 

filed herewith

23

 

Consent of Independent Auditors

 

filed herewith

99.1

 

Certification of Chief Executive Officer

 

filed herewith

99.2

 

Certification of Chief Financial Officer

 

filed herewith

(a)
Only portions of the 2002 Annual Report to Shareholders specifically incorporated by reference are filed herewith. A supplemental paper copy of this report will be provided to the SEC for informational purposes.

(1)
Incorporated by reference to Cintas' Annual Report on Form 10-K for the year ended May 31, 1989.

(2)
Incorporated by reference to Cintas' 1994 Proxy Statement.

(3)
Incorporated by reference to Cintas' Registration Statement No. 33-23228 on Form S-8 filed under the Securities Act of 1933.

8


(4)
Incorporated by reference to Cintas' Registration Statement No. 33-56623 on Form S-8 filed under the Securities Act of 1933.

(5)
Incorporated by reference to Cintas' Registration Statement No. 33-71124 on Form S-8 filed under the Securities Act of 1933.

(6)
Incorporated by reference to Cintas' Proxy Statement for its 1994 Annual Shareholders Meeting.

(7)
Incorporated by reference to Cintas' Form 8-K dated April 8, 1998.

(8)
Incorporated by reference to the Unitog Company's Form 8-K dated January 9, 1999.

(9)
Incorporated by reference to Cintas' Form 8-K dated March 24, 1999.

(10)
Incorporated by reference to the Unitog Company's Form 10-K for the fiscal year ended January 26, 1992.

(11)
Incorporated by reference to the Unitog Company's Form 10-K for the fiscal year ended January 30, 1994.

(12)
Incorporated by reference to the Unitog Company's 1997 Proxy Statement.

(13)
Incorporated by reference to Cintas' Form 10-Q for the quarter ended November 30, 2000.

(14)
Incorporated by reference to Cintas' Form 10-Q for the quarter ended November 30, 2001.

(15)
Incorporated by reference to Cintas' Form 10-Q for the quarter ended February 28, 2002.

(16)
Incorporated by reference to Cintas' Form 8-K dated May 13, 2002.

(b)
A Form 8-K was filed on May 13, 2002 to report the acquisition of the stock of Omni Services, Inc.

9



SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

    CINTAS CORPORATION

 

 

 

 
DATE SIGNED:  August 26, 2002   By: /s/   ROBERT J. KOHLHEPP       
Robert J. Kohlhepp
Chief Executive Officer

        Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature
  Capacity
  Date

/s/  
RICHARD T. FARMER       
Richard T. Farmer

 

Chairman of the Board of Directors

 

August 26, 2002

/s/  
ROBERT J. KOHLHEPP       
Robert J. Kohlhepp

 

Chief Executive Officer and Director

 

August 26, 2002

/s/  
SCOTT D. FARMER       
Scott D. Farmer

 

President, Chief Operating Officer and Director

 

August 26, 2002

/s/  
JAMES J. GARDNER       
James J. Gardner

 

Director

 

August 26, 2002

/s/  
DONALD P. KLEKAMP       
Donald P. Klekamp

 

Director

 

August 26, 2002

/s/  
WILLIAM C. GALE       
William C. Gale

 

Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

 

August 26, 2002

10


CINTAS CORPORATION

Schedule II—Valuation and Qualifying Accounts and Reserves
(In Thousands)

 
   
  Additions
   
   
Description

  Balance At
Beginning
of Year

  (1)
Charged to
Costs and
Expenses

  (2)
Charged to
Other
Accounts

  (3)


Deductions

  Balance
at End of
Year

Allowance for Doubtful Accounts                              
 
May 31, 2000

 

$

8,754

 

$

1,994

 

$

1,123

 

$

4,507

 

$

7,364
   
 
 
 
 
  May 31, 2001   $ 7,364   $ 5,300   $ 1,154   $ 5,053   $ 8,765
   
 
 
 
 
  May 31, 2002   $ 8,765   $ 3,365   $ 3,516   $ 6,417   $ 9,229
   
 
 
 
 
Reserve for Obsolete Inventory                              
 
May 31, 2000

 

$

31,853

 

$

1,220

 

$

821

 

$

11,590(4

)

$

22,304
   
 
 
 
 
  May 31, 2001   $ 22,304   $ 2,892   $ (97 ) $ 5,025   $ 20,074
   
 
 
 
 
  May 31, 2002   $ 20,074   $ 5,057   $ 1,302   $ 7,575   $ 18,858
   
 
 
 
 

(1)
Represents amounts charged to expense to increase reserve for estimated future bad debts or to increase reserve for obsolete inventory. Amounts related to inventory are computed by performing a thorough analysis of future marketability by specific inventory item.

(2)
Represents an increase in the appropriate balance sheet reserve due to acquisitions during the respective period.

(3)
Represents reductions in the balance sheet reserve due to the actual write-off of non-collectible accounts receivable or the physical disposal of obsolete inventory items. These amounts do not impact Cintas' income statement.

(4)
Represents inventory values either contributed to charitable organizations or destroyed. A reserve for obsolescence was recognized as an expense in prior periods. Most of these amounts were attributed to inventories from acquired companies.

11




QuickLinks

FORM 10-K
INDEX TO ANNUAL REPORT
PART I
PART II
PART III
PART IV
SIGNATURES
Schedule II—Valuation and Qualifying Accounts and Reserves (In Thousands)

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Exhibit 4.1

CINTAS CORPORATION NO. 2,

Issuer,

CINTAS CORPORATION,

Parent Guarantor,

and

the Subsidiary Guarantors Party Hereto,

to

WACHOVIA BANK, NATIONAL ASSOCIATION,

Trustee


INDENTURE


Dated as of May 28, 2002

Debt Securities



Reconciliation and Tie between
Trust Indenture Act of 1939 (the "Trust Indenture Act")
and Indenture

Trust Indenture Act Section

  Indenture Section
Section 310(a)(1)   6.7
  (a)(2)   6.7
  (b)   6.8
Section 312(a)   7.1
  (b)   7.2
  (c)   7.2
Section 313(a)   7.3
  (b)(2)   7.3
  (c)   7.3
  (d)   7.3
Section 314(a)   7.4
  (c)(1)   1.2
  (c)(2)   1.2
  (e)   1.2
  (f)   1.2
Section 316(a) (last sentence)   1.1
  (a)(1)(A)   5.2, 5.12
  (a)(1)(B)   5.13
  (b)   5.8
Section 317(a)(1)   5.3
  (a)(2)   5.4
  (b)   10.3
Section 318(a)   1.8

Note: This reconciliation and tie shall not, for any purpose, be deemed to be part of this Indenture.

2



TABLE OF CONTENTS

ARTICLE 1 DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

Section 1.1

 

Definitions

 

1
    Act   2
    Additional Amounts   2
    Affiliate   2
    Attributable Debt   2
    Authenticating Agent   2
    Authorized Newspaper   2
    Authorized Officer   2
    Bearer Security   3
    Board of Directors   3
    Board Resolution   3
    Business Day   3
    Capital Stock   3
    Clearstream   3
    Commission   3
    Company   3
    Company Order or Company Request   3
    Consolidated Net Worth   3
    Conversion Event   3
    Corporate Trust Office   3
    Corporation   3
    Coupon   3
    Credit Agreement or Credit Agreements   4
    Currency   4
    CUSIP number   4
    Debt   4
    Defaulted Interest   4
    Dollar or $   4
    Domestic Subsidiary   4
    EC Treaty   4
    EMU   4
    Euro   4
    Euroclear   4
    Event of Default   4
    Foreign Currency   4
    Funded Debt   4
    Government Obligations   4
    Guarantee or Guarantees   5
    Guarantor or Guarantors   5
    Guarantor's Board of Directors   5
    Guarantor's Board Resolution   5
    Guarantor's Officers' Certificate   5
    Guarantor Request and Guarantor Order   5
    Holder   5
    Indenture   5
    Indexed Security   5
    Initial Subsidiary Guarantor or Initial Subsidiary Guarantors   5

i


    Interest   6
    Interest Payment Date   6
    Judgment Currency   6
    Legal Holidays   6
    Lien   6
    Maturity   6
    New York Banking Day   6
    Office or Agency   6
    Officers' Certificate   6
    Opinion of Counsel   6
    Original Issue Discount Security   6
    Outstanding   6
    Parent Guarantor   7
    Paying Agent   7
    Permitted Liens   8
    Person   8
    Place of Payment   8
    Predecessor Security   8
    Principal Property   8
    Redemption Date   8
    Redemption Price   8
    Registered Security   8
    Regular Record Date   8
    Required Currency   8
    Responsible Officer   8
    Security or Securities   8
    Security Register or Security Registrar   8
    Significant Subsidiary   8
    Significant Subsidiary Guarantor   8
    Special Record Date   9
    Stated Maturity   9
    Subsequent Subsidiary Guarantor   9
    Subsidiary   9
    Subsidiary Guarantor or Subsidiary Guarantors   9
    Trust Indenture Act   9
    Trustee   9
    United States   9
    U.S. Depository or Depository   9
    U.S. Alien   9
    Vice President   10
Section 1.2   Compliance Certificates and Opinions   10
Section 1.3   Form of Documents Delivered to Trustee   10
Section 1.4   Acts of Holders   11
Section 1.5   Notices, etc. to Trustee and Company and Guarantors   12
Section 1.6   Notice to Holders of Securities; Waiver   13
Section 1.7   Language of Notices   13
Section 1.8   Conflict with Trust Indenture Act   13
Section 1.9   Effect of Headings and Table of Contents   13
Section 1.10   Successors and Assigns   14
Section 1.11   Separability Clause   14
Section 1.12   Benefits of Indenture   14

ii


Section 1.13   Governing Law   14
Section 1.14   Legal Holidays   14
Section 1.15   Counterparts   14
Section 1.16   Judgment Currency   14
Section 1.17   No Security Interest Created   15
Section 1.18   Limitation on Individual Liability   15

ARTICLE 2 SECURITIES FORMS

Section 2.1

 

Forms Generally

 

15
Section 2.2   Form of Trustee's Certificate of Authentication   16
Section 2.3   Securities in Global Form   16

ARTICLE 3 THE SECURITIES

Section 3.1

 

Amount Unlimited; Issuable in Series

 

16
Section 3.2   Currency; Denominations   19
Section 3.3   Execution, Authentication, Delivery and Dating   19
Section 3.4   Temporary Securities   21
Section 3.5   Registration, Transfer and Exchange   22
Section 3.6   Mutilated, Destroyed, Lost and Stolen Securities   25
Section 3.7   Payment of Interest and Certain Additional Amounts; Rights to Interest and Certain Additional Amounts Preserved   26
Section 3.8   Persons Deemed Owners   27
Section 3.9   Cancellation   27
Section 3.10   Computation of Interest   27

ARTICLE 4 SATISFACTION AND DISCHARGE OF INDENTURE

Section 4.1

 

Satisfaction and Discharge

 

28
Section 4.2   Defeasance and Covenant Defeasance   29
Section 4.3   Application of Trust Money   32

ARTICLE 5 REMEDIES

Section 5.1

 

Events of Default

 

32
Section 5.2   Acceleration of Maturity; Rescission and Annulment   34
Section 5.3   Collection of Debt and Suits for Enforcement by Trustee   35
Section 5.4   Trustee May File Proofs of Claim   36
Section 5.5   Trustee May Enforce Claims without Possession of Securities or Coupons   36
Section 5.6   Application of Money Collected   37
Section 5.7   Limitations on Suits   37
Section 5.8   Unconditional Right of Holders to Receive Principal and any Premium, Interest and Additional Amounts   38
Section 5.9   Restoration of Rights and Remedies   38
Section 5.10   Rights and Remedies Cumulative   38
Section 5.11   Delay or Omission Not Waiver   38
Section 5.12   Control by Holders of Securities   38
Section 5.13   Waiver of Past Defaults   39
Section 5.14   Waiver of Usury, Stay or Extension Laws   39
Section 5.15   Undertaking for Costs   39

ARTICLE 6 THE TRUSTEE

Section 6.1

 

Certain Rights of Trustee

 

39
Section 6.2   Notice of Defaults   41

iii


Section 6.3   Not Responsible for Recitals or Issuance of Securities   41
Section 6.4   May Hold Securities   41
Section 6.5   Money Held in Trust   41
Section 6.6   Compensation and Reimbursement   42
Section 6.7   Corporate Trustee Required; Eligibility   42
Section 6.8   Resignation and Removal; Appointment of Successor   42
Section 6.9   Acceptance of Appointment by Successor   44
Section 6.10   Merger, Conversion, Consolidation or Succession to Business   45
Section 6.11   Appointment of Authenticating Agent   45

ARTICLE 7 HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY

Section 7.1

 

Company and Guarantors to Furnish Trustee Names and Addresses of Holders

 

47
Section 7.2   Preservation of Information; Communications to Holders   47
Section 7.3   Reports by Trustee   47
Section 7.4   Reports by Company and Guarantors; Rule 144A Information   47

ARTICLE 8 CONSOLIDATION, MERGER AND SALES

Section 8.1

 

Company May Consolidate, etc., Only on Certain Terms

 

48
Section 8.2   Successor Person Substituted for Company   49
Section 8.3   Parent Guarantor May Consolidate, Etc., Only on Certain Terms   49
Section 8.4   Successor Person Substituted for Parent Guarantor   50
Section 8.5   Subsidiaries May Consolidate, Etc., Only on Certain Terms   50
Section 8.6   Successor Person Substituted for Subsidiary Guarantor   51

ARTICLE 9 SUPPLEMENTAL INDENTURES

Section 9.1

 

Supplemental Indentures without Consent of Holders

 

51
Section 9.2   Supplemental Indentures with Consent of Holders   52
Section 9.3   Execution of Supplemental Indentures   53
Section 9.4   Effect of Supplemental Indentures   54
Section 9.5   Reference in Securities to Supplemental Indentures   54
Section 9.6   Conformity with Trust Indenture Act   54
Section 9.7   Notice of Supplemental Indenture   54

ARTICLE 10 COVENANTS

Section 10.1

 

Payment of Principal, any Premium, Interest and Additional Amounts

 

54
Section 10.2   Maintenance of Office or Agency   54
Section 10.3   Money for Securities Payments to Be Held in Trust   55
Section 10.4   Additional Amounts   57
Section 10.5   Limitation on Liens; Restriction on Sale-Leasebacks   57
Section 10.6   Legal Existence   59
Section 10.7   Subsequent Subsidiary Guarantors   59
Section 10.8   Waiver of Certain Covenants   59
Section 10.9   Company Statement as to Compliance; Notice of Certain Defaults   60
Section 10.10   Guarantor Statement as to Compliance; Notice of Certain Defaults   60

ARTICLE 11 REDEMPTION OF SECURITIES

Section 11.1

 

Applicability of Article

 

61
Section 11.2   Election to Redeem; Notice to Trustee   61
Section 11.3   Selection by Trustee of Securities to be Redeemed   61
Section 11.4   Notice of Redemption   61
Section 11.5   Deposit of Redemption Price   62

iv


Section 11.6   Securities Payable on Redemption Date   62
Section 11.7   Securities Redeemed in Part   63

ARTICLE 12 SINKING FUNDS

Section 12.1

 

Applicability of Article

 

64
Section 12.2   Satisfaction of Sinking Fund Payments with Securities   64
Section 12.3   Redemption of Securities for Sinking Fund   64

ARTICLE 13 REPAYMENT AT THE OPTION OF HOLDERS

Section 13.1

 

Applicability of Article

 

80

ARTICLE 14 SECURITIES IN FOREIGN CURRENCIES

Section 14.1

 

Applicability of Article

 

65

ARTICLE 15 MEETINGS OF HOLDERS OF SECURITIES

Section 15.1

 

Purposes for Which Meetings May Be Called

 

65
Section 15.2   Call, Notice and Place of Meetings   65
Section 15.3   Persons Entitled to Vote at Meetings   66
Section 15.4   Quorum; Action   66
Section 15.5   Determination of Voting Rights; Conduct and Adjournment of Meetings   67
Section 15.6   Counting Votes and Recording Action of Meetings   67

ARTICLE 16 GUARANTEE

Section 16.1

 

Guarantee

 

68
Section 16.2   Operation of Guarantees   69
Section 16.3   Release of Guarantee   69

v


        INDENTURE, dated as of May 28, 2002 (the "Indenture"), among CINTAS CORPORATION NO. 2, a corporation duly organized and existing under the laws of the State of Nevada (hereinafter called the "Company"), having its principal executive office located at 6800 Cintas Boulevard, P.O. Box 625737, Cincinnati, Ohio 45262-5737, CINTAS CORPORATION, a corporation duly organized and existing under the laws of the State of Washington (hereinafter called the "Parent Guarantor") having its principal executive office located at 6800 Cintas Boulevard, P.O. Box 625737, Cincinnati, Ohio 45262-5737, the Subsidiary Guarantors referred to below and WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association duly organized and existing under the laws of the United States of America (hereinafter called the "Trustee"), having its Corporate Trust Office located at 5847 San Felipe, Suite 1050, Houston, Texas 77057.

RECITALS

        The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its senior unsecured debentures, notes or other evidences of indebtedness (hereinafter called the "Securities"), unlimited as to principal amount, to bear such rates of interest, to mature at such time or times, to be issued in one or more series and to have such other provisions as shall be fixed as hereinafter provided.

        The Company has duly authorized the execution and delivery of this Indenture. All things necessary to make this Indenture a valid agreement of the Company, in accordance with its terms, have been done.

        For value received, each Guarantor named herein has duly authorized the execution and delivery of this Indenture to provide for the issuance of the Guarantees provided for herein. All things necessary to make this Indenture a valid agreement of each such Guarantor, in accordance with its terms, have been done.

        This Indenture is subject to the provisions of the Trust Indenture Act of 1939, as amended, and the rules and regulations of the Securities and Exchange Commission promulgated thereunder that are required to be part of this Indenture and, to the extent applicable, shall be governed by such provisions.

        NOW, THEREFORE, THIS INDENTURE WITNESSETH:

        For and in consideration of the premises and the purchase of the Securities by the Holders (as herein defined) thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities or of any series thereof and any Coupons (as herein defined) as follows:


ARTICLE 1

DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

        Section 1.1     Definitions.     

        Except as otherwise expressly provided in or pursuant to this Indenture or unless the context otherwise requires, for all purposes of this Indenture:


        Certain terms used principally in certain Articles hereof are defined in those Articles.

        "Act", when used with respect to any Holders, has the meaning specified in Section 1.4.

        "Additional Amounts" means any additional amounts which are required hereby or by any Security, under circumstances specified herein or therein, to be paid by the Company in respect of certain taxes, assessments or other governmental charges imposed on Holders specified therein and which are owing to such Holders.

        "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control", when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have the meanings correlative to the foregoing.

        "Attributable Debt" means, as to any particular lease at any date as of which the amount thereof is to be determined, the total net amount of rent (discounted from the respective due dates thereof at the rate per annum set forth or implicit in the terms of such lease, compounded semiannually) required to be paid by the lessee under such lease during the remaining term thereof. The net amount of rent required to be paid under any such lease for any such period shall be the total scheduled amount of the rent payable by the lessee with respect to such period, but may exclude amounts required to be paid on account of maintenance and repairs, insurance, taxes, assessments, water rates and similar charges. In the case of any lease that is terminable by the lessee upon the payment of a penalty or other termination payment, such amount shall be the amount determined assuming termination upon the first date such lease may be terminated (in which case the amount shall also include the amount of the penalty or termination payment, but no rent shall be considered as required to be paid under such lease subsequent to the first date upon which it may be so terminated).

        "Authenticating Agent" means any Person authorized by the Trustee pursuant to Section 6.11 to act on behalf of the Trustee to authenticate Securities of one or more series.

        "Authorized Newspaper" means a newspaper, in an official language of the place of publication or in the English language, customarily published on each day that is a Business Day in the place of publication, whether or not published on days that are Legal Holidays in the place of publication, and of general circulation in each place in connection with which the term is used or in the financial community of each such place. Where successive publications are required to be made in Authorized Newspapers, the successive publications may be made in the same or in different newspapers in the same city meeting the foregoing requirements and in each case on any day that is a Business Day in the place of publication.

        "Authorized Officer" means, when used with respect to the Company, the Chief Executive Officer, the Chairman of the Board of Directors, the President, Senior Vice President, any Vice President, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company.

2



        "Bearer Security" means any Security in the form established pursuant to Section 2.1 which is payable to bearer.

        "Board of Directors" means the board of directors of the Company or any committee of that board duly authorized to act generally or in any particular respect for the Company hereunder.

        "Board Resolution" means a copy of one or more resolutions, certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, delivered to the Trustee.

        "Business Day", with respect to any Place of Payment or other location, means, unless otherwise specified with respect to any Securities pursuant to Section 3.1, any day other than a Saturday, Sunday or other day on which banking institutions in such Place of Payment or other location are authorized or obligated by law, regulation or executive order to close.

        "Capital Stock" means, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated) in the equity interests of such Person, including without limitation, (i) with respect to a corporation, common stock, preferred stock and any other capital stock, (ii) with respect to a partnership, partnership interests (whether general or limited), and (iii) with respect to a limited liability company, limited liability company interests.

        "Clearstream" means Clearstream Banking, société anonyme , Luxembourg.

        "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, as amended, or, if at any time after the execution of this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time.

        "Company" means the Person named as the "Company" in the first paragraph of this instrument until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Person, and any other obligor upon the Securities.

        "Company Order" or "Company Request" means, respectively, a written order or request, as the case may be, signed in the name of the Company by the Chairman of the Board of Directors, the President, a Senior Vice President or a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company, and delivered to the Trustee.

        "Consolidated Net Worth" means at any time the consolidated stockholders' equity of the Parent Guarantor and its Subsidiaries calculated on a consolidated basis as of such time.

        "Conversion Event" means the cessation of use of (i) a Foreign Currency both by the government of the country or the confederation which issued such Foreign Currency and for the settlement of transactions by a central bank or other public institutions of or within the international banking community, (ii) the Euro both within the EMU and for the settlement of transactions by public institutions of or within the EMU or (iii) any currency unit or composite currency other than the Euro for the purposes for which it was established.

        "Corporate Trust Office" means the principal corporate trust office of the Trustee at which at any particular time its corporate trust business shall be administered, which office at the date of original execution of this Indenture is located at 5847 San Felipe, Suite 1050, Houston, Texas 77057.

        "Corporation" includes corporations and limited liability companies and, except for purposes of Article Eight, associations, companies and business trusts.

        "Coupon" means any interest coupon appertaining to a Bearer Security.

3



        "Credit Agreement" or "Credit Agreements" means, collectively, (i) the Amended and Restated 364-day Credit Agreement, dated April 30, 2002 (as amended from time to time), among the Company, the Parent Guarantor and the lenders and agents named therein relating to the Company's $150,000,000 revolving credit facility, (ii) the Three-Year Credit Agreement, dated January 31, 2002 (as amended from time to time), among the Company, the Parent Guarantor and the lenders and agents named therein relating to the Company's $150,000,000 revolving credit facility, (iii) the Bridge Facility Credit Agreement, dated as of May 8, 2002, among the Company, the Parent Guarantor and the lenders and agents named therein relating to the Company's $500,000,000 credit facility and (iv) any future credit facility or lending arrangement for indebtedness of the Company or the Parent Guarantor between the Company and/or the Parent Guarantor and one or more third party lenders.

        "Currency", with respect to any payment, deposit or other transfer in respect of the principal of or any premium or interest on or any Additional Amounts with respect to any Security, means Dollars or any Foreign Currency in which such payment, deposit or other transfer is required to be made by or pursuant to the terms hereof or such Security and, with respect to any other payment, deposit or transfer pursuant to or contemplated by the terms hereof or such Security, means Dollars.

        "CUSIP number" means the alphanumeric designation assigned to a Security by Standard & Poor's Corporation, CUSIP Service Bureau.

        "Debt" means indebtedness for borrowed money.

        "Defaulted Interest" has the meaning specified in Section 3.7.

        "Dollar" or "$" means a dollar or other equivalent unit of legal tender for payment of public or private debts in the United States of America.

        "Domestic Subsidiary" means each present and future Subsidiary of Cintas which is not organized under the laws of a jurisdiction outside of the United States.

        "EC Treaty" means the Treaty establishing the European Communities (signed in Rome on 25 March 1957), as amended by the Treaty on European Union, as amended (signed in Maastricht on 7 February 1992).

        "EMU" means European Economic and Monetary Union.

        "Euro" each means the lawful currency of the member states of the European Union that adopt the single currency in accordance with the EC Treaty.

        "Euroclear" means Euroclear Bank S.A./N.V., as operator of the Euroclear System.

        "Event of Default" has the meaning specified in Section 5.1.

        "Foreign Currency" means any currency, currency unit or composite currency, including, without limitation, the Euro, issued by the government of one or more countries other than the United States of America or by any recognized confederation or association of such governments.

        "Funded Debt" means Debt having a maturity of more than 12 months from the date as of which the amount thereof is to be determined or having a maturity of less than 12 months but by its terms being renewable or extendible beyond 12 months from such date at the option of the obligor.

        "Government Obligations" means securities which are (i) direct obligations of the United States of America or the other government or governments in the confederation which issued the Foreign Currency in which the principal of or any premium or interest on such Security or any Additional Amounts in respect thereof shall be payable, in each case where the payment or payments thereunder are supported by the full faith and credit of such government or governments or (ii) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America or such other government or governments, in each case where the timely payment or

4



payments thereunder are unconditionally guaranteed as a full faith and credit obligation by the United States of America or such other government or governments, and which, in the case of (i) or (ii), are not callable or redeemable at the option of the issuer or issuers thereof, and shall also include a depositary receipt issued by a bank or trust company as custodian with respect to any such Government Obligation or a specific payment of interest on or principal of or other amount with respect to any such Government Obligation held by such custodian for the account of the holder of a depositary receipt, provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the Government Obligation or the specific payment of interest on or principal of or other amount with respect to the Government Obligation evidenced by such depositary receipt.

        "Guarantee" or "Guarantees" means the unconditional guarantee of the payment of the principal of or any premium or interest on or any Additional Amounts with respect to the Securities by each Guarantor, as more fully set forth in Article 16.

        "Guarantor" or "Guarantors" means the Parent Guarantor, the Initial Subsidiary Guarantors and any and all Subsequent Subsidiary Guarantors in their capacities as guarantors of the Securities issued hereunder, until, in each case a successor Person shall have become such pursuant to the applicable provisions of this Indenture and thereafter "Guarantor" shall mean each such successor Person.

        "Guarantor's Board of Directors" means, with respect to any Guarantor, the board of directors of such Guarantor or any committee of that board duly authorized to act generally or in any particular respect for such Guarantor hereunder.

        "Guarantor's Board Resolution" means, with respect to any Guarantor, a copy of one or more resolutions, certified by the Secretary or an Assistant Secretary of such Guarantor to have been duly adopted by such Guarantor's Board of Directors and to be in full force and effect on the date of such certification, is delivered to the Trustee.

        "Guarantor's Officers' Certificate" means, with respect to any Guarantor, a certificate signed by the Chairman, the Chief Executive Officer, the President or a Vice President and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of such Guarantor, that complies with the requirements of Section 314(e) of the Trust Indenture Act and is delivered to the Trustee.

        "Guarantor Request" and "Guarantor Order" mean, respectively, a written request or order signed in the name of a Guarantor by the Chairman, the Chief Executive Officer, the President or a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, any such Guarantor, and delivered to the Trustee.

        "Holder", in the case of any Registered Security, means the Person in whose name such Security is registered in the Security Register and, in the case of any Bearer Security, means the bearer thereof and, in the case of any Coupon, means the bearer thereof.

        "Indenture" means this instrument as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof and, with respect to any Security, by the terms and provisions of such Security and any Coupon appertaining thereto established pursuant to Section 3.1 (as such terms and provisions may be amended pursuant to the applicable provisions hereof).

        "Indexed Security" means a Security the terms of which provide that the principal amount thereof payable at Stated Maturity may be more or less than the principal face amount thereof at original issuance.

        "Initial Subsidiary Guarantor" or "Initial Subsidiary Guarantors" means Affirmed Medical, Inc., a California corporation, American First Aid Company, a Maryland corporation, Cintas Corporation No. 3, a Nevada corporation, Cintas Corp. No. 8, Inc., a Nevada corporation, Cintas Corp.No. 15, Inc.

5


a Nevada corporation, Cintas—RUS, L.P., a Texas limited partnership, Cintas First Aid Holdings Corporation, a Nevada corporation, LLT, Inc., a Virginia Corporation, Respond Industries, Incorporated, a Colorado corporation, and Xpect First Aid Corporation, a Kansas corporation, as guarantors hereunder, until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Initial Subsidiary Guarantor" and "Initial Subsidiary Guarantors" shall mean each such successor Person.

        "Interest", with respect to any Original Issue Discount Security which by its terms bears interest only after Maturity, means interest payable after Maturity and, when used with respect to a Security which provides for the payment of Additional Amounts pursuant to Section 10.4, includes such Additional Amounts.

        "Interest Payment Date", with respect to any Security, means the Stated Maturity of an installment of interest on such Security.

        "Judgment Currency" has the meaning specified in Section 1.16.

        "Legal Holidays" has the meaning specified in Section 1.14.

        "Lien" means and includes any mortgage, pledge, lien, security interest, conditional sale or other title retention agreement or other similar encumbrance.

        "Maturity", with respect to any Security, means the date on which the principal of such Security or an installment of principal becomes due and payable as provided in or pursuant to this Indenture, whether at the Stated Maturity or by declaration of acceleration, notice of redemption or repurchase, notice of option to elect repayment or otherwise, and includes the Redemption Date.

        "New York Banking Day" has the meaning specified in Section 1.16.

        "Office" or "Agency" with respect to any Securities, means an office or agency of the Company maintained or designated in a Place of Payment for such Securities pursuant to Section 10.2 or any other office or agency of the Company maintained or designated for such Securities pursuant to Section 10.2 or, to the extent designated or required by Section 10.2 in lieu of such office or agency, the Corporate Trust Office of the Trustee.

        "Officers' Certificate" means a certificate signed by the Chairman of the Board, the Chief Executive Officer, the President, a Senior Vice President or a Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of the Company, that complies with the requirements of Section 314(e) of the Trust Indenture Act and is delivered to the Trustee.

        "Opinion of Counsel" means a written opinion of counsel, who may be an employee of or counsel for the Company or other counsel who shall be reasonably acceptable to the Trustee, that, if required by the Trust Indenture Act, complies with the requirements of Section 314(e) of the Trust Indenture Act.

        "Original Issue Discount Security" means a Security issued pursuant to this Indenture which provides for declaration of an amount less than the principal face amount thereof to be due and payable upon acceleration pursuant to Section 5.2.

        "Outstanding", when used with respect to any Securities, means, as of the date of determination, all such Securities theretofore authenticated and delivered under this Indenture, except:

6


provided, however, that in determining whether the Holders of the requisite principal amount of Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder or are present at a meeting of Holders of Securities for quorum purposes, (i) the principal amount of an Original Issue Discount Security that may be counted in making such determination and that shall be deemed to be Outstanding for such purposes shall be equal to the amount of the principal thereof that pursuant to the terms of such Original Issue Discount Security would be declared (or shall have been declared to be) due and payable upon a declaration of acceleration thereof pursuant to Section 5.2 at the time of such determination, and (ii) the principal amount of any Indexed Security that may be counted in making such determination and that shall be deemed Outstanding for such purposes shall be equal to the principal face amount of such Indexed Security at original issuance, unless otherwise provided in or pursuant to this Indenture, and (iii) the principal amount of a Security denominated in a Foreign Currency shall be the Dollar equivalent, determined on the date of original issuance of such Security, of the principal amount (or, in the case of an Original Issue Discount Security, the Dollar equivalent on the date of original issuance of such Security of the amount determined as provided in (i) above) of such Security, and (iv) Securities owned by the Company, any Guarantor or any other obligor upon the Securities or any Affiliate of the Company, any Guarantor or such other obligor, shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in making any such determination or relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which a Responsible Officer of the Trustee actually knows to be so owned shall be so disregarded. Securities so owned which shall have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee (A) the pledgee's right so to act with respect to such Securities and (B) that the pledgee is not the Company, any Guarantor or any other obligor upon the Securities or any Coupons appertaining thereto or an Affiliate of the Company, any Guarantor or such other obligor.

        "Parent Guarantor" means Cintas Corporation, a Washington corporation, as guarantor hereunder, until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Parent Guarantor" shall mean such successor Person.

        "Paying Agent" means any Person authorized by the Company to pay the principal of, or any premium or interest on, or any Additional Amounts with respect to, any Security or any Coupon on behalf of the Company.

7


        "Permitted Liens" has the meaning specified in Section 10.5.

        "Person" means any individual, Corporation, partnership, association, joint venture, trust, or any other entity or organization, including government or political subdivision or an agency or instrumentality thereof.

        "Place of Payment", with respect to any Security, means the place or places where the principal of, or any premium or interest on, or any Additional Amounts with respect to such Security are payable as provided in or pursuant to this Indenture or such Security.

        "Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same Debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 3.6 in exchange for or in lieu of a lost, destroyed, mutilated or stolen Security or any Security to which a mutilated, destroyed, lost or stolen Coupon appertains shall be deemed to evidence the same Debt as the lost, destroyed, mutilated or stolen Security or the Security to which a mutilated, destroyed, lost or stolen Coupon appertains.

        "Principal Property" means, whether owned or leased on the date of the indenture or thereafter acquired, each manufacturing or processing plant or facility of the Company, any Guarantor or any of their respective Subsidiaries located in the United States of America.

        "Redemption Date", with respect to any Security or portion thereof to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture or such Security.

        "Redemption Price", with respect to any Security or portion thereof to be redeemed, means the price at which it is to be redeemed as determined by or pursuant to this Indenture or such Security.

        "Registered Security" means any Security established pursuant to Section 2.1 which is registered in a Security Register.

        "Regular Record Date" for the interest payable on any Registered Security on any Interest Payment Date therefor means the date, if any, specified in or pursuant to this Indenture or such Security as the "Regular Record Date".

        "Required Currency" has the meaning specified in Section 1.16.

        "Responsible Officer" means with respect to the Trustee any officer assigned by the Trustee to administer corporate trust matters and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his or her knowledge of and familiarity with the particular subject.

        "Security" or "Securities" means any note or notes, bond or bonds, debenture or debentures, or any other evidences of Debt, as the case may be, authenticated and delivered under this Indenture; provided, however, that, if at any time there is more than one Person acting as Trustee under this Indenture, "Securities", with respect to any such Person, shall mean Securities authenticated and delivered under this Indenture, exclusive, however, of Securities of any series as to which such Person is not Trustee.

        "Security Register" or "Security Registrar" have the respective meanings specified in Section 3.5.

        "Significant Subsidiary", means at any date of determination, any Subsidiary of the Parent Guarantor that, together with its Subsidiaries, (i) for the most recent fiscal quarter of the Parent Guarantor, accounted for more than 15% of the consolidated revenues of the Parent Guarantor and its Subsidiaries or (ii) as of the end of such fiscal quarter, was the owner of more than 25% of the consolidated assets of the Parent Guarantor.

        "Significant Subsidiary Guarantor" means each Subsidiary Guarantor that is a Significant Subsidiary.

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        "Special Record Date" for the payment of any Defaulted Interest on any Registered Security means a date fixed by the Company pursuant to Section 3.7.

        "Stated Maturity", with respect to any Security or any installment of principal thereof or interest thereon or any Additional Amounts with respect thereto, means the date established by or pursuant to this Indenture or such Security as the fixed date on which the principal of such Security or such installment of principal or interest is, or such Additional Amounts are, due and payable.

        "Subsequent Subsidiary Guarantor" means (i) any Person that after the date hereof becomes both a direct or indirect wholly-owned Domestic Subsidiary and a Significant Subsidiary of the Parent Guarantor and (ii) any other Subsidiary of the Parent Guarantor that after the date hereof becomes a guarantor under any of the Credit Agreements, until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Subsequent Subsidiary Guarantor" and "Subsequent Subsidiary Guarantors" shall mean each such successor Person.

        "Subsidiary" of any Person means any corporation, limited liability company or other business entity of which more than 50% of the total voting power of the equity interests entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof or any partnership of which more than 50% of the partnership interests (considering all general and limited partnership interests as a single class) is, in each case, at the time owned or controlled, directly or indirectly, by such Person, one or more of the Subsidiaries of such Person, or combination thereof.

        "Subsidiary Guarantor" or "Subsidiary Guarantors" means, subject to Section 16.3, the Initial Subsidiary Guarantors and any and all Subsequent Subsidiary Guarantors in their capacities as guarantors of the Securities issued hereunder.

        "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended, and any reference herein to the Trust Indenture Act or a particular provision thereof shall mean such Act or provision, as the case may be, as amended or replaced from time to time or as supplemented from time to time by rules or regulations adopted by the Commission under or in furtherance of the purposes of such Act or provision, as the case may be.

        "Trustee" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such with respect to one or more series of Securities pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean each Person who is then a Trustee hereunder; provided, however, that if at any time there is more than one such Person, "Trustee" shall mean each such Person and as used with respect to the Securities of any series shall mean the Trustee with respect to the Securities of such series.

        "United States", except as otherwise provided in or pursuant to this Indenture or any Security, means the United States of America (including the states thereof and the District of Columbia), its territories and possessions and other areas subject to its jurisdiction.

        "U.S. Depository" or "Depository" means, with respect to any Security issuable or issued in the form of one or more global Securities, the Person designated as U.S. Depository by the Company in or pursuant to this Indenture, which Person must be, to the extent required by applicable law or regulation, a clearing agency registered under the Securities Exchange Act of 1934, as amended, and, if so provided with respect to any Security, any successor to such Person. If at any time there is more than one such Person, "U.S. Depository" shall mean, with respect to any Securities, the qualifying entity which has been appointed with respect to such Securities.

        "U.S. Alien", except as otherwise provided in or pursuant to this Indenture or any Security, means any Person who, for United States Federal income tax purposes, is a foreign corporation, a non-resident alien individual, a non-resident alien fiduciary of a foreign estate or trust, or a foreign partnership one or more of the members of which is, for United States Federal income tax purposes, a

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foreign corporation, a non-resident alien individual or a non-resident alien fiduciary of a foreign estate or trust.

        "Vice President", when used with respect to the Company, a Guarantor or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title "Vice President".

        Section 1.2     Compliance Certificates and Opinions.     

        Except as otherwise expressly provided in this Indenture, upon any application or request by the Company or any Guarantor to the Trustee to take any action under any provision of this Indenture, the Company or such Guarantor, as the case may be, shall furnish to the Trustee an Officers' Certificate or a Guarantor's Officer's Certificate, as the case may be, stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents or any of them is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished.

        Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include:

        Section 1.3     Form of Documents Delivered to Trustee.     

        In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.

        Any certificate or opinion of an officer of the Company or any Guarantor may be based, insofar as it relates to legal matters, upon an Opinion of Counsel, provided that such officer, after reasonable inquiry, has no reason to believe and does not believe that the Opinion of Counsel with respect to the matters upon which his certificate or opinion is based is erroneous. Any such Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company or a Guarantor stating that the information with respect to such factual matters is in the possession of the Company or such Guarantor, as the case may be, provided that such counsel, after reasonable inquiry, has no reason to believe and does not believe that the certificate or opinion or representations with respect to such matters are erroneous.

        Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture or any Security, they may, but need not, be consolidated and form one instrument.

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        Section 1.4     Acts of Holders.     

        (1)  Any request, demand, authorization, direction, notice, consent, waiver or other action provided by or pursuant to this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing. If, but only if, Securities of a series are issuable as Bearer Securities, any request, demand, authorization, direction, notice, consent, waiver or other action provided in or pursuant to this Indenture to be given or taken by Holders of Securities of such series may, alternatively, be embodied in and evidenced by the record of Holders of Securities of such series voting in favor thereof, either in person or by proxies duly appointed in writing, at any meeting of Holders of Securities of such series duly called and held in accordance with the provisions of Article Fifteen, or a combination of such instruments and any such record. Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments or record or both are delivered to the Trustee and, where it is hereby expressly required, to the Company and the Guarantors. Such instrument or instruments and any such record (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments or so voting at any such meeting. Proof of execution of any such instrument or of a writing appointing any such agent, or of the holding by any Person of a Security, shall be sufficient for any purpose of this Indenture and (subject to Section 315 of the Trust Indenture Act) conclusive in favor of the Trustee and the Company and the Guarantors and any agent of the Trustee or the Company and the Guarantors, if made in the manner provided in this Section. The record of any meeting of Holders of Securities shall be proved in the manner provided in Section 15.6.

        Without limiting the generality of this Section 1.4, unless otherwise provided in or pursuant to this Indenture, a Holder, including a U.S. Depository that is a Holder of a global Security, may make, give or take, by a proxy or proxies duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other Act provided in or pursuant to this Indenture to be made, given or taken by Holders, and a U.S. Depository that is a Holder of a global Security may provide its proxy or proxies to the beneficial owners of interests in any such global Security through such U.S. Depository's standing instructions and customary practices.

        The Company shall fix a record date for the purpose of determining the Persons who are beneficial owners of interest in any permanent global Security held by a U.S. Depository entitled under the procedures of such U.S. Depository to make, give or take, by a proxy or proxies duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other Act provided in or pursuant to this Indenture to be made, given or taken by Holders. If such a record date is fixed, the Holders on such record date or their duly appointed proxy or proxies, and only such Persons, shall be entitled to make, give or take such request, demand, authorization, direction, notice, consent, waiver or other Act, whether or not such Holders remain Holders after such record date. No such request, demand, authorization, direction, notice, consent, waiver or other Act shall be valid or effective if made, given or taken more than 90 days after such record date.

        (2)  The fact and date of the execution by any Person of any such instrument or writing referred to in this Section 1.4 may be proved in any reasonable manner; and the Trustee may in any instance reasonably require further proof with respect to any of the matters referred to in this Section.

        (3)  The ownership, principal amount and serial numbers of Registered Securities held by any Person, and the date of the commencement and the date of the termination of holding the same, shall be proved by the Security Register.

        (4)  The ownership, principal amount and serial numbers of Bearer Securities held by any Person, and the date of the commencement and the date of the termination of holding the same, may be proved by the production of such Bearer Securities or by a certificate executed, as depositary, by any trust company, bank, banker or other depositary reasonably acceptable to the Company and the

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Guarantors, wherever situated, if such certificate shall be deemed by the Company and the Trustee to be satisfactory, showing that at the date therein mentioned such Person had on deposit with such depositary, or exhibited to it, the Bearer Securities therein described; or such facts may be proved by the certificate or affidavit of the Person holding such Bearer Securities, if such certificate or affidavit is deemed by the Trustee to be satisfactory. The Trustee, the Guarantors and the Company may assume that such ownership of any Bearer Security continues until (i) another certificate or affidavit bearing a later date issued in respect of the same Bearer Security is produced, or (ii) such Bearer Security is produced to the Trustee by some other Person, or (iii) such Bearer Security is surrendered in exchange for a Registered Security, or (iv) such Bearer Security is no longer Outstanding. The ownership, principal amount and serial numbers of Bearer Securities held by the Person so executing such instrument or writing and the date of the commencement and the date of the termination of holding the same may also be proved in any other manner which the Company and the Trustee deem sufficient.

        (5)  If the Company or any Guarantor shall solicit from the Holders of any Registered Securities any request, demand, authorization, direction, notice, consent, waiver or other Act, the Company or such Guarantor, as the case may be, may at its option (but is not obligated to), by Board Resolution or Guarantor's Board Resolution, as the case may be, fix in advance a record date for the determination of Holders of Registered Securities entitled to give such request, demand, authorization, direction, notice, consent, waiver or other Act. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other Act may be given before or after such record date, but only the Holders of Registered Securities of record at the close of business on such record date shall be deemed to be Holders for the purpose of determining whether Holders of the requisite proportion of Outstanding Securities have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other Act, and for that purpose the Outstanding Securities shall be computed as of such record date; provided that no such authorization, agreement or consent by the Holders of Registered Securities shall be deemed effective unless it shall become effective pursuant to the provisions of this Indenture not later than six months after the record date.

        (6)  Any request, demand, authorization, direction, notice, consent, waiver or other Act by the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done or suffered to be done by the Trustee, any Security Registrar, any Paying Agent, any Guarantor or the Company in reliance thereon, whether or not notation of such Act is made upon such Security.

        Section 1.5     Notices, etc. to Trustee and Company and Guarantors.     

        Any request, demand, authorization, direction, notice, consent, waiver or other Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with,

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        Section 1.6     Notice to Holders of Securities; Waiver.     

        Except as otherwise expressly provided in or pursuant to this Indenture, where this Indenture provides for notice to Holders of Securities of any event,

        In any case where notice to Holders of Registered Securities is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder of a Registered Security shall affect the sufficiency of such notice with respect to other Holders of Registered Securities or the sufficiency of any notice to Holders of Bearer Securities given as provided herein. Any notice which is mailed in the manner herein provided shall be conclusively presumed to have been duly given or provided. In the case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder.

        In case by reason of the suspension of publication of any Authorized Newspaper or Authorized Newspapers or by reason of any other cause it shall be impracticable to publish any notice to Holders of Bearers Securities as provided above, then such notification to Holders of Bearer Securities as shall be given with the approval of the Trustee shall constitute sufficient notice to such Holders for every purpose hereunder. Neither failure to give notice by publication to Holders of Bearer Securities as provided above, nor any defect in any notice so published, shall affect the sufficiency of any notice mailed to Holders of Registered Securities as provided above.

        Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders of Securities shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.

        Section 1.7     Language of Notices.     

        Any request, demand, authorization, direction, notice, consent, election or waiver required or permitted under this Indenture shall be in the English language, except that, if the Company or the Guarantor, as the case may be, so elects, any published notice may be in an official language of the country of publication.

        Section 1.8     Conflict with Trust Indenture Act.     

        If any provision hereof limits, qualifies or conflicts with any duties under any required provision of the Trust Indenture Act, such required provision shall control.

        Section 1.9     Effect of Headings and Table of Contents.     

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

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        Section 1.10     Successors and Assigns.     

        All covenants and agreements in this Indenture by the Company and the Guarantors shall bind their respective successors and assigns, whether so expressed or not.

        Section 1.11     Separability Clause.     

        In case any provision in this Indenture, any Security or any Coupon shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

        Section 1.12     Benefits of Indenture.     

        Nothing in this Indenture, any Security or any Coupon, express or implied, shall give to any Person, other than the parties hereto, any Security Registrar, any Paying Agent, any Authenticating Agent and their successors hereunder and the Holders of Securities or Coupons, any benefit or any legal or equitable right, remedy or claim under this Indenture.

        Section 1.13     Governing Law.     

        Pursuant to New York General Obligations Law 5-1401, this Indenture, the Securities and any Coupons shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements made or instruments entered into and, in each case, performed in said state.

        Section 1.14     Legal Holidays.     

        Unless otherwise specified in or pursuant to this Indenture or any Securities, in any case where any Interest Payment Date, Stated Maturity or Maturity of any Security shall be a Legal Holiday at any Place of Payment, then (notwithstanding any other provision of this Indenture, any Security or any Coupon other than a provision in any Security or Coupon that specifically states that such provision shall apply in lieu hereof) payment need not be made at such Place of Payment on such date, but such payment may be made on the next succeeding day that is a Business Day at such Place of Payment with the same force and effect as if made on the Interest Payment Date or at the Stated Maturity or Maturity, and no interest shall accrue on the amount payable on such date or at such time for the period from and after such Interest Payment Date, Stated Maturity or Maturity, as the case may be, to such next succeeding Business Day.

        Section 1.15     Counterparts.     

        This Indenture may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

        Section 1.16     Judgment Currency.     

        The Company and the Guarantors agree, jointly and severally, to the fullest extent that they may effectively do so under applicable law, that (a) if for the purpose of obtaining judgment in any court it is necessary to convert the sum due in respect of the principal of, or premium or interest, if any, or Additional Amounts on the Securities of any series (the "Required Currency") into a currency in which a judgment will be rendered (the "Judgment Currency"), the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Trustee could purchase in The City of New York the requisite amount of the Required Currency with the Judgment Currency on the New York Banking Day preceding the day on which a final unappealable judgment is given and (b) their respective obligations under this Indenture to make payments in the Required Currency (i) shall not be discharged or satisfied by any tender, or any recovery pursuant to any judgment (whether or not entered in accordance with clause (a)), in any currency other than the Required Currency, except to the extent that such tender or recovery shall result in the actual receipt, by the payee, of the full amount of the Required Currency expressed to be payable in respect of such payments, (ii) shall be

14



enforceable as an alternative or additional cause of action for the purpose of recovering in the Required Currency the amount, if any, by which such actual receipt shall fall short of the full amount of the Required Currency so expressed to be payable and (iii) shall not be affected by judgment being obtained for any other sum due under this Indenture. For purposes of the foregoing, "New York Banking Day" means any day except a Saturday, Sunday or a legal holiday in The City of New York or a day on which banking institutions in The City of New York are authorized or obligated by law, regulation or executive order to be closed.

        Section 1.17     No Security Interest Created.     

        Subject to the provisions of Section 10.5, nothing in this Indenture or in any Securities, express or implied, shall be construed to constitute a security interest under the Uniform Commercial Code or similar legislation, as now or hereafter enacted and in effect in any jurisdiction where property of the Company, the Parent Guarantor or its Subsidiaries is or may be located.

        Section 1.18     Limitation on Individual Liability.     

        No recourse under or upon any obligation, covenant or agreement contained in this Indenture or in any Security or Guarantee, or for any claim based thereon or otherwise in respect thereof, shall be had against any incorporator, shareholder, officer or director, as such, past, present or future, of the Company or any Guarantor, either directly or through the Company or such Guarantor, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that this Indenture and the obligations issued hereunder are solely corporate obligations, and that no such personal liability whatever shall attach to, or is or shall be incurred by, the incorporators, shareholders, officers or directors, as such, of the Company or any Guarantor, or any of them, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any Security or Guarantee or implied therefrom; and that any and all such personal liability of every name and nature, either at common law or in equity or by constitution or statute, of, and any and all such rights and claims against, every such incorporator, shareholder, officer or director, as such, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any Security or Guarantee or implied therefrom, are hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issuance of such Security or Guarantee.


ARTICLE 2

SECURITIES FORMS

        Section 2.1     Forms Generally.     

        Each Registered Security, Bearer Security, Coupon and temporary or permanent global Security issued pursuant to this Indenture shall be in the form established by or pursuant to a Board Resolution or in one or more indentures supplemental hereto, shall have such appropriate insertions, omissions, substitutions and other variations as are required or permitted by or pursuant to this Indenture or any indenture supplemental hereto and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may, consistently herewith, be determined by the officers executing such Security or Coupon as evidenced by their execution of such Security or Coupon.

        Unless otherwise provided in or pursuant to this Indenture or any Securities, the Securities shall be issuable in registered form without Coupons and shall not be issuable upon the exercise of warrants.

        Definitive Securities and definitive Coupons shall be printed in any such manner as determined by the officers of the Company executing such Securities or Coupons, as evidenced by their execution of such Securities or Coupons.

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        Section 2.2     Form of Trustee's Certificate of Authentication.     

        Subject to Section 6.11, the Trustee's certificate of authentication shall be in substantially the following form:

        This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.

    WACHOVIA BANK, NATIONAL ASSOCIATION,
        as Trustee

 

 

By:

 
     
Authorized Signatory

        Section 2.3     Securities in Global Form.     

        Unless otherwise provided in or pursuant to this Indenture or any Securities, the Securities shall be issuable in temporary or permanent global form. If Securities of a series shall be issuable in global form, any such Security may provide that it or any number of such Securities shall represent the aggregate amount of all Outstanding Securities of such series (or such lesser amount as is permitted by the terms thereof) from time to time endorsed thereon and may also provide that the aggregate amount of Outstanding Securities represented thereby may from time to time be increased or reduced to reflect exchanges. Any endorsement of any Security in global form to reflect the amount, or any increase or decrease in the amount, or changes in the rights of Holders, of Outstanding Securities represented thereby shall be made in such manner and by such Person or Persons as shall be specified therein or in the Company Order to be delivered pursuant to Section 3.3 or 3.4 with respect thereto. Subject to the provisions of Section 3.3 and, if applicable, Section 3.4, the Trustee shall deliver and redeliver, in each case at the Company's expense, any Security in permanent global form in the manner and upon instructions given by the Person or Persons specified therein or in the applicable Company Order. If a Company Order pursuant to Section 3.3 or 3.4 has been, or simultaneously is, delivered, any instructions by the Company with respect to a Security in global form shall be in writing but need not be accompanied by or contained in an Officers' Certificate and need not be accompanied by an Opinion of Counsel.

        Notwithstanding the provisions of Section 3.7, unless otherwise specified in or pursuant to this Indenture or any Securities, payment of principal of, any premium and interest on, and any Additional Amounts in respect of, any Security in temporary or permanent global form shall be made to the Person or Persons specified therein.

        Notwithstanding the provisions of Section 3.8 and except as provided in the preceding paragraph, the Company, the Trustee and any agent of the Company or the Trustee shall treat as the Holder of such principal amount of Outstanding Securities represented by a global Security (i) in the case of a global Security in registered form, the Holder of such global Security in registered form, or (ii) in the case of a global Security in bearer form, the Person or Persons specified pursuant to Section 3.1.


ARTICLE 3

THE SECURITIES

        Section 3.1     Amount Unlimited; Issuable in Series.     

        The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited. The Securities may be issued in one or more series.

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        With respect to any Securities to be authenticated and delivered hereunder, there shall be established in or pursuant to a Board Resolution and set forth in an Officers' Certificate, or established in one or more indentures supplemental hereto,

17


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        All Securities of any one series and all Coupons, if any, appertaining to Bearer Securities of such series shall be substantially identical except as to Currency of payments due thereunder, denomination and the rate of interest thereon, or method of determining the rate of interest, if any, Maturity, and the date from which interest, if any, shall accrue and except as may otherwise be provided by the Company in or pursuant to the Board Resolution and set forth in the Officers' Certificate or in any indenture or indentures supplemental hereto pertaining to such series of Securities. The terms of the Securities of any series may provide, without limitation, that the Securities shall be authenticated and delivered by the Trustee on original issue from time to time upon written order of persons designated in the Officers' Certificate or supplemental indenture and that such persons are authorized to determine, consistent with such Officers' Certificate or any applicable supplemental indenture, such terms and conditions of the Securities of such series as are specified in such Officers' Certificate or supplemental indenture. All Securities of any one series need not be issued at the same time and, unless otherwise so provided, a series may be reopened for issuances of additional Securities of such series or to establish additional terms of such series of Securities.

        If any of the terms of the Securities of any series shall be established by action taken by or pursuant to a Board Resolution, the Board Resolution shall be delivered to the Trustee at or prior to the delivery of the Officers' Certificate setting forth the terms of such series.

        Section 3.2     Currency; Denominations.     

        Unless otherwise provided in or pursuant to this Indenture, the principal of, any premium and interest on and any Additional Amounts with respect to the Securities shall be payable in Dollars. Unless otherwise provided in or pursuant to this Indenture, Registered Securities denominated in Dollars shall be issuable in registered form without Coupons in denominations of $1,000 and any integral multiple thereof, and the Bearer Securities denominated in Dollars shall be issuable in the denomination of $5,000. Securities not denominated in Dollars shall be issuable in such denominations as are established with respect to such Securities in or pursuant to this Indenture.

        Section 3.3     Execution, Authentication, Delivery and Dating.     

        Securities shall be executed on behalf of the Company by its Chairman of the Board, a Vice Chairman, its Chief Executive Officer, its President, a Senior Vice President or a Vice President under

19



its corporate seal reproduced thereon and attested by its Secretary or one of its Assistant Secretaries. Coupons shall be executed on behalf of the Company by its Chairman of the Board, a Vice Chairman, its Chief Executive Officer, its President, its Treasurer, a Senior Vice President or a Vice President the Treasurer or any Assistant Treasurer of the Company. The signature of any of these officers on the Securities or any Coupons appertaining thereto may be manual or facsimile.

        Securities and any Coupons appertaining thereto bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities and Coupons or did not hold such offices at the date of original issuance of such Securities or Coupons.

        At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities, together with any Coupons appertaining thereto, executed by the Company, to the Trustee for authentication and, provided that the Board Resolution and Officers' Certificate or supplemental indenture or indentures with respect to such Securities referred to in Section 3.1 and a Company Order for the authentication and delivery of such Securities have been delivered to the Trustee, the Trustee in accordance with the Company Order and subject to the provisions hereof and of such Securities shall authenticate and deliver such Securities. In authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities and any Coupons appertaining thereto, the Trustee shall be entitled to receive, and (subject to Sections 315(a) through 315(d) of the Trust Indenture Act) shall be fully protected in relying upon,

and, to the extent that this Indenture is required to be qualified under the Trust Indenture Act in connection with the issuance of such Securities, to the further effect that:

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        If all the Securities of any series are not to be issued at one time, it shall not be necessary to deliver an Opinion of Counsel and an Officers' Certificate at the time of issuance of each Security, but such opinion and certificate, with appropriate modifications, shall be delivered at or before the time of issuance of the first Security of such series. After any such first delivery, any separate written request by an Authorized Officer of the Company that the Trustee authenticate and deliver Securities of such series for original issue will be deemed to be a certification by the Company that all conditions precedent provided for in this Indenture relating to authentication and delivery of such Securities continue to have been complied with.

        The Trustee shall not be required to authenticate or to cause an Authenticating Agent to authenticate any Securities if the issue of such Securities pursuant to this Indenture will affect the Trustee's own rights, duties or immunities, as Trustee under the Securities and this Indenture or otherwise in a manner which is not reasonably acceptable to the Trustee or if the Trustee, being advised by counsel, determines that such action may not lawfully be taken.

        Each Registered Security shall be dated the date of its authentication. Each Bearer Security and any Bearer Security in global form shall be dated as of the date specified in or pursuant to this Indenture.

        No Security or Coupon appertaining thereto shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Security a certificate of authentication substantially in the form provided for in Section 2.2 or 6.11 executed by or on behalf of the Trustee or by the Authenticating Agent by the manual signature of one of its authorized officers. Such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. Except as permitted by Section 3.6 or 3.7, the Trustee shall not authenticate and deliver any Bearer Security unless all Coupons appertaining thereto then matured have been detached and cancelled.

        Section 3.4     Temporary Securities.     

        Pending the preparation of definitive Securities, the Company may execute and deliver to the Trustee and, upon Company Order, the Trustee shall authenticate and deliver, in the manner provided in Section 3.3, temporary Securities in lieu thereof which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued, in registered form or, if authorized in or pursuant to this Indenture, in bearer form with one or more Coupons or without Coupons and with such appropriate insertions, omissions, substitutions and other variations as the officers of the Company executing such Securities may determine, as conclusively evidenced by their execution of such Securities. Such temporary Securities may be in global form.

        Except in the case of temporary Securities in global form, which shall be exchanged in accordance with the provisions thereof, if temporary Securities are issued, the Company shall cause definitive Securities to be prepared without unreasonable delay. After the preparation of definitive Securities of the same series and containing terms and provisions that are identical to those of any temporary Securities, such temporary Securities shall be exchangeable for such definitive Securities upon surrender of such temporary Securities at an Office or Agency for such Securities, without charge to any Holder thereof. Upon surrender for cancellation of any one or more temporary Securities (accompanied by any unmatured Coupons appertaining thereto), the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Securities of authorized denominations of the same series and containing identical terms and provisions; provided,

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however, that no definitive Bearer Security, except as provided in or pursuant to this Indenture, shall be delivered in exchange for a temporary Registered Security; and provided, further, that a definitive Bearer Security shall be delivered in exchange for a temporary Bearer Security only in compliance with the conditions set forth in or pursuant to this Indenture. Unless otherwise provided in or pursuant to this Indenture with respect to a temporary global Security, until so exchanged the temporary Securities of any series shall in all respects be entitled to the same benefits under this Indenture as definitive Securities of such series.

        Section 3.5     Registration, Transfer and Exchange.     

        With respect to the Registered Securities of each series, if any, the Company shall cause to be kept a register (each such register being herein sometimes referred to as the "Security Register") at an Office or Agency for such series in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of the Registered Securities of such series and of transfers of the Registered Securities of such series. Such Office or Agency shall be the "Security Registrar" for that series of Securities. Unless otherwise specified in or pursuant to this Indenture or the Securities, the Trustee shall be the initial Security Registrar for each series of Securities. The Company shall have the right to remove and replace from time to time the Security Registrar for any series of Securities; provided that no such removal or replacement shall be effective until a successor Security Registrar with respect to such series of Securities shall have been appointed by the Company and shall have accepted such appointment by the Company. In the event that the Trustee shall not be or shall cease to be Security Registrar with respect to a series of Securities, it shall have the right to examine the Security Register for such series at all reasonable times. There shall be only one Security Register for each series of Securities.

        Upon surrender for registration of transfer of any Registered Security of any series at any Office or Agency for such series, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Registered Securities of the same series denominated as authorized in or pursuant to this Indenture, of a like aggregate principal amount bearing a number not contemporaneously outstanding and containing identical terms and provisions.

        At the option of the Holder, Registered Securities of any series may be exchanged for other Registered Securities of the same series containing identical terms and provisions, in any authorized denominations, and of a like aggregate principal amount, upon surrender of the Securities to be exchanged at any Office or Agency for such series. Whenever any Registered Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Registered Securities which the Holder making the exchange is entitled to receive.

        If provided in or pursuant to this Indenture, with respect to Securities of any series, at the option of the Holder, Bearer Securities of such series may be exchanged for Registered Securities of such series containing identical terms, denominated as authorized in or pursuant to this Indenture and in the same aggregate principal amount, upon surrender of the Bearer Securities to be exchanged at any Office or Agency for such series, with all unmatured Coupons and all matured Coupons in default thereto appertaining. If the Holder of a Bearer Security is unable to produce any such unmatured Coupon or Coupons or matured Coupon or Coupons in default, such exchange may be effected if the Bearer Securities are accompanied by payment in funds acceptable to the Company, the Guarantors and the Trustee in an amount equal to the face amount of such missing Coupon or Coupons, or the surrender of such missing Coupon or Coupons may be waived by the Company, the Guarantors and the Trustee if there is furnished to them such security or indemnity as they may require to save each of them and any agent of either of them harmless. If thereafter the Holder of such Bearer Security shall surrender to any Paying Agent any such missing Coupon in respect of which such a payment shall have been made, such Holder shall be entitled to receive the amount of such payment; provided, however,

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that, except as otherwise provided in Section 10.2, interest represented by Coupons shall be payable only upon presentation and surrender of those Coupons at an Office or Agency for such series located outside the United States. Notwithstanding the foregoing, in case a Bearer Security of any series is surrendered at any such Office or Agency for such series in exchange for a Registered Security of such series and like tenor after the close of business at such Office or Agency on (i) any Regular Record Date and before the opening of business at such Office or Agency on the next succeeding Interest Payment Date, or (ii) any Special Record Date and before the opening of business at such Office or Agency on the related date for payment of Defaulted Interest, such Bearer Security shall be surrendered without the Coupon relating to such Interest Payment Date or proposed date of payment, as the case may be (or, if such Coupon is so surrendered with such Bearer Security, such Coupon shall be returned to the Person so surrendering the Bearer Security), and interest or Defaulted Interest, as the case may be, shall not be payable on such Interest Payment Date or proposed date for payment, as the case may be, in respect of the Registered Security issued in exchange for such Bearer Security, but shall be payable only to the Holder of such Coupon when due in accordance with the provisions of this Indenture.

        If provided in or pursuant to this Indenture with respect to Securities of any series, at the option of the Holder, Registered Securities of such series may be exchanged for Bearer Securities upon such terms and conditions as may be provided in or pursuant to this Indenture with respect to such series.

        Whenever any Securities are surrendered for exchange as contemplated by the immediately preceding two paragraphs, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive.

        Notwithstanding the foregoing, except as otherwise provided in or pursuant to this Indenture, any global Security in a series shall be exchangeable for definitive Securities of such series only if (i) the Depository is at any time unwilling, unable to continue as depository or if the Depositary ceases to be eligible under this Indenture and a successor depository is not appointed by the Company within 90 days of the date the Company is so informed in writing, (ii) the Company executes and delivers to the Trustee a Company Order to the effect that such global Security shall be so exchangeable, or (iii) an Event of Default has occurred and is continuing with respect to the Securities and the Holders of at least a majority in principal amount of the Outstanding Securities of such series have requested definitive Securities. If the beneficial owners of interests in a global Security are entitled to exchange such interests for definitive Securities as the result of an event described in clause (i), (ii) or (iii) of the preceding sentence, then without unnecessary delay but in any event not later than the earliest date on which such interests may be so exchanged, the Company shall deliver to the Trustee definitive Securities in such form and denominations as are required by or pursuant to this Indenture, and of the same series, containing identical terms and in aggregate principal amount equal to the principal amount of such global Security, executed by the Company. On or after the earliest date on which such interests may be so exchanged, such global Security shall be surrendered from time to time by the U.S. Depository or such other Depository as shall be specified in the Company Order with respect thereto, and in accordance with instructions given to the Trustee and the U.S. Depository or such other Depository, as the case may be (which instructions shall be in writing but need not be contained in or accompanied by an Officers' Certificate or be accompanied by an Opinion of Counsel), as shall be specified in the Company Order with respect thereto to the Trustee, as the Company's agent for such purpose, to be exchanged, in whole or in part, for definitive Securities as described above without charge. The Trustee shall authenticate and make available for delivery, in exchange for each portion of such surrendered global Security, a like aggregate principal amount of definitive Securities of the same series of authorized denominations and of like tenor as the portion of such global Security to be exchanged, which (unless such Securities are not issuable both as Bearer Securities and as Registered Securities, in which case the definitive Securities exchanged for the global Security shall be issuable only in the form in which the Securities are issuable, as provided in or pursuant to this Indenture) shall

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be in the form of Bearer Securities or Registered Securities, or any combination thereof, as shall be specified by the beneficial owner thereof, but subject to the satisfaction of any certification or other requirements to the issuance of Bearer Securities; provided, however, that no such exchanges may occur during a period beginning at the opening of business 15 days before any selection of Securities of the same series to be redeemed and ending on the relevant Redemption Date; and provided, further, that (unless otherwise provided in or pursuant to this Indenture) no Bearer Security delivered in exchange for a portion of a global Security shall be mailed or otherwise delivered to any location in the United States. Promptly following any such exchange in part, such global Security shall be returned by the Trustee to such Depository or the U.S. Depository, as the case may be, or such other Depository or U.S. Depository referred to above in accordance with the instructions of the Company referred to above. If a Registered Security is issued in exchange for any portion of a global Security after the close of business at the Office or Agency for such Security where such exchange occurs on or after (i) any Regular Record Date for such Security and before the opening of business at such Office or Agency on the next succeeding Interest Payment Date, or (ii) any Special Record Date for such Security and before the opening of business at such Office or Agency on the related proposed date for payment of interest or Defaulted Interest, as the case may be, interest shall not be payable on such Interest Payment Date or proposed date for payment, as the case may be, in respect of such Registered Security, but shall be payable on such Interest Payment Date or proposed date for payment, as the case may be, only to the Person to whom interest in respect of such portion of such global Security shall be payable in accordance with the provisions of this Indenture.

        All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company and the Guarantors evidencing the same debt and entitling the Holders thereof to the same benefits under this Indenture as the Securities surrendered upon such registration of transfer or exchange.

        Every Registered Security presented or surrendered for registration of transfer or for exchange or redemption shall (if so required by the Company or the Security Registrar for such Security) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar for such Security duly executed by the Holder thereof or his attorney duly authorized in writing.

        No service charge shall be made for any registration of transfer or exchange, or redemption of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge and any other expenses (including fees and expenses of the Trustee) that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Section 3.4, 9.5 or 11.7 not involving any transfer.

        Except as otherwise provided in or pursuant to this Indenture, the Company shall not be required (i) to issue, register the transfer of or exchange any Securities during a period beginning at the opening of business 15 days before the day of the selection for redemption of Securities of like tenor and the same series under Section 11.3 and ending at the close of business on the day of such selection, or (ii) to register the transfer of or exchange any Registered Security so selected for redemption in whole or in part, except in the case of any Security to be redeemed in part, the portion thereof not to be redeemed, or (iii) to exchange any Bearer Security so selected for redemption except, to the extent provided with respect to such Bearer Security, that such Bearer Security may be exchanged for a Registered Security of like tenor and the same series, provided that such Registered Security shall be immediately surrendered for redemption with written instruction for payment consistent with the provisions of this Indenture or (iv) to issue, register the transfer of or exchange any Security which, in accordance with its terms, has been surrendered for repayment at the option of the Holder, except the portion, if any, of such Security not to be so repaid.

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        Section 3.6     Mutilated, Destroyed, Lost and Stolen Securities.     

        If any mutilated Security or a Security with a mutilated Coupon appertaining to it is surrendered to the Trustee, subject to the provisions of this Section 3.6, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security of the same series containing identical terms and of like principal amount and bearing a number not contemporaneously outstanding, with Coupons appertaining thereto corresponding to the Coupons, if any, appertaining to the surrendered Security.

        If there be delivered to the Company, the Guarantors and to the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Security or Coupon, and (ii) such security or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company, the Guarantors or the Trustee of any adverse claim or that such Security or Coupon has been acquired by a bona fide purchaser, the Company shall execute and, upon the Company's request the Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Security or in exchange for the Security to which a destroyed, lost or stolen Coupon appertains with all appurtenant Coupons not destroyed, lost or stolen, a new Security of the same series containing identical terms and of like principal amount and bearing a number not contemporaneously outstanding, with Coupons appertaining thereto corresponding to the Coupons, if any, appertaining to such destroyed, lost or stolen Security or to the Security to which such destroyed, lost or stolen Coupon appertains.

        Notwithstanding the foregoing provisions of this Section 3.6, in case any mutilated, destroyed, lost or stolen Security or Coupon has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security or Coupon; provided, however, that payment of principal of, any premium or interest on or any Additional Amounts with respect to any Bearer Securities shall, except as otherwise provided in Section 10.2, be payable only at an Office or Agency for such Securities located outside the United States and, unless otherwise provided in or pursuant to this Indenture, any interest on Bearer Securities and any Additional Amounts with respect to such interest shall be payable only upon presentation and surrender of the Coupons appertaining thereto.

        Upon the issuance of any new Security under this Section 3.6, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.

        Every new Security, with any Coupons appertaining thereto issued pursuant to this Section 3.6 in lieu of any destroyed, lost or stolen Security, or in exchange for a Security to which a destroyed, lost or stolen Coupon appertains shall constitute a separate obligation of the Company, whether or not the destroyed, lost or stolen Security and Coupons appertaining thereto or the destroyed, lost or stolen Coupon shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of such series and any Coupons, if any, duly issued hereunder.

        The provisions of this Section 3.6, as amended or supplemented pursuant to this Indenture with respect to particular Securities or generally, shall be exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities or Coupons.

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        Section 3.7     Payment of Interest and Certain Additional Amounts; Rights to Interest and Certain Additional Amounts Preserved.     

        Unless otherwise provided in or pursuant to this Indenture, any interest on and any Additional Amounts with respect to any Registered Security which shall be payable, and are punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name such Security (or one or more Predecessor Securities) is registered as of the close of business on the Regular Record Date for such interest.

        Unless otherwise provided in or pursuant to this Indenture, any interest on and any Additional Amounts with respect to any Registered Security which shall be payable, but shall not be punctually paid or duly provided for, on any Interest Payment Date for such Registered Security (herein called "Defaulted Interest") shall forthwith cease to be payable to the Holder thereof on the relevant Regular Record Date by virtue of having been such Holder; and such Defaulted Interest may be paid by the Company or any Guarantor, at its election in each case, as provided in clause (1) or (2) below:

        Unless otherwise provided in or pursuant to this Indenture or the Securities of any particular series pursuant to the provisions of this Indenture, at the option of the Company, interest on Registered Securities that bear interest may be paid by mailing a check to the address of the Person

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entitled thereto as such address shall appear in the Security Register or by transfer to an account maintained by the payee with a bank located in the United States.

        Subject to the foregoing provisions of this Section and Section 3.5, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security.

        Section 3.8     Persons Deemed Owners.     

        Prior to due presentment of a Registered Security for registration of transfer, the Company, the Guarantors, the Trustee and any agent of the Company or the Guarantors or the Trustee may treat the Person in whose name such Registered Security is registered in the Security Register as the owner of such Registered Security for the purpose of receiving payment of principal of, any premium and (subject to Sections 3.5 and 3.7) interest on and any Additional Amounts with respect to such Registered Security and for all other purposes whatsoever, whether or not any payment with respect to such Registered Security shall be overdue, and none of the Company, the Guarantors, the Trustee or any agent of the Company, or the Trustee shall be affected by notice to the contrary.

        The Company, the Guarantors, the Trustee and any agent of the Company, the Guarantors or the Trustee may treat the bearer of any Bearer Security or the bearer of any Coupon as the absolute owner of such Security or Coupon for the purpose of receiving payment thereof or on account thereof and for all other purposes whatsoever, whether or not any payment with respect to such Security or Coupon shall be overdue, and none of the Company, the Guarantors, the Trustee or any agent of the Company or the Trustee shall be affected by notice to the contrary.

        No Holder of any beneficial interest in any global Security held on its behalf by a Depository shall have any rights under this Indenture with respect to such global Security, and such Depository may be treated by the Company, the Guarantors the Trustee, and any agent of the Company, the Guarantors or the Trustee as the owner of such global Security for all purposes whatsoever. None of the Company, the Guarantors, the Trustee, any Paying Agent or the Security Registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a global Security or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.

        Section 3.9     Cancellation.     

        All Securities and Coupons surrendered for payment, redemption, registration of transfer, exchange or conversion or for credit against any sinking fund payment shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee, and any such Securities and Coupons, as well as Securities and Coupons surrendered directly to the Trustee for any such purpose, shall be cancelled promptly by the Trustee. The Company or the Guarantor may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company or the Guarantor may have acquired in any manner whatsoever, and all Securities so delivered shall be cancelled promptly by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities cancelled as provided in this Section, except as expressly permitted by or pursuant to this Indenture. All cancelled Securities and Coupons held by the Trustee shall be destroyed by the Trustee, unless by a Company Order or a Guarantor Order, the Company or a Guarantor, as the case may be, directs their return to it.

        Section 3.10     Computation of Interest.     

        Except as otherwise provided in or pursuant to this Indenture or in any Security, interest on the Securities shall be computed on the basis of a 360-day year of twelve 30-day months.

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ARTICLE 4

SATISFACTION AND DISCHARGE OF INDENTURE

        Section 4.1     Satisfaction and Discharge.     

        Upon the direction of the Company by a Company Order or of a Guarantor by a Guarantor Order, this Indenture shall cease to be of further effect with respect to any series of Securities specified in such Company Order or Guarantor Order and any Coupons appertaining thereto, and the Trustee, on receipt of a Company Order or Guarantor Order, at the expense of the Company and the Guarantors, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture as to such series, when

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        In the event there are Securities of two or more series hereunder, the Trustee shall be required to execute an instrument acknowledging satisfaction and discharge of this Indenture only if requested to do so with respect to Securities of such series as to which it is Trustee and if the other conditions thereto are met.

        Notwithstanding the satisfaction and discharge of this Indenture with respect to any series of Securities, the obligations of the Company and the Guarantors to the Trustee under Section 6.6 and, if money shall have been deposited with the Trustee pursuant to subclause (b) of clause (1) of this Section, the obligations of the Company and the Trustee with respect to the Securities of such series under Sections 3.5, 3.6, 4.3, 10.2 and 10.3, with respect to the payment of Additional Amounts, if any, with respect to such Securities as contemplated by Section 10.4 (but only to the extent that the Additional Amounts payable with respect to such Securities exceed the amount deposited in respect of such Additional Amounts pursuant to Section 4.1(1)(b)) shall survive.

        Section 4.2     Defeasance and Covenant Defeasance.     

        (1)  Unless pursuant to Section 3.1, either or both of (i) defeasance of the Securities of or within a series under clause (2) of this Section 4.2 shall not be applicable with respect to the Securities of such series or (ii) covenant defeasance of the Securities of or within a series under clause (3) of this Section 4.2 shall not be applicable with respect to the Securities of such series, then such provisions, together with the other provisions of this Section 4.2 (with such modifications thereto as may be specified pursuant to Section 3.1 with respect to any Securities), shall be applicable to such Securities and any Coupons appertaining thereto, and the Company may at its option by Board Resolution, at any time, with respect to such Securities and any Coupons appertaining thereto, elect to have Section 4.2(2) or Section 4.2(3) be applied to such Outstanding Securities and any Coupons appertaining thereto upon compliance with the conditions set forth below in this Section 4.2.

        (2)  Upon the Company's exercise of the above option applicable to this Section 4.2(2) with respect to any Securities of or within a series, each of the Company and the Guarantors shall be deemed to have been discharged from its obligations with respect to such Outstanding Securities and any Coupons appertaining thereto and of the Guarantee in respect thereof on the date the conditions set forth in clause (4) of this Section 4.2 are satisfied (hereinafter, "defeasance"). For this purpose, such defeasance means that the Company and the Guarantors shall be deemed to have paid and discharged the entire Debt represented by such Outstanding Securities and any Coupons appertaining thereto, and under the Guarantee in respect thereof, which shall thereafter be deemed to be "Outstanding" only for the purposes of clause (5) of this Section 4.2 and the other Sections of this Indenture referred to in clauses (i) and (ii) below, and to have satisfied all of its other obligations under such Securities and any Coupons appertaining thereto, and under the Guarantee in respect thereof, and this Indenture insofar as such Securities and any Coupons appertaining thereto and under the Guarantee in respect thereof, are concerned (and the Trustee, at the expense of the Company and the Guarantors, shall execute proper instruments acknowledging the same), except for the following which shall survive until otherwise terminated or discharged hereunder: (i) the rights of Holders of such Outstanding Securities and any Coupons appertaining thereto to receive, solely from the trust fund described in clause (4) of this Section 4.2 and as more fully set forth in such clause, payments in respect of the principal of (and premium, if any) and interest, if any, on, and Additional Amounts, if any, with respect to, such Securities and any Coupons appertaining thereto when such payments are due, (ii) the obligations of the Company and the Trustee with respect to such Securities under Sections 3.5, 3.6, 6.6, 10.2 and 10.3 and with respect to the payment of Additional Amounts, if any, on such Securities as contemplated by Section 10.4 (but only to the extent that the Additional Amounts payable with respect to such Securities exceed the amount deposited in respect of such Additional Amounts pursuant to Section 4.2(4)(a) below), (iii) the rights, powers, trusts, duties and immunities of the Trustee hereunder and (iv) this Section 4.2. The Company may exercise its option under this

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Section 4.2(2) notwithstanding the prior exercise of its option under clause (3) of this Section 4.2 with respect to such Securities and any Coupons appertaining thereto.

        (3)  Upon the Company's exercise of the option to have this Section 4.2(3) apply with respect to any Securities of or within a series, the Company shall be released from its obligations under Section 10.5 and, to the extent specified pursuant to any indenture supplement, any other covenant applicable to such Securities, with respect to such Outstanding Securities and any Coupons appertaining thereto on and after the date the conditions set forth in clause (4) of this Section 4.2 are satisfied (hereinafter, "covenant defeasance"), and such Securities and any Coupons appertaining thereto shall thereafter be deemed to be not "Outstanding" for the purposes of any direction, waiver, consent or declaration or Act of Holders (and the consequences of any thereof) in connection with any such covenant, but shall continue to be deemed "Outstanding" for all other purposes hereunder. For this purpose, such covenant defeasance means that, with respect to such Outstanding Securities and any Coupons appertaining thereto, the Company may omit to comply with, and shall have no liability in respect of, any term, condition or limitation set forth in any such Section or such other covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such Section or such other covenant or by reason of reference in any such Section or such other covenant to any other provision herein or in any other document and such omission to comply shall not constitute a default or an Event of Default under Section 5.1(4) or 5.1(8) or otherwise, as the case may be, but, except as specified above, the remainder of this Indenture and such Securities and Coupons appertaining thereto shall be unaffected thereby.

        (4)  The following shall be the conditions to application of clause (2) or (3) of this Section 4.2 to any Outstanding Securities of or within a series and any Coupons appertaining thereto:

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        (5)  Unless otherwise specified in or pursuant to this Indenture or any Security, if, after a deposit referred to in Section 4.2(4)(a) has been made, (a) the Holder of a Security in respect of which such deposit was made is entitled to, and does, elect pursuant to Section 3.1 or the terms of such Security to receive payment in a Currency other than that in which the deposit pursuant to Section 4.2(4)(a) has been made in respect of such Security, or (b) a Conversion Event occurs in respect of the Foreign Currency in which the deposit pursuant to Section 4.2(4)(a) has been made, the indebtedness represented by such Security and any Coupons appertaining thereto shall be deemed to have been, and will be, fully discharged and satisfied through the payment of the principal of (and premium, if any), and interest, if any, on, and Additional Amounts, if any, with respect to, such Security as the same becomes due out of the proceeds yielded by converting (from time to time as specified below in the

31


case of any such election) the amount or other property deposited in respect of such Security into the Currency in which such Security becomes payable as a result of such election or Conversion Event based on (x) in the case of payments made pursuant to clause (a) above, the applicable market exchange rate for such Currency in effect on the second Business Day prior to each payment date, or (y) with respect to a Conversion Event, the applicable market exchange rate for such Foreign Currency in effect (as nearly as feasible) at the time of the Conversion Event. The Company shall pay and indemnify the Trustee (or other qualifying trustee, collectively for purposes of Section 4.3, the "Trustee") against any tax, fee or other charge, imposed on or assessed against the Government Obligations deposited pursuant to this Section 4.2 or the principal or interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of such Outstanding Securities and any Coupons appertaining thereto.

        Anything in this Section 4.2 to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon Company Request, or any Guarantor, as the case may be, upon a Guarantor Request, any money or Government Obligations (or other property and any proceeds therefrom) held by it as provided in clause (4) of this Section 4.2 which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, are in excess of the amount thereof which would then be required to be deposited to effect a defeasance or covenant defeasance, as applicable, in accordance with this Section 4.2.

        Section 4.3     Application of Trust Money.     

        Subject to the provisions of the last paragraph of Section 10.3, all money and Government Obligations (or other property as may be provided pursuant to Section 3.1) (including the proceeds thereof) deposited with the Trustee pursuant to Section 4.1 or 4.2 in respect of any Outstanding Securities of any series and any Coupons appertaining thereto shall be held in trust and applied by the Trustee, in accordance with the provisions of such Securities and any Coupons appertaining thereto and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Holders of such Securities and any Coupons appertaining thereto of all sums due and to become due thereon in respect of principal (and premium, if any) and interest and Additional Amounts, if any; but such money and Government Obligations need not be segregated from other funds except to the extent required by law.


ARTICLE 5

REMEDIES

        Section 5.1     Events of Default.     

        "Event of Default", wherever used herein with respect to Securities of any series means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body), unless such event is specifically deleted or modified in or pursuant to the supplemental indenture, Board Resolution or Officers' Certificate establishing the terms of such Series pursuant to this Indenture:

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        Section 5.2     Acceleration of Maturity; Rescission and Annulment.     

        If an Event of Default with respect to Securities of any series at the time Outstanding (other than an Event of Default with respect to the Company or any Guarantor specified in clause (7) or (8) of Section 5.1) occurs and is continuing, then the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Securities of such series may declare the principal of all the Securities of such series, or such lesser amount as may be provided for in the Securities of such series, to be due and payable immediately, by a notice in writing to the Company and Parent Guarantor (and to the Trustee if given by the Holders), and upon any such declaration such principal or such lesser amount shall become immediately due and payable.

        If an Event of Default with respect to the Company or any Guarantor specified in clause (7) or (8) of Section 5.1 occurs, all unpaid principal of and accrued interest on the Outstanding Securities of that series (or such lesser amount as may be provided for in the Securities of such series) shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder of any Security of that series.

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        At any time after a declaration of acceleration with respect to the Securities of any series has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of not less than a majority in principal amount of the Outstanding Securities of such series, by written notice to the Company, the Parent Guarantor and the Trustee, may rescind and annul such declaration and its consequences if

        No such rescission shall affect any subsequent default or impair any right consequent thereon.

        Section 5.3     Collection of Debt and Suits for Enforcement by Trustee.     

        The Company covenants and each Guarantor covenants, in each case, that if

        If the Company or any Guarantor fails to pay the money it is required to pay the Trustee pursuant to the preceding paragraph forthwith upon the demand of the Trustee, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the money so due and unpaid, and may prosecute such proceeding to judgment or final decree, and may enforce the

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same against the Company or the Guarantors or any other obligor upon such Securities and any Coupons appertaining thereto and collect the monies adjudged or decreed to be payable in the manner provided by law out of the property of the Company or the Guarantors or any other obligor upon such Securities and any Coupons appertaining thereto, wherever situated.

        If an Event of Default with respect to Securities of any series occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities of such series and any Coupons appertaining thereto by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or such Securities or in aid of the exercise of any power granted herein or therein, or to enforce any other proper remedy.

        Section 5.4     Trustee May File Proofs of Claim.     

        In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company, any Guarantor or any other obligor upon the Securities of any series or the property of the Company, any Guarantor or such other obligor or their creditors, the Trustee (irrespective of whether the principal of the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company or the Guarantors for the payment of any overdue principal, premium, interest or Additional Amounts) shall be entitled and empowered, by intervention in such proceeding or otherwise,

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder of Securities or any Coupons to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders of Securities or any Coupons, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and any other amounts due the Trustee under Section 6.6.

        Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder of a Security or any Coupon any plan of reorganization, arrangement, adjustment or composition affecting the Securities or Coupons or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder of a Security or any Coupon in any such proceeding.

        Section 5.5     Trustee May Enforce Claims without Possession of Securities or Coupons.     

        All rights of action and claims under this Indenture or any of the Securities or Coupons may be prosecuted and enforced by the Trustee without the possession of any of the Securities or Coupons or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery or judgment, after provision for the payment of the reasonable compensation, expenses, disbursements and advances

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of the Trustee, its agents and counsel, shall be for the ratable benefit of each and every Holder of the Securities or Coupons in respect of which such judgment has been recovered.

        Section 5.6     Application of Money Collected.     

        Any money collected by the Trustee pursuant to this Article shall be applied in the following order with respect to the Securities of such series, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal, or any premium, interest or Additional Amounts, upon presentation of the Securities or Coupons of the applicable series, or both, as the case may be, and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:

        Section 5.7     Limitations on Suits.     

        No Holder of any Security of any series or any Coupons appertaining thereto shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless

it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture or any Security to affect, disturb or prejudice the rights of any other such Holders or Holders of Securities of any other series, or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all such Holders.

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        Section 5.8     Unconditional Right of Holders to Receive Principal and any Premium, Interest and Additional Amounts.     

        Notwithstanding any other provision in this Indenture, the Holder of any Security or Coupon shall have the right, which is absolute and unconditional, to receive payment of the principal of, any premium and (subject to Sections 3.5 and 3.7) interest on, and any Additional Amounts with respect to such Security or payment of such Coupon, as the case may be, on the respective Stated Maturity or Maturities therefor specified in such Security or Coupon (or, in the case of redemption, on the Redemption Date or, in the case of repayment at the option of such Holder if provided in or pursuant to this Indenture, on the date such repayment is due) and to institute suit for the enforcement of any such payment, and such right shall not be impaired without the consent of such Holder.

        Section 5.9     Restoration of Rights and Remedies.     

        If the Trustee or any Holder of a Security or a Coupon has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case the Company, the Guarantors, the Trustee and each such Holder shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee and each such Holder shall continue as though no such proceeding had been instituted.

        Section 5.10     Rights and Remedies Cumulative.     

        Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities or Coupons in the last paragraph of Section 3.6, no right or remedy herein conferred upon or reserved to the Trustee or to each and every Holder of a Security or a Coupon is intended to be exclusive of any other right or remedy, and every right and remedy, to the extent permitted by law, shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not, to the extent permitted by law, prevent the concurrent assertion or employment of any other appropriate right or remedy.

        Section 5.11     Delay or Omission Not Waiver.     

        No delay or omission of the Trustee or of any Holder of any Security or Coupon to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to any Holder of a Security or a Coupon may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by such Holder, as the case may be.

        Section 5.12     Control by Holders of Securities.     

        The Holders of a majority in principal amount of the Outstanding Securities of any series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee with respect to the Securities of such series and any Coupons appertaining thereto, provided that

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        Section 5.13     Waiver of Past Defaults.     

        The Holders of not less than a majority in principal amount of the Outstanding Securities of any series on behalf of the Holders of all the Securities of such series and any Coupons appertaining thereto may waive any past default hereunder with respect to such series and its consequences, except a default

Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.

        Section 5.14     Waiver of Usury, Stay or Extension Laws.     

        The Company and each Guarantor covenants, in each case, that (to the extent that it may lawfully do so) it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company and each Guarantor expressly waives (to the extent that it may lawfully do so) all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

        Section 5.15     Undertaking for Costs.     

        All parties to this Indenture agree, and each Holder of any Security by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of any undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section 5.15 shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of Outstanding Securities of any series, or to any suit instituted by any Holder for the enforcement of the payment of the principal of (or premium, if any) or interest, if any, on or Additional Amounts, if any, with respect to any Security on or after the respective Stated Maturities expressed in such Security (or, in the case of redemption, on or after the Redemption Date, and, in the case of repayment, on or after the date for repayment).


ARTICLE 6

THE TRUSTEE

        Section 6.1     Certain Rights of Trustee.     

        Subject to Sections 315(a) through 315(d) of the Trust Indenture Act:

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        Section 6.2     Notice of Defaults.     

        Within 90 days after the occurrence of any default hereunder with respect to the Securities of any series or, if later, within 30 days after the Trustee has actual notice of such default, but subject, in any case, to the requirements of the Trust Indenture Act, the Trustee shall transmit by mail to all Holders of Securities of such series entitled to receive reports pursuant to Section 7.3(3), notice of such default hereunder actually known to a Responsible Officer of the Trustee, unless such default shall have been cured or waived; provided, however, that, except in the case of a default in the payment of the principal of (or premium, if any), or interest, if any, on, or Additional Amounts or any sinking fund or purchase fund installment with respect to, any Security of such series, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determine that the withholding of such notice is in the best interest of the Holders of Securities and Coupons of such series; and provided, further, that in the case of any default of the character specified in Section 5.1(4) with respect to Securities of such series, no such notice to Holders shall be given until at least 30 days after the occurrence thereof. For the purpose of this Section, the term "default" means any event which is, or after notice or lapse of time or both would become, an Event of Default with respect to Securities of such series.

        Section 6.3     Not Responsible for Recitals or Issuance of Securities.     

        The recitals contained herein and in the Securities, or any document issued in connection with the sale of the Securities, except the Trustee's certificate of authentication, and in any Coupons shall be taken as the statements of the Company and the Guarantors, as the case may be, and neither the Trustee nor any Authenticating Agent assumes any responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities or the Coupons, except that the Trustee represents that it is duly authorized to execute and deliver this Indenture, authenticate the Securities and perform its obligations hereunder and that the statements made by it in a Statement of Eligibility on Form T-1, if necessary, supplied to the Company are true and accurate, subject to the qualifications set forth therein. Neither the Trustee nor any Authenticating Agent shall be accountable for the use or application by the Company of the Securities or the proceeds thereof or any money paid to the Company or upon the Company's direction under any provision hereof, without limiting the application of any other provision of this Indenture. Neither the Trustee nor any Authenticating Agent shall be accountable for the use or application of any money received by any Paying Agent other than the Trustee, without limiting the application of any other provision of this Indenture.

        Section 6.4     May Hold Securities.     

        The Trustee, any Authenticating Agent, any Paying Agent, any Security Registrar or any other Person that may be an agent of the Trustee or the Guarantors or the Company, in its individual or any other capacity, may become the owner or pledgee of Securities or Coupons and, subject to Sections 310(b) and 311 of the Trust Indenture Act, may otherwise deal with the Company or the Guarantors with the same rights it would have if it were not the Trustee, Authenticating Agent, Paying Agent, Security Registrar or such other Person.

        Section 6.5     Money Held in Trust.     

        Except as provided in Section 4.3 and Section 10.3, money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law and shall be held uninvested. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed to in writing with the Company or the Parent Guarantor.

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        Section 6.6     Compensation and Reimbursement.     

        The Company agrees and the Guarantors agree, in each case:

        As security for the performance of the obligations of the Company and the Guarantors under this Section, the Trustee shall have a lien prior to the Securities of any series upon all property and funds held or collected by the Trustee as such, except funds held in trust for the payment of principal of, and premium or interest on or any Additional Amounts with respect to Securities or any Coupons appertaining thereto.

        To the extent permitted by law, any compensation or expense incurred by the Trustee after a default specified in or pursuant to Section 5.1 is intended to constitute an expense of administration under any then applicable bankruptcy or insolvency law. "Trustee" for purposes of this Section 6.6 shall include any predecessor Trustee but the negligence or bad faith of any Trustee shall not affect the rights of any other Trustee under this Section 6.6.

        The provisions of this Section 6.6 shall survive the satisfaction and discharge of this Indenture or the earlier resignation or removal of the Trustee and shall apply with equal force and effect to the Trustee in its capacity as Authenticating Agent, Paying Agent or Security Registrar.

        Section 6.7     Corporate Trustee Required; Eligibility.     

        There shall at all times be a Trustee hereunder that is a Corporation organized and doing business under the laws of the United States of America, any state thereof or the District of Columbia, that is eligible under Section 310(a)(1) of the Trust Indenture Act to act as trustee under an indenture qualified under the Trust Indenture Act and that has a combined capital and surplus (computed in accordance with Section 310(a)(2) of the Trust Indenture Act) of at least $50,000,000, and that is subject to supervision or examination by Federal or state authority. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article.

        Section 6.8     Resignation and Removal; Appointment of Successor.     

        (1)  No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee pursuant to Section 6.9.

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        (2)  The Trustee may resign at any time with respect to the Securities of all series by giving written notice thereof to the Company and the Guarantors. If the instrument of acceptance by a successor Trustee required by Section 6.9 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to such series.

        (3)  The Trustee may be removed at any time with respect to the Securities of any series by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series, delivered to the Trustee and the Company and the Guarantors.

        (4)  If at any time:

then, in any such case, (i) the Company, by or pursuant to a Board Resolution, or a Guarantor, by or pursuant to such Guarantor's Board Resolution may remove the Trustee with respect to all Securities or the Securities of such series, or (ii) subject to Section 315(e) of the Trust Indenture Act, any Holder of a Security who has been a bona fide Holder of a Security of such series for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee with respect to all Securities of such series and the appointment of a successor Trustee or Trustees.

        (5)  If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, with respect to the Securities of all series, the Company, by or pursuant to a Board Resolution, and a Guarantor, by or pursuant to such Guarantor's Board Resolution shall promptly appoint a successor Trustee or Trustees with respect to the Securities of such series (it being understood that any such successor Trustee shall be appointed with respect to the Securities of all of such series and that at any time there shall be only one Trustee with respect to the Securities of any particular series) and shall comply with the applicable requirements of Section 6.9. If, within one year after such resignation, removal or incapacity, or the occurrence of such vacancy, a successor Trustee with respect to the Securities of any series shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Securities of such series delivered to the Company, the Guarantors and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 6.9, become the successor Trustee with respect to the Securities of such series and to that extent supersede the successor Trustee appointed by the Company and the Guarantors. If no successor Trustee with respect to the Securities of any series shall have been so appointed by the Company and the Guarantors or the Holders of Securities and accepted appointment in the manner required by Section 6.9, any Holder of a Security who has been a bona fide Holder of a Security of such series for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series.

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        (6)  The Company shall give notice of each resignation and each removal of the Trustee with respect to the Securities of any series and each appointment of a successor Trustee with respect to the Securities of any series by mailing written notice of such event by first-class mail, postage prepaid, to the Holders of Registered Securities, if any, of such series as their names and addresses appear in the Security Register and, if Securities of such series are issued as Bearer Securities, by publishing notice of such event once in an Authorized Newspaper in each Place of Payment located outside the United States. Each notice shall include the name of the successor Trustee with respect to the Securities of such series and the address of its Corporate Trust Office.

        (7)  In no event shall any retiring Trustee be liable for the acts or omissions of any successor Trustee hereunder.

        Section 6.9     Acceptance of Appointment by Successor.     

        (1)  Upon the appointment hereunder of any successor Trustee with respect to all Securities, such successor Trustee so appointed shall execute, acknowledge and deliver to the Company, the Guarantors and the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties hereunder of the retiring Trustee; but, on the request of the Company, the Guarantors or such successor Trustee, such retiring Trustee, upon payment of its charges, shall execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and, subject to Section 10.3, shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder, subject nevertheless to its claim, if any, provided for in Section 6.6.

        (2)  Upon the appointment hereunder of any successor Trustee with respect to the Securities of one or more (but not all) series, the Company, the Guarantors, the retiring Trustee and such successor Trustee shall execute and deliver an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and which (1) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, such successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates, (2) if the retiring Trustee is not retiring with respect to all Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and (3) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust, that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee and that no Trustee shall be responsible for any notice given to, or received by, or any act or failure to act on the part of any other Trustee hereunder, and, upon the execution and delivery of such supplemental indenture, the resignation or removal of the retiring Trustee shall become effective to the extent provided therein, such retiring Trustee shall have no further responsibility for the exercise of rights and powers or for the performance of the duties and obligations vested in the Trustee under this Indenture with respect to the Securities of that or those series to which the appointment of such successor Trustee relates other than as hereinafter expressly set forth, and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates; but, on request of the Company, any Guarantor or such successor Trustee, such retiring Trustee, upon payment of its charges with respect to the Securities of that or those series to which the appointment of such successor Trustee relates and subject to Section 10.3 shall duly assign, transfer and

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deliver to such successor Trustee, to the extent contemplated by such supplemental indenture, the property and money held by such retiring Trustee hereunder with respect to the Securities of that or those series to which the appointment of such successor Trustee relates, subject to its claim, if any, provided for in Section 6.6.

        (3)  Upon request of any Person appointed hereunder as a successor Trustee, the Company and the Guarantors shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in paragraph (1) or (2) of this Section, as the case may be.

        (4)  No Person shall accept its appointment hereunder as a successor Trustee unless at the time of such acceptance such successor Person shall be qualified and eligible under this Article.

        Section 6.10     Merger, Conversion, Consolidation or Succession to Business.     

        Any Corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any Corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any Corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated but not delivered by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities.

        Section 6.11     Appointment of Authenticating Agent.     

        The Trustee may appoint one or more Authenticating Agents acceptable to the Company with respect to one or more series of Securities which shall be authorized to act on behalf of the Trustee to authenticate Securities of that or those series issued upon original issue, exchange, registration of transfer, partial redemption or partial repayment or pursuant to Section 3.6, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent.

        Each Authenticating Agent must be acceptable to the Company and the Guarantors and, except as provided in or pursuant to this Indenture, shall at all times be a corporation that would be permitted by the Trust Indenture Act to act as trustee under an indenture qualified under the Trust Indenture Act, is authorized under applicable law and by its charter to act as an Authenticating Agent and has a combined capital and surplus (computed in accordance with Section 310(a)(2) of the Trust Indenture Act) of at least $50,000,000. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect specified in this Section.

        Any Corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any Corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any Corporation succeeding to all or substantially all of the corporate agency or corporate trust business of an Authenticating Agent, shall be the successor of such Authenticating Agent hereunder, provided such Corporation shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent.

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        An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee, the Guarantors and the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent, the Guarantors and the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Company and the Guarantors and shall (i) mail written notice of such appointment by first-class mail, postage prepaid, to all Holders of Registered Securities, if any, of the series with respect to which such Authenticating Agent shall serve, as their names and addresses appear in the Security Register, and (ii) if Securities of the series are issued as Bearer Securities, publish notice of such appointment at least once in an Authorized Newspaper in the place where such successor Authenticating Agent has its principal office if such office is located outside the United States. Any successor Authenticating Agent, upon acceptance of its appointment hereunder, shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section.

        The Company and the Guarantors agree to pay each Authenticating Agent from time to time reasonable compensation for its services under this Section. If the Trustee makes such payments, it shall be entitled to be reimbursed for such payments, subject to the provisions of Section 6.6.

        The provisions of Sections 3.8, 6.3 and 6.4 shall be applicable to each Authenticating Agent.

        If an Authenticating Agent is appointed with respect to one or more series of Securities pursuant to this Section, the Securities of such series may have endorsed thereon, in addition to or in lieu of the Trustee's certificate of authentication, an alternate certificate of authentication in substantially the following form:

        This is one of the Securities of the series designated herein referred to in the within-mentioned Indenture.

    WACHOVIA BANK, NATIONAL ASSOCIATION,
        as Trustee

 

 

By:

 
     
as Authenticating Agent

 

 

By:

 
     
Authorized Signatory

        If all of the Securities of any series may not be originally issued at one time, and if the Trustee does not have an office capable of authenticating Securities upon original issuance located in a Place of Payment where the Company wishes to have Securities of such series authenticated upon original issuance, the Trustee, if so requested in writing (which writing need not be accompanied by or contained in an Officers' Certificate by the Company), shall appoint in accordance with this Section an Authenticating Agent having an office in a Place of Payment designated by the Company with respect to such series of Securities.

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ARTICLE 7

HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY

        Section 7.1     Company and Guarantors to Furnish Trustee Names and Addresses of Holders.     

        In accordance with Section 312(a) of the Trust Indenture Act, the Company and the Guarantors shall furnish or cause to be furnished to the Trustee

provided, however, that so long as the Trustee is the Security Registrar no such list shall be required to be furnished.

        Section 7.2     Preservation of Information; Communications to Holders.     

        The Trustee shall comply with the obligations imposed upon it pursuant to Section 312 of the Trust Indenture Act.

        Every Holder of Securities or Coupons, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company, the Guarantors, the Trustee, any Paying Agent or any Security Registrar shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders of Securities in accordance with Section 312(c) of the Trust Indenture Act, regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under Section 312(b) of the Trust Indenture Act.

        Section 7.3     Reports by Trustee.     

        (1)  Within 60 days after March 1 of each year commencing with the first March 1 following the first issuance of Securities pursuant to Section 3.1, if required by Section 313(a) of the Trust Indenture Act, the Trustee shall transmit, pursuant to Section 313(c) of the Trust Indenture Act, a brief report dated as of such March 1 with respect to any of the events specified in said Section 313(a) which may have occurred since the later of the immediately preceding March 1 and the date of this Indenture.

        (2)  The Trustee shall transmit the reports required by Section 313(a) of the Trust Indenture Act at the times specified therein.

        (3)  Reports pursuant to this Section shall be transmitted in the manner and to the Persons required by Sections 313(c) and 313(d) of the Trust Indenture Act.

        Section 7.4     Reports by Company and Guarantors; Rule 144A Information.     

        The Company and the Guarantors, pursuant to Section 314(a) of the Trust Indenture Act, shall:

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        In addition, in the event that the offer and sale of the Securities of any series has not been registered under the Securities Act of 1933, as amended, in reliance on Section 4(2) thereof, the Parent Guarantor and, to the extent then required by Rule 144A, the Company and the Subsidiary Guarantors agree that, in order to render such Securities eligible for resale pursuant to Rule 144A, while any of such Securities remain outstanding and "restricted securities" (within the meaning of Rule 144(a)(3) under the Securities Act of 1933, as amended), each of the Parent Guarantor and, to the extent then required by Rule 144A, the Company and the Subsidiary Guarantors will make available, upon request, to any Holder or owner of Securities or prospective purchasers of Securities the information specified in Rule 144A(d)(4) with respect to the Parent Guarantor, the Company and any Subsidiaries, unless such information is furnished to the Commission pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended.


ARTICLE 8

CONSOLIDATION, MERGER AND SALES

        Section 8.1     Company May Consolidate, etc., Only on Certain Terms.     

        The Company shall not consolidate with or merge into any other Person (whether or not affiliated with the Company), or convey, transfer or lease its properties and assets as an entirety or substantially as an entirety to any other Person (whether or not affiliated with the Company), and the Company shall not permit any other Person (whether or not affiliated with the Company) to consolidate with or merge into the Company or convey, transfer or lease its properties and assets as an entirety or substantially as an entirety to the Company, unless:

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        Section 8.2     Successor Person Substituted for Company.     

        Upon any consolidation by the Company with or merger of the Company into any other Person or any conveyance, transfer or lease of the properties and assets of the Company substantially as an entirety to any Person in accordance with Section 8.1, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein; and thereafter, except in the case of a lease, the predecessor Person shall be released from all obligations and covenants under this Indenture, the Securities and the Coupons.

        Section 8.3     Parent Guarantor May Consolidate, Etc., Only on Certain Terms.     

        The Parent Guarantor shall not consolidate with or merge into any other Person (whether or not affiliated with the Parent Guarantor), or convey, transfer or lease its properties and assets as an entirety or substantially as an entirety to any other Person (whether or not affiliated with the Parent Guarantor), and the Parent Guarantor shall not permit any other Person (whether or not affiliated with the Parent Guarantor) to consolidate with or merge into the Parent Guarantor or convey, transfer or lease its properties and assets as an entirety or substantially as an entirety to the Parent Guarantor unless:

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        Section 8.4     Successor Person Substituted for Parent Guarantor.     

        Upon any consolidation or merger or any conveyance, transfer or lease of all or substantially all of the properties and assets of the Parent Guarantor to any Person in accordance with Section 8.3, the successor Person formed by such consolidation or into which the Parent Guarantor is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Parent Guarantor under this Indenture with the same effect as if such successor Person had been named as the Parent Guarantor herein, and thereafter, except in the case of a lease to another Person, the predecessor Person shall be released from all obligations and covenants under this Indenture.

        Section 8.5     Subsidiaries May Consolidate, Etc., Only on Certain Terms.     

        Nothing contained in this Indenture or in any of the Securities shall prevent any consolidation or merger of any Subsidiary with or into any other Person or Persons (whether or not affiliated with such Subsidiary), or successive consolidations or mergers in which such Subsidiary or its successor or successors shall be a party or parties, or shall prevent any conveyance, transfer or lease of the property of any Subsidiary as an entirety or substantially as an entirety, to any other Person (whether or not affiliated with such Subsidiary); provided, however that:

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        Section 8.6     Successor Person Substituted for Subsidiary Guarantor.     

        Subject to the release provisions set forth in Section 16.3 of this Indenture, upon any consolidation or merger or any conveyance, transfer or lease of the properties and assets of any Subsidiary Guarantor substantially as an entirety to any Person in accordance with Section 8.5, the successor Person formed by such consolidation or into which such Subsidiary Guarantor is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, such Subsidiary Guarantor under this Indenture with the same effect as if such successor Person had been named as a Subsidiary Guarantor herein, and thereafter, except in the case of a lease to another Person, the predecessor Person shall be released from all obligations and covenants under this Indenture.


ARTICLE 9

SUPPLEMENTAL INDENTURES

        Section 9.1     Supplemental Indentures without Consent of Holders.     

        Without the consent of any Holders of Securities or Coupons, the Company (when authorized by or pursuant to a Board Resolution) a Guarantor (when authorized by such Guarantor's Board Resolution) and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, for any of the following purposes:

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        Section 9.2     Supplemental Indentures with Consent of Holders.     

        With the consent of the Holders of not less than a majority in principal amount of the Outstanding Securities of each series affected by such supplemental indenture, by Act of said Holders delivered to the Company, the Guarantors and the Trustee, the Company (when authorized by or pursuant to a Company's Board Resolution), each Guarantor (when authorized by or pursuant to such Guarantor's Board Resolution) and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of Securities of such series under this Indenture or of the Securities of such series; provided, however, that no such supplemental indenture, without the consent of the Holder of each Outstanding Security affected thereby, shall

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        A supplemental indenture which changes or eliminates any covenant or other provision of this Indenture which shall have been included expressly and solely for the benefit of one or more particular series of Securities, or which modifies the rights of the Holders of Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other series.

        It shall not be necessary for any Act of Holders of Securities under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof.

        Section 9.3     Execution of Supplemental Indentures.     

        As a condition to executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trust created by this Indenture, the Trustee shall be provided, and (subject to Section 315 of the Trust Indenture Act) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture and an Officers' Certificate stating that all conditions precedent to the execution of such supplemental indenture have been fulfilled. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise.

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        Section 9.4     Effect of Supplemental Indentures.     

        Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of a Security theretofore or thereafter authenticated and delivered hereunder and of any Coupon appertaining thereto shall be bound thereby.

        Section 9.5     Reference in Securities to Supplemental Indentures.     

        Securities of any series authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities of any series so modified as to conform, in the opinion of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities of such series.

        Section 9.6     Conformity with Trust Indenture Act.     

        Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect.

        Section 9.7     Notice of Supplemental Indenture.     

        Promptly after the execution by the Company and the Trustee of any supplemental indenture pursuant to Section 9.2, the Company shall transmit to the Holders of Outstanding Securities of any series affected thereby a notice setting forth the substance of such supplemental indenture.


ARTICLE 10

COVENANTS

        Section 10.1     Payment of Principal, any Premium, Interest and Additional Amounts.     

        The Company covenants and agrees for the benefit of the Holders of the Securities of each series that it will duly and punctually pay the principal of, any premium and interest on and any Additional Amounts with respect to the Securities of such series in accordance with the terms thereof, any supplement hereto any Coupons appertaining thereto and this Indenture. Any interest due on any Bearer Security on or before the Maturity thereof, and any Additional Amounts payable with respect to such interest, shall be payable only upon presentation and surrender of the Coupons appertaining thereto for such interest as they severally mature.

        Section 10.2     Maintenance of Office or Agency.     

        The Company or a Guarantor shall maintain in each Place of Payment for any series of Securities an Office or Agency where Securities of such series (but not Bearer Securities, except as otherwise provided below, unless such Place of Payment is located outside the United States) may be presented or surrendered for payment, where Securities of such series may be surrendered for registration of transfer or exchange, and where notices and demands to or upon the Company or a Guarantor in respect of the Securities of such series relating thereto and this Indenture may be served. If Securities of a series are issuable as Bearer Securities, the Company or a Guarantor shall maintain, subject to any laws or regulations applicable thereto, an Office or Agency in a Place of Payment for such series which is located outside the United States where Securities of such series and any Coupons appertaining thereto may be presented and surrendered for payment; provided, however, that if the Securities of such series are listed on The Stock Exchange of the United Kingdom and the Republic of Ireland or the Luxembourg Stock Exchange or any other stock exchange located outside the United States and

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such stock exchange shall so require, a Company or the Guarantor shall maintain a Paying Agent in London, Luxembourg or any other required city located outside the United States, as the case may be, so long as the Securities of such series are listed on such exchange. The Company or the Guarantor will give prompt written notice to the Trustee of the location, and any change in the location, of such Office or Agency. If at any time the Company or such Guarantor shall fail to maintain any such required Office or Agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, except that Bearer Securities of such series and any Coupons appertaining thereto may be presented and surrendered for payment at the place specified for the purpose with respect to such Securities as provided in or pursuant to this Indenture, and the Company and the Guarantors hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands.

        Except as otherwise provided in or pursuant to this Indenture, no payment of principal, premium, interest or Additional Amounts with respect to Bearer Securities shall be made at any Office or Agency in the United States or by check mailed to any address in the United States or by transfer to an account maintained with a bank located in the United States; provided, however, if amounts owing with respect to any Bearer Securities shall be payable in Dollars, payment of principal of, any premium or interest on and any Additional Amounts with respect to any such Security may be made at the Corporate Trust Office of the Trustee or any Office or Agency designated by the Company or a Guarantor in the Borough of Manhattan, The City of New York, if (but only if) payment of the full amount of such principal, premium, interest or Additional Amounts at all offices outside the United States maintained for such purpose by the Company or such Guarantor in accordance with this Indenture is illegal or effectively precluded by exchange controls or other similar restrictions.

        The Company or a Guarantor may also from time to time designate one or more other Offices or Agencies where the Securities of one or more series may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company or such Guarantor of its obligation to maintain an Office or Agency in each Place of Payment for Securities of any series for such purposes. The Company or a Guarantor shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other Office or Agency. Unless otherwise provided in or pursuant to this Indenture, the Company and the Guarantors hereby designates as the Place of Payment for each series of Securities the Borough of Manhattan, The City of New York, and initially appoints the corporate trust office of the Trustee located at 12 East 49 th Street, 37 th Floor, New York, NY 10017, the Office or Agency of the Company or the Guarantor, as the case may be, in the Borough of Manhattan, The City of New York for such purpose. The Company or a Guarantor may subsequently appoint a different Office or Agency in the Borough of Manhattan, The City of New York or any other Place of Payment for the Securities of any series.

        Section 10.3     Money for Securities Payments to Be Held in Trust.     

        If the Company shall at any time act as its own Paying Agent with respect to any series of Securities, it shall, on or before each due date of the principal of, any premium or interest on or Additional Amounts with respect to any of the Securities of such series, segregate and hold in trust for the benefit of the Persons entitled thereto a sum in the currency or currencies, currency unit or units or composite currency or currencies in which the Securities of such series are payable (except as otherwise specified pursuant to Section 3.1 for the Securities of such series) sufficient to pay the principal or any premium, interest or Additional Amounts so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided, and shall promptly notify the Trustee of its action or failure so to act.

        Whenever the Company shall have one or more Paying Agents for any series of Securities, it shall, on or prior to each due date of the principal of, any premium or interest on or any Additional

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Amounts with respect to any Securities of such series, deposit with any Paying Agent a sum (in the currency or currencies, currency unit or units or composite currency or currencies described in the preceding paragraph) sufficient to pay the principal or any premium, interest or Additional Amounts so becoming due, such sum to be held in trust for the benefit of the Persons entitled thereto, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act.

        The Company shall cause each Paying Agent for any series of Securities other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent shall:

        The Company or a Guarantor may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order or Guarantor Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same terms as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such sums.

        Except as otherwise provided herein or pursuant hereto, any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, any premium or interest on or any Additional Amounts with respect to any Security of any series or any Coupon appertaining thereto and remaining unclaimed for two years after such principal or any such premium or interest or any such Additional Amounts shall have become due and payable shall be paid to the Company on Company Request (or if deposited by a Guarantor, paid to such Guarantor on Guarantor Request), or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security or any Coupon appertaining thereto shall thereafter, as an unsecured general creditor, look only to the Company and the Guarantors for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company in the case of Bearer Securities cause to be published once, in an Authorized Newspaper in each Place of Payment for such series or in the case of Registered Securities to be mailed to Holders of such Registered Securities of such series, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication or mailing nor shall it be later than two years after such principal and any premium or interest or Additional Amounts shall have become due and payable, any unclaimed balance of such money then remaining will be repaid to the Company or the Guarantors, as the case may be.

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        Section 10.4     Additional Amounts.     

        If any Securities of a series provide for the payment of Additional Amounts, the Company and the Guarantors agree to pay to the Holder of any such Security or any Coupon appertaining thereto Additional Amounts as provided in or pursuant to this Indenture or such Securities. Whenever in this Indenture there is mentioned, in any context, the payment of the principal of or any premium or interest on, or in respect of, any Security of any series or any Coupon or the net proceeds received on the sale or exchange of any Security of any series, such mention shall be deemed to include mention of the payment of Additional Amounts provided by the terms of such series established hereby or pursuant hereto to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof pursuant to such terms, and express mention of the payment of Additional Amounts (if applicable) in any provision hereof shall not be construed as excluding the payment of Additional Amounts in those provisions hereof where such express mention is not made.

        Except as otherwise provided in or pursuant to this Indenture or the Securities of the applicable series, if the Securities of a series provide for the payment of Additional Amounts, at least 10 days prior to the first Interest Payment Date with respect to such series of Securities (or if the Securities of such series shall not bear interest prior to Maturity, the first day on which a payment of principal is made), and at least 10 days prior to each date of payment of principal or interest if there has been any change with respect to the matters set forth in the below-mentioned Officers' Certificate, the Company or a Guarantor, as the case may be, shall furnish to the Trustee and the principal Paying Agent or Paying Agents, if other than the Trustee, an Officers' Certificate instructing the Trustee and such Paying Agent or Paying Agents whether such payment of principal of and premium, if any, or interest on the Securities of such series shall be made to Holders of Securities of such series or the Coupons appertaining thereto who are U.S. Aliens without withholding for or on account of any tax, assessment or other governmental charge described in the Securities of such series. If any such withholding shall be required, then such Officers' Certificate shall specify by country the amount, if any, required to be withheld on such payments to such Holders of Securities or Coupons, and the Company agrees to pay to the Trustee or such Paying Agent the Additional Amounts required by the terms of such Securities. The Company and the Guarantors covenant to indemnify the Trustee and any Paying Agent for, and to hold them harmless against, any loss, liability or expense reasonably incurred without negligence or bad faith on their part arising out of or in connection with actions taken or omitted by any of them in reliance on any Officers' Certificate furnished pursuant to this Section.

        Section 10.5     Limitation on Liens; Restriction on Sale-Leasebacks.     

        (1)  The Company and the Guarantors covenant and agree for the benefit of each series of Securities, other than any series established in or pursuant to a Board Resolution or in one or more indentures supplemental hereto which specifically provide otherwise, that for so long as the Securities of any applicable series are outstanding, the Company and the Guarantors will not, and will not permit any Subsidiary to, create, assume, incur or suffer to exist any Lien upon any Principal Property or upon any shares of Capital Stock or Debt of any Subsidiary owning or leasing any Principal Property, whether owned or leased on the date of this Indenture or thereafter acquired, other than Permitted Liens or as permitted under subsection (3) below, to secure any Debt incurred or guaranteed by the Company, the Guarantors or any Subsidiary (other than the applicable series of Securities), without in any such case making effective provision whereby all of the Securities of the applicable series then outstanding (together with, if the Company so determines, any other Debt or guarantee thereof by the Company or the Guarantors ranking equally with the applicable series of Securities) shall be secured equally and ratably with, or prior to, such Debt so long as such Debt shall be so secured.

        "Permitted Liens" means

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        (2)  Except as permitted under subsection (3) below, the Company and the Guarantors will not, and will not permit any Subsidiary to, engage in the sale or transfer by the Company, the Guarantors or any Subsidiary of any Principal Property to a person (other than the Parent Guarantor or a

58


Subsidiary of the Parent Guarantor) and the taking back by the Parent Guarantor or any Subsidiary of the Parent Guarantor, as the case may be, of a lease of such Principal Property, unless:

        (3)  Notwithstanding the foregoing restrictions on Liens and sale-leaseback transactions, the Company and the Guarantors may, and may permit any Subsidiary to, create, assume, incur, or suffer to exist any Lien upon any Principal Property or upon any shares of Capital Stock or Debt of any Subsidiary owning or leasing any Principal Property to secure Debt incurred or guaranteed by the Parent Guarantor or any Subsidiary (other than the applicable series of Securities) or effect any sale-leaseback transaction of a Principal Property that is not a Permitted Lien or excepted by clauses (a) and (b) of subsection (2) above without equally and ratably securing the Securities of the applicable series provided that, after giving effect thereto, the aggregate principal amount of outstanding Debt (other than the applicable series of Securities) secured by Liens, other than Permitted Liens upon Principal Property, and/or upon such shares of Capital Stock or Debt, plus the Attributable Debt from sale-leaseback transactions of Principal Property, not so excepted, do not exceed 15% of Consolidated Net Worth.

        Section 10.6     Legal Existence.     

        Subject to Article Eight, each of the Company and the Parent Guarantor shall do or cause to be done all things necessary to preserve and keep in full force and effect its legal existence and that of each Significant Subsidiary, their respective rights (charter and statutory) and franchises; provided, however, that the foregoing shall not obligate the Company, the Parent Guarantor or any Significant Subsidiary to preserve any such right or franchise if the Parent Guarantor shall determine that the preservation thereof is no longer desirable in the conduct of its business or the business of the Company or such Significant Subsidiary and that the loss thereof is not disadvantageous in any material respect to any Holder.

        Section 10.7     Subsequent Subsidiary Guarantors.     

        Subject to Article Sixteen, the Company and the Parent Guarantor shall cause each Person that falls within the definition of Subsequent Subsidiary Guarantor to become a Guarantor hereunder and thereby to fully and unconditionally guarantee the due and punctual payment of the principal of, interest on and any other amounts payable under the Securities, when and if the same shall become due and payable, whether at the Stated Maturity, by declaration of acceleration, upon redemption, repurchase or repayment or otherwise, by execution of an indenture supplemental hereto that adds such Person as a Subsequent Subsidiary Guarantor.

        Section 10.8     Waiver of Certain Covenants.     

        The Company or a Guarantor, as the case may be, may omit in any particular instance to comply with any term, provision or condition set forth in Section 10.5 with respect to the Securities of any series if before the time for such compliance the Holders of at least a majority in principal amount of the Outstanding Securities of such series, by Act of such Holders, either shall waive such compliance in such instance or generally shall have waived compliance with such term, provision or condition, but no such waiver shall extend to or affect such term, provision or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company and the

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Guarantors and the duties of the Trustee in respect of any such term, provision or condition shall remain in full force and effect.

        Section 10.9     Company Statement as to Compliance; Notice of Certain Defaults.     

        (1)  The Company shall deliver to the Trustee, within 120 days after the end of each fiscal year, a written statement (which need not be contained in or accompanied by an Officers' Certificate) signed by the principal executive officer, the principal financial officer or the principal accounting officer of the Company, stating that

        (2)  The Company shall deliver to the Trustee, within five days after the occurrence thereof, written notice of any Event of Default or any event which after notice or lapse of time or both would become an Event of Default pursuant to clause (4) of Section 5.1.

        (3)  The Trustee shall have no duty to monitor the Company's compliance with the covenants contained in this Article 10 other than as specifically set forth in this Section 10.9.

        Section 10.10     Guarantor Statement as to Compliance; Notice of Certain Defaults.     

        (1)  Each Guarantor shall deliver to the Trustee, within 120 days after the end of each fiscal year, a written statement (which need not be contained in or accompanied by an Officers' Certificate) signed by the principal executive officer, the principal financial officer or the principal accounting officer of such Guarantor, stating that

        (2)  A Guarantor shall deliver to the Trustee, within five days after the occurrence thereof, written notice of any event which after notice or lapse of time or both would become an Event of Default pursuant to clause (4) of Section 5.1.

        (3)  The Trustee shall have no duty to monitor the Guarantors' compliance with the covenants contained in this Article 10 other than as specifically set forth in this Section 10.10.

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ARTICLE 11

REDEMPTION OF SECURITIES

        Section 11.1     Applicability of Article.     

        Redemption of Securities of any series at the option of the Company as permitted or required by the terms of such Securities shall be made in accordance with the terms of such Securities and (except as otherwise provided herein or pursuant hereto) this Article.

        Section 11.2     Election to Redeem; Notice to Trustee.     

        The election of the Company to redeem any Securities shall be evidenced by or pursuant to a Board Resolution. In case of any redemption at the election of the Company of (a) less than all of the Securities of any series or (b) all of the Securities of any series, with the same issue date, interest rate or formula, Stated Maturity and other terms, the Company shall, at least 60 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the principal amount of Securities of such series to be redeemed.

        Section 11.3     Selection by Trustee of Securities to be Redeemed.     

        If less than all of the Securities of any series with the same issue date, interest rate or formula, Stated Maturity and other terms are to be redeemed, the particular Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Trustee from the Outstanding Securities of such series not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions of the principal amount of Registered Securities of such series; provided, however, that no such partial redemption shall reduce the portion of the principal amount of a Registered Security of such series not redeemed to less than the minimum denomination for a Security of such series established herein or pursuant hereto.

        The Trustee shall promptly notify the Company and the Security Registrar (if other than itself) in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed.

        For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to be redeemed only in part, to the portion of the principal of such Securities which has been or is to be redeemed.

        Section 11.4     Notice of Redemption.     

        Notice of redemption shall be given in the manner provided in Section 1.6, not less than 30 nor more than 60 days prior to the Redemption Date, unless a shorter period is specified in the Securities to be redeemed, to the Holders of Securities to be redeemed. Failure to give notice by mailing in the manner herein provided to the Holder of any Registered Securities designated for redemption as a whole or in part, or any defect in the notice to any such Holder, shall not affect the validity of the proceedings for the redemption of any other Securities or portion thereof.

        Any notice that is mailed to the Holder of any Registered Securities in the manner herein provided shall be conclusively presumed to have been duly given, whether or not such Holder receives the notice.

        All notices of redemption shall state:

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        A notice of redemption published as contemplated by Section 1.6 need not identify particular Registered Securities to be redeemed.

        Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company.

        Section 11.5     Deposit of Redemption Price.     

        On or prior to any Redemption Date, the Company shall deposit, with respect to the Securities of any series called for redemption pursuant to Section 11.4, with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 10.3) an amount of money in the applicable Currency sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date, unless otherwise specified pursuant to Section 3.1 or in the Securities of such series) any accrued interest on and Additional Amounts with respect thereto, all such Securities or portions thereof which are to be redeemed on that date.

        Section 11.6     Securities Payable on Redemption Date.     

        Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified, and from and after such date (unless the Company shall default in the payment of the Redemption Price and

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accrued interest) such Securities shall cease to bear interest and the Coupons for such interest appertaining to any Bearer Securities so to be redeemed, except to the extent provided below, shall be void. Upon surrender of any such Security for redemption in accordance with said notice, together with all Coupons, if any, appertaining thereto maturing after the Redemption Date, such Security shall be paid by the Company at the Redemption Price, together with any accrued interest and Additional Amounts to the Redemption Date; provided, however, that, except as otherwise provided in or pursuant to this Indenture or the Bearer Securities of such series, installments of interest on Bearer Securities whose Stated Maturity is on or prior to the Redemption Date shall be payable only upon presentation and surrender of Coupons for such interest (at an Office or Agency located outside the United States except as otherwise provided in Section 10.2), and provided, further, that, except as otherwise specified in or pursuant to this Indenture or the Registered Securities of such series, installments of interest on Registered Securities whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the Regular Record Dates therefor according to their terms and the provisions of Section 3.7.

        If any Bearer Security surrendered for redemption shall not be accompanied by all appurtenant Coupons maturing after the Redemption Date, such Security may be paid after deducting from the Redemption Price an amount equal to the face amount of all such missing Coupons, or the surrender of such missing Coupon or Coupons may be waived by the Company and the Trustee if there be furnished to them such security or indemnity as they may require to save each of them and any Paying Agent harmless. If thereafter the Holder of such Security shall surrender to the Trustee or any Paying Agent any such missing Coupon in respect of which a deduction shall have been made from the Redemption Price, such Holder shall be entitled to receive the amount so deducted; provided, however, that any interest or Additional Amounts represented by Coupons shall be payable only upon presentation and surrender of those Coupons at an Office or Agency for such Security located outside of the United States except as otherwise provided in Section 10.2.

        If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal and any premium, until paid, shall bear interest from the Redemption Date at the rate prescribed therefor in the Security.

        Section 11.7     Securities Redeemed in Part.     

        Any Registered Security which is to be redeemed only in part shall be surrendered at any Office or Agency for such Security (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his attorney duly authorized in writing) and the Company shall execute and the Trustee shall authenticate and deliver to the Holder of such Security without service charge, a new Registered Security or Securities of the same series, containing identical terms and provisions, of any authorized denomination as requested by such Holder in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered. If a Security in global form is so surrendered, the Company shall execute, and the Trustee shall authenticate and deliver to the U.S. Depository or other Depository for such Security in global form as shall be specified in the Company Order with respect thereto to the Trustee, without service charge, a new Security in global form in a denomination equal to and in exchange for the unredeemed portion of the principal of the Security in global form so surrendered.

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ARTICLE 12

SINKING FUNDS

        Section 12.1     Applicability of Article.     

        The provisions of this Article shall be applicable to any sinking fund for the retirement of Securities of a series, except as otherwise permitted or required in or pursuant to this Indenture or any Security of such series issued pursuant to this Indenture.

        The minimum amount of any sinking fund payment provided for by the terms of Securities of any series is herein referred to as a "mandatory sinking fund payment", and any payment in excess of such minimum amount provided for by the terms of Securities of such series is herein referred to as an "optional sinking fund payment". If provided for by the terms of Securities of any series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 12.2. Each sinking fund payment shall be applied to the redemption of Securities of any series as provided for by the terms of Securities of such series and this Indenture.

        Section 12.2     Satisfaction of Sinking Fund Payments with Securities.     

        The Company may, in satisfaction of all or any part of any sinking fund payment with respect to the Securities of any series to be made pursuant to the terms of such Securities (1) deliver Outstanding Securities of such series (other than any of such Securities previously called for redemption or any of such Securities in respect of which cash shall have been released to the Company), together in the case of any Bearer Securities of such series with all unmatured Coupons appertaining thereto, and (2) apply as a credit Securities of such series which have been redeemed either at the election of the Company pursuant to the terms of such series of Securities or through the application of permitted optional sinking fund payments pursuant to the terms of such Securities, provided that such series of Securities have not been previously so credited. Such Securities shall be received and credited for such purpose by the Trustee at the Redemption Price specified in such Securities for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly. If, as a result of the delivery or credit of Securities of any series in lieu of cash payments pursuant to this Section 12.2, the principal amount of Securities of such series to be redeemed in order to satisfy the remaining sinking fund payment shall be less than $100,000, the Trustee need not call Securities of such series for redemption, except upon Company Request, and such cash payment shall be held by the Trustee or a Paying Agent and applied to the next succeeding sinking fund payment, provided, however, that the Trustee or such Paying Agent shall at the request of the Company from time to time pay over and deliver to the Company any cash payment so being held by the Trustee or such Paying Agent upon delivery by the Company to the Trustee of Securities of that series purchased by the Company having an unpaid principal amount equal to the cash payment requested to be released to the Company.

        Section 12.3     Redemption of Securities for Sinking Fund.     

        Not less than 75 days prior to each sinking fund payment date for any series of Securities, the Company shall deliver to the Trustee an Officers' Certificate specifying the amount of the next ensuing mandatory sinking fund payment for that series pursuant to the terms of that series, the portion thereof, if any, which is to be satisfied by payment of cash and the portion thereof, if any, which is to be satisfied by delivering and crediting of Securities of that series pursuant to Section 12.2, and the optional amount, if any, to be added in cash to the next ensuing mandatory sinking fund payment, and will also deliver to the Trustee any Securities to be so credited and not theretofore delivered. If such Officers' Certificate shall specify an optional amount to be added in cash to the next ensuing mandatory sinking fund payment, the Company shall thereupon be obligated to pay the amount therein specified. Not less than 60 days before each such sinking fund payment date the Trustee shall select the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 11.3 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 11.4. Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Sections 11.6 and 11.7.

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ARTICLE 13

REPAYMENT AT THE OPTION OF HOLDERS

        Section 13.1     Applicability of Article.     

        Securities of any series which are repayable at the option of the Holders thereof before their Stated Maturity shall be repaid in accordance with the terms of the Securities of such series. The repayment of any principal amount of Securities pursuant to such option of the Holder to require repayment of Securities before their Stated Maturity, for purposes of Section 3.9, shall not operate as a payment, redemption or satisfaction of the Debt represented by such Securities unless and until the Company, at its option, shall deliver or surrender the same to the Trustee with a directive that such Securities be cancelled. Notwithstanding anything to the contrary contained in this Section 13.1, in connection with any repayment of Securities, the Company may arrange for the purchase of any Securities by an agreement with one or more investment bankers or other purchasers to purchase such Securities by paying to the Holders of such Securities on or before the close of business on the repayment date an amount not less than the repayment price payable by the Company on repayment of such Securities, and the obligation of the Company to pay the repayment price of such Securities shall be satisfied and discharged to the extent such payment is so paid by such purchasers.


ARTICLE 14

SECURITIES IN FOREIGN CURRENCIES

        Section 14.1     Applicability of Article.     

        Whenever this Indenture provides for (i) any action by, or the determination of any of the rights of, Holders of Securities of any series in which not all of such Securities are denominated in the same Currency, or (ii) any distribution to Holders of Securities, in the absence of any provision to the contrary in the form of Security of any particular series or pursuant to this Indenture or the Securities, any amount in respect of any Security denominated in a Currency other than Dollars shall be treated for any such action or distribution as that amount of Dollars that could be obtained for such amount on such reasonable basis of exchange and as of the record date with respect to Registered Securities of such series (if any) for such action, determination of rights or distribution (or, if there shall be no applicable record date, such other date reasonably proximate to the date of such action, determination of rights or distribution) as the Company may specify in a written notice to the Trustee.


ARTICLE 15

MEETINGS OF HOLDERS OF SECURITIES

        Section 15.1     Purposes for Which Meetings May Be Called.     

        A meeting of Holders of Securities of any series may be called at any time and from time to time pursuant to this Article to make, give or take any request, demand, authorization, direction, notice, consent, waiver or other Act provided by this Indenture to be made, given or taken by Holders of Securities of such series.

        Section 15.2     Call, Notice and Place of Meetings.     

        (1)  The Trustee may at any time call a meeting of Holders of Securities of any series for any purpose specified in Section 15.1, to be held at such time and at such place in the Borough of Manhattan, The City of New York, or, if Securities of such series have been issued in whole or in part as Bearer Securities, in London or in such place outside the United States as the Trustee shall determine. Notice of every meeting of Holders of Securities of any series, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting, shall be

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given, in the manner provided in Section 1.6, not less than 21 nor more than 180 days prior to the date fixed for the meeting.

        (2)  In case at any time the Company (by or pursuant to a Board Resolution), a Guarantor, (by or pursuant to a Guarantor's Board Resolution) or the Holders of at least 10% in principal amount of the Outstanding Securities of any series shall have requested the Trustee to call a meeting of the Holders of Securities of such series for any purpose specified in Section 15.1, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have mailed notice of or made the first publication of the notice of such meeting within 21 days after receipt of such request (whichever shall be required pursuant to Section 1.6) or shall not thereafter proceed to cause the meeting to be held as provided herein, then the Company or the Holders of Securities of such series in the amount above specified, as the case may be, may determine the time and the place in the Borough of Manhattan, The City of New York, or, if Securities of such series are to be issued as Bearer Securities, in London for such meeting and may call such meeting for such purposes by giving notice thereof as provided in clause (1) of this Section.

        Section 15.3     Persons Entitled to Vote at Meetings.     

        To be entitled to vote at any meeting of Holders of Securities of any series, a Person shall be (1) a Holder of one or more Outstanding Securities of such series, or (2) a Person appointed by an instrument in writing as proxy for a Holder or Holders of one or more Outstanding Securities of such series by such Holder or Holders. The only Persons who shall be entitled to be present or to speak at any meeting of Holders of Securities of any series shall be the Persons entitled to vote at such meeting and their counsel, any representatives of the Trustee and its counsel, any representatives of the Guarantor and its counsel and any representatives of the Company and its counsel.

        Section 15.4     Quorum; Action.     

        The Persons entitled to vote a majority in principal amount of the Outstanding Securities of a series shall constitute a quorum for any meeting of Holders of Securities of such series. In the absence of a quorum within 30 minutes after the time appointed for any such meeting, the meeting shall, if convened at the request of Holders of Securities of such series, be dissolved. In any other case the meeting may be adjourned for a period of not less than 10 days as determined by the chairman of the meeting prior to the adjournment of such meeting. In the absence of a quorum at any reconvened meeting, such reconvened meeting may be further adjourned for a period of not less than 10 days as determined by the chairman of the meeting prior to the adjournment of such reconvened meeting. Notice of the reconvening of any adjourned meeting shall be given as provided in Section 15.2(1), except that such notice need be given only once not less than five days prior to the date on which the meeting is scheduled to be reconvened. Notice of the reconvening of an adjourned meeting shall state expressly the percentage, as provided above, of the principal amount of the Outstanding Securities of such series which shall constitute a quorum.

        Except as limited by the proviso to Section 9.2, any resolution presented to a meeting or adjourned meeting duly reconvened at which a quorum is present as aforesaid may be adopted only by the affirmative vote of the Holders of a majority in principal amount of the Outstanding Securities of that series; provided, however, that, except as limited by the proviso to Section 9.2, any resolution with respect to any request, demand, authorization, direction, notice, consent, waiver or other Act which this Indenture expressly provides may be made, given or taken by the Holders of a specified percentage, which is less than a majority, in principal amount of the Outstanding Securities of a series may be adopted at a meeting or an adjourned meeting duly reconvened and at which a quorum is present as aforesaid by the affirmative vote of the Holders of such specified percentage in principal amount of the Outstanding Securities of such series.

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        Any resolution passed or decision taken at any meeting of Holders of Securities of any series duly held in accordance with this Section shall be binding on all the Holders of Securities of such series and the Coupons appertaining thereto, whether or not such Holders were present or represented at the meeting.

        Section 15.5     Determination of Voting Rights; Conduct and Adjournment of Meetings.     

        (1)  Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Holders of Securities of such series in regard to proof of the holding of Securities of such series and of the appointment of proxies and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall deem appropriate. Except as otherwise permitted or required by any such regulations, the holding of Securities shall be proved in the manner specified in Section 1.4 and the appointment of any proxy shall be proved in the manner specified in Section 1.4 or by having the signature of the person executing the proxy witnessed or guaranteed by any trust company, bank or banker authorized by Section 1.4 to certify to the holding of Bearer Securities. Such regulations may provide that written instruments appointing proxies, regular on their face, may be presumed valid and genuine without the proof specified in Section 1.4 or other proof.

        (2)  The Trustee shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or by Holders of Securities as provided in Section 15.2(2), in which case the Company, a Guarantor or the Holders of Securities of the series calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by vote of the Persons entitled to vote a majority in principal amount of the Outstanding Securities of such series represented at the meeting.

        (3)  At any meeting, each Holder of a Security of such series or proxy shall be entitled to one vote for each $1,000 principal amount of Securities of such series held or represented by him; provided, however, that no vote shall be cast or counted at any meeting in respect of any Security challenged as not Outstanding and ruled by the chairman of the meeting to be not Outstanding. The chairman of the meeting shall have no right to vote, except as a Holder of a Security of such series or proxy.

        (4)  Any meeting of Holders of Securities of any series duly called pursuant to Section 15.2 at which a quorum is present may be adjourned from time to time by Persons entitled to vote a majority in principal amount of the Outstanding Securities of such series represented at the meeting; and the meeting may be held as so adjourned without further notice.

        Section 15.6     Counting Votes and Recording Action of Meetings.     

        The vote upon any resolution submitted to any meeting of Holders of Securities of any series shall be by written ballots on which shall be subscribed the signatures of the Holders of Securities of such series or of their representatives by proxy and the principal amounts and serial numbers of the Outstanding Securities of such series held or represented by them. The permanent chairman of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in triplicate of all votes cast at the meeting. A record, at least in triplicate, of the proceedings of each meeting of Holders of Securities of any series shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that said notice was given as provided in Section 15.2 and, if applicable, Section 15.4. Each copy shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one such copy shall be delivered to the

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Company and the Guarantors, and another to the Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting. Any record so signed and verified shall be conclusive evidence of the matters therein stated.


ARTICLE 16

GUARANTEE

        Section 16.1     Guarantee.     

        Subject to the provisions of this Article Sixteen, the Guarantors hereby irrevocably and unconditionally guarantee, jointly and severally, on a senior basis to each Holder of a Security authenticated and delivered by the Trustee the due and punctual payment of the principal of, any premium and interest on, and any Additional Amounts with respect to such Security and the due and punctual payment of the sinking fund payments (if any) provided for pursuant to the terms of such Security, when and as the same shall become due and payable, whether at maturity, by acceleration, redemption, repayment or otherwise, and the due and punctual payment of interest on overdue principal of and premium, if any, and interest, if any, on the Securities, to the extent lawful, in accordance with the terms of such Security and of this Indenture, and the due and punctual performance of all other obligations of the Company, to the Holders or the Trustee all in accordance with the terms of the Securities and this Indenture (the foregoing, collectively, the "Guaranteed Obligations"). In case of the failure of the Company punctually to pay any such principal, premium, interest, Additional Amounts or sinking fund payment, each Guarantor hereby agrees to cause any such payment to be made punctually when and as the same shall become due and payable, whether at maturity, upon acceleration, redemption, repayment or otherwise, and as if such payment were made by the Company.

        Each Guarantor hereby agrees that its obligations hereunder shall be as principal and not merely as surety, and shall be absolute, irrevocable and unconditional, irrespective of, and shall be unaffected by, any invalidity, irregularity or unenforceability of any Security or this Indenture, any failure to enforce the provisions of any Security or this Indenture, or any waiver, modification, consent or indulgence granted with respect thereto by the Holder of such Security or the Trustee, the recovery of any judgment against the Company or any action to enforce the same, or any other circumstances which may otherwise constitute a legal or equitable discharge of a surety or guarantor. Each Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of merger, insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest or notice with respect to any such Security or the Debt evidenced thereby and all demands whatsoever, and covenants that no Guarantee will be discharged except by payment in full of the principal of, any premium and interest on, and any Additional Amounts and sinking fund payments required with respect to, the Securities and the complete performance of all other obligations contained in the Securities and this Indenture.

        The maturity of the obligations guaranteed hereby may be accelerated as provided in Article Five for the purposes of this Article Sixteen. In the event of any declaration of acceleration of such obligations as provided in Article Five, such obligations (whether or not due and payable) shall forthwith become due and payable by each Guarantor for the purpose of this Article Sixteen. In addition, without limiting the foregoing provisions, upon the effectiveness of an acceleration under Article Five, the Trustee shall promptly make a demand for payment on the Securities under each Guarantee provided for in this Article Sixteen.

        If the Trustee or the Holder of any Security is required by any court or otherwise to return to the Company or any Guarantor, or any custodian, receiver, liquidator, trustee, sequestrator or other similar official acting in relation to the Company or any Guarantor, any amount paid to the Trustee or such Holder in respect of a Security, any Guarantee, to the extent theretofore discharged, shall be reinstated

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in full force and effect. Each Guarantor further agrees, to the fullest extent that it may lawfully do so, that, as between it, on the one hand, and the Holders and the Trustee, on the other hand, the maturity of the obligations guaranteed hereby may be accelerated as provided in Article Five hereof for the purposes of each Guarantee, notwithstanding any stay, injunction or other prohibition issued or imposed under any applicable bankruptcy law preventing such acceleration in respect of the obligations guaranteed hereby.

        Until this Indenture is discharged and all of the Securities are discharged and paid in full, each Guarantor hereby irrevocably waives and agrees not to exercise any claim or other rights which it may now or hereafter acquire against the Company that arise from the existence, payment, performance or enforcement of the Company's obligations under the Securities or this Indenture and such Guarantor's obligations under this Guarantee and this Indenture, in any such instance including, without limitation, any right of subrogation, reimbursement, exoneration, contribution, indemnification, and any right to participate in any claim or remedy against the Company, whether or not such claim, remedy or right arises in equity, or under contract, statute or common law, including, without limitation, the right to take or receive from the Company, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim or other rights. If any amount shall be paid to any Guarantor in violation of the preceding sentence and any amounts owing to the Trustee or the Holders of Securities under the Securities, this Indenture, or any other document or instrument delivered under or in connection with such agreements or instruments, shall not have been paid in full, such amount shall be deemed to have been paid to such Guarantor for the benefit of, and held in trust for the benefit of, the Holders of the Securities, and shall forthwith be paid to the Trustee for the benefit of such Holders to be credited and applied to the Securities, whether matured or unmatured, in accordance with the terms of this Indenture. Each Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by this Indenture and that the waiver set forth in this Section is knowingly made in contemplation of such benefits.

        Anything to the contrary in this Indenture notwithstanding, each Guarantee by a Subsidiary Guarantor shall be, and hereby is, limited to the maximum amount that can be guaranteed by the applicable Guarantor without rendering such Guarantee, as it relates to such Guarantor, voidable under any applicable law relating to fraudulent conveyance, fraudulent transfer or similar laws affecting the rights of creditors generally.

        Each Guarantee set forth in this Section 16.1 shall not be valid and obligatory for any purpose with respect to a Security until the certificate of authentication of such Security shall have been signed by or on behalf of the Trustee.

        Each Guarantee is a guarantee of payment and not of collection.

        Section 16.2     Operation of Guarantees.     

        By execution of this Agreement (in the case of the Parent Guarantor and each Initial Subsidiary Guarantor) or a supplemental indenture (in the case of any Subsequent Subsidiary Guarantors) and upon delivery of a Guarantor's Order to the Trustee by all Guarantors prior to the issuance of any Security of a series, the Guarantee of each Guarantor in respect of such Securities shall be set forth in Section 16.1 and shall be effective for all purposes upon authentication of such Security by or on behalf of the Trustee, regardless of whether such authentication occurs prior to a Subsequent Subsidiary Guarantor's execution of the required supplemental indenture, and shall not require any Guarantor's endorsement on the Securities.

        Section 16.3     Release of Guarantee.     

        (1)  Concurrently with the payment in full of all of the Guaranteed Obligations, the Guarantors shall be released from and relieved of their obligations under this Article Sixteen. Upon the delivery by the Company to the Trustee of an Officers' Certificate and, if requested by the Trustee, an Opinion of

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Counsel to the effect that the transaction giving rise to the release of such obligations was made by the Company in accordance with the provisions of this Indenture and the Securities, the Trustee shall execute any documents reasonably required in order to evidence the release of the Guarantors from their obligations. If any of the Guaranteed Obligations are revived and reinstated after the termination of this Guarantee, then all of the obligations of the Guarantors under this Guarantee shall be revived and reinstated as if this Guarantee had not been terminated until such time as the Guaranteed Obligations are paid in full, and the Guarantors shall enter into an amendment to this Guarantee, reasonably satisfactory to the Trustee, evidencing such revival and reinstatement.

        (2)  Upon the sale or disposition of all of the Common Stock of a Subsidiary Guarantor (by merger or otherwise) to a Person that is not an Affiliate of the Parent Guarantor and which sale or disposition is otherwise in compliance with the terms of this Indenture, such Subsidiary Guarantor shall be deemed released from all obligations under this Article Sixteen; provided however , that any such release upon such sale or disposition shall occur if and only to the extent that all obligations of such Subsidiary Guarantor under all of its guarantees of, and under all of its pledges or assets or other security interests which secure, indebtedness of the Company, the Parent Guarantor or any Subsidiary shall also terminate upon such sale or disposition. Upon the delivery by the Company to the Trustee of an Officers' Certificate and, if requested by the Trustee, an Opinion of Counsel to the effect that the transaction giving rise to the release of such obligations was made in accordance with the provisions of this Indenture and the Securities, the Trustee shall execute any documents reasonably required in order to evidence the release of such Guarantor from its obligations. Any Subsidiary Guarantor not so released remains liable for the full amount of the Guaranteed Obligations as provided in this Article Sixteen.

        (3)  At any time, upon the Company's request and without the consent of the Holders, any Subsidiary Guarantor other than a Significant Subsidiary Guarantor may be released from all obligations under this Article Sixteen, provided however , that any such release upon such request shall occur if and only to the extent that all obligations of such Subsidiary Guarantor under all of its guarantees of indebtedness of the Company, the Parent Guarantor or any other Subsidiary of the Parent Guarantor shall also terminate at the time of such release.

* * * *

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        IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, all as of the day and year first above written.

  CINTAS CORPORATION NO. 2,
    as Issuer
       

 

By:

 

/s/  
ROBERT J. KOHLHEPP       
Name: Robert J. Kohlhepp
Title: Chief Executive Officer
       

 

CINTAS CORPORATION,
    as 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
       

 

WACHOVIA BANK, NATIONAL ASSOCIATION,
    as Trustee
       

 

By:

 

/s/  
R. DOUGLAS MILNER       
Name: R. Douglas Milner
Title: Vice President



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Reconciliation and Tie between Trust Indenture Act of 1939 (the "Trust Indenture Act") and Indenture
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
ARTICLE 2 SECURITIES FORMS
ARTICLE 3 THE SECURITIES
ARTICLE 4 SATISFACTION AND DISCHARGE OF INDENTURE
ARTICLE 5 REMEDIES
ARTICLE 6 THE TRUSTEE
ARTICLE 7 HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
ARTICLE 8 CONSOLIDATION, MERGER AND SALES
ARTICLE 9 SUPPLEMENTAL INDENTURES
ARTICLE 10 COVENANTS
ARTICLE 11 REDEMPTION OF SECURITIES
ARTICLE 12 SINKING FUNDS
ARTICLE 13 REPAYMENT AT THE OPTION OF HOLDERS
ARTICLE 14 SECURITIES IN FOREIGN CURRENCIES
ARTICLE 15 MEETINGS OF HOLDERS OF SECURITIES
ARTICLE 16 GUARANTEE

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Exhibit 4.2

THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY (AS DEFINED IN THE INDENTURE) OR A NOMINEE THEREOF. THIS GLOBAL NOTE IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND, UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS GLOBAL NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY, OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY, OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY.

UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY (AS DEFINED BELOW) OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

[RESTRICTED SECURITIES LEGEND:][THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.

THE HOLDER OF THIS NOTE, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED NOTES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH NOTE OR INTEREST OR PARTICIPATION THEREIN, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") THAT IS TWO YEARS (OR SUCH PERIOD AS MAY BE REQUIRED BY ANY SUBSEQUENT CHANGE IN APPLICABLE LAW) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF SUCH NOTE), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE NOTE FOR ITS OWN ACCOUNT OF FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE NOTES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE



REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.]

No.       
CUSIP No.                         
      Principal Amount $                        ,
as revised by the Schedule of
Increases and Decreases in Global
Security attached hereto


Cintas Corporation No. 2
5 1 / 8 % Senior Notes due 2007
Payment of Principal, Premium, if any, and Interest
Unconditionally Guaranteed, Jointly and Severally,
by Cintas Corporation and
Certain Subsidiaries of Cintas Corporation

        Cintas Corporation No. 2, a corporation duly organized and existing under the laws of Nevada (hereinafter called the "Company", which term includes any successor Person under the Indenture referred to below), for value received, hereby promises to pay to Cede & Co., c/o Depository Trust Company, 55 Water Street, New York, New York 10041, or registered assigns, the principal sum of                        Million Dollars ($                        ) as revised by the Schedule of Increases and Decreases in Global Security attached hereto, on June 1, 2007, and to pay interest thereon from May 28, 2002 or from the most recent date to which interest has been paid or duly provided for, semiannually on June 1 and December 1 in each year (each, an "Interest Payment Date"), commencing on December 1, 2002, at the rate of 5 1 / 8 % per annum (subject to increase as provided in the Registration Rights Agreement (as defined below)), until the principal hereof and premium, if any, hereon is paid or duly made available for payment, and on any overdue principal or premium, if any, and (to the extent that payment of such interest is lawful) on any overdue installment of interest at the same rate per annum during the period in which such principal or premium, if any, or interest remains unpaid. The interest so payable and punctually paid or duly provided for on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Note (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the May 15 or November 15 (whether or not a Business Day (as defined below)), as the case may be, next preceding such Interest Payment Date. Except as otherwise provided in the Indenture, any such interest which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date shall forthwith cease to be payable to the Holder hereof on such Regular Record Date and may either be paid to the Person in whose name this Note (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Notes of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in such Indenture. Payment of the principal of (and premium, if any) and interest on this Note will be made at the office or agency of the Company or, if applicable, the Guarantor maintained for that purpose in The Borough of Manhattan, The City of New York, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that, at the option of the Company, payment of interest may be made by United States dollar

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check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register; provided, further, that payment to the Depository Trust Company or any successor depository ("DTC") may be made by wire transfer to the account designated by DTC or such successor depository in writing.

        If any Interest Payment Date or Maturity Date falls on a day that is not a Business Day, the related payment of principal, premium, if any, and interest on the Notes will be made on the next succeeding Business Day with the same force and effect as if it were made on the date such payment was due and no interest shall accrue on the amount so payable for the period from and after such Interest Payment Date or Maturity Date, as the case may be, to the next succeeding Business Day. "Business Day" means any day other than a Saturday, Sunday or other day on which banking institutions are authorized or obligated by law, regulation or executive order to close.

        Payments of interest hereon with respect to any Interest Payment Date will include interest accrued to but excluding such Interest Payment Date. Interest on this Note shall be calculated on the basis of a 360-day year consisting of twelve 30-day months.

        This Note is one of a duly authorized series of Securities of the Company (herein called the "Notes") issued or to be issued under an Indenture dated as of May 28, 2002 (herein called, together with all indentures supplemental thereto, the "Indenture") by and among the Company, Cintas Corporation (the "Parent Guarantor"), Affirmed Medical, Inc., American First Aid Company, Cintas Corporation No. 3, Cintas Corporation No. 8, Cintas Corporation No. 15, Cintas—R.U.S., L.P., Cintas First Aid Holdings Corporation, a Nevada corporation, LLT, Inc., Respond Industries, Incorporated, and Xpect First Aid Corporation, as guarantors (the "Initial Subsidiary Guarantors" and, together with the Parent Guarantor and each other subsidiary of the Company that pursuant to the terms of the Indenture guarantees the Company's obligations under such Indenture, in each case in such entity's capacity as guarantor, the "Guarantors") to Wachovia Bank, National Association, as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture with respect to the Notes), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Guarantors, the Trustee and the Holders of the Notes, and of the terms upon which the Notes are, and are to be, authenticated and delivered. This Note is one of the series designated on the face hereof, initially limited (subject to exceptions provided in the Indenture) to the aggregate principal amount specified in the Officers' Certificate dated May 28, 2002 establishing the terms of the Notes pursuant to the Indenture; provided that the Company may, without the consent of Holders, reopen this series of Securities and issue additional Notes, so as to increase the aggregate principal amount of the Notes Outstanding upon the terms and subject to the conditions set forth in the Indenture so long as any such additional Notes have the same tenor and terms (including, without limitation, rights to receive accrued and unpaid interest as the Notes then Outstanding).    The Notes are issuable only in registered form without coupons in the denominations specified in the Officers' Certificate dated May 28, 2002 establishing the terms of the Notes, all as more fully provided in the Indenture and such Officers' Certificate. As provided in the Indenture and in such Officers' Certificate, and subject to certain limitations set forth in the Indenture, such Officers' Certificate and in this Note, the Notes of this series are exchangeable for a like aggregate principal amount of Notes of this series in different authorized denominations, as requested by the Holders surrendering the same.

        The Notes are unconditionally guaranteed as to the due and punctual payment of principal, premium, if any, and interest in respect thereof by the Guarantors as evidenced by their guarantees (the "Guarantees") included in the Indenture and set forth hereon. The Guarantees are direct and unconditional obligations of such Guarantors and rank and will rank equally in priority of payment and in all other respects with all other unsecured and unsubordinated obligations of such Guarantors now or hereafter outstanding.

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        The Holder of this Note is entitled to the benefits of the Registration Rights Agreement, dated as of May 28, 2002, by and among the Company, the Guarantors and the Initial Purchasers named therein (as the same may be amended from time to time, the "Registration Rights Agreement"). In the event that the Exchange Offer (as such term is defined in the Registration Rights Agreement) is not consummated or a Shelf Registration Statement (as such term is defined in the Registration Rights Agreement) with respect to the Notes is not declared effective on or prior to the date that is 180 days after the Closing Date (as such term is defined in the Registration Rights Agreement) then the interest rate borne by the Notes shall be increased by one-quarter of one percent (0.25%) per annum commencing the date that is 180 days after the Closing Date until the Exchange Offer is consummated or the Shelf Registration Statement is declared effective by the Securities and Exchange Commission (the "Commission") provided, that in the case of a Shelf Registration Statement, if the Company and the Guarantors are unable to cause such Shelf Registration Statement to become effective because the Holders of Notes have not provided information with respect to themselves as required by law to be included therein pursuant to the Company's or the Guarantors' request as provided in the Registration Rights Agreement, such one-quarter of one percent (0.25%) increase in the interest rate shall be payable only to the Holders that have furnished such information required by law to be included therein to the Company or the Guarantors pursuant to its request under the Registration Rights Agreement from but excluding the date such information is provided to the Company or the Guarantors to but excluding the date the Shelf Registration Statement is declared effective by the Commission.

        This Note is redeemable at the option of the Company, in whole or in part at any time, at a redemption price equal to the greater of (i) 100% of the principal amount of this Note to be redeemed and (ii) the sum, as determined by the Independent Investment Banker (as defined below), of the present values of the remaining scheduled payments of principal and interest on this Note to be redeemed (exclusive of interest accrued to the date of redemption) discounted to the date of redemption on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below) plus 15 basis points, and accrued but unpaid interest thereon to the redemption date.

        "Treasury Rate" means, with respect to any redemption date for the Notes, (i) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated "H.15(519)" or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption "Treasury Constant Maturities," for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after the maturity date of the Notes, yields for the two published maturities most closely corresponding to the Comparable Treasury Issuer will be determined and the Treasury Rate shall be interpolated or extrapolated from those yields on a straight line basis, rounding to the nearest month) or (ii) if the release referred to in clause (i) (or any successor release) is not published during the week preceding the calculation date or does not contain the yields referred to above, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for that redemption date. The Treasury Rate will be calculated on the third Business Day preceding the redemption date.

        "Comparable Treasury Issue" means the United States Treasury security selected by the Independent Investment Banker as having a maturity comparable to the remaining term of the Notes that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Notes.

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        "Comparable Treasury Price" means, with respect to any redemption date, the average of the Reference Treasury Dealer Quotations obtained by the Trustee for such redemption date, after excluding the highest and lowest of four such Reference Treasury Dealer Quotations, or if the Trustee is unable to obtain at least four such Reference Treasury Dealer Quotations, the average of all Reference Treasury Dealer Quotations obtained by the Trustee.

        "Independent Investment Banker" means Banc One Capital Markets, Inc., or, if such firm is unwilling or unable to select the applicable Comparable Treasury Issue, an independent investment banking institution of national standing appointed by the Trustee and reasonably acceptable to the Company or, if applicable, the Guarantor.

        "Reference Treasury Dealer" means Banc One Capital Markets, Inc., (and its successors) and three other primary U.S. government securities dealers in New York City selected by the Independent Investment Banker (each, a "Primary Treasury Dealer"); provided, however, that if any of the foregoing shall cease to be a Primary Treasury Dealer, the Company shall substitute therefor another Primary Treasury Dealer.

        "Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any redemption date for the Notes, an average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue for the Note (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day preceding such redemption date.

        Notice of any redemption will be mailed at least 30 days but not more than 60 days before the redemption date to the Holder hereof at its address as such address shall appear in the Security Register of the Company. Unless the Company defaults in payment of the redemption price and accrued interest on and after the redemption date, interest will cease to accrue on the principal amount of this Note called for redemption.

        Except as provided above, this Note is not redeemable by the Company prior to maturity and is not subject to any sinking fund.

        If an Event of Default with respect to the Notes shall occur and be continuing, the principal amount of all the Notes may be declared due and payable in the manner and with the effect provided in the Indenture.

        The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and, if applicable, the Guarantors and the rights of the Holders of the Securities of each series issued under the Indenture at any time by the Company and, if applicable, the Guarantors, and the Trustee with the consent of the Holders of not less than a majority in aggregate principal amount of the Securities at the time Outstanding of each series affected thereby. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Securities of any series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company and, if applicable, the Guarantors with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Notes issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note.

        No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligations of the Company and the Guarantors, which are absolute and unconditional, to pay the principal of, premium, if any, and interest on this Note, at the times, place and rate, and in the coin or currency, herein and in the Indenture prescribed.

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        As provided in the Indenture and subject to certain limitations set forth therein and in this Note, the transfer of this Note is registerable on the Security Register of the Company, upon surrender of this Note for registration of transfer at the office or agency of the Company or the Guarantors in any place where the principal of (and premium, if any) and interest on this Note are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company or the Guarantors, the Security Registrar and the Trustee duly executed by, the Holder hereof or such Holder's attorney duly authorized in writing, and thereupon one or more new Notes of this series and of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.

        No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith, other than in certain cases provided in the Indenture.

        Prior to due presentment of this Note for registration of transfer, the Company, the Guarantors, the Trustee and any agent of the Company, the Guarantors or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for all purposes, whether or not this Note is overdue, and none of the Company, the Guarantors, the Trustee or any such agent shall be affected by notice to the contrary.

        The Indenture contains provisions whereby (i) the Company or the Guarantors may be discharged from their obligations with respect to the Notes (subject to certain exceptions) or (ii) the Company or the Guarantors may be released from their obligations under specified covenants and agreements in the Indenture, in each case if the Company or any Guarantor irrevocably deposits with the Trustee money or U.S. Government Obligations sufficient to pay and discharge the entire indebtedness on all Notes of this series, and satisfies certain other conditions, all as more fully provided in the Indenture.

        This Note shall be governed by and construed in accordance with the laws of the State of New York.

        All terms used in this Note which are defined in the Indenture shall have the meanings assigned to them in the Indenture.

        Unless the certificate of authentication hereon has been duly executed by the Trustee referred to below, directly or through an Authenticating Agent, by manual signature of an authorized signatory, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

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        IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed, manually or by facsimile by an authorized signatory.

Dated:      

[SEAL]

 

CINTAS CORPORATION NO.2
    as Issuer



 

 

 

 
      By:     
Name:
Title:



 

 

 

 
Attest:      



 

 

 

 
By:     
Name:
Title:
     


TRUSTEE'S CERTIFICATE OF AUTHENTICATION

        This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.

    WACHOVIA BANK, NATIONAL ASSOCIATION
    as Trustee



 

 

 
    By:     
Authorized Signatory

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GUARANTEE

        For value received, each of the undersigned hereby irrevocably and unconditionally guarantees (subject to release, if applicable, upon the terms set forth in the Indenture), jointly and severally, on a senior basis to the Holder of this Note and to the Trustee, on behalf of the Holder, (i) due and punctual payment of principal, premium, if any, and interest on this Note, when and as the same shall become due and payable, whether at Stated Maturity, by declaration of acceleration or otherwise, the due and punctual payment of interest on the overdue principal of (and premium, if any) and interest, if any, on this Note, to the extent lawful, and the due and punctual performance of all other obligations of the Company to the Holder of this Note or the Trustee all in accordance with the terms of this Note and the Indenture and (ii) in the case of any extension of time of payment or renewal of this Note or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, at Stated Maturity, by declaration of acceleration or otherwise. This Guarantee will not be valid or obligatory for any purpose until the Trustee duly executes the certificate of authentication on the Note upon which this Guarantee is endorsed.

Dated:   Cintas Corporation
a Washington corporation;

 

 

Affirmed Medical, Inc.,
a California corporation;

 

 

American First Aid Company,
a Maryland corporation;

 

 

Cintas Corporation No. 3,
a Nevada corporation;

 

 

Cintas Corporation No. 8,
a Nevada corporation;

 

 

Cintas Corporation No. 15,
a Nevada corporation;

 

 

Cintas—R.U.S., L.P.,
a Texas limited partnership;

 

 

Cintas First Aid Holdings Corporation,
a Nevada corporation;

 

 

LLT, Inc.,
a Virginia corporation;

 

 

Respond Industries, Incorporated,
a Colorado corporation;

 

 

 

 

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Xpect First Aid Corporation,
a Kansas corporation;



 

 

 

 

 

By:

    

Authorized Signatory for each of the Guarantors



 

 

 

 

 

Attest:



 

 

 

 

 

By:

    

Authorized Signatory for each of the Guarantors

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ABBREVIATIONS

        The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations:

TEN COM as tenants in common        UNIF GIFT MIN ACT    —                    Custodian               

TEN ENT


as tenants by the entireties    (Cust)    (Minor)

JT TEN


as joint tenants with right of survivorship Under Uniform Gifts to Minors and not as tenants in common                        Act                                                  

(State)

Additional abbreviations may also be used though not in the above list.

        FOR VALUE RECEIVED, the undersigned registered holder hereby sell(s), assign(s) and transfer(s) unto

         PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE



  



  


PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
  


the within Note and all rights thereunder, hereby irrevocably constituting and appointing
  


to transfer said Note on the books of the Company with full power of substitution in the premises.
  

Dated:

Notice:    The signature to this assignment must correspond with the name as it appears upon the face
of the within Note in every particular, without alteration or enlargement or any change whatever.

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        In connection with any transfer or exchange of any of the Notes evidenced by this certificate occurring prior to the date that is two years after the later of the date of original issuance of such Notes and the last date, if any, on which such Notes were owned by the Company or any Affiliate of the Company, the undersigned confirms that such Notes are being:

CHECK ONE BOX BELOW:

1 o acquired for the undersigned's own account, without transfer; or

2

o

transferred to the Company; or

3

o

transferred pursuant to and in compliance with Rule 144A under the Securities Act of 1933, as amended (the "
Securities Act "); or

4

o

transferred pursuant to an effective registration statement under the Securities Act; or

5

o

transferred pursuant to and in compliance with Regulation S under the Securities Act; or

6

o

transferred in a minimum purchase amount of $250,000 to an institutional "accredited investor" (as defined in Rule 501(a)(l), (2), (3) or (7) under the Securities Act), that has furnished to the Trustee a signed letter containing certain representations and agreements that it is acquiring this Notes for investment and not with a view to, or for offer or sale in connection with, any distribution (as contemplated in the Securities Act) or fractionalization thereof or with any intention of reselling the Note or any part thereof, subject to any requirement of law that the disposition of its property will be at all times within its control and subject to its ability to resell this Note pursuant to Rule 144A, Regulation S or other exemption from registration available under the Securities Act; or

7

o

transferred pursuant to another available exemption from the registration requirements of the Securities Act of 1933.

        Unless one of the boxes is checked, the Trustee will refuse to register any of the Notes evidenced by this certificate in the name of any person other than the registered holder thereof; provided , however , that if box (5), (6) or (7) is checked, the Trustee or the Company may require, prior to registering any such transfer of the Notes, in their sole discretion, such legal opinions, certifications and other information as the Trustee or the Company may reasonably request to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act.

   
Signature

Signature Guarantee:
  

 

 


(Signature must be guaranteed)

 


Signature

        The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to S.E.C. Rule 17Ad-15.

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TO BE COMPLETED BY PURCHASER IF (1) OR (3) ABOVE IS CHECKED.

        The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, as amended, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company and the Guarantors as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A.


Dated:
   

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[TO BE ATTACHED TO GLOBAL NOTE]


SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE

        The following increases or decreases in this Global Note have been made

Date of Exchange

  Amount of increase in
Principal Amount of
this Global Note

  Amount of decrease in
Principal Amount of
this Global Note

  Principal Amount of
this Global Note
following each
decrease or increase

  Signature of
authorized signatory
of Trustee









               

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QuickLinks

Cintas Corporation No. 2 5–1/8% Senior Notes due 2007
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
GUARANTEE
ABBREVIATIONS
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE

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Exhibit 4.3

THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY (AS DEFINED IN THE INDENTURE) OR A NOMINEE THEREOF. THIS GLOBAL NOTE IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND, UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS GLOBAL NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY, OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY, OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY.

UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY (AS DEFINED BELOW) OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

[RESTRICTED SECURITIES LEGEND:][THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.

THE HOLDER OF THIS NOTE, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED NOTES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH NOTE OR INTEREST OR PARTICIPATION THEREIN, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") THAT IS TWO YEARS (OR SUCH PERIOD AS MAY BE REQUIRED BY ANY SUBSEQUENT CHANGE IN APPLICABLE LAW) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF SUCH NOTE), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE NOTE FOR ITS OWN ACCOUNT OF FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE NOTES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE



REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.]

No.       
CUSIP No.                         
      Principal Amount $                        ,
as revised by the Schedule of
Increases and Decreases in Global
Security attached hereto


Cintas Corporation No. 2
6% Senior Notes due 2012
Payment of Principal, Premium, if any, and Interest
Unconditionally Guaranteed, Jointly and Severally,
by Cintas Corporation and
Certain Subsidiaries of Cintas Corporation

        Cintas Corporation No. 2, a corporation duly organized and existing under the laws of Nevada (hereinafter called the "Company", which term includes any successor Person under the Indenture referred to below), for value received, hereby promises to pay to Cede & Co., c/o Depository Trust Company, 55 Water Street, New York, New York 10041, or registered assigns, the principal sum of                        Million Dollars ($                        ), as revised by the Schedule of Increases and Decreases in Global Security attached hereto, on June 1, 2012, and to pay interest thereon from May 28, 2002 or from the most recent date to which interest has been paid or duly provided for, semiannually on June 1 and December 1 in each year (each, an "Interest Payment Date"), commencing on December 1, 2002, at the rate of 6% per annum (subject to increase as provided in the Registration Rights Agreement (as defined below)), until the principal hereof and premium, if any, hereon is paid or duly made available for payment, and on any overdue principal or premium, if any, and (to the extent that payment of such interest is lawful) on any overdue installment of interest at the same rate per annum during the period in which such principal or premium, if any, or interest remains unpaid. The interest so payable and punctually paid or duly provided for on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Note (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the May 15 or November 15 (whether or not a Business Day (as defined below)), as the case may be, next preceding such Interest Payment Date. Except as otherwise provided in the Indenture, any such interest which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date shall forthwith cease to be payable to the Holder hereof on such Regular Record Date and may either be paid to the Person in whose name this Note (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Notes of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in such Indenture. Payment of the principal of (and premium, if any) and interest on this Note will be made at the office or agency of the Company or, if applicable, the Guarantor maintained for that purpose in The Borough of Manhattan, The City of New York, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that, at the option of the Company, payment of interest may be made by United States dollar check mailed to the

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address of the Person entitled thereto as such address shall appear in the Security Register; provided, further, that payment to the Depository Trust Company or any successor depository ("DTC") may be made by wire transfer to the account designated by DTC or such successor depository in writing.

        If any Interest Payment Date or Maturity Date falls on a day that is not a Business Day, the related payment of principal, premium, if any, and interest on the Notes will be made on the next succeeding Business Day with the same force and effect as if it were made on the date such payment was due and no interest shall accrue on the amount so payable for the period from and after such Interest Payment Date or Maturity Date, as the case may be, to the next succeeding Business Day. "Business Day" means any day other than a Saturday, Sunday or other day on which banking institutions are authorized or obligated by law, regulation or executive order to close.

        Payments of interest hereon with respect to any Interest Payment Date will include interest accrued to but excluding such Interest Payment Date. Interest on this Note shall be calculated on the basis of a 360-day year consisting of twelve 30-day months.

        This Note is one of a duly authorized series of Securities of the Company (herein called the "Notes") issued or to be issued under an Indenture dated as of May 28, 2002 (herein called, together with all indentures supplemental thereto, the "Indenture") by and among the Company, Cintas Corporation (the "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, a Nevada corporation, LLT, Inc., Respond Industries, Incorporated, and Xpect First Aid Corporation, as guarantors (the "Initial Subsidiary Guarantors" and, together with the Parent Guarantor and each other subsidiary of the Company that pursuant to the terms of the Indenture guarantees the Company's obligations under such Indenture, in each case in such entity's capacity as guarantor, the "Guarantors") to Wachovia Bank, National Association, as Trustee (herein called the "Trustee", which term includes any successor trustee under the Indenture with respect to the Notes), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Guarantors, the Trustee and the Holders of the Notes, and of the terms upon which the Notes are, and are to be, authenticated and delivered. This Note is one of the series designated on the face hereof, initially limited (subject to exceptions provided in the Indenture) to the aggregate principal amount specified in the Officers' Certificate dated May 28, 2002 establishing the terms of the Notes pursuant to the Indenture; provided that the Company may, without the consent of Holders, reopen this series of Securities and issue additional Notes, so as to increase the aggregate principal amount of the Notes Outstanding upon the terms and subject to the conditions set forth in the Indenture so long as any such additional Notes have the same tenor and terms (including, without limitation, rights to receive accrued and unpaid interest as the Notes then Outstanding).    The Notes are issuable only in registered form without coupons in the denominations specified in the Officers' Certificate dated May 28, 2002 establishing the terms of the Notes, all as more fully provided in the Indenture and such Officers' Certificate. As provided in the Indenture and in such Officers' Certificate, and subject to certain limitations set forth in the Indenture, such Officers' Certificate and in this Note, the Notes of this series are exchangeable for a like aggregate principal amount of Notes of this series in different authorized denominations, as requested by the Holders surrendering the same.

        The Notes are unconditionally guaranteed as to the due and punctual payment of principal, premium, if any, and interest in respect thereof by the Guarantors as evidenced by their guarantees (the "Guarantees") included in the Indenture and set forth hereon. The Guarantees are direct and unconditional obligations of such Guarantors and rank and will rank equally in priority of payment and in all other respects with all other unsecured and unsubordinated obligations of such Guarantors now or hereafter outstanding.

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        The Holder of this Note is entitled to the benefits of the Registration Rights Agreement, dated as of May 28, 2002, by and among the Company, the Guarantors and the Initial Purchasers named therein (as the same may be amended from time to time, the "Registration Rights Agreement"). In the event that the Exchange Offer (as such term is defined in the Registration Rights Agreement) is not consummated or a Shelf Registration Statement (as such term is defined in the Registration Rights Agreement) with respect to the Notes is not declared effective on or prior to the date that is 180 days after the Closing Date (as such term is defined in the Registration Rights Agreement) then the interest rate borne by the Notes shall be increased by one-quarter of one percent (0.25%) per annum commencing the date that is 180 days after the Closing Date until the Exchange Offer is consummated or the Shelf Registration Statement is declared effective by the Securities and Exchange Commission (the "Commission") provided, that in the case of a Shelf Registration Statement, if the Company and the Guarantors are unable to cause such Shelf Registration Statement to become effective because the Holders of Notes have not provided information with respect to themselves as required by law to be included therein pursuant to the Company's or the Guarantors' request as provided in the Registration Rights Agreement, such one-quarter of one percent (0.25%) increase in the interest rate shall be payable only to the Holders that have furnished such information required by law to be included therein to the Company or the Guarantors pursuant to its request under the Registration Rights Agreement from but excluding the date such information is provided to the Company or the Guarantors to but excluding the date the Shelf Registration Statement is declared effective by the Commission.

        This Note is redeemable at the option of the Company, in whole or in part at any time, at a redemption price equal to the greater of (i) 100% of the principal amount of this Note to be redeemed and (ii) the sum, as determined by the Independent Investment Banker (as defined below), of the present values of the remaining scheduled payments of principal and interest on this Note to be redeemed (exclusive of interest accrued to the date of redemption) discounted to the date of redemption on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below) plus 20 basis points, and accrued but unpaid interest thereon to the redemption date.

        "Treasury Rate" means, with respect to any redemption date for the Notes, (i) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated "H.15(519)" or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption "Treasury Constant Maturities," for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before or after the maturity date of the Notes, yields for the two published maturities most closely corresponding to the Comparable Treasury Issuer will be determined and the Treasury Rate shall be interpolated or extrapolated from those yields on a straight line basis, rounding to the nearest month) or (ii) if the release referred to in clause (i) (or any successor release) is not published during the week preceding the calculation date or does not contain the yields referred to above, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for that redemption date. The Treasury Rate will be calculated on the third Business Day preceding the redemption date.

        "Comparable Treasury Issue" means the United States Treasury security selected by the Independent Investment Banker as having a maturity comparable to the remaining term of the Notes that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Notes.

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        "Comparable Treasury Price" means, with respect to any redemption date, the average of the Reference Treasury Dealer Quotations obtained by the Trustee for such redemption date, after excluding the highest and lowest of four such Reference Treasury Dealer Quotations, or if the Trustee is unable to obtain at least four such Reference Treasury Dealer Quotations, the average of all Reference Treasury Dealer Quotations obtained by the Trustee.

        "Independent Investment Banker" means Banc One Capital Markets, Inc., or, if such firm is unwilling or unable to select the applicable Comparable Treasury Issue, an independent investment banking institution of national standing appointed by the Trustee and reasonably acceptable to the Company or, if applicable, the Guarantor.

        "Reference Treasury Dealer" means Banc One Capital Markets, Inc., (and its successors) and three other primary U.S. government securities dealers in New York City selected by the Independent Investment Banker (each, a "Primary Treasury Dealer"); provided, however, that if any of the foregoing shall cease to be a Primary Treasury Dealer, the Company shall substitute therefor another Primary Treasury Dealer.

        "Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any redemption date for the Notes, an average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue for the Note (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day preceding such redemption date.

        Notice of any redemption will be mailed at least 30 days but not more than 60 days before the redemption date to the Holder hereof at its address as such address shall appear in the Security Register of the Company. Unless the Company defaults in payment of the redemption price and accrued interest on and after the redemption date, interest will cease to accrue on the principal amount of this Note called for redemption.

        Except as provided above, this Note is not redeemable by the Company prior to maturity and is not subject to any sinking fund.

        If an Event of Default with respect to the Notes shall occur and be continuing, the principal amount of all the Notes may be declared due and payable in the manner and with the effect provided in the Indenture.

        The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and, if applicable, the Guarantors and the rights of the Holders of the Securities of each series issued under the Indenture at any time by the Company and, if applicable, the Guarantors, and the Trustee with the consent of the Holders of not less than a majority in aggregate principal amount of the Securities at the time Outstanding of each series affected thereby. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Securities of any series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company and, if applicable, the Guarantors with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Notes issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note.

        No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligations of the Company and the Guarantors, which are absolute and unconditional, to pay the principal of, premium, if any, and interest on this Note, at the times, place and rate, and in the coin or currency, herein and in the Indenture prescribed.

5



        As provided in the Indenture and subject to certain limitations set forth therein and in this Note, the transfer of this Note is registerable on the Security Register of the Company, upon surrender of this Note for registration of transfer at the office or agency of the Company or the Guarantors in any place where the principal of (and premium, if any) and interest on this Note are payable, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company or the Guarantors, the Security Registrar and the Trustee duly executed by, the Holder hereof or such Holder's attorney duly authorized in writing, and thereupon one or more new Notes of this series and of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.

        No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith, other than in certain cases provided in the Indenture.

        Prior to due presentment of this Note for registration of transfer, the Company, the Guarantors, the Trustee and any agent of the Company, the Guarantors or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for all purposes, whether or not this Note is overdue, and none of the Company, the Guarantors, the Trustee or any such agent shall be affected by notice to the contrary.

        The Indenture contains provisions whereby (i) the Company or the Guarantors may be discharged from their obligations with respect to the Notes (subject to certain exceptions) or (ii) the Company or the Guarantors may be released from their obligations under specified covenants and agreements in the Indenture, in each case if the Company or any Guarantor irrevocably deposits with the Trustee money or U.S. Government Obligations sufficient to pay and discharge the entire indebtedness on all Notes of this series, and satisfies certain other conditions, all as more fully provided in the Indenture.

        This Note shall be governed by and construed in accordance with the laws of the State of New York.

        All terms used in this Note which are defined in the Indenture shall have the meanings assigned to them in the Indenture.

        Unless the certificate of authentication hereon has been duly executed by the Trustee referred to below, directly or through an Authenticating Agent, by manual signature of an authorized signatory, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

6



        IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed, manually or by facsimile by an authorized signatory.

Dated:      

[SEAL]

 

CINTAS CORPORATION NO.2
    as Issuer



 

 

 

 
      By:     
Name:
Title:



 

 

 

 
Attest:      



 

 

 

 
By:     
Name:
Title:
     


TRUSTEE'S CERTIFICATE OF AUTHENTICATION

        This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.

    WACHOVIA BANK, NATIONAL ASSOCIATION
    as Trustee



 

 

 
    By:     
Authorized Signatory

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GUARANTEE

        For value received, each of the undersigned hereby irrevocably and unconditionally guarantees (subject to release, if applicable, upon the terms set forth in the Indenture), jointly and severally, on a senior basis to the Holder of this Note and to the Trustee, on behalf of the Holder, (i) due and punctual payment of principal, premium, if any, and interest on this Note, when and as the same shall become due and payable, whether at Stated Maturity, by declaration of acceleration or otherwise, the due and punctual payment of interest on the overdue principal of (and premium, if any) and interest, if any, on this Note, to the extent lawful, and the due and punctual performance of all other obligations of the Company to the Holder of this Note or the Trustee all in accordance with the terms of this Note and the Indenture and (ii) in the case of any extension of time of payment or renewal of this Note or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, at Stated Maturity, by declaration of acceleration or otherwise. This Guarantee will not be valid or obligatory for any purpose until the Trustee duly executes the certificate of authentication on the Note upon which this Guarantee is endorsed.

Dated:   Cintas Corporation
a Washington corporation;

 

 

Affirmed Medical, Inc.,
a California corporation;

 

 

American First Aid Company,
a Maryland corporation;

 

 

Cintas Corporation No. 3,
a Nevada corporation;

 

 

Cintas Corporation No. 8,
a Nevada corporation;

 

 

Cintas Corporation No. 15,
a Nevada corporation;

 

 

Cintas First Aid Holdings Corporation,
a Nevada corporation;

 

 

LLT, Inc.,
a Virginia corporation;

 

 

Respond Industries, Incorporated,
a Colorado corporation;

 

 

 

 

8



 

 

Xpect First Aid Corporation,
a Kansas corporation;



 

 

 

 

 

By:

    

Authorized Signatory for each of the Guarantors



 

 

 

 

 

Attest:



 

 

 

 

 

By:

    

Authorized Signatory for each of the Guarantors



 

 

 

 

 

Cintas—RUS, L.P.

 

 

By: Cintas Corp. No. 8, Inc., its General Partner



 

 

 

 

 

By:

    

Authorized Signatory

 

 

Attest:



 

 

 

 

 

By:

    

Authorized Signatory

9



ABBREVIATIONS

        The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations:

TEN COM as tenants in common        UNIF GIFT MIN ACT—      Custodian         

TEN ENT


as tenants by the entireties (Cust) (Minor)

JT TEN


as joint tenants with right of survivorship Under Uniform Gifts to Minors and not as tenants in common                        Act                                                  

(State)

Additional abbreviations may also be used though not in the above list.

        FOR VALUE RECEIVED, the undersigned registered holder hereby sell(s), assign(s) and transfer(s) unto

         PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE



  



  


PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
  


the within Note and all rights thereunder, hereby irrevocably constituting and appointing
  


to transfer said Note on the books of the Company with full power of substitution in the premises.
  

Dated:

Notice:    The signature to this assignment must correspond with the name as it appears upon the face
of the within Note in every particular, without alteration or enlargement or any change whatever.

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        In connection with any transfer or exchange of any of the Notes evidenced by this certificate occurring prior to the date that is two years after the later of the date of original issuance of such Notes and the last date, if any, on which such Notes were owned by the Company or any Affiliate of the Company, the undersigned confirms that such Notes are being:

CHECK ONE BOX BELOW:

1 o acquired for the undersigned's own account, without transfer; or

2

o

transferred to the Company; or

3

o

transferred pursuant to and in compliance with Rule 144A under the Securities Act of 1933, as amended (the "
Securities Act "); or

4

o

transferred pursuant to an effective registration statement under the Securities Act; or

5

o

transferred pursuant to and in compliance with Regulation S under the Securities Act; or

6

o

transferred in a minimum purchase amount of $250,000 to an institutional "accredited investor" (as defined in Rule 501(a)(l), (2), (3) or (7) under the Securities Act), that has furnished to the Trustee a signed letter containing certain representations and agreements that it is acquiring this Notes for investment and not with a view to, or for offer or sale in connection with, any distribution (as contemplated in the Securities Act) or fractionalization thereof or with any intention of reselling the Note or any part thereof, subject to any requirement of law that the disposition of its property will be at all times within its control and subject to its ability to resell this Note pursuant to Rule 144A, Regulation S or other exemption from registration available under the Securities Act; or

7

o

transferred pursuant to another available exemption from the registration requirements of the Securities Act of 1933.

        Unless one of the boxes is checked, the Trustee will refuse to register any of the Notes evidenced by this certificate in the name of any person other than the registered holder thereof; provided , however , that if box (5), (6) or (7) is checked, the Trustee or the Company may require, prior to registering any such transfer of the Notes, in their sole discretion, such legal opinions, certifications and other information as the Trustee or the Company may reasonably request to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act.

   
Signature

Signature Guarantee:
  

 

 


(Signature must be guaranteed)

 


Signature

        The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to S.E.C. Rule 17Ad-15.

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TO BE COMPLETED BY PURCHASER IF (1) OR (3) ABOVE IS CHECKED.

        The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933, as amended, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company and the Guarantors as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A.


Dated:
   

12


[TO BE ATTACHED TO GLOBAL NOTE]


SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE

        The following increases or decreases in this Global Note have been made

Date of Exchange

  Amount of increase in
Principal Amount of
this Global Note

  Amount of
decrease in
Principal
Amount of
this Global Note

  Principal Amount of
this Global Note
following each
decrease or increase

  Signature of
authorized signatory
of Trustee









               

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Cintas Corporation No. 2 6% Senior Notes due 2012
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
GUARANTEE
ABBREVIATIONS
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE

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Execution Copy


Exhibit 4.4

Registration Rights Agreement

Dated as of May 28, 2002

among

Cintas Corporation No. 2,
as Issuer

Cintas Corporation, as 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

as Subsidiary Guarantors

and

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

as Initial Purchasers



REGISTRATION RIGHTS AGREEMENT

        This Registration Rights Agreement (the "Agreement") is made and entered into this 28th day of May, 2002, by and among Cintas Corporation No. 2, a Nevada corporation (the "Issuer"), Cintas Corporation, a Washington corporation (the "Parent Guarantor"), and the 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 Banc One Capital Markets, Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Lehman Brothers Inc., William Blair & Company, LLC, McDonald Investments Inc., U.S. Bancorp Piper Jaffray Inc., First Union Securities, Inc. and Morgan Stanley & Co. Incorporated (collectively, the "Initial Purchasers").

        This Agreement is made pursuant to the Purchase Agreement, dated May 22, 2002 (the "Purchase Agreement"), among the Issuer, the Guarantors and the Initial Purchasers, which provides for the sale by the Issuer to the Initial Purchasers of an aggregate of $225,000,000 principal amount of the Issuer's 5 1 / 8 % Senior Notes due 2007 (the "5 1 / 8 % 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 1 / 8 % Notes the "Notes"). The Notes will be unconditionally guaranteed, jointly and severally, as to payment of principal, premium, if any, and interest by the Guarantors (the "Guarantees"). In order to induce the Initial Purchasers to enter into the Purchase Agreement, the Issuer and the Guarantors have agreed to provide to the Initial Purchasers and their direct and indirect transferees the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the closing under the Purchase Agreement.

        In consideration of the foregoing, the parties hereto agree as follows:

        1.     Definitions.     As used in this Agreement, the following capitalized defined terms shall have the following meanings:


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        2.     Registration Under the 1933 Act.     

        2.1.     Exchange Offer.     The Issuer and the Guarantors shall (A) prepare and, as soon as practicable but not later than 90 calendar days following the Closing Date, file with the SEC an Exchange Offer Registration Statement with respect to a proposed Exchange Offer and the issuance and delivery to the Holders, in exchange for the Registrable Notes of each series, a like principal amount of Exchange

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Notes of such series, (B) use their reasonable best efforts to cause the Exchange Offer Registration Statement to be declared effective under the 1933 Act not later than 150 calendar days following the Closing Date, (C) use their reasonable best efforts to keep the Exchange Offer Registration Statement effective until the closing of the Exchange Offer and (D) use their reasonable best efforts to cause the Exchange Offer to be consummated within 180 calendar days following the Closing Date. The Exchange Notes will be issued under the Indenture. Upon the effectiveness of the Exchange Offer Registration Statement, the Issuer shall promptly commence the Exchange Offer, it being the objective of such Exchange Offer to enable each Holder eligible and electing to exchange Registrable Notes together with the Registrable Guarantees for Exchange Notes together with the Exchange Guarantees (assuming that such Holder (a) is not an affiliate of the Issuer or any Guarantor within the meaning of Rule 405 under the 1933 Act, (b) is not a broker-dealer tendering Registrable Notes acquired directly from the Issuer for its own account, (c) acquired the Exchange Notes in the ordinary course of such Holder's business and (d) has no arrangements or understandings with any person to participate in the Exchange Offer for the purpose of distributing the Exchange Notes) to transfer such Exchange Notes from and after their receipt without any limitations or restrictions under the 1933 Act and without material restrictions under the securities laws of a substantial proportion of the several states of the United States.

        In connection with the Exchange Offer, the Issuer and the Guarantors shall:

        As soon as practicable after the close of the Exchange Offer, the Issuer and the Guarantors shall:

        The Issuer and the Guarantors shall use their reasonable best efforts to keep the Exchange Offer Registration Statement effective and to amend and supplement the Prospectus contained therein, in order to permit such Prospectus to be lawfully delivered by all Participating Broker-Dealers subject to

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the prospectus delivery requirements of the 1933 Act for such period of time as such Participating Broker-Dealers must comply with such requirements in order to resell the Exchange Notes; provided, however , that (i) such period shall be the lesser of 90 days after the consummation of the Exchange Offer and the date on which all Participating Broker-Dealers have sold all Exchange Notes held by them (unless such period is extended pursuant to Section 3(k) below) and (ii) the Issuer and the Guarantors shall make such Prospectus, and any amendment or supplement thereto, available to any such Participating Broker-Dealer for use in connection with any resale of any Exchange Notes for a period of the lesser of 90 days after the consummation of the Exchange Offer and the date on which all Participating Broker-Dealers have sold all Exchange Notes held by them (unless such period is extended pursuant to Section 3(k) below).

        Interest on the Exchange Notes of each series will accrue from the most recent interest payment date to which interest has been paid on the respective Registrable Notes surrendered in exchange therefor or, if no interest has been paid on such Registrable Notes, from the date of original issuance. The Exchange Offer shall not be subject to any conditions, other than (i) that the Exchange Offer, or the making of any exchange by a Holder, does not violate applicable law or any applicable interpretation of the staff of the SEC, (ii) the due tendering of Registrable Notes in accordance with the Exchange Offer, (iii) that each Holder of Registrable Notes exchanged in the Exchange Offer shall have represented that all Exchange Notes to be received by it shall be acquired in the ordinary course of its business and that at the time of the consummation of the Exchange Offer it shall have no arrangement or understanding with any person to participate in the distribution (within the meaning of the 1933 Act) of the Exchange Notes and shall have made such other representations as may be reasonably necessary under applicable SEC rules, regulations or interpretations to render the use of Form S-4 or other appropriate form under the 1933 Act available and (iv) that no action or proceeding shall have been instituted or threatened in any court or by or before any governmental agency with respect to the Exchange Offer which, in the judgment of the Issuer and the Guarantors, would reasonably be expected to impair the ability of the Issuer or the Guarantors to proceed with the Exchange Offer. The Issuer and the Guarantors shall inform the Initial Purchasers of the names and addresses of the Holders to whom the Exchange Offer is made, and the Initial Purchasers shall have the right to contact such Holders and otherwise facilitate the tender of Registrable Notes in the Exchange Offer.

        2.2.     Shelf Registration.     (i) If, because of any changes in law, SEC rules or regulations or applicable interpretations thereof by the staff of the SEC, the Issuer or the Guarantors are not permitted to effect the Exchange Offer as contemplated by Section 2.1 hereof, (ii) if for any other reason (A) the Exchange Offer Registration Statement is not declared effective within 150 calendar days following the Closing Date or (B) the Exchange Offer is not consummated within 180 calendar days after the Closing Date (provided that the Issuer is not then actively pursuing such effectiveness or consummation, as the case may be), (iii) upon the written request of the Initial Purchasers with respect to any Registrable Notes which it acquired directly from the Issuer or (iv) upon the written request of any Holder that either (A) is not permitted pursuant to applicable law, SEC rules and regulations or applicable interpretations thereof by the staff of the SEC to participate in the Exchange Offer or (B) participates in the Exchange Offer and does not receive fully tradable Exchange Notes pursuant to the Exchange Offer, then in case of each of clauses (i) through (iv) the Issuer and the Guarantors shall, at their cost:

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        The Issuer and the Guarantors further agree, if necessary, to supplement or amend the Shelf Registration Statement, as required by Section 3(b) below, and to furnish to the Holders of Registrable Notes copies of any such supplement or amendment promptly as reasonably practicable after its being used or filed with the SEC.

        2.3.     Expenses.     The Issuer and the Guarantors shall pay all Registration Expenses in connection with the registration pursuant to Section 2.1 or 2.2. Each Holder shall pay all underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of such Holder's Registrable Notes pursuant to the Shelf Registration Statement.

        2.4.     Effectiveness.     (a) The Issuer and the Guarantors will be deemed not to have used their reasonable best efforts to cause the Exchange Offer Registration Statement or the Shelf Registration Statement, as the case may be, to become, or to remain, effective during the requisite period if the Issuer or any Guarantor voluntarily takes any action that would, or omits to take any action which omission would, result in any such Registration Statement not being declared effective or in the holders of Registrable Notes covered thereby not being able to exchange or offer and sell such Registrable Notes that during that period as and to the extent contemplated hereby, unless such action is required by applicable law.

        2.5.     Interest.     The Notes will provide that if the Exchange Offer is not consummated and the Shelf Registration Statement is not declared effective on or prior to the date that is 180 days after the Closing Date, the interest rate on the Notes will be increased by 0.25% per annum commencing the date that is 180 days after the Closing Date, until the Exchange Offer is consummated or the Shelf Registration Statement is declared effective by the SEC; provided , that in the case of a Shelf Registration Statement, if the Issuer and the Guarantors are unable to cause such Shelf Registration

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Statement to become effective because Holders of Registrable Notes have not provided information with respect to themselves as required by law to be included therein pursuant to the Issuer's or the Guarantors' request as provided herein, such 0.25% increase in the interest rate shall be payable only to Holders that have furnished such information required by law to be included therein to the Issuer or the Guarantors pursuant to its request hereunder from but excluding the date such information is provided to the Issuer or the Guarantors to but excluding the date the Shelf Registration Statement is declared effective by the SEC.

        2.6.     Specific Enforcement.     Without limiting the remedies available to the Initial Purchasers and the Holders, the Issuer and the Guarantors acknowledge that any failure by the Issuer or any Guarantor to comply with their respective obligations under Sections 2.1 and 2.2 hereof may result in material irreparable injury to the Initial Purchasers or the Holders for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, the Initial Purchasers or any Holder may obtain such relief as may be required to specifically enforce the Issuer's and the Guarantors' obligations under Sections 2.1 and 2.2 hereof.

        3.     Registration Procedures.     In connection with the obligations of the Issuer and the Guarantors with respect to Registration Statements pursuant to Sections 2.1 and 2.2 hereof, the Issuer and the Guarantors shall:

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        In the case of a Shelf Registration Statement, the Issuer and the Guarantors may (as a condition to such Holder's participation in the Shelf Registration) require each Holder of Registrable Notes to furnish to the Issuer and the Guarantors such information regarding the Holder and the proposed distribution by such Holder of such Registrable Notes as the Issuer and the Guarantors may from time to time reasonably request in writing for use in connection with any Shelf Registration Statement or Prospectus included therein, including, without limitation, information specified in item 507 of Regulation S-K under the 1933 Act. Each Holder as to which any Shelf Registration is being effected agrees to furnish promptly to the Issuer and the Guarantors all information required to be disclosed with respect to such Holder in order to make any information with respect to such Holder previously furnished to the Issuer and the Guarantors by such Holder not materially misleading.

        In the case of a Shelf Registration Statement, each Holder agrees that, upon receipt of any notice from the Issuer or the Guarantors of the happening of any event or the discovery of any facts, each of the kind described in Section 3(e)(v) hereof, such Holder will forthwith discontinue disposition of Registrable Notes pursuant to a Registration Statement until such Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 3(k) hereof, and, if so directed by the Issuer or any Guarantor, such Holder will deliver to the Issuer and the Guarantors (at its expense) all copies in such Holder's possession, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Registrable Notes current at the time of receipt of such notice.

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        If any of the Registrable Notes covered by any Shelf Registration Statement are to be sold in an underwritten offering, the underwriter or underwriters and manager or managers that will manage such offering will be selected by the Majority Holders of such Registrable Notes included in such offering and shall be acceptable to the Issuer and the Guarantors. No Holder of Registrable Notes may participate in any underwritten registration hereunder unless such Holder (a) agrees to sell such Holder's Registrable Notes on the basis provided in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting agreement.

        4.     Indemnification; Contribution.     (a) The Issuer and the Guarantors, jointly and severally, agree to indemnify and hold harmless the Initial Purchasers, each Holder, each Participating Broker-Dealer, each Person who participates as an underwriter (any such Person being an "Underwriter") and each Person, if any, who controls any Holder or Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows:

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 any Initial Purchaser, Holder, Participating Broker-Dealer or Underwriter with respect to such Initial Purchaser, Holder, Participating Broker-Dealer or Underwriter, as the case may be, expressly for use in a Registration Statement (or any amendment thereto) or any Prospectus (or any amendment or supplement thereto) or made in reliance upon the Statements of Eligibility and Qualification of Trustees (Form T-1) under the 1939 Act filed as exhibits to the Registration Statement.

        (b)  Each Holder, each Initial Purchaser, each participating Broker-Dealer and each Underwriter severally, but not jointly, agrees to indemnify and hold harmless the Issuer, the Guarantors, each other

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Initial Purchaser, each other Participating Broker-Dealer, each other Underwriter and each other selling Holder, and each of their respective directors and officers, and each Person, if any, who controls the Issuer, any Guarantor, any Initial Purchaser, any Underwriter, any Participating Broker-Dealer or any other selling Holder 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 Section 4(a) hereof, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Shelf Registration Statement (or any amendment thereto) or any Prospectus included therein (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Issuer or the Guarantors by such Holder, Initial Purchaser, Underwriter or Participating Broker-Dealer, respectively, expressly for use in the Shelf Registration Statement (or any amendment thereto) or such Prospectus (or any amendment or supplement thereto); provided, however , that no such Holder, Initial Purchaser, Underwriter or Participating Broker-Dealer shall be liable for any claims hereunder in excess of the amount of net proceeds received by such Holder from the sale of Registrable Notes pursuant to such Shelf Registration Statement.

        (c)  Each indemnified party shall give notice as promptly as reasonably practicable to each indemnifying party of any action or proceeding 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. An indemnifying party may participate at its own expense in the defense of 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 party or parties be liable for the 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 of 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 4 (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)  If at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, such indemnifying party agrees that it shall be liable for any settlement of the nature contemplated by Section 4(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.

        (e)  In order to provide for just and equitable contribution in circumstances in which the indemnity agreement provided for in this Section 5 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, in such proportion as is appropriate to reflect the relative fault of the indemnifying party or parties on the one

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hand and of the indemnified party or parties on the other hand in connection with the statements or omissions that resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party or parties on the one hand and the indemnified party or parties on the other hand shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such indemnifying party or parties or such indemnified party or parties, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

        The relative benefits received by the Issuer and the Guarantors from the offering of the Notes, Exchange Notes, Exchange Guarantees, Registrable Notes and Registrable Guarantees (taken together) included in such offering shall in each case be deemed to include the proceeds received by the Issuer in connection with the offering of the Notes pursuant to the Purchase Agreement. The parties hereto agree that any underwriting discount or commission or reimbursement of fees paid to the Initial Purchasers pursuant to the Purchase Agreement shall not be deemed to be a benefit received by the Initial Purchasers in connection with the offering of the Exchange Notes and Exchange Guarantees or Registrable Notes and Registrable Guarantees included in such offering.

        The Issuer, the Guarantors, the Holders and the Initial Purchasers agree that it would not be just and equitable if contribution pursuant to this Section 4 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 4. The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an indemnified party and referred to above in this Section 4 shall be deemed to include any legal and other expenses reasonably incurred by such indemnified party in investigating, preparing 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 4, no Initial Purchaser or Holder, Participating Broker-Dealer or Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Notes sold by it were offered exceeds the amount of any damages which such Initial Purchaser, Holder, Participating Broker-Dealer or Underwriter 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.

        For purposes of this Section 4, each person, if any, who controls an Initial Purchaser, Holder, Participating Broker-Dealer or Underwriter 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, Holder, Participating Broker-Dealer or Underwriter, as the case may be, and each director of the Issuer and the Guarantors, 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 shall have the same rights to contribution as the Issuer and such Guarantor, respectively. The respective obligations of the Initial Purchasers, Holders, Participating Broker-Dealers and Underwriters to contribute pursuant to this Section 4 are several in proportion to the principal amount of Notes purchased by them and not joint.

        5.     Miscellaneous.     

        5.1.     Rule 144 and Rule 144A.     For so long as the Parent Guarantor is subject to the reporting requirements of Section 13 or 15 of the 1934 Act, the Parent Guarantor covenants that it will file the reports required to be filed by it under the 1933 Act and Section 13(a) or 15(d) of the 1934 Act and the rules and regulations adopted by the SEC thereunder. If the Parent Guarantor ceases to be so

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required to file such reports, the Parent Guarantor covenants that it will upon the request of any Holder of Registrable Notes (a) make publicly available such information as is necessary to permit sales pursuant to Rule 144 under the 1933 Act, (b) deliver such information to a prospective purchaser as is necessary to permit sales pursuant to Rule 144A under the 1933 Act, and (c) take such further action that is reasonable in the circumstances, in each case, to the extent required from time to time to enable such Holder to sell its Registrable Notes without registration under the 1933 Act within the limitation of the exemptions provided by (i) Rule 144 under the 1933 Act, as such Rule may be amended from time to time, (ii) Rule 144A under the 1933 Act, as such Rule may be amended from time to time, or (iii) any similar rules or regulations hereafter adopted by the SEC. Upon the request of any Holder of Registrable Notes, the Parent Guarantor will deliver to such Holder a written statement as to whether it has complied with such requirements. The Issuer and the Subsidiary Guarantors agree to comply with the information obligations to the extent they are required by applicable law or regulation.

        5.2.     No Inconsistent Agreements.     The Issuer and the Guarantors have not entered into and neither the Issuer nor the Guarantors will after the date of this Agreement enter into any agreement which is inconsistent with the rights granted to the Holders of Registrable Notes in this Agreement or otherwise conflicts with the provisions hereof. The rights granted to the Holders hereunder do not in any way conflict with the rights granted to the Holders of the Issuer's and the Guarantor's other issued and outstanding Notes under any such agreements.

        5.3.     Amendments and Waivers.     The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers of consents to departures from the provisions hereof may not be given unless the Issuer and the Guarantors have obtained the written consent of Holders of at least a majority in aggregate principal amount of the outstanding Registrable Notes of each series affected by such amendment, modification, supplement, waiver or departure.

        5.4.     Notices.     All notices and other communications provided for or permitted hereunder shall be made in writing by hand delivery, registered first-class mail, telex, telecopier, or any courier guaranteeing overnight delivery (a) if to a Holder, at the most current address given by such Holder to the Issuer and the Guarantors by means of a notice given in accordance with the provisions of this Section 5.4, which address initially is the address set forth in the Purchase Agreement with respect to the Initial Purchasers; and (b) if to the Issuer or the Guarantors initially at the Issuer's and Guarantors' address set forth in the Purchase Agreement, and thereafter at such other address of which notice is given in accordance with the provisions of this Section 5.4.

        All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; two business days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt is acknowledged, if telecopied; and on the next business day if timely delivered to an air courier guaranteeing overnight delivery.

        Copies of all such notices, demands, or other communications shall be concurrently delivered by the person given the same to the Trustee under the Indenture, at the address specified in such Indenture.

        5.5.     Successor and Assigns.     This Agreement shall inure to the benefit of and be binding upon the successors, assigns and transferees of each of the parties, including without limitation and without the need for an express assignment, subsequent Holders; provided that nothing herein shall be deemed to permit any assignment, transfer or other disposition of Registrable Notes in violation of the terms of the Purchase Agreement. If any transferee of any Holder shall acquire Registrable Notes, in any manner, whether by operation of law or otherwise, such Registrable Notes shall be held subject to all of the terms of this Agreement, and by taking any holding such Registrable Notes such person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement, including the restrictions on resale set forth in this Agreement and, if applicable, the Purchase Agreement, and such person shall be entitled to receive the benefits hereof.

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        5.6.     Third Party Beneficiaries.     The Initial Purchasers (even if the Initial Purchasers are not Holders of Registrable Notes) shall be a third party beneficiary to the agreements made hereunder between the Issuer and the Guarantors, on the one hand, and the Holders, on the other hand, and shall have the right to enforce such agreements directly to the extent it deems such enforcement necessary or advisable to protect its rights or the rights of Holders hereunder. Each Holder of Registrable Notes shall be a third party beneficiary to the agreements made hereunder between the Issuer and the Guarantors, on the one hand, and the Initial Purchasers, on the other hand, and shall have the right to enforce such agreements directly to the extent it deems such enforcement necessary or advisable to protect its rights hereunder.

        5.7.     Counterparts.     This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

        5.8.     Headings.     The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

        5.9.     GOVERNING LAW.     THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF.

        5.10.     Severability.     In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby.

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        IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

  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

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Confirmed and accepted as
of the date first above written:
   

BANC ONE CAPITAL MARKETS, INC.
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:  Brit Bartter
Title:    
Managing Director

 

 

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

 

 

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Exhibit A


Form of Opinion of Counsel

        We are of the opinion that the Exchange Offer Registration Statement and the Prospectus (other than the financial statements, notes or schedules thereto and other financial data and supplemental schedules included or incorporated by reference therein or omitted therefrom and the Form T-1, as to which we need express no opinion), comply as to form in all material respects with the requirements of the 1933 Act and the applicable rules and regulations promulgated under the 1933 Act.

        In addition, we have participated in conferences with officers and other representatives of the Issuer and the Guarantors, representatives of the independent public accountants of the Issuer and the Guarantors and representatives of the Initial Purchasers, at which the contents of the Registration Statement and the Prospectus and related matters were discussed and, although we are not passing upon, and do not assume any responsibility for, the accuracy, completeness or fairness of the statements contained in the Registration Statement and the Prospectus and have not made any independent check or verification thereof, during the course of such participation, no facts came to our attention that caused us to believe that the Registration Statement or any amendment thereto, at the time the Registration Statement or any such amendment became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus or any amendment or supplement thereto, at the time the Prospectus was issued, at the time any such amended or supplemented Prospectus was issued or at the Closing Time, included or includes an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; it being understood that we express no belief with respect to the financial statements and schedules and other financial data included in the Registration Statement and the Prospectus.

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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

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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

EXHIBITS

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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.

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        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:

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4


5


6


7


8


9


10


        (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.

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        (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:

15


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

16


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

17


        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:

18


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:

21


        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





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TABLE OF CONTENTS
Schedule 1
Schedule 2
FORM OF OPINION KEATING, MUETHING & KLEKAMP, P.L.L. [TO FOLLOW]

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EXHIBIT 13


ELEVEN YEAR FINANCIAL SUMMARY

(In thousands except per share and percentage data)

Years Ended May 31

  1992
  1993
  1994
  1995
  1996
  1997
  1998
  1999
  2000
  2001
  2002
  10-Year
Compd
Growth

 
Revenue   $ 621,041   711,663   803,009   929,534   1,103,492   1,261,899   1,476,945   1,751,568   1,901,991   2,160,700   2,271,052   13.8 %(3)
Net Income   $ 45,744   54,956   67,141   85,413   98,956   118,557   133,654   138,939   193,387   222,451   234,251   17.7 %
Pro Forma Net Income(1)   $ 45,151   53,374   64,459   80,752   94,151   112,763   128,704   138,939   193,387   222,451   234,251   17.9 %
Basic EPS   $ 0.31   0.36   0.44   0.55   0.64   0.75   0.83   0.84   1.16   1.32   1.38   16.1 %
Diluted EPS   $ 0.31   0.35   0.43   0.55   0.63   0.75   0.82   0.82   1.14   1.30   1.36   15.9 %
Pro Forma Basic EPS(1)   $ 0.30   0.35   0.42   0.52   0.61   0.72   0.80   0.84   1.16   1.32   1.38   16.5 %
Pro Forma Diluted EPS(1)   $ 0.30   0.35   0.41   0.51   0.60   0.71   0.79   0.82   1.14   1.30   1.36   16.3 %
Dividends Per Share   $ 0.04   0.05   0.06   0.07   0.09   0.10   0.12   0.15   0.19   0.22   0.25   20.1 %
Total Assets   $ 501,769   634,197   700,872   816,508   996,046   1,101,182   1,305,400   1,407,818   1,581,342   1,752,224   2,519,234   17.5 %
Shareholders' Equity   $ 273,501   324,562   409,053   481,654   553,701   650,603   756,795   871,423   1,042,876   1,231,315   1,423,759   17.9 %
Return on Average Equity     17.8 % 17.8 % 17.6 % 18.1 % 18.2 % 18.7 % 18.8 %(2) 20.1 %(2) 20.2 % 19.6 % 17.6 %    
Long-Term Debt   $ 122,372   158,311   132,929   164,332   237,550   227,799   307,633   283,581   254,378   220,940   703,250      

Note:
Results prior to March 24, 1999, have been restated to include Unitog Company.
Results prior to April 8, 1998, have also been restated to include Uniforms To You Companies.

(1)
Results for 1998 and prior years were adjusted on a pro forma basis to reflect the true tax impact of Uniforms To You as if it had been reported as a C Corporation prior to the merger with Cintas.

(2)
Return on average equity before one-time items.

(3)
Represents the 10-year compound annual growth rate based on revenue as restated for pooling of interests transactions noted above. Please refer to the graph below for the 10-year compound annual growth rates in revenue based on financial data, as originally reported by Cintas Corporation, before restatement for pooling of interests transactions.

CHART

1



CONSOLIDATED STATEMENTS OF INCOME

(In thousands except per share data)

Years Ended May 31

  2002
  2001
  2000
 
Revenue:                    
  Rentals   $ 1,753,368   $ 1,610,606   $ 1,424,892  
  Other services     517,684     550,094     477,099  
   
 
 
 
      2,271,052     2,160,700     1,901,991  
Costs and expenses (income):                    
  Cost of rentals     953,352     896,539     807,301  
  Cost of other services     360,330     367,894     315,138  
  Selling and administrative expenses     580,469     529,063     456,628  
  Interest income     (5,636 )   (4,369 )   (4,742 )
  Interest expense     10,952     15,119     15,907  
   
 
 
 
      1,899,467     1,804,246     1,590,232  
   
 
 
 
Income before income taxes     371,585     356,454     311,759  
Income taxes     137,334     134,003     118,372  
   
 
 
 
Net income   $ 234,251   $ 222,451   $ 193,387  
   
 
 
 
Basic earnings per share   $ 1.38   $ 1.32   $ 1.16  
   
 
 
 
Diluted earnings per share   $ 1.36   $ 1.30   $ 1.14  
   
 
 
 
Dividends declared and paid per share   $ .25   $ .22   $ .19  
   
 
 
 

See accompanying notes.

2



CONSOLIDATED BALANCE SHEETS

(In thousands except share data)

As of May 31

  2002
  2001
 
Assets              
Current assets:              
  Cash and cash equivalents   $ 40,628   $ 73,724  
  Marketable securities     44,458     36,505  
  Accounts receivable, principally trade, less allowance of $9,229 and $8,765, respectively     283,234     244,450  
  Inventories     193,821     214,349  
  Uniforms and other rental items in service     280,936     242,172  
  Prepaid expenses     10,173     8,470  
   
 
 
Total current assets     853,250     819,670  
Property and equipment, at cost, net     778,402     702,132  
Goodwill     678,598     123,753  
Other assets     208,984     106,669  
   
 
 
    $ 2,519,234   $ 1,752,224  
   
 
 
Liabilities and Shareholders' Equity              
Current liabilities:              
  Accounts payable   $ 60,393   $ 42,495  
  Accrued compensation and related liabilities     29,004     35,140  
  Accrued liabilities     131,705     81,548  
  Income taxes:              
    Current     11,791     13,412  
    Deferred     61,372     57,703  
  Long-term debt due within one year     18,369     20,605  
   
 
 
Total current liabilities     312,634     250,903  
Long-term debt due after one year     703,250     220,940  
Deferred income taxes     79,591     49,066  
Shareholders' equity:              
  Preferred stock, no par value: 100,000 shares authorized, none outstanding          
  Common stock, no par value: 425,000,000 shares authorized, 169,930,290 and 169,370,563 shares issued and outstanding, respectively     66,508     62,409  
  Retained earnings     1,365,136     1,174,330  
  Other accumulated comprehensive loss:              
    Foreign currency translation     (4,863 )   (5,424 )
    Unrealized loss on derivatives     (3,022 )    
   
 
 
Total shareholders' equity     1,423,759     1,231,315  
   
 
 
    $ 2,519,234   $ 1,752,224  
   
 
 

See accompanying notes.

3



CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(In thousands)

 
  Common Stock
   
  Other
Accumulated
Comprehensive
Income (Loss)

   
 
 
  Retained
Earnings

  Total
Shareholders'
Equity

 
 
  Shares
  Amount
 
Balance at May 31, 1999   166,424   $ 49,974   $ 825,268   $ (3,819 ) $ 871,423  
Net income           193,387         193,387  
Equity adjustment for foreign currency translation               (493 )   (493 )
                         
 
Comprehensive income                           192,894  
                         
 
Dividends           (31,249 )       (31,249 )
Effects of acquisitions   1,419     825     5,044         5,869  
Stock options exercised net of shares surrendered   439     3,399             3,399  
Tax benefit resulting from exercise of employee stock options       540             540  
   
 
 
 
 
 
Balance at May 31, 2000   168,282     54,738     992,450     (4,312 )   1,042,876  
   
 
 
 
 
 
Net income           222,451         222,451  
Equity adjustment for foreign currency translation               (1,112 )   (1,112 )
                         
 
Comprehensive income                           221,339  
                         
 
Dividends           (37,173 )       (37,173 )
Effects of acquisitions   459     (11 )   (3,398 )       (3,409 )
Stock options exercised net of shares surrendered   630     5,992             5,992  
Tax benefit resulting from exercise of employee stock options       1,690             1,690  
   
 
 
 
 
 
Balance at May 31, 2001   169,371     62,409     1,174,330     (5,424 )   1,231,315  
   
 
 
 
 
 
Cumulative effect of accounting change for SFAS 133, net of tax               (44 )   (44 )
Net income           234,251         234,251  
Equity adjustment for foreign currency translation               561     561  
Change in fair value of derivatives               (2,978 )   (2,978 )
                         
 
Comprehensive income                           231,834  
                         
 
Dividends           (42,454 )       (42,454 )
Effects of acquisitions   137         (991 )       (991 )
Stock options exercised net of shares surrendered   422     3,247             3,247  
Tax benefit resulting from exercise of employee stock options       852             852  
   
 
 
 
 
 
Balance at May 31, 2002   169,930   $ 66,508   $ 1,365,136   $ (7,885 ) $ 1,423,759  
   
 
 
 
 
 

See accompanying notes.

4



CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Years Ended May 31

  2002
  2001
  2000
 
Cash flows from operating activities:                    
  Net income   $ 234,251   $ 222,451   $ 193,387  
  Adjustments to reconcile net income to net cash provided by (used in) operating activities:                    
    Depreciation     101,215     90,239     78,516  
    Amortization of deferred charges     18,810     21,850     20,997  
    Deferred income taxes     20,629     8,459     17,379  
    Change in current assets and liabilities, net of acquisitions of businesses:                    
      Accounts receivable     3,162     (16,486 )   (19,259 )
      Inventories     31,731     (48,693 )   (22,976 )
      Uniforms and other rental items in service     (27,257 )   (28,471 )   (14,425 )
      Prepaid expenses     1,330     (1,160 )   (938 )
      Accounts payable     3,345     (10,107 )   (600 )
      Accrued compensation and related liabilities     (12,696 )   6,666     2,270  
      Accrued liabilities     4,534     (4,011 )   (8,889 )
      Income taxes payable     (1,621 )   6,221     12,570  
   
 
 
 
Net cash provided by operating activities     377,433     246,958     258,032  
Cash flows from investing activities:                    
  Capital expenditures     (107,284 )   (147,444 )   (161,432 )
  Proceeds from sale or redemption of marketable securities     157,419     61,609     112,908  
  Purchase of marketable securities     (165,372 )   (40,474 )   (98,233 )
  Acquisitions of businesses, net of cash acquired     (732,227 )   (30,535 )   (24,982 )
  Proceeds from divestiture of certain facilities         1,400     25,722  
  Other     (1,882 )   (5,965 )   (10,921 )
   
 
 
 
Net cash used in investing activities     (849,346 )   (161,409 )   (156,938 )
Cash flows from financing activities:                    
  Proceeds from issuance of long-term debt     640,245     230     140,739  
  Repayment of long-term debt     (160,612 )   (33,634 )   (177,651 )
  Stock options exercised     3,247     5,992     3,399  
  Dividends paid     (42,454 )   (37,173 )   (31,249 )
  Other     (1,609 )   578     47  
   
 
 
 
Net cash provided by (used in) financing activities     438,817     (64,007 )   (64,715 )
Net (decrease) increase in cash and cash equivalents     (33,096 )   21,542     36,379  
Cash and cash equivalents at beginning of year     73,724     52,182     15,803  
   
 
 
 
Cash and cash equivalents at end of year   $ 40,628   $ 73,724   $ 52,182  
   
 
 
 

See accompanying notes.

5



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands except per share and share data)

1.    SIGNIFICANT ACCOUNTING POLICIES

         Business description. Cintas Corporation (Cintas) classifies its businesses into two operating segments: Rentals and Other Services. The Rentals operating segment designs and manufactures corporate identity uniforms which it rents, along with other items, to its customers. The Other Services operating segment involves the design, manufacture and direct sale of uniforms to its customers, as well as the sale of ancillary services including sanitation supplies, first aid products and services and cleanroom supplies. All of these services are provided throughout the United States and Canada to businesses of all types—from small service and manufacturing companies to major corporations that employ thousands of people.

         Principles of consolidation. The consolidated financial statements include the accounts of Cintas and its subsidiaries. Intercompany balances and transactions have been eliminated.

         Use of estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Financial results could differ from those estimates.

         Cash and cash equivalents. Cintas considers all highly liquid investments with a maturity of three months or less, at date of purchase, to be cash equivalents.

         Inventories. Inventories are valued at the lower of cost (first-in, first-out) or market. Substantially all inventories represent finished goods.

         Uniforms and other rental items in service. These items are valued at cost less amortization, calculated using the straight-line method. Uniforms in service (other than cleanroom and flame resistant garments) are amortized over their useful life of eighteen months. Other rental items including shop towels, mats, cleanroom garments, flame resistant garments, linens and hygiene dispensers are amortized over their useful lives of eight to forty-eight months.

         Property and equipment. Depreciation is calculated using the straight-line method over the following estimated useful lives, in years:

Buildings and Improvements   5 to 40
Equipment   3 to 10
Leasehold Improvements   2 to 5

         Long-lived assets. When events or circumstances indicate that the carrying amount of long-lived assets may not be recoverable, the estimated future cash flows (undiscounted) are compared to the carrying amount of the assets. If the estimated future cash flows are less than the carrying amount of the assets, an impairment loss is recorded. The impairment loss is measured by comparing the fair value of the assets with their carrying amounts. Fair value is determined by discounted cash flows or appraised values, as appropriate. Long-lived assets that are held for disposal are reported at the lower of the carrying amount or the fair value, less estimated costs related to disposition.

         Other assets. Other assets consist primarily of service contracts and noncompete and consulting agreements obtained through the acquisition of businesses, which are amortized by use of the straight-line method over the estimated lives of the agreements, which are generally three to twelve years.

         Accrued liabilities. Accrued liabilities consist primarily of insurance, medical and profit sharing obligations and legal and environmental contingencies. These are recorded when it is probable that a liability has occurred and the amount of the liability can be reasonably estimated.

         Stock options. Cintas applies the provisions of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees. Accordingly, no compensation expense has been reflected in the financial statements as the exercise price of options granted to employees is equal to the fair market value of Cintas' common stock on the date of grant. Cintas has adopted the disclosure-only provisions of Statement of Financial Accounting Standards No. 123 (SFAS 123), Accounting for Stock Based Compensation.

6


         Derivatives and hedging activities. Effective June 1, 2001, Cintas adopted Statement of Financial Accounting Standards No. 133 (SFAS 133), Accounting for Derivatives and Hedging Activities, as amended. This standard requires the recognition of all derivatives on the balance sheet at fair value and recognition of the resulting gains or losses as adjustments to earnings or other comprehensive income. The adoption of this new standard resulted in a cumulative effect of change in accounting principle of $44 recorded in other comprehensive loss to reflect the interest rate swaps described in Note 5.

        Cintas formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. Cintas' hedging activities are transacted only with highly-rated institutions, reducing the exposure to credit risk in the event of nonperformance.

        Cintas uses derivatives for both cash flow hedging and fair value hedging purposes. For derivative instruments that hedge the exposure of variability in short-term interest rates, designated as cash flow hedges, the effective portion of the net gain or loss on the derivative instrument is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. For the ineffective portion of the hedge, gains or losses are charged to earnings in the current period. For derivative instrumentsthat hedge the exposure to changes in the fair value of certain fixed rate debt, designated as fair value hedges, the effective portion of the net gain or loss on the derivative instrument, as well as the offsetting gain or loss on the fixed rate debt attributable to the hedged risk, are recorded in current period earnings.

        Cintas uses interest rate swap and lock agreements as hedges against variability in short-term interest rates. These agreements effectively convert a portion of the floating rate debt to a fixed rate basis, thus reducing the impact of interest rate changes on future interest expense. Cintas uses the Hypothetical Derivative Method for assessing the effectiveness of these swaps. The effectiveness of these swaps is reviewed at least every fiscal quarter. Cintas will also periodically use reverse interest rate swap agreements to convert a portion of fixed rate debt to a floating rate basis, thus hedging for changes in the fair value of the fixed rate debt being hedged. Cintas has determined that the interest rate swap agreement referenced in Note 5, designated as a fair value hedge, qualifies for treatment under the short-cut method of measuring effectiveness. Under the provisions of SFAS 133, this hedge is determined to be perfectly effective and there is no requirement to periodically evaluate effectiveness.

         Revenue recognition. Rental revenue is recognized when services are performed and other services revenue is recognized when products are shipped and the title and risks of ownership pass to the customer. Cintas also establishes an estimate of allowances for uncollectible accounts when revenue is recorded.

         Fair value of financial instruments. The following methods and assumptions were used by Cintas in estimating the fair value of financial instruments:

         Reclassification. Certain prior year amounts have been reclassified to conform with current year presentation.

         Other accounting pronouncements. In August 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 144 (SFAS 144), Accounting for the Impairment or Disposal of Long-Lived Assets . SFAS 144 addresses significant issues relating to the implementation of Statement of Financial Accounting Standards No. 121 (SFAS 121), Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of , and develops a single accounting model, based on the framework established in SFAS 121 for long-lived assets to be disposed of by sale, whether such assets are or are not deemed to be a business. SFAS 144 also modifies the accounting and disclosure rules for discontinued operations. Effective June 1, 2002, Cintas adopted SFAS 144 and it did not have a material effect on the financial statements.

7


2.    MARKETABLE SECURITIES

        All marketable securities are comprised of debt securities and classified as available-for-sale. Realized gains and losses and declines in value determined to be other than temporary on available-for-sale securities are included in interest income. The cost of the securities sold is based on the specific identification method. Interest on securities classified as available-for-sale is included in interest income.

        The following is a summary of marketable securities:

 
  2002
  2001
 
  Cost
  Estimated
Fair Value

  Cost
  Estimated
Fair Value

Obligations of state and political subdivisions   $ 41,447   $ 41,540   $ 32,171   $ 32,468
U.S. Treasury securities and obligations of U.S. government agencies     881     851     600     600
Other debt securities     2,130     2,130     3,734     3,794
   
 
 
 
    $ 44,458   $ 44,521   $ 36,505   $ 36,862
   
 
 
 

        The gross realized gains on sales of available-for-sale securities totaled $585, $64 and $54 for the years ended May 31, 2002, 2001 and 2000, and the gross realized losses totaled $95, $21 and $130, respectively. Net unrealized gains are $63 and $357 at May 31, 2002 and 2001, respectively.

        The cost and estimated fair value of debt securities at May 31, 2002, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to prepay the obligations without prepayment penalties.

 
  Cost
  Estimated
Fair Value

Due in one year or less   $ 17,703   $ 17,798
Due after one year through three years     24,453     24,454
Due after three years     2,302     2,269
   
 
    $ 44,458   $ 44,521
   
 

3.    PROPERTY AND EQUIPMENT

 
  2002
  2001
Land   $ 64,823   $ 54,743
Buildings and improvements     388,695     326,512
Equipment     674,969     589,945
Leasehold improvements     10,653     12,124
Construction in progress     72,523     74,609
   
 
      1,211,663     1,057,933
Less: accumulated depreciation     433,261     355,801
   
 
    $ 778,402   $ 702,132
   
 

4.    GOODWILL AND OTHER ASSETS

        As of June 1, 2001, Cintas adopted Statement of Financial Accounting Standards No. 142 (SFAS 142), Goodwill and Other Intangible Assets, which addresses the financial accounting and reporting standards for the acquisition of intangible assets outside of a business combination and for goodwill and other intangible assets subsequent to their acquisition. This accounting standard requires that goodwill be separately disclosed from other intangible assets in the balance sheet, and no longer be amortized, but tested for impairment on a periodic basis. The provisions of this accounting standard also require the completion of a transitional impairment test within six months of adoption, with any impairments identified treated as a cumulative effect of a change in accounting principle.

8


        Cintas completed the transitional and the annual goodwill impairment tests as required by SFAS 142. Based on the results of the impairment tests, Cintas was not required to recognize an impairment of goodwill. Cintas will continue to perform future impairment tests as required by SFAS 142.

        In accordance with SFAS 142, Cintas discontinued the amortization of goodwill effective June 1, 2001. A reconciliation of previously reported net income and earnings per share to the amounts adjusted for the exclusion of goodwill amortization, net of the related income tax effect, follows:

 
  2002
  2001
  2000
Reported net income   $ 234,251   $ 222,451   $ 193,387
Add: goodwill amortization, net of tax         3,328     2,362
   
 
 
Adjusted net income   $ 234,251   $ 225,779   $ 195,749
   
 
 
Reported basic earnings per share   $ 1.38   $ 1.32   $ 1.16
Add: goodwill amortization, net of tax per basic share         .02     .01
   
 
 
Adjusted basic earnings per share   $ 1.38   $ 1.34   $ 1.17
   
 
 
Reported diluted earnings per share   $ 1.36   $ 1.30   $ 1.14
Add: goodwill amortization, net of tax per diluted share         .02     .01
   
 
 
Adjusted diluted earnings per share   $ 1.36   $ 1.32   $ 1.15
   
 
 

        Changes in the carrying amount of goodwill for the year ended May 31, 2002, by operating segment, are as follows:

 
  Rentals
  Other
Services

  Total
Balance as of June 1, 2001   $ 110,030   $ 13,723   $ 123,753
Goodwill acquired during the period     535,415     19,430     554,845
   
 
 
Balance as of May 31, 2002   $ 645,445   $ 33,153   $ 678,598
   
 
 

        As required by Statement of Financial Accounting Standards No.141 (SFAS 141), Business Combinations , (see Note 8), intangible assets that do not meet the criteria for recognition apart from goodwill must be reclassified. As a result of Cintas' analysis, no reclassifications to goodwill were required as of June 1, 2001.

        Information regarding Cintas' other assets follows:

As of May 31, 2002

  Carrying
Amount

  Accumulated
Amortization

  Net
Service contracts   $ 226,023   $ 67,494   $ 158,529
Noncompete and consulting agreements     61,742     41,792     19,950
Other     31,111     606     30,505
   
 
 
Total   $ 318,876   $ 109,892   $ 208,984
   
 
 
As of May 31, 2001

  Carrying
Amount

  Accumulated
Amortization

  Net
Service contracts   $ 118,241   $ 61,810   $ 56,431
Noncompete and consulting agreements     63,519     42,334     21,185
Other     29,887     834     29,053
   
 
 
Total   $ 211,647   $ 104,978   $ 106,669
   
 
 

9


        Amortization expense was $18,810, $21,850 and $20,997 for the years ended May 31, 2002, 2001 and 2000, respectively. Estimated amortization expense, excluding any future acquisitions, for each of the next five years is $27,528, $23,925, $21,722, $20,854 and $19,579, respectively.

5.    LONG-TERM DEBT

 
  2002
  2001
Secured and unsecured term notes due through 2003 at an average rate of 9.98%   $ 5,500   $ 7,500
Unsecured term notes due through 2026 at an average rate of 5.59%     492,697     54,348
Unsecured notes due through 2009 at an average rate of 2.44%     207,272     160,156
Industrial development revenue bonds due through 2026 at an average rate of 3.24%     11,691     14,489
Other     4,459     5,052
   
 
      721,619     241,545
Less: amounts due within one year     18,369     20,605
   
 
    $ 703,250   $ 220,940
   
 

        Debt in the amount of $21,650 is secured by assets with a carrying value of $26,297 at May 31, 2002. Cintas has letters of credit outstanding at May 31, 2002 approximating $39,603. Maturities of long-term debt during each of the next five years are $18,369, $218,853, $10,401, $7,347 and $4,056, respectively.

        Interest expense is net of capitalized interest of $594, $1,468 and $1,257 for the years ended May 31, 2002, 2001 and 2000, respectively. Interest paid, net of amount capitalized, was $11,017, $15,194 and $16,773 for the years ended May 31, 2002, 2001 and 2000, respectively.

        Cintas has a commercial paper program supported by a $300 million long-term credit facility. As of May 31, 2002, $190 million in commercial paper was outstanding.

        Cintas uses interest rate swap and lock agreements as hedges against variability in short-term interest rates. These agreements effectively convert a portion of our floating rate debt to a fixed rate basis, thus reducing the impact of interest rate changes on future interest expense. During fiscal 2001, and again in the second quarter of fiscal 2002, Cintas entered into interest rate swap agreements that effectively converted a portion of our floating rate debt to a fixed rate basis for a period of two years. Approximately 20%, or $50 million, of outstanding floating rate debt was designated as the hedged items covered by interest rate swap agreements at May 31, 2002. Cintas has entered into two interest rate swap agreements. The first agreement totals $10 million, expires in March 2003 and allows Cintas to pay an effective interest rate of approximately 4.76%. The second agreement totals $40 million, expires in September 2003 and allows Cintas to pay an effective interest rate of approximately 4.02%.

        Cintas has also entered into a reverse interest rate swap agreement to protect the debt against changes in the fair value due to changes in the benchmark interest rate. The reverse interest rate swap agreement utilized by Cintas effectively modifies Cintas' exposure to interest risk by converting Cintas' fixed rate debt to floating rate. This agreement involves the receipt of fixed rate amounts in exchange for floating rate interest payments over the life of the agreementwithout an exchange of underlying principal amount. The mark-to-market values of both the fair value hedging instruments and the underlying debt obligations are equal and recorded as offsetting gains and losses in other comprehensive income. The fair value hedge is 100% effective. As a result, there is no impact to earnings due to hedge ineffectiveness.The reverse interest rate swap agreement totals $125 million, expires in June 2007 and allows Cintas to receive an effective interest rate of approximately 5.13% and pay an interest rate based on LIBOR.

10


6.    LEASES

        Cintas conducts certain operations from leased facilities and leases certain equipment. Most leases contain renewal options for periods from one to ten years. The lease agreements provide for increases in rentals if the options are exercised based on increases in certain price level factors or prearranged increases. It is anticipated that expiring leases will be renewed or replaced. The minimum rental payments under noncancelable lease arrangements for each of the next five years and thereafter are $14,923, $12,039, $9,603, $8,201, $6,426 and $10,674, respectively. Rent expense under operating leases during the years ended May 31, 2002, 2001 and 2000 was $18,377, $17,063 and $16,949, respectively.

7.    INCOME TAXES

 
  2002
  2001
  2000
Income taxes consist of the following components:                  
  Current:                  
    Federal   $ 105,027   $ 111,408   $ 88,842
    State and local     11,849     14,135     12,151
   
 
 
      116,876     125,543     100,993
  Deferred     20,458     8,460     17,379
   
 
 
    $ 137,334   $ 134,003   $ 118,372
   
 
 
 
  2002
  2001
  2000
 
Reconciliation of income tax expense using the statutory rate and actual income tax expense is as follows:                    
    Income taxes at the U.S. federal statutory rate   $ 129,979   $ 124,760   $ 109,109  
    State and local income taxes, net of federal benefit     8,786     9,710     9,727  
    Other     (1,431 )   (467 )   (464 )
   
 
 
 
    $ 137,334   $ 134,003   $ 118,372  
   
 
 
 

        The components of deferred income taxes included on the balance sheets are as follows:

 
  2002
  2001
 
Deferred tax assets:              
  Employee benefits   $ 4,411   $ 4,177  
  Allowance for bad debts     3,180     2,519  
  Inventory obsolescence     10,757     10,064  
  Insurance and contingencies     8,476     7,397  
  Other     10,727     4,214  
   
 
 
      37,551     28,371  

Deferred tax liabilities:

 

 

 

 

 

 

 
  In service inventory     96,843     84,579  
  Property     53,362     50,078  
  Intangibles     21,973     (6,123 )
  Other     6,336     6,606  
   
 
 
      178,514     135,140  
   
 
 
Net deferred tax liability   $ 140,963   $ 106,769  
   
 
 

        Income taxes paid were $120,553, $112,307 and $85,509 for the years ended May 31, 2002, 2001 and 2000, respectively.

        U.S. income taxes of $1,750, net of foreign tax credits, have not been provided for on a cumulative total of approximately $28,500 of undistributed earnings for certain non-U.S. subsidiaries as of May 31, 2002. Cintas intends to reinvest these earnings indefinitely in operations outside the United States.

11


8.    ACQUISITIONS

        In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 141 (SFAS 141), Business Combinations, which eliminates the pooling of interests method of accounting for all business combinations initiated after June 30, 2001, and addresses the initial recognition and measurement of goodwill and other intangible assets acquired in a business combination. Cintas adopted this accounting standard for business combinations initiated after June 30, 2001.

        During the years ended May 31, 2002, 2001 and 2000, Cintas completed numerous acquisitions, one of which was significant. On May 13, 2002, Cintas acquired 100% of Omni Services, Inc. (Omni) from Filuxel S.A. for a price of $660,000 (less a $3,000 adjustment for environmental issues and $929 in assumed debt). Certain Omni locations and all corporate functions will be integrated into existing Cintas operations, allowing Cintas to service the Omni customer base more cost effectively. This additional customer base will also allow for additional cross-selling opportunities among other Cintas products. Omni's operating results for the period from May 13, 2002 through May 31, 2002 have been included in Cintas' consolidated results.

        The total cash paid to acquire Omni was $656,071. Per the terms of the agreement, this price will be adjusted slightly for changes in working capital as reflected in the final closing balance sheet. Following is the preliminary purchase price allocation for the Omni acquisition:

 
  Preliminary Purchase Price Allocation
Assets:      
Current assets   $ 58,923
Property and equipment     62,529
Goodwill     501,534
Other assets     103,961
   
    $ 726,947
   
Liabilities:      
Current liabilities   $ 51,822
Deferred taxes     18,737
Long-term debt due after one year     317
   
    $ 70,876
   
Total purchase price   $ 656,071
   

        At the time of acquisition, management approved a plan to integrate certain Omni facilities into existing Cintas operations. Included in the purchase price allocation is a restructuring charge of approximately $36 million, which includes approximately $6 million in severance-related costs for corporate and field employees and $30 million in asset write-downs and lease cancellation costs. Cintas expects to incur these costs within the first year of acquisition.

        The pro forma information presented below assumes that Omni had been acquired at the beginning of fiscal 2001 and includes the effect of intangible amortization and the impact on interest expense due to the significant change in Cintas' capital structure. This is presented for informational purposes only, and is not necessarily indicative of the financial position or financial results which may be attained in the future, including synergies that may be achieved.

 
  2002
  2001
Net revenues   $ 2,575,331   $ 2,489,786
Net income   $ 237,966   $ 226,009
Basic earnings per share   $ 1.40   $ 1.34
Diluted earnings per share   $ 1.38   $ 1.32

        For all acquisitions accounted for as purchases, including insignificant acquisitions (33 businesses), the purchase price paid for each has been allocated to the fair value of the assets acquired and liabilities assumed. The following summarizes the aggregate purchase price for all businesses acquired, with the exception of Omni, which have been accounted for as purchases:

12


 
  2002
  2001
Fair value of assets acquired   $ 92,627   $ 32,286
Liabilities assumed and incurred     8,630     2,379
   
 
Total cash paid for acquisitions   $ 83,997   $ 29,907
   
 

        The results of operations for the acquired businesses are included in the consolidated statements of income from the dates of acquisition. The pro forma revenue, net income and earnings per share information relating to acquired businesses, with the exception of Omni, are not presented because they are not significant.

9.    DEFINED CONTRIBUTION PLANS

        Cintas' Partners' Plan is a non-contributory profit sharing plan and ESOP for the benefit of substantially all U.S. Cintas employees who have completed one year of service. The plan also includes a 401(k) savings feature covering substantially all employees. The amount of contributions to the profit sharing plan and ESOP, as well as the matching contribution to the 401(k), are made at the discretion of Cintas. Total contributions, including Cintas' matching contributions, were $19,283, $18,385 and $15,600 for the years ended May 31, 2002, 2001 and 2000, respectively.

        Cintas also has a non-contributory deferred profit sharing plan (DPSP), which covers substantially all Canadian employees. In addition, a registered retirement savings plan (RRSP) is offered to those employees. The amount of contributions to the DPSP, as well as the matching contribution to the RRSP, are made at the discretion of Cintas. Total contributions were $786, $577 and $480 for the years ended May 31, 2002, 2001 and 2000, respectively.

        As a result of previous mergers and acquisitions, Cintas also sponsored contributory thrift plans covering certain salaried and clerical employees and certain employees subject to collective bargaining agreements. Under the provisions of these thrift plans, employees are permitted to contribute a maximum of 6% of their earnings and Cintas makes matching contributions of 25% to 50%. Employees may make additional unmatched contributions to these plans of up to 9% of their earnings. Cintas' contributions to these thrift plans were $0, $355 and $596 for the years ended May 31, 2002, 2001 and 2000, respectively.

10.  EARNINGS PER SHARE

        Earnings per share are computed in accordance with Statement of Financial Accounting Standards No. 128, Earnings per Share. The basic computations are computed based on the weighted average number of common shares outstanding during each period. The diluted computations reflect the potential dilution that could occur if stock options were exercised into common stock, under certain circumstances, that then would share in the earnings of Cintas.

        The following table represents a reconciliation of the shares used to calculate basic and diluted earnings per share for the respective years:

 
  2002
  2001
  2000
Numerator:                  
  Net income   $ 234,251   $ 222,451   $ 193,387
   
 
 
Denominator:                  
  Denominator for basic earnings per share—
weighted average shares (000's)
    169,713     168,779     167,067
  Effect of dilutive securities—
employee stock options (000's)
    2,531     2,850     2,920
   
 
 
  Denominator for diluted earnings per share—
adjusted weighted average shares and assumed conversions (000's)
    172,244     171,629     169,987
   
 
 
Basic earnings per share   $ 1.38   $ 1.32   $ 1.16
   
 
 
Diluted earnings per share   $ 1.36   $ 1.30   $ 1.14
   
 
 

        On January 18, 2000, the Board of Directors approved a three-for-two common stock split effective March 7, 2000. All share and per share information have been adjusted to retroactively reflect the effect of this stock split for all periods presented.

13


11.  STOCK BASED COMPENSATION

        Under the stock option plan adopted by Cintas in fiscal 2000, Cintas may grant officers and key employees incentive stock options and/or non-qualified stock options to purchase an aggregate of 9,000,000 shares of Cintas' common stock. Options are granted at the fair market value of the underlying common stock on the date of grant and generally vest and become exercisable at the rate of 20% per year commencing five years after grant, so long as the holder remains an employee of Cintas.

        As part of the Unitog acquisition in March 1999, Cintas retained a non-qualified stock option plan for certain Unitog employees. The exercise price of the options granted under this plan is the fair market value at date of grant and the options vest ratably over four years and expire ten years after the date of grant. Certain provisions of the plan required immediate vesting and a cash settlement, as opposed to the issuance of common stock, upon termination of the option holders' employment prior to March 24, 2000.

        The information presented in the following table relates primarily to stock options granted and outstanding under either the plan adopted in fiscal 2000 or under similar plans:

 
  Shares
  Weighted Average
Exercise Price

Outstanding May 31, 1999 (623,280 shares exercisable)   5,921,177   $ 17.46
  Granted   760,825     41.39
  Cancelled   (249,575 )   25.72
  Exercised   (493,736 )   10.71
   
 
Outstanding May 31, 2000 (671,391 shares exercisable)   5,938,691     20.74
  Granted   691,500     42.88
  Cancelled   (241,175 )   30.87
  Exercised   (662,823 )   11.03
   
 
Outstanding May 31, 2001 (555,544 shares exercisable)   5,726,193     24.11
  Granted   823,750     47.32
  Cancelled   (171,600 )   30.64
  Exercised   (517,246 )   11.93
   
 
Outstanding May 31, 2002 (674,595 shares exercisable)   5,861,097   $ 28.31
   
 

        The following table summarizes the information related to stock options outstanding at May 31, 2002:

 
   
  Outstanding Options
  Exercisable Options
Range of
Exercise Prices

  Number
Outstanding

  Average
Remaining
Option
Life

  Weighted
Average
Exercise
Price

  Number
Exercisable

  Weighted
Average
Exercise
Price

$ 8.42—$16.83   1,888,729   2.98   $ 13.24   573,469   $ 11.58
  17.25—  23.54   1,258,225   5.09     22.90   63,595     18.36
  24.38—  41.96   1,236,993   6.70     36.32   35,968     28.98
  42.19—  53.19   1,477,150   8.72     45.46   1,563     42.24
     
 
 
 
 
$ 8.42—$53.19   5,861,097   5.67   $ 28.31   674,595   $ 13.22
     
 
 
 
 

        At May 31, 2002, 7,528,050 shares of common stock are reserved for future issuance under the 2000 plan.

14


        Pro forma information regarding earnings and earnings per share is required by SFAS 123 and has been determined as if Cintas had accounted for its stock options granted subsequent to May 31, 1995, under the fair value method of SFAS 123. The weighted average fair value of stock options granted during fiscal 2002, 2001 and 2000 was $22.65, $21.40 and $21.29, respectively. The fair value of these options was estimated at the date of grant using a Black-Scholes option-pricing model with the following weighted-average assumptions:

 
  2002
  2001
  2000
 
Risk free interest rate   4.75 % 5.50 % 6.25 %
Dividend yield   .50 % .50 % .50 %
Expected volatility of Cintas' common stock   34 % 34 % 32 %
Expected life of the option in years   9   9   9  

        The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are freely transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because Cintas' options have characteristics significantly different from those of traded options and because changes in the subjective input assumptions can materially affect the fair value estimate, in Cintas' opinion existing models do not necessarily provide a reliable single measure of the fair value of its stock options.

        For purposes of pro forma disclosure, the estimated fair value of the options is amortized to expense over the options' vesting period. Cintas' pro forma information is as follows:

 
  2002
  2001
  2000
Net income:                  
  As reported   $ 234,251   $ 222,451   $ 193,387
  Pro forma for SFAS 123   $ 229,466   $ 218,665   $ 190,386

Earnings per share:

 

 

 

 

 

 

 

 

 
  Pro forma basic earnings per share for SFAS 123   $ 1.35   $ 1.30   $ 1.14
  Pro forma diluted earnings per share for SFAS 123   $ 1.33   $ 1.27   $ 1.12

        The effects of providing pro forma disclosure are not representative of earnings to be reported for future years.

12.  LITIGATION AND ENVIRONMENTAL MATTERS

        Cintas is subject to legal proceedings and claims arising from the ordinary course of its business, including personal injury, customer contract and employment claims. In the opinion of management, the aggregate liability, if any, with respect to such actions will not have a material adverse effect on the financial position or results of operations of Cintas.

        In acquiring Unitog in March 1999, Cintas became a potentially responsible party, and thus faces the possibility of joint and several liability under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) in connection with alleged environmental contamination in an area near a rental facility in Tempe, Arizona. This facility, located near the South Indian Bend Wash (SIBW) Federal Superfund site, has been tested for soil and groundwater contamination. Soil testing at Cintas' facility detected volatile organic compounds, and Cintas promptly took steps to remediate the contamination. Groundwater testing in the area of Cintas' property has detected a very low level of volatile organic compound contamination. The United States Environmental Protection Agency (EPA) in March 1999 issued a Record of Decision to the effect that groundwater contamination in the vicinity of Cintas' plant does not warrant remediation at this time. Instead, the low levels of groundwater contamination near Cintas' facility will be monitored and allowed to attenuate naturally. The Record of Decision requires active groundwater remediation in other parts of the SIBW site, which are believed to be unrelated to Cintas. According to the Record of Decision, the EPA estimates that the 30 year net present value of costs to be incurred to remediate and monitor groundwater contamination at the SIBW site is $22,000. It is possible that the EPA will attempt to recover from the potentially responsible parties the costs it has incurred to date with respect to the SIBW site as well as the costs it expects to incur going forward. To date, no specific claim has been asserted against Cintas. Thus it is not possible at this time to estimate Cintas' loss exposure, if any, with respect to this matter.

15


        As part of the Agreement and Plan of Merger dated January 9, 1999 between Unitog and Cintas, Cintas performed environmental testing at nine previously untested Unitog laundry facilities. The testing resulted in the discovery of soil and groundwater contamination at certain of these sites. As a result of all of the environmental matters noted above, Cintas recorded a charge to operating expense of $5,000 during the third quarter of fiscal 1999 to reflect its current estimate of the additional costs to be incurred relative to these sites. At May 31, 2002, Cintas has an undiscounted liability of $3,970 for these environmental matters.

        As part of the acquisition of Omni, Cintas performed environmental testing at ten previously untested Omni laundry facilities. The testing resulted in the discovery of soil and groundwater contamination at certain of these sites. Cintas estimated that remedial action would cost approximately $9 million to clean up these sites, which Cintas has accrued as a liability as of the date of the acquisition of Omni. Under its agreement to acquire Omni, Cintas has agreed to pay for any remedial action, up to the first $5 million, and the parties agreed that remedial costs of $3 million would be treated as a purchase price adjustment and credited to Cintas.

        Cintas is party to additional litigation, none of which is expected to have a material impact on operating results. This litigation includes lawsuits challenging the legality of certain ancillary charges on invoices. The estimated liability, if any, relating to these lawsuits has not been determined, but is not expected to have a material adverse effect on results. In addition, a class action suit was filed in the State of California alleging that Cintas violated the California overtime pay laws applicable to its service sales representatives, which Cintas believed to be exempt employees. Management of Cintas has established estimated accruals to the extent that liabilities exist for such matters and believes that any liability in excess of amounts accrued will not have a material impact on the financial statements.

13.  SEGMENT INFORMATION

        Cintas classifies its businesses into two operating segments: Rentals and Other Services. The Rentals operating segment designs and manufactures corporate identity uniforms which it rents, along with other items, to its customers. The Other Services operating segment involves the design, manufacture and direct sale of uniforms to its customers, as well as the sale of ancillary services including sanitation supplies, first aid products and services and cleanroom supplies. All of these services are provided throughout the United States and Canada to businesses of all types—from small service and manufacturing companies to major corporations that employ thousands of people.

        Information as to the operations of Cintas' different business segments is set forth below based on the distribution of products and services offered. Cintas evaluates performance based on several factors of which the primary financial measures are business segment revenue and income before income taxes. The accounting policies of the business segments are the same as those described in the Significant Accounting Policies (Note 1).

May 31, 2002

  Rentals
  Other
Services

  Corporate
  Total
 
Revenue   $ 1,753,368   $ 517,684   $   $ 2,271,052  
   
 
 
 
 
Gross margin   $ 800,016   $ 157,354   $   $ 957,370  
Selling and administrative expenses     450,276     129,132     1,061     580,469  
Interest income             (5,636 )   (5,636 )
Interest expense             10,952     10,952  
   
 
 
 
 
Income before income taxes   $ 349,740   $ 28,222   $ (6,377 ) $ 371,585  
   
 
 
 
 
Depreciation and amortization   $ 103,586   $ 16,439   $   $ 120,025  
   
 
 
 
 
Capital expenditures   $ 98,938   $ 8,346   $   $ 107,284  
   
 
 
 
 
Total assets   $ 2,144,544   $ 289,604   $ 85,086   $ 2,519,234  
   
 
 
 
 

16


May 31, 2001

  Rentals
  Other
Services

  Corporate
  Total
 
Revenue   $ 1,610,606   $ 550,094   $   $ 2,160,700  
   
 
 
 
 
Gross margin   $ 714,067   $ 182,200   $   $ 896,267  
Selling and administrative expenses     390,992     137,362     709     529,063  
Interest income             (4,369 )   (4,369 )
Interest expense             15,119     15,119  
   
 
 
 
 
Income before income taxes   $ 323,075   $ 44,838   $ (11,459 ) $ 356,454  
   
 
 
 
 
Depreciation and amortization   $ 95,957   $ 16,132   $   $ 112,089  
   
 
 
 
 
Capital expenditures   $ 133,786   $ 13,658   $   $ 147,444  
   
 
 
 
 
Total assets   $ 1,362,298   $ 279,697   $ 110,229   $ 1,752,224  
   
 
 
 
 
May 31, 2000

  Rentals
  Other
Services

  Corporate
  Total
 
Revenue   $ 1,424,892   $ 477,099   $   $ 1,901,991  
   
 
 
 
 
Gross margin   $ 617,591   $ 161,961   $   $ 779,552  
Selling and administrative expenses     338,887     116,907     834     456,628  
Interest income             (4,742 )   (4,742 )
Interest expense             15,907     15,907  
   
 
 
 
 
Income before income taxes   $ 278,704   $ 45,054   $ (11,999 ) $ 311,759  
   
 
 
 
 
Depreciation and amortization   $ 86,270   $ 13,243   $   $ 99,513  
   
 
 
 
 
Capital expenditures   $ 129,838   $ 31,594   $   $ 161,432  
   
 
 
 
 
Total assets   $ 1,214,318   $ 257,202   $ 109,822   $ 1,581,342  
   
 
 
 
 

14.  QUARTERLY FINANCIAL DATA (UNAUDITED)

        The following is a summary of the results of operations for each of the quarters within the years ended May 31, 2002 and 2001:

May 31, 2002

  First
Quarter

  Second
Quarter

  Third
Quarter

  Fourth
Quarter

Revenue   $ 564,600   $ 557,148   $ 545,491   $ 603,813
Gross margin   $ 237,277   $ 235,198   $ 229,340   $ 255,555
Net income   $ 56,540   $ 57,985   $ 55,584   $ 64,142
Basic earnings per share   $ .33   $ .34   $ .33   $ .38
Diluted earnings per share   $ .33   $ .34   $ .32   $ .37
Weighted average number of shares outstanding (000's)     169,528     169,726     169,786     169,876
May 31, 2001

  First
Quarter

  Second
Quarter

  Third
Quarter

  Fourth
Quarter

Revenue   $ 521,959   $ 539,052   $ 536,723   $ 562,966
Gross margin   $ 217,265   $ 223,377   $ 219,916   $ 235,709
Net income   $ 50,849   $ 56,533   $ 54,910   $ 60,159
Basic earnings per share   $ .30   $ .34   $ .32   $ .36
Diluted earnings per share   $ .30   $ .33   $ .32   $ .35
Weighted average number of shares outstanding (000's)     168,366     168,660     168,890     169,206

17


15.  SUPPLEMENTAL GUARANTOR INFORMATION

        On May 13, 2002, Cintas completed the acquisition of Omni for approximately $656,000. For the twelve months ended January 31, 2002, Omni had total revenue of approximately $300,000. The purchase price for Omni was funded with $450,000 in long-term notes, $100,000 of borrowings under a commercial paper program and approximately $106,000 in cash. The $450,000 in long-term notes consist of $225,000 with five-year maturities at an interest rate of 5 1 / 8 % and $225,000 with ten-year maturities at an interest rate of 6%.

        Effective June 1, 2000, Cintas reorganized its legal structure and created Cintas Corporation No. 2 (Corp. 2) as its indirectly, wholly-owned principal operating subsidiary. Cintas and its wholly-owned, direct and indirect domestic subsidiaries, other than Corp. 2, will unconditionally guarantee, jointly and severally, debt of Corp. 2. As allowed by SEC rules, the following condensed consolidating financial statements are provided as an alternative to filing separate financial statements of the guarantors. Each of the subsidiaries presented in the condensed consolidating financial statements has been fully consolidated in Cintas' financial statements. The condensed consolidating financial statements should be read in conjunction with the financial statements of Cintas and notes thereto of which this note is an integral part.

        Condensed consolidating financial statements for Cintas, Corp. 2, the subsidiary guarantors and non-guarantors are presented below:

CONDENSED CONSOLIDATING INCOME STATEMENT

Year Ended May 31, 2002

  Cintas
Corporation

  Corp. 2
  Subsidiary
Guarantors

  Non -
Guarantors

  Eliminations
  Cintas
Corporation
Consolidated

 
Revenue:                                      
  Rentals   $   $ 1,289,261   $ 382,184   $ 82,096   $ (173 ) $ 1,753,368  
  Other services         896,807     181,217     22,434     (582,774 )   517,684  
  Equity in net income of affiliates     234,251                 (234,251 )    
   
 
 
 
 
 
 
      234,251     2,186,068     563,401     104,530     (817,198 )   2,271,052  
Costs and expenses (income):                                      
  Cost of rentals         789,092     226,452     48,024     (110,216 )   953,352  
  Cost of other services         680,366     129,561     16,919     (466,516 )   360,330  
  Selling and administrative expenses         596,112     (38,864 )   27,034     (3,813 )   580,469  
  Interest income         (5,042 )   (385 )   (209 )       (5,636 )
  Interest expense         48,616     (37,617 )   (47 )       10,952  
   
 
 
 
 
 
 
          2,109,144     279,147     91,721     (580,545 )   1,899,467  
Income before income taxes     234,251     76,924     284,254     12,809     (236,653 )   371,585  
Income taxes         12,319     120,452     4,563         137,334  
   
 
 
 
 
 
 
Net income   $ 234,251   $ 64,605   $ 163,802   $ 8,246   $ (236,653 ) $ 234,251  
   
 
 
 
 
 
 

18


CONDENSED CONSOLIDATING INCOME STATEMENT

Year Ended May 31, 2001

  Cintas
Corporation

  Corp. 2
  Subsidiary
Guarantors

  Non -
Guarantors

  Eliminations
  Cintas
Corporation
Consolidated

 
Revenue:                                      
  Rentals   $   $ 1,188,257   $ 356,184   $ 66,308   $ (143 ) $ 1,610,606  
  Other services         961,260     172,736     8,997     (592,899 )   550,094  
  Equity in net income of affiliates     222,451                 (222,451 )    
   
 
 
 
 
 
 
      222,451     2,149,517     528,920     75,305     (815,493 )   2,160,700  
Costs and expenses (income):                                      
  Cost of rentals         751,096     217,907     40,288     (112,752 )   896,539  
  Cost of other services         718,262     120,694     5,693     (476,755 )   367,894  
  Selling and administrative expenses         588,237     (71,151 )   20,469     (8,492 )   529,063  
  Interest income         (3,619 )   (2,585 )   (337 )   2,172     (4,369 )
  Interest expense         15,211     (505 )   413         15,119  
   
 
 
 
 
 
 
          2,069,187     264,360     66,526     (595,827 )   1,804,246  
Income before income taxes     222,451     80,330     264,560     8,779     (219,666 )   356,454  
Income taxes         30,760     100,532     2,711         134,003  
   
 
 
 
 
 
 
Net income   $ 222,451   $ 49,570   $ 164,028   $ 6,068   $ (219,666 ) $ 222,451  
   
 
 
 
 
 
 

CONDENSED CONSOLIDATING INCOME STATEMENT

Year Ended May 31, 2000

  Cintas
Corporation

  Corp. 2
  Subsidiary
Guarantors

  Non -
Guarantors

  Eliminations
  Cintas
Corporation
Consolidated

 
Revenue:                                      
  Rentals   $   $   $ 1,366,660   $ 58,261   $ (29 ) $ 1,424,892  
Other services             986,699     4,387     (513,987 )   477,099  
  Equity in net income of affiliates     193,387                 (193,387 )    
   
 
 
 
 
 
 
      193,387         2,353,359     62,648     (707,403 )   1,901,991  
Costs and expenses (income):                                      
  Cost of rentals             869,879     36,453     (99,031 )   807,301  
  Cost of other services             717,390     2,047     (404,299 )   315,138  
  Selling and administrative expenses             443,657     22,883     (9,912 )   456,628  
  Interest income             (6,689 )   (283 )   2,230     (4,742 )
  Interest expense             15,032     876     (1 )   15,907  
   
 
 
 
 
 
 
              2,039,269     61,976     (511,013 )   1,590,232  
Income before income taxes     193,387         314,090     672     (196,390 )   311,759  
Income taxes             116,007     2,365         118,372  
   
 
 
 
 
 
 
Net income   $ 193,387   $   $ 198,083   $ (1,693 ) $ (196,390 ) $ 193,387  
   
 
 
 
 
 
 

19


CONDENSED CONSOLIDATING BALANCE SHEET

Year Ended May 31, 2002

  Cintas
Corporation

  Corp. 2
  Subsidiary
Guarantors

  Non -
Guarantors

  Eliminations
  Cintas
Corporation
Consolidated

Assets                                    
Current assets:                                    
  Cash and cash equivalents   $   $ 22,440   $ 5,011   $ 13,177   $   $ 40,628
  Marketable securities         42,472         1,986         44,458
  Accounts receivable, net         225,364     70,720     782     (13,632 )   283,234
  Inventories         182,858     14,899     5,539     (9,475 )   193,821
  Uniforms and other rental items in service         210,409     71,251     13,101     (13,825 )   280,936
  Prepaid expenses         7,421     1,995     760     (3 )   10,173
   
 
 
 
 
 
Total current assets         690,964     163,876     35,345     (36,935 )   853,250
Property and equipment, at cost, net         637,882     108,258     32,262         778,402
Goodwill         104,140     566,748     7,710         678,598
Other assets     966,397     55,571     905,353     106,180     (1,824,517 )   208,984
   
 
 
 
 
 
    $ 966,397   $ 1,488,557   $ 1,744,235   $ 181,497   $ (1,861,452 ) $ 2,519,234
   
 
 
 
 
 
Liabilities and Shareholders' Equity                                    
Current liabilities:                                    
  Accounts payable   $ (465,247 ) $ (58,727 ) $ 531,544   $ 14,842   $ 37,981   $ 60,393
  Accrued compensation and related liabilities         23,441     4,508     1,055         29,004
  Accrued liabilities         137,236     476     6,820     (1,036 )   143,496
  Deferred income taxes         1,737     58,020     1,615         61,372
  Long-term debt due within one year         16,315     2,126     117     (189 )   18,369
   
 
 
 
 
 
Total current liabilities     (465,247 )   120,002     596,674     24,449     36,756     312,634
Long-term debt due after one year         710,728     (23,499 )   48,111     (32,090 )   703,250
Deferred income taxes         7,251     70,239     2,101         79,591
Total shareholders' equity     1,431,644     650,576     1,100,821     106,836     (1,866,118 )   1,423,759
   
 
 
 
 
 
    $ 966,397   $ 1,488,557   $ 1,744,235   $ 181,497   $ (1,861,452 ) $ 2,519,234
   
 
 
 
 
 

20


CONDENSED CONSOLIDATING BALANCE SHEET

Year Ended May 31, 2001

  Cintas
Corporation

  Corp. 2
  Subsidiary
Guarantors

  Non -
Guarantors

  Eliminations
  Cintas
Corporation
Consolidated

Assets                                    
Current assets:                                    
  Cash and cash equivalents   $   $ 57,629   $ 8,792   $ 7,303   $   $ 73,724
  Marketable securities         35,055         1,450         36,505
  Accounts receivable, net         157,895     89,082     10,343     (12,870 )   244,450
  Inventories         202,773     14,564     3,088     (6,076 )   214,349
  Uniforms and other rental items in service         189,026     57,800     10,168     (14,822 )   242,172
  Prepaid expenses         6,170     1,827     476     (3 )   8,470
   
 
 
 
 
 
Total current assets         648,548     172,065     32,828     (33,771 )   819,670
Property and equipment, at cost, net         546,578     127,148     28,406         702,132
Goodwill         71,913     51,550     290         123,753
Other assets     1,427,562     245,980     713,033     39,492     (2,319,398 )   106,669
   
 
 
 
 
 
    $ 1,427,562   $ 1,513,019   $ 1,063,796   $ 101,016   $ (2,353,169 ) $ 1,752,224
   
 
 
 
 
 
Liabilities and Shareholders' Equity                                    
Current liabilities:                                    
  Accounts payable   $ 190,823   $ 89,451   $ (294,324 ) $ 17,296   $ 39,249   $ 42,495
  Accrued compensation and related liabilities         27,055     6,907     1,178         35,140
  Accrued liabilities         129,144     (35,578 )   2,694     (1,300 )   94,960
  Deferred income taxes         50,748     5,350     1,605         57,703
  Long-term debt due within one year         17,328     3,450     1     (174 )   20,605
   
 
 
 
 
 
Total current liabilities     190,823     313,726     (314,195 )   22,774     37,775     250,903
Long-term debt due after one year         227,231     5,733     20,286     (32,310 )   220,940
Deferred income taxes         41,444     6,714     908         49,066
Total shareholders' equity     1,236,739     930,618     1,365,544     57,048     (2,358,634 )   1,231,315
   
 
 
 
 
 
    $ 1,427,562   $ 1,513,019   $ 1,063,796   $ 101,016   $ (2,353,169 ) $ 1,752,224
   
 
 
 
 
 

21


CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Year Ended May 31, 2002

  Cintas
Corporation

  Corp. 2
  Subsidiary
Guarantors

  Non -
Guarantors

  Eliminations
  Cintas
Corporation
Consolidated

 
Cash flows from operating activities:                                      
Net income   $ 234,251   $ 64,605   $ 163,802   $ 8,246   $ (236,653 ) $ 234,251  
Adjustments to reconcile net income to net cash provided by (used in) operating activities:                                      
  Depreciation         66,885     29,789     4,541         101,215  
  Amortization of deferred charges         10,795     6,267     1,748         18,810  
  Deferred income taxes         (96,769 )   116,195     1,203         20,629  
  Changes in current assets and liabilities, net of acquisitions of businesses:                                      
    Accounts receivable         (28,735 )   18,906     12,229     762     3,162  
    Inventories         30,105     59     (1,832 )   3,399     31,731  
    Uniforms and other rental items in service         (10,463 )   (13,189 )   (2,608 )   (997 )   (27,257 )
    Prepaid expenses         1,730     (167 )   (233 )       1,330  
    Accounts payable         (160,208 )   169,662     (4,841 )   (1,268 )   3,345  
    Accrued compensation and related liabilities         (10,153 )   (2,420 )   (123 )       (12,696 )
    Accrued liabilities         (32,381 )   31,819     3,211     264     2,913  
   
 
 
 
 
 
 
Net cash provided by (used in) operating activities     234,251     (164,589 )   520,723     21,541     (234,493 )   377,433  
Cash flows from investing activities:                                      
  Capital expenditures         (89,806 )   (10,175 )   (7,303 )       (107,284 )
  Proceeds from sale or redemption of marketable securities         152,128         5,291         157,419  
  Purchase of marketable securities         (159,545 )       (5,827 )       (165,372 )
  Acquisitions of businesses, net of cash acquired     (656,070 )   (49,071 )   (14,059 )   (13,027 )       (732,227 )
  Proceeds from divestiture of certain facilities                          
  Other     213,445     42,842     (469,714 )   (22,743 )   234,288     (1,882 )
   
 
 
 
 
 
 
Net cash (used in) provided by investing activities     (442,625 )   (103,452 )   (493,948 )   (43,609 )   234,288     (849,346 )
Cash flows from financing activities:                                      
  Proceeds from issuance of long-term debt         639,383     (27,112 )   27,974         640,245  
  Repayment of long-term debt         (157,341 )   (3,444 )   (32 )   205     (160,612 )
  Stock options exercised     3,247                     3,247  
  Dividends paid     203,714     (246,168 )               (42,454 )
  Other     1,413     (3,022 )               (1,609 )
   
 
 
 
 
 
 
Net cash provided by (used in) financing activities     208,374     232,852     (30,556 )   27,942     205     438,817  
   
 
 
 
 
 
 
Net (decrease) increase in cash and cash equivalents         (35,189 )   (3,781 )   5,874         (33,096 )
Cash and cash equivalents at beginning of period         57,629     8,792     7,303         73,724  
   
 
 
 
 
 
 
Cash and cash equivalents at end of period   $   $ 22,440   $ 5,011   $ 13,177   $   $ 40,628  
   
 
 
 
 
 
 

22


CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Year Ended May 31, 2001

  Cintas
Corporation

  Corp. 2
  Subsidiary
Guarantors

  Non -
Guarantors

  Eliminations
  Cintas
Corporation
Consolidated

 
Cash flows from operating activities:                                      
Net income   $ 222,451   $ 49,570   $ 164,028   $ 6,068   $ (219,666 ) $ 222,451  
Adjustments to reconcile net income to net cash provided by (used in) operating activities:                                      
  Depreciation         71,082     15,832     3,325         90,239  
  Amortization of deferred charges         12,528     3,152     6,170         21,850  
  Deferred income taxes         92,192     (84,362 )   629         8,459  
  Changes in current assets and liabilities, net of acquisitions of businesses:                                      
    Accounts receivable         (156,917 )   150,343     (7,246 )   (2,666 )   (16,486 )
    Inventories         (202,704 )   156,790     (2,601 )   (178 )   (48,693 )
    Uniforms and other rental items in service         (189,095 )   165,792     (390 )   (4,778 )   (28,471 )
    Prepaid expenses         (6,173 )   5,055     (42 )       (1,160 )
    Accounts payable     409,903     88,845     (539,607 )   15,783     14,969     (10,107 )
    Accrued compensation and related liabilities         26,765     (20,503 )   404         6,666  
    Accrued liabilities         128,231     (123,212 )   (1,938 )   (871 )   2,210  
   
 
 
 
 
 
 
Net cash provided by (used in) operating activities     632,354     (85,676 )   (106,692 )   20,162     (213,190 )   246,958  
Cash flows from investing activities:                                      
  Capital expenditures         (616,834 )   475,467     (6,077 )       (147,444 )
  Proceeds from sale or redemption of marketable securities         59,021         2,588         61,609  
  Purchase of marketable securities         (94,076 )   55,285     (1,683 )       (40,474 )
  Acquisitions of businesses, net of cash acquired         (18,709 )   (11,348 )   (478 )       (30,535 )
  Proceeds from divestiture of certain facilities         1,400                 1,400  
  Other     (601,751 )   608,550     (236,609 )   (231 )   224,076     (5,965 )
   
 
 
 
 
 
 
Net cash (used in) provided by investing activities     (601,751 )   (60,648 )   282,795     (5,881 )   224,076     (161,409 )
Cash flows from financing activities:                                      
  Proceeds from issuance of long-term debt         257,982     (247,032 )   786     (11,506 )   230  
  Repayment of long-term debt         (14,029 )   (6,557 )   (13,668 )   620     (33,634 )
  Stock options exercised     5,992                     5,992  
  Dividends paid     (37,173 )   (40,000 )   40,000             (37,173 )
  Other     578                     578  
   
 
 
 
 
 
 
Net cash (used in) provided by financing activities     (30,603 )   203,953     (213,589 )   (12,882 )   (10,886 )   (64,007 )
   
 
 
 
 
 
 
Net increase (decrease) in cash and cash equivalents         57,629     (37,486 )   1,399         21,542  
Cash and cash equivalents at beginning of period             46,278     5,904         52,182  
   
 
 
 
 
 
 
Cash and cash equivalents at end of period   $   $ 57,629   $ 8,792   $ 7,303   $   $ 73,724  
   
 
 
 
 
 
 

23


CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Year Ended May 31, 2000

  Cintas
Corporation

  Corp. 2
  Subsidiary
Guarantors

  Non -
Guarantors

  Eliminations
  Cintas
Corporation
Consolidated

 
Cash flows from operating activities:                                      
Net income   $ 193,387   $   $ 198,083   $ (1,693 ) $ (196,390 ) $ 193,387  
Adjustments to reconcile net income to net cash (used in) provided by operating activities:                                      
  Depreciation             76,302     2,214         78,516  
  Amortization of deferred charges             13,031     7,966         20,997  
  Deferred income taxes             17,831     (452 )       17,379  
  Changes in current assets and liabilities, net of acquisitions of businesses:                                      
    Accounts receivable             (25,172 )   5,188     725     (19,259 )
    Inventories             (25,436 )   3     2,457     (22,976 )
    Uniforms and other rental items in service             (13,325 )   585     (1,685 )   (14,425 )
    Prepaid expenses             (951 )   10     3     (938 )
    Accounts payable     (409,903 )       404,862     4,784     (343 )   (600 )
    Accrued compensation and related liabilities             2,113     157         2,270  
    Accrued liabilities             3,577     207     (103 )   3,681  
   
 
 
 
 
 
 
Net cash (used in) provided by operating activities     (216,516 )       650,915     18,969     (195,336 )   258,032  
Cash flows from investing activities:                                      
  Capital expenditures             (153,180 )   (8,252 )       (161,432 )
  Proceeds from sale or redemption of marketable securities             100,558     12,350         112,908  
  Purchase of marketable securities             (88,260 )   (9,973 )       (98,233 )
  Acquisitions of businesses, net of cash acquired             (24,561 )   (421 )       (24,982 )
  Proceeds from divestiture of certain facilities             25,722             25,722  
  Other     244,319         (451,665 )   684     195,741     (10,921 )
   
 
 
 
 
 
 
Net cash provided by (used in) investing activities     244,319         (591,386 )   (5,612 )   195,741     (156,938 )
Cash flows from financing activities:                                      
  Proceeds from issuance of long-term debt             147,946     (6,428 )   (779 )   140,739  
  Repayment of long-term debt             (171,708 )   (6,317 )   374     (177,651 )
  Stock options exercised     3,399                     3,399  
  Dividends paid     (31,249 )                   (31,249 )
  Other     47                     47  
   
 
 
 
 
 
 
Net cash used in financing activities     (27,803 )       (23,762 )   (12,745 )   (405 )   (64,715 )
   
 
 
 
 
 
 
Net increase in cash and cash equivalents             35,767     612         36,379  
Cash and cash equivalents at beginning of period             10,511     5,292         15,803  
   
 
 
 
 
 
 
Cash and cash equivalents at end of period   $   $   $ 46,278   $ 5,904   $   $ 52,182  
   
 
 
 
 
 
 

24



REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

        

  

The Board of Directors
Cintas Corporation

        We have audited the accompanying consolidated balance sheets of Cintas Corporation as of May 31, 2002 and 2001, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the three years in the period ended May 31, 2002. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

        We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Cintas Corporation at May 31, 2002 and 2001, and the consolidated results of its operations and its cash flows for each of the three years in the period ended May 31, 2002, in conformity with accounting principles generally accepted in the United States.
  

    SIGNATURE

Cincinnati, Ohio
July 5, 2002

25




MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Fiscal 2002 Compared to Fiscal 2001

        Fiscal 2002 marked the 33rd year of uninterrupted growth for Cintas. Total revenue was $2.3 billion, an increase of 5% over fiscal 2001. Revenue from the Rentals segment increased 9%, primarily due to a combination of acquisitions and growth in the customer base. Other Services revenue decreased 6%, primarily due to a delay in customer purchases driven by slow economic conditions and a decline in the hospitality and airline industries resulting from the events of September 11. Despite slow economic growth, internal growth in the Rentals segment averaged over 4% for the year.

        Pre-tax income was $372 million, a 4% increase over fiscal 2001. Pre-tax income from the Rentals segment increased 8% over the prior year, primarily due to higher rental revenue. Pre-tax income for the Other Services segment decreased 37% from the prior year, due to lower sales volume and excess capacity costs.

        Net interest expense decreased $5.4 million from the prior year due to lower interest rates, a lower average level of debt and a higher average level of cash and marketable securities in fiscal 2002. Cintas' effective tax rate was 37% for fiscal 2002 compared to 38% for fiscal 2001, primarily due to tax planning efforts.

        Net income for fiscal 2002 of $234 million and diluted earnings per share of $1.36, both represent a 5% increase over fiscal 2001. Return on average equity was 18% in fiscal 2002 and 20% in fiscal 2001.

        Cash, cash equivalents and marketable securities decreased by $25 million in 2002, or 23%, primarily due to the acquisition of Omni. The cash, cash equivalents and marketable securities will be used to finance future acquisitions and capital expenditures. Marketable securities consist primarily of municipal bonds and federal government securities.

        Accounts receivable increased $39 million due to sales growth and acquisitions made during the year. Inventories decreased $21 million due to focused efforts to improve inventory turns. Net property and equipment increased by $76 million. In fiscal 2002, Cintas completed construction of seven new uniform rental facilities and had another five uniform rental facilities in various stages of construction to accommodate growth in rental operations.

Fiscal 2001 Compared to Fiscal 2000

        Total revenue for fiscal 2001 was $2.2 billion, an increase of 14% over fiscal 2000. Revenue from the Rentals segment increased 13% and Other Services revenue increased 15%, primarily due to growth in the customer base. Despite a slowing economy, internal growth in the Rentals segment averaged approximately 11% for the year.

        Pre-tax income for fiscal 2001 was $356 million, a 14% increase over fiscal 2000. Pre-tax income from the Rentals segment increased 16% over the prior year, while pre-tax income for the Other Services segment remained flat.

        Net interest expense decreased $0.4 million from the prior year due to lower interest rates and a lower level of average debt in fiscal 2001. Cintas' effective tax rate was 38% for fiscal 2001 and fiscal 2000.

        Net income for fiscal 2001 of $222 million and diluted earnings per share of $1.30 represent a 15% and 14% increase, respectively, over fiscal 2000. Return on average equity was 20% for both fiscal 2001 and fiscal 2000.

        Cash, cash equivalents and marketable securities remained relatively consistent year over year. The cash, cash equivalents and marketable securities were used to finance acquisitions and capital expenditures. Marketable securities consisted primarily of municipal bonds and federal government securities.

        Accounts receivable increased $19 million due to sales growth and acquisitions made during the year. Inventories increased $49 million due to the expansion of outside contract manufacturing capacity, the stocking of new distribution centers, an effort to reduce lead times on direct sale products and sales growth in both business segments. Net property and equipment increased by $60 million. In fiscal 2001, Cintas completed construction of eight new uniform rental facilities and had another ten uniform rental facilities in various stages of construction to accommodate growth in rental operations.

26


Liquidity and Capital Resources

        At May 31, 2002, Cintas had $85 million in cash, cash equivalents and marketable securities, a decrease of $25 million from May 31, 2001. This decrease is primarily due to cash paid for acquisitions of $732 million, partially offset by strong operating cash flows and proceeds from debt to finance acquisitions. Cintas' investment policy pertaining to marketable securities is conservative. Preservation of principal, while earning an attractive yield, is the criteria used in making investment decisions.

        Working capital decreased $28 million to $541 million in fiscal 2002. This decrease is primarily the result of lower direct sale inventories, a lower level of cash due to acquisitions and higher accrued liabilities due primarily to the acquisition of Omni.

        Capital expenditures for fiscal 2002 totaled $107 million, including $99 million for the Rentals segment and $8 million for Other Services. Cintas continues to reinvest in land, buildings and equipment in an effort to expand capacity for future growth. Cintas anticipates that capital expenditures for fiscal 2003 will approximate $150 million.

        On May 13, 2002, Cintas completed the acquisition of Omni for approximately $656 million. This acquisition, coupled with smaller acquisitions in both the Rentals and Other Services segments, were financed with a combination of approximately $182 million in cash, $450 million in long-term notes, and approximately $100 million in commercial paper. As a result of this additional debt, the total debt to total capitalization ratio increased to 34% at May 31, 2002, versus 16% at May 31, 2001.

        The $450 million in long-term notes consist of $225 million with five-year maturities at a rate of 5 1 / 8 %, and $225 million with ten-year maturities at a rate of 6%. Cintas has earned credit ratings on these notes of "A" from Standard & Poor's and "A2" from Moody's. Cintas also utilizes a $300 million commercial paper program, on which it has earned credit ratings of "A-1" from Standard & Poor's and "Prime-1" from Moody's. These ratings reflect Cintas' commitment to conservative financial policies, strong financial management and a disciplined integration strategy for acquisitions. The commercial paper program is fully supported by a long-term credit facility that matures in 2005. As of May 31, 2002, $190 million in commercial paper was outstanding, which is included in the $207 million of unsecured notes detailed in Note 5.

        During the year, Cintas paid dividends of $42 million, or $.25 per share. On a per share basis, this dividend is an increase of 14% over that paid in fiscal 2001.

        Following is information regarding Cintas' long-term contractual obligations and other commitments outstanding as of May 31, 2002:

 
  Payments Due by Period
Long-term contractual obligations

  Total
  One year
or less

  Two to
three years

  Four to
five years

  After five
years

 
  (In thousands)

Long-term debt(1)   $ 717,160   $ 17,828   $ 228,259   $ 10,240   $ 460,833
Capital lease obligations(2)     4,459     541     995     1,163     1,760
Operating leases(3)     61,866     14,923     21,642     14,627     10,674
Unconditional purchase obligations                    
   
 
 
 
 
Total contractual cash obligations   $ 783,485   $ 33,292   $ 250,896   $ 26,030   $ 473,267

(1)
Reference Note 5 for a detailed discussion of long-term debt.

(2)
Capital lease obligations are included in long-term debt detailed in Note 5.

(3)
Operating leases consist primarily of building leases and synthetic leases on the two corporate jets.

27


 
  Amount of Commitment Expiration Per Period
Other commercial commitments

  Total
  One year
or less

  Two to
three years

  Four to
five years

  After five
years

 
  (In thousands)

Lines of credit(1)   $ 300,000   $ 150,000   $ 150,000   $   $
Standby letters of credit(2)     40,000     40,000            
Guarantees                    
Standby repurchase obligations                    
Other commercial commitments                    
   
 
 
 
 
Total commercial commitments   $ 340,000   $ 190,000   $ 150,000   $   $

(1)
Back-up facility for the commercial paper program (reference Note 5 for further discussion).

(2)
Support certain outstanding debt (reference Note 5) and self-insured workers' compensation and general liability insurance programs.

Market Risk

        Cintas manages interest rate risk by using a combination of variable and fixed rate debt, marketable securities and interest rate swap agreements. Earnings are affected by changes in short-term interest rates due to the use of variable rate notes and revolving credit facilities amounting to approximately $275 million, with an average interest rate of 2.23%. This exposure is limited by the purchase of marketable securities and interest rate swap agreements as a hedge against variability in short-term rates. If short-term rates change by one-half percent (or 50 basis points), Cintas' income before taxes would change by approximately $2.0 million. This estimated exposure considers the mitigating effects of marketable securities and swap agreements on the change in the cost of variable rate debt. This analysis does not consider the effects of a change in economic activity or a change in Cintas' capital structure.

Inflation and Changing Prices

        Management believes inflation has not had a material impact on Cintas' financial condition or a negative impact on operations.

Environmental

        Cintas is subject to various environmental laws and regulations, as are other companies in the industry. While costs related to environmental compliance are not a material component of the cost of rentals, Cintas must incur capital expenditures and associated operating costs for water treatment and waste removal on a regular basis. Environmental spending amounted to approximately $8.0 million in fiscal 2002 and $7.0 million in fiscal 2001. This spending includes labor and chemical costs for water treatment, as well as costs for waste removal. Capital expenditures to limit or monitor hazardous substances were $5.0 million in fiscal 2002 and $2.5 million in fiscal 2001. These expenditures were primarily related to the purchase of water treatment systems.

        Cintas is subject to legal proceedings and claims related to environmental matters arising from the ordinary course of business. Cintas does not believe that these actions will result in a material adverse effect on its financial position or results of operations. A detailed discussion of litigation and environmental matters is included in Note 12.

28


New Accounting Standards

        In compliance with Statement of Financial Accounting Standards No. 142 (SFAS 142), Goodwill and Other Intangible Assets, Cintas discontinued the amortization of goodwill effective June 1, 2001. Cintas completed the transitional goodwill impairment test as required by SFAS 142 using a measurement date of June 1, 2001. Based on the results of the transitional impairment test, Cintas was not required to recognize an impairment of goodwill. A periodic test of goodwill impairment was conducted in the fourth quarter of fiscal 2002, as required by SFAS 142. As a result of this test, there was no impairment of goodwill.

        In August 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 144 (SFAS 144), Accounting for the Impairment or Disposal of Long-Lived Assets. The standard is effective for years beginning after December 15, 2001. This standard supercedes previous guidance related to impairment or disposal of long-lived assets. For long-lived assets to be held and used, it retains the basic recognition and measurement requirements of Statement of Financial Accounting Standards No. 121 (SFAS 121), Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, but addresses certain implementation issues. For long-lived assets to be disposed of by sale, it broadens the definition of disposals that should be reported separately as discontinued operations. Cintas adopted SFAS 144 on June 1, 2002, and it is not expected to have a material effect on the financial statements.

        Please reference Note 1 for more information on recent accounting pronouncements adopted by Cintas.

Critical Accounting Policies

        The preparation of Cintas' consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and judgments that have a significant effect on the amounts reported in the financial statements and accompanying notes. These critical accounting policies should be read in conjunction with Note 1 to the financial statements. Significant changes, estimates or assumptions related to any of the following critical accounting policies could possibly have a material impact on the financial statements.

Revenue recognition

        Rental revenue is recognized when services are performed and Other Services revenue is recognized when products are shipped and the title and risks of ownership pass to the customer. Cintas also establishes an allowance for uncollectible accounts. This allowance is an estimate based on historical rates of collectibility. An uncollectible accounts provision is recorded for overdue amounts, beginning with a nominal percentage and increasing substantially as the account ages. The amount provided as the account ages will differ slightly between the Rentals and Other Services segments, because of differences in customers served and the nature of each business segment.

Inventories

        Inventories are valued at the lower of cost (first-in, first-out) or market. Substantially all inventories represent finished goods. Cintas applies a commonly accepted practice of using inventory turns to apply variances between actual to standard costs to the inventory balances. The judgments and estimates used to calculate inventory turns will have an impact on the valuation of inventory at the lower of cost or market. Inventory obsolescence is determined by specific identification, as well as historical information.

29


Uniforms and other rental items in service

        These items are valued at cost less amortization, calculated using the straight-line method. Uniforms in service (other than cleanroom and flame resistant garments) are amortized over their useful life of eighteen months. Other rental items including shop towels, mats, cleanroom garments, flame resistant garments, linens and hygiene dispensers are amortized over their useful lives of eight to forty-eight months. The amortization rates used are based on industry experience, Cintas' experience and wear tests performed by Cintas. These factors are critical to determining the amount of in service inventory that is presented in the financial statements.

Property, plant and equipment

        Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. When events or circumstances indicate that the carrying amount of long-lived assets may not be recoverable, the estimated future cash flows (undiscounted) are compared to the carrying amount of the assets. If the estimated future cash flows are less than the carrying amount of the assets, an impairment loss is recorded. The impairment loss is measured by comparing the fair value of the assets with their carrying amounts. Fair value is determined by discounted cash flows or appraised values, as appropriate. Long-lived assets that are held for disposal are reported at the lower of the carrying amount or the fair value, less estimated costs related to disposition.

Other assets

        Other assets consist primarily of service contracts and noncompete and consulting agreements obtained through the acquisition of businesses, which are amortized by use of the straight-line method over the estimated lives of the agreements, which are generally three to twelve years. Noncompete and consulting agreements are usually determined through negotiation with the seller of the acquired business. Certain noncompete agreements, as well as all service contracts, require that a valuation be determined using a discounted cash flow model. The assumptions and judgments used in these models involve estimates of cash flows and discount rates, among other factors. Because of the assumptions used to value these intangible assets, actual results over time could vary from original estimates.

Environmental and litigation

        Cintas is subject to legal proceedings and claims related to environmental matters arising from the ordinary course of business. Accounting principles generally accepted in the United States require that a liability for contingencies be recorded when it is probable that a liability has occurred and the amount of the liability can be reasonably estimated. Significant judgment is required to determine the existence of a liability, as well as the amount to be recorded. Cintas regularly consults with attorneys to ensure that all of the relevant facts and circumstances are considered, before a contingent liability is recorded. While a significant change in assumptions and judgments could have a material impact on the amounts recorded for contingent liabilities, Cintas does not believe that they will result in a material adverse effect on financial statements. A detailed discussion of litigation and environmental matters is included in Note 12.

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Deferred tax liability

        Deferred tax assets and liabilities are determined by the differences between the financial statement carrying amounts and the tax basis of assets and liabilities. Please reference Note 7 for the types of items that give rise to significant deferred income tax assets and liabilities. Deferred income taxes are classified as assets or liabilities based on the classification of the related asset or liability for financial reporting purposes. Deferred income taxes that are not related to an asset or liability for financial reporting are classified according to the expected reversal date. Cintas regularly reviews deferred tax assets for recoverability based upon projected future taxable income and the expected timing of the reversals of existing temporary differences. As a result of this review, Cintas has not established a valuation allowance against the deferred tax assets.

        Cintas is periodically reviewed by domestic and foreign tax authorities regarding the amount of taxes due. These reviews include questions regarding the timing and amount of deductions and the allocation of income among various tax jurisdictions. In evaluating the exposure associated with various filing positions, Cintas records reserves for probable exposures. Based on Cintas' evaluation of current tax positions, Cintas believes they have appropriately accrued for probable exposures.

Forward-Looking Statements

        The Private Securities Litigation Reform Act of 1995 provides a safe harbor from civil litigation for forward-looking statements. This Annual Report contains forward-looking statements that reflect Cintas' current views as to future events and financial performance with respect to its operations. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in this Annual Report. Factors that might cause such a difference include the possibility of greater than anticipated operating costs, lower sales volumes, the performance and costs of integration of acquisitions, fluctuations in costs of materials and labor, the outcome of pending environmental matters, the initiation or outcome of litigation, higher assumed sourcing or distribution costs of products and the reactions of competitors in terms of price and service. Forward-looking statements speak only as of the date made. Cintas undertakes no obligation under the Act to update any forward-looking statements to reflect the events or circumstances arising after the date on which they are made.

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DIRECTORS AND OFFICERS

Board of Directors

Paul R. Carter
President of Wal-Mart Realty Company

Gerald V. Dirvin
Retired Executive Vice President
and Director of
The Procter & Gamble Company


Richard T. Farmer
Chairman of the Board
of the Corporation


Scott D. Farmer
President & Chief Operating Officer
of the Corporation


James J. Gardner
Retired Vice President
of the Corporation


Robert J. Herbold
Retired Executive Vice President
and Chief Operating Officer of
Microsoft Corporation


Roger L. Howe
Retired Chairman of the Board
of U.S. Precision Lens, Inc.


Donald P. Klekamp
Associated with
Keating, Muething & Klekamp


Robert J. Kohlhepp
Chief Executive Officer
of the Corporation


Corporate Officers

Robert R. Buck
Senior Vice President &
President—Uniform Rental Division


Karen L. Carnahan
Vice President & Treasurer

Richard T. Farmer
Chairman of the Board

Scott D. Farmer
President & Chief Operating Officer
  Thomas E. Frooman
Vice President & Secretary,
General Counsel


William C. Gale
Vice President & Chief Financial Officer

Robert J. Kohlhepp
Chief Executive Officer

Operating and Staff Officers

David B. Armbrester
Vice President
Great Lakes Rental Group


James J. Case
Vice President
Southwest Rental Group


James V. Critchfield
Vice President
Northcentral Rental Group


William L. Cronin
President—National Account
Sales Division


Gregory J. Eling
Vice President
Central Rental Group


Larry L. Fultz
Vice President
Human Resources


Michael P. Gaburo
Vice President
Cleanroom Division


Arnold Gedmintas
Vice President
Northern Rental Group


William W. Goetz
Vice President
Marketing & Merchandising


J. Todd Gregory
Vice President
Southcentral Rental Group


Larry A. Harmon
Vice President
Western Rental Group
  J. Phillip Holloman
Vice President
Distribution


Jeffry E. Jones
Vice President
Northwest Rental Group


James J. Krupansky
Vice President

Glenn W. Larsen
Vice President
Logistics & Manufacturing


John W. Milligan
Vice President
Midwest Rental Group


John E. Myers
Vice President
MidAtlantic Rental Group


Robert A. Oswald
Vice President

David Pollak, Jr.
Vice President
First Aid & Safety Division


Rodger V. Reed
Vice President
Northeast Rental Group


Bruce E. Rotte
Vice President
Southeast Rental Group


Michael E. Schneider
Vice President
Research & Development


Richard B. Surdykowski, Jr.
Vice President
MidSouth Rental Group


G. Thomas Thornley
Vice President &
Chief Information Officer

32




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ELEVEN YEAR FINANCIAL SUMMARY (In thousands except per share and percentage data)
CONSOLIDATED STATEMENTS OF INCOME (In thousands except per share data)
CONSOLIDATED BALANCE SHEETS (In thousands except share data)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (In thousands)
CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands except per share and share data)
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
DIRECTORS AND OFFICERS

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EXHIBIT 21

SUBSIDIARIES OF REGISTRANT

STATE/PROVINCE OF NAME

  INCORPORATION

Cintas Corporation No. 3   Nevada

Cintas Corporation No. 2

 

Nevada

Cintas Canada Limited

 

Ontario, Canada

Cintas Corporation No. 8, Inc.

 

Nevada

Cintas Corporation No. 15, Inc.

 

Nevada

Respond Industries, Incorporated

 

Colorado

Cintas—R.U.S., LP

 

Texas Partnership

American First Aid Company

 

Maryland

Cintas First Aid Holdings

 

Nevada

XPECT First Aid Corporation

 

Kansas

Uniforms To You—Canada, LTD.

 

Quebec, Canada

Affirmed Medical, Inc.

 

California

Unitog De Honduras, S.A.

 

Honduras

Uniforms To You Mexico S.A. de CV

 

Mexico

Empresa Cintas de Mexico S.A. de CV

 

Mexico

LLT, Inc.

 

Virginia

3065521 Nova Scotia Company

 

Nova Scotia, Canada

3065520 Nova Scotia Company

 

Nova Scotia, Canada

Cintas Canada Investment Limited Partnership

 

Alberta, Canada

Ensambles de Coahuila S.A. de C.V.

 

Mexico

Cintas Cleanroom de Mexico S.A.

 

Mexico



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SUBSIDIARIES OF REGISTRANT

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EXHIBIT 23

CONSENT OF INDEPENDENT AUDITORS

        We consent to the incorporation by reference in this Annual Report on Form 10-K of Cintas Corporation of our report dated July 5, 2002, included in the 2002 Annual Report to Shareholders of Cintas Corporation.

        Our audits also included the financial statement schedule of Cintas Corporation listed in Item 14(a). This schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements as a whole, presents fairly in all material respects the information set forth therein.

        We also consent to the incorporation by reference in Registration Statement Number 33-56623 on Form S-8 pertaining to the Partners' Plan, Registration Statement Number 33-23228 on Form S-8 pertaining to the Incentive Stock Option Plan, Registration Statement Number 33-71124 on Form S-8 pertaining to the 1990 Directors Plan and 1992 Stock Option Plan, Registration Statement Number 333-75015 on Form S-8 pertaining to the Unitog Company 1992 and 1997 Stock Option Plans, Registration Statement Number 333-44654 on Form S-8 pertaining to the 1999 Stock Option Plan, Registration Statement Number 333-57950 on Form S-3, and Registration Statement Number 333-78085 on Form S-4, of our report dated July 5, 2002, with respect to the financial statements of Cintas Corporation incorporated by reference in, and of our opinion with respect to the financial statement schedule of Cintas Corporation listed in Item 14(a) included in, this Annual Report on Form 10-K for the year ended May 31, 2002.

Cincinnati, Ohio
August 23, 2002




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CONSENT OF INDEPENDENT AUDITORS

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Exhibit 99.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
Pursuant to 18 U.S.C. §1350, as adopted pursuant to
§906 of the Sarbanes-Oxley Act of 2002

        In connection with the filing with the Securities and Exchange Commission of the Annual Report of Cintas Corporation (the "Company") on Form 10-K for the year ended May 31, 2002 (the "Report"), I, Robert J. Kohlhepp, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:


/s/   ROBERT J. KOHLHEPP       
Robert J. Kohlhepp
Chief Executive Officer
   

August 26, 2002

 

 



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CERTIFICATION OF CHIEF EXECUTIVE OFFICER

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Exhibit 99.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER
Pursuant to 18 U.S.C. §1350, as adopted pursuant to
§906 of the Sarbanes-Oxley Act of 2002

        In connection with the filing with the Securities and Exchange Commission of the Annual Report of Cintas Corporation (the "Company") on Form 10-K for the year ended May 31, 2002 (the "Report"), I, William C. Gale, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:


/s/   WILLIAM C. GALE       
William C. Gale
Chief Financial Officer
   

August 26, 2002

 

 



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CERTIFICATION OF CHIEF FINANCIAL OFFICER