Exhibit 10.2

 

THIS PROMISSORY NOTE AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE
SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH IN SECTION 4 HEREOF TO THE
INDEBTEDNESS (INCLUDING INTEREST AND OTHER AMOUNTS) OWED BY MAKER PURSUANT TO
THAT CERTAIN SENIOR SECURED CREDIT AGREEMENT (AS AMENDED, RESTATED, EXTENDED OR
OTHERWISE MODIFIED FROM TIME TO TIME, THE “SENIOR CREDIT AGREEMENT”) DATED AS OF
THE DATE HEREOF AMONG MAKER, MAC-GRAY CORPORATION AND INTIRION CORPORATION (THE
“SENIOR BORROWERS”), THE LENDERS PARTY THERETO AND BANK OF AMERICA, N.A., AS
ADMINISTRATIVE AGENT AND COLLATERAL AGENT, AND TO INDEBTEDNESS REFINANCING THE
INDEBTEDNESS UNDER THE SENIOR CREDIT AGREEMENT; AND EACH HOLDER OF THIS
PROMISSORY NOTE, BY ITS ACCEPTANCE HEREOF, IRREVOCABLY AGREES TO BE BOUND BY THE
SUBORDINATION PROVISIONS IN SECTION 4 HEREOF.

 

PROMISSORY NOTE

 

$10,000,000.00

April 1, 2008

 

FOR VALUE RECEIVED, MAC-GRAY SERVICES, INC., a Delaware corporation (“Maker”),
promises to pay to the order of Paceco Investors, L.P., a Texas limited
partnership (“Payee”), at 420 Throckmorton Street, Suite 710, Fort Worth, Texas
76102, in lawful money of the United States of America, the sum of TEN MILLION
AND NO/100 DOLLARS ($10,000,000.00), together with interest on the unpaid
principal balance from time to time outstanding hereunder at a rate per annum of
nine percent (9%) (the “Applicable Rate”), provided that in no event shall the
Applicable Rate exceed the maximum lawful rate (the “Maximum Rate”) which may be
contracted for, charged, taken, received or reserved by Payee in accordance with
applicable law, due credit being given for all payments, charges and
calculations made in connection with the loan evidenced hereby that may be
treated as interest under applicable law.

 

SECTION 1.                                          INTEREST.  INTEREST WILL BE
COMPUTED ON A 360-DAY YEAR AND WILL BE ACCRUED ON THE NUMBER OF DAYS FUNDS ARE
ACTUALLY OUTSTANDING.  SUBJECT TO SECTION 4, ACCRUED INTEREST ON THE UNPAID
PRINCIPAL BALANCE OF THIS NOTE SHALL BE DUE AND PAYABLE IN THE AMOUNT OF
$225,000.00 ON THE 1ST DAY OF JANUARY, APRIL, JULY, AND OCTOBER, OF EACH YEAR
(THE “QUARTERLY PERIODS”) COMMENCING ON JULY 1, 2008, UNTIL THE SECOND
ANNIVERSARY OF THE DATE HEREOF.

 

SECTION 2.                                          PAYMENTS OF PRINCIPAL AND
INTEREST.

 

(A)                                  SUBJECT TO SECTION 4, ALL UNPAID PRINCIPAL
AND ACCRUED INTEREST HEREUNDER SHALL BE DUE AND PAYABLE ON THE EARLIER OF A
CHANGE IN CONTROL (AS SUCH TERM IS HEREINAFTER DEFINED) AND APRIL 1, 2010 (THE
“MATURITY DATE”).  SUBJECT TO SECTION 4, PRINCIPAL AND

 

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INTEREST ON THIS NOTE MAY BE PREPAID BY MAKER, IN WHOLE OR IN PART, AT ANY TIME
OR FROM TIME TO TIME, WITHOUT PREMIUM OR PENALTY.  ALL PAYMENTS ON THIS NOTE
SHALL BE APPLIED FIRST TO THE PAYMENT OF UNPAID ACCRUED INTEREST, AND ANY
REMAINDER SHALL BE APPLIED TO REDUCTION OF THE PRINCIPAL BALANCE HEREOF. FOR
PURPOSES OF THIS NOTE, (I) A “CHANGE IN CONTROL” SHALL MEAN (A) ANY PERSON WHO
IS NOT AN AFFILIATE OF MAKER ON THE DATE HEREOF BECOMING THE BENEFICIAL OWNER,
DIRECTLY OR INDIRECTLY, OF FIFTY PERCENT (50%) OR MORE OF THE COMBINED VOTING
POWER OF THE THEN OUTSTANDING SECURITIES OF MAKER, OR (B) THE SALE, TRANSFER OR
OTHER DISPOSITION OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF MAKER, WHETHER BY
SALE OF ASSETS, MERGER OR OTHERWISE OR (C) A “CHANGE IN CONTROL” AS DEFINED IN
THE SENIOR FINANCING AGREEMENT, AND (II) A “CONTROL EVENT” SHALL MEAN (A) THE
EXECUTION BY MAKER OR ANY OF ITS AFFILIATES OF ANY AGREEMENT OR LETTER OF INTENT
WITH RESPECT TO A TRANSACTION WHICH MAY REASONABLY BE EXPECTED TO RESULT IN A
CHANGE OF CONTROL, OR (B) THE EXECUTION OF AN AGREEMENT WHICH, WHEN PERFORMED BY
THE PARTIES THERETO, WILL RESULT IN A CHANGE IN CONTROL.  MAKER SHALL PROMPTLY
GIVE PAYEE NOTICE OF ANY CONTROL EVENT OR CHANGE IN CONTROL.

 

(B)                                 IF ANY PAYMENT OF THIS NOTE SHALL NOT BE
MADE WHEN DUE TO PAYEE, THEN THIS NOTE SHALL BEAR INTEREST UNTIL PAID AT THE
DEFAULT RATE (AS DEFINED BELOW).

 

(C)                                  EXCEPT AS HEREINAFTER SPECIFICALLY
PROVIDED, TO THE EXTENT PERMITTED BY APPLICABLE LAW, MAKER AND ALL SURETIES,
ENDORSERS, GUARANTORS AND OTHER PARTIES HEREAFTER ASSUMING OR OTHERWISE BECOMING
LIABLE FOR THE PAYMENT OF ANY SUM OF MONEY PAYABLE UNDER THIS NOTE (I) SEVERALLY
WAIVE GRACE, PRESENTMENT AND DEMAND FOR PAYMENT, PROTEST AND NOTICE OF PROTEST,
NOTICE OF INTENT TO ACCELERATE MATURITY, NOTICE OF ACCELERATION OF MATURITY,
NOTICE OF NONPAYMENT, AND ALL OTHER NOTICES OF WHATSOEVER NATURE, FILING OF
SUIT, AND DILIGENCE IN COLLECTING THIS NOTE OR ENFORCING ANY OF THE SECURITY
HEREFOR; (II) SEVERALLY AGREE THAT PAYEE SHALL NOT BE REQUIRED FIRST TO
INSTITUTE SUIT OR EXHAUST ITS REMEDIES HEREIN AGAINST MAKER OR OTHERS LIABLE OR
TO BECOME LIABLE HEREON IN ORDER TO ENFORCE PAYMENT OF THIS NOTE BY THEM; AND
(IV) SEVERALLY AGREE THAT AMOUNTS DUE HEREUNDER SHALL BE PAID WITHOUT SET-OFF,
COUNTER-CLAIM, ABATEMENT, SUSPENSION, OR DIMINUTION, EXCEPT TO THE LIMITED
EXTENT PROVIDED IN SECTION 8.07 OF THE PARTNERSHIP INTEREST PURCHASE AGREEMENT
OF EVEN DATE HEREWITH AMONG AUTOMATIC LAUNDRY COMPANY, LTD., THE PARTNERS
SIGNATORY THERETO, MAC-GRAY NEWCO, LLC AND MAKER.  NO EXTENSION OF TIME FOR THE
PAYMENT OF THIS NOTE OR ANY INSTALLMENT HEREOF SHALL AFFECT THE LIABILITY OF
MAKER UNDER THIS NOTE.

 

(D)                                 SET-OFF RIGHT.  NOTWITHSTANDING ANYTHING IN
THIS NOTE TO THE CONTRARY (INCLUDING, WITHOUT LIMITATION, SECTION 4 HEREOF), IN
ACCORDANCE WITH SECTION 8.07 OF THE PURCHASE AGREEMENT, THE MAKER SHALL HAVE THE
RIGHT TO SET-OFF AGAINST ANY UNSATISFIED PRINCIPAL AMOUNT OF THIS NOTE (WHETHER
OR NOT SUCH PRINCIPAL AMOUNT IS THEN DUE AND PAYABLE) THE AMOUNT OF ANY
INDEMNIFIABLE LOSSES SUFFERED OR INCURRED BY THE MAKER, IN ACCORDANCE WITH THE
PROCEDURES, AND SUBJECT TO THE LIMITATIONS, SET FORTH IN SECTION 8.07 OF THE
PURCHASE AGREEMENT.  UPON ANY SUCH SET-OFF, THE PRINCIPAL AMOUNT OF THIS NOTE
WILL BE REDUCED BY THE AMOUNT OF SUCH SET-OFF AND, FROM AND AFTER THE DATE OF
ANY SUCH SET-OFF, INTEREST ON THIS NOTE SHALL ACCRUE ONLY ON THE REMAINING
PRINCIPAL AMOUNT OF THIS NOTE, BUT

 

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NO SET-OFF OF INTEREST SHALL BE MADE OR PERMITTED, AND INTEREST SHALL CONTINUE
TO ACCRUE AND BE PAID ON THE REMAINING PRINCIPAL OF THIS NOTE IN ACCORDANCE WITH
ITS TERMS.  IF A COURT OF COMPETENT JURISDICTION DETERMINES, OR THE PARTIES
AGREE, THAT INTEREST HAS ACCRUED AND BEEN PAID ON PRINCIPAL OF THIS NOTE THAT
WAS SUBJECT TO VALID SET-OFF CLAIM (AS DEFINED IN THE PURCHASE AGREEMENT) BUT
WAS NOT SET-OFF, THE PAYEE SHALL RETURN SUCH AMOUNT OF INTEREST TO MAKER,
TOGETHER WITH INTEREST ON SUCH AMOUNT AT THE RATE OF NINE PERCENT (9%) PER ANNUM
FROM, AND INCLUDING, THE DATE OF PAYMENT TO, BUT NOT INCLUDING, THE DATE SUCH
INTEREST IS RETURNED.  IF ANY UNSATISFIED SET-OFF CLAIM HAS NOT BEEN RESOLVED IN
ACCORDANCE WITH THE PURCHASE AGREEMENT WHEN THE PRINCIPAL AMOUNT OF THIS NOTE
BECOMES DUE AND PAYABLE, THEN, IN ACCORDANCE WITH THE PURCHASE AGREEMENT, MAKER
WILL DEPOSIT WITH AN ESCROW AGENT AN AMOUNT (THE “ESCROW AMOUNT”) EQUAL TO THE
LEAST OF (I) THE AGGREGATE AMOUNT OF UNSATISFIED SET-OFF CLAIMS, (II) THE
REMAINING PRINCIPAL AMOUNT OF THE NOTE AND (III) THE EXCESS OF $5,825,000 OVER
THE AGGREGATE AMOUNT SET OFF AGAINST THE PRINCIPAL AMOUNT OF THIS NOTE PRIOR TO
MATURITY, AND MAKER WILL PAY THE REMAINING PRINCIPAL AMOUNT OF THE NOTE AFTER
REDUCTION BY THE ESCROW AMOUNT, IF ANY, TO PAYEE.

 

SECTION 3.                                          EVENTS OF DEFAULT.  IF ANY
ONE OR MORE OF THE FOLLOWING EVENTS (EACH SUCH EVENT IS HEREIN REFERRED TO AS AN
“EVENT OF DEFAULT”) SHALL HAPPEN:

 

(A)                                  MAKER SHALL:

 

(I)                                     DEFAULT IN THE PAYMENT WHEN DUE OF ALL
OR PART OF THE PRINCIPAL OF THIS NOTE;

 

(II)                                  DEFAULT IN THE PAYMENT WHEN DUE OF ALL OR
ANY PART OF THE INTEREST DUE ON THIS NOTE OR ANY OTHER AMOUNT PAYABLE BY THE
MAKER TO THE PAYEE UNDER THIS NOTE, WHICH DEFAULT REMAINS UNREMEDIED FOR A
PERIOD OF 5 BUSINESS DAYS AFTER THE DUE DATE THEREOF;

 

(III)                               FAIL TO NOTIFY PAYEE OF A CONTROL EVENT OR
CHANGE IN CONTROL AND SUCH FAILURE CONTINUES FOR FIVE BUSINESS DAYS AFTER A
RESPONSIBLE OFFICER OF MAKER HAS KNOWLEDGE OF THE OCCURRENCE THEREOF;

 

(IV)                              FAIL TO OBSERVE OR PERFORM ANY OF THE OTHER
AGREEMENTS OR COVENANTS HEREUNDER AND SUCH FAILURE CONTINUES FOR 30 DAYS AFTER
WRITTEN NOTICE THEREOF IS GIVEN TO THE MAKER BY THE PAYEE;

 

(V)                                 COMMENCE A VOLUNTARY CASE UNDER TITLE 11 OF
THE UNITED STATES CODE AS FROM TIME TO TIME IN EFFECT (THE “BANKRUPTCY CODE”);

 

(VI)                              SEEK RELIEF AS A DEBTOR UNDER ANY APPLICABLE
LAW, OTHER THAN THE BANKRUPTCY CODE, OF ANY JURISDICTION RELATING TO THE
LIQUIDATION OR REORGANIZATION OF DEBTORS OR TO THE MODIFICATION OR ALTERATION OF
THE RIGHTS OF CREDITORS, OR CONSENT TO OR ACQUIESCE IN SUCH RELIEF;

 

(VII)                           HAVE ENTERED AGAINST IT ANY ORDER BY A COURT OF
COMPETENT JURISDICTION (I) FINDING IT TO BE BANKRUPT OR INSOLVENT, (II) ASSUMING
CUSTODY

 

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OF, OR APPOINTING A RECEIVER OR OTHER CUSTODIAN FOR, ALL OR A SUBSTANTIAL PART
OF ITS PROPERTY;

 

(VIII)                       MAKE AN ASSIGNMENT FOR THE BENEFIT OF, OR ENTER
INTO A COMPOSITION WITH, ITS CREDITORS, OR APPOINT OR CONSENT TO THE APPOINTMENT
OF A RECEIVER OR OTHER CUSTODIAN FOR ALL OR A SUBSTANTIAL PART OF ITS PROPERTY;
OR

 

(IX)                               LIQUIDATE, TERMINATE OR DISSOLVE ITS
BUSINESS; OR

 

(B)                                 IF:

 

(I)                                    A COURT HAVING JURISDICTION IN THE
PREMISES SHALL ENTER A DECREE OR ORDER FOR RELIEF IN RESPECT OF MAKER IN AN
INVOLUNTARY CASE UNDER THE BANKRUPTCY CODE OR UNDER ANY OTHER APPLICABLE
BANKRUPTCY, INSOLVENCY OR SIMILAR LAW NOW OR HEREAFTER IN EFFECT, WHICH DECREE
OR ORDER IS NOT STAYED; OR ANY OTHER SIMILAR RELIEF SHALL BE GRANTED UNDER ANY
APPLICABLE FEDERAL OR STATE LAW; OR

 

(II)                                 AN INVOLUNTARY CASE SHALL BE COMMENCED
AGAINST MAKER UNDER THE BANKRUPTCY CODE OR UNDER ANY OTHER APPLICABLE
BANKRUPTCY, INSOLVENCY OR SIMILAR LAW NOW OR HEREAFTER IN EFFECT; OR A DECREE OR
ORDER OF A COURT HAVING JURISDICTION IN THE PREMISES FOR THE APPOINTMENT OF A
RECEIVER, LIQUIDATOR, SEQUESTRATOR, TRUSTEE, CUSTODIAN OR OTHER OFFICER HAVING
SIMILAR POWERS OVER MAKER, OR OVER ALL OR A SUBSTANTIAL PART OF ITS PROPERTY,
SHALL HAVE BEEN ENTERED; OR THERE SHALL HAVE OCCURRED THE INVOLUNTARY
APPOINTMENT OF AN INTERIM RECEIVER, TRUSTEE OR OTHER CUSTODIAN OF MAKER FOR ALL
OR A SUBSTANTIAL PART OF ITS PROPERTY; OR A WARRANT OF ATTACHMENT, EXECUTION OR
SIMILAR PROCESS SHALL HAVE BEEN ISSUED AGAINST ANY SUBSTANTIAL PART OF THE
PROPERTY OF MAKER, AND ANY SUCH EVENT DESCRIBED IN THIS CLAUSE (B) SHALL
CONTINUE FOR 60 DAYS UNLESS DISMISSED, BONDED OR DISCHARGED;

 

then and in each and every such case the principal of and unpaid accrued
interest on this Note shall automatically become due and payable without
presentation, presentment, protest or further demand or notice of any kind, all
of which are hereby expressly waived, and such Payee or Payees may proceed,
subject to Section 4, to enforce payment of such amount or part thereof in a
commercially reasonable manner.

 

(C)                                  UPON AN EVENT OF DEFAULT, AT THE OPTION OF
PAYEE ALL AMOUNTS THEN DUE AND PAYABLE HEREUNDER SHALL BEAR INTEREST FOR THE
PERIOD BEGINNING WITH THE DATE OF OCCURRENCE OF SUCH DEFAULT AT A RATE OF
INTEREST PER ANNUM (THE “DEFAULT RATE”) EQUAL TO THE LESSER OF (A) TWELVE
PERCENT (12%) PER ANNUM, OR (B) THE MAXIMUM RATE.

 

SECTION 4.                                          SUBORDINATION.

 

(A)                                  AGREEMENT TO SUBORDINATE.  THE MAKER
AGREES, AND THE PAYEE BY ACCEPTING THE NOTE AGREES, THAT THE PAYMENT OF ALL
AMOUNTS OWING UNDER OR IN RESPECT OF THE NOTE ARE SUBORDINATED IN RIGHT OF
PAYMENT, TO THE EXTENT AND IN THE MANNER PROVIDED IN THIS SECTION 4, TO THE
PRIOR PAYMENT IN FULL IN CASH OF ALL EXISTING AND FUTURE SENIOR FINANCING

 

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OBLIGATIONS AND THAT THE SUBORDINATION AND RELATED TERMS HEREUNDER ARE FOR THE
BENEFIT OF AND ENFORCEABLE BY THE HOLDERS OF THE SENIOR FINANCING OBLIGATIONS.

 

(B)                                 LIQUIDATION, DISSOLUTION, BANKRUPTCY.  UPON
ANY PAYMENT OR DISTRIBUTION OF THE ASSETS OF THE MAKER TO CREDITORS UPON A TOTAL
OR PARTIAL LIQUIDATION OR A TOTAL OR PARTIAL DISSOLUTION OF THE MAKER OR IN A
REORGANIZATION, INSOLVENCY OR BANKRUPTCY OF OR SIMILAR PROCEEDING RELATING TO
THE COMPANY OR ITS PROPERTY (A “PROCEEDING”):

 

(I)                                     THE HOLDERS OF SENIOR FINANCING
OBLIGATIONS SHALL BE ENTITLED TO RECEIVE PAYMENT IN FULL OF THE SENIOR FINANCING
OBLIGATIONS BEFORE THE PAYEE SHALL BE ENTITLED TO RECEIVE ANY PAYMENT OR
DISTRIBUTION OF ANY KIND OR CHARACTER WITH RESPECT TO ANY OBLIGATIONS ON, OR
RELATING TO, THE NOTE; AND

 

(II)                                  UNTIL THE SENIOR FINANCING OBLIGATIONS ARE
PAID IN FULL, ANY PAYMENT OR DISTRIBUTION TO WHICH THE PAYEE WOULD BE ENTITLED
BUT FOR THE SUBORDINATION PROVISIONS OF THIS SECTION 4 SHALL BE MADE TO HOLDERS
OF THE SENIOR FINANCING OBLIGATIONS AS THEIR INTERESTS MAY APPEAR.

 

(C)                                  PERMITTED PAYMENTS.  ALL SENIOR FINANCING
OBLIGATIONS SHALL BE PAID-IN-FULL BEFORE THE MAKER MAY MAKE ANY PAYMENTS ON THIS
NOTE, EXCEPT FOR ANY PAYMENT WITH THE PROCEEDS OF ANY SELLER SUBORDINATED NOTE
REFINANCING INDEBTEDNESS AS AND TO THE EXTENT PERMITTED UNDER THE SENIOR
FINANCING AGREEMENT; PROVIDED THAT SUBJECT TO THE PROVISIONS CONTAINED IN
SECTIONS 4(B) AND 4(D), THE MAKER MAY PAY (X) REGULARLY SCHEDULED INTEREST
PAYMENTS, AND (Y) PRINCIPAL PAYMENTS UPON A CHANGE OF CONTROL OR THE MATURITY
DATE.

 

(D)                                 DEFAULT UNDER SENIOR FINANCING AGREEMENT. 
THE MAKER SHALL NOT PAY PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON THE NOTE
OR PAY ANY OTHER OBLIGATIONS RELATING TO THE NOTE, INCLUDING FEES, COSTS,
EXPENSES, INDEMNITIES AND RESCISSION OR DAMAGE CLAIMS AND MAY NOT PURCHASE,
REDEEM OR OTHERWISE RETIRE OR ACQUIRE FOR CASH OR PROPERTY THE NOTE
(COLLECTIVELY, “PAY THE NOTE”) IF EITHER OF THE FOLLOWING OCCURS:

 

(I)                                     A DEFAULT OR EVENT OF DEFAULT UNDER ANY
DOCUMENT GOVERNING ANY SENIOR FINANCING OBLIGATION THAT RESULTS FROM THE FAILURE
OR INABILITY TO TIMELY COMPLY WITH ANY PAYMENT OBLIGATION (A “PAYMENT DEFAULT”),
INCLUDING, WITHOUT LIMITATION, FOR PRINCIPAL, INTEREST, FEES, OR EXPENSES; OR

 

(II)                                  AN EVENT OF DEFAULT UNDER ANY DOCUMENT
GOVERNING ANY SENIOR FINANCING OBLIGATION OTHER THAN A PAYMENT DEFAULT (A
“NON-PAYMENT DEFAULT”);

 

(A)                              in the case of a Payment Default, until
(x) such Payment Default has been cured or waived in writing by the party
entitled to waive such Payment Default or (y) the date on which the Senior
Financing Obligations are Paid-in-Full; and

 

(B)                                in the case of a Non-Payment Default, during
the period (the “Payment Blockage Period”) commencing on the date that the Payee
receives written notice of such Non-Payment

 

5

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Default from the Representative stating that a Payment Blockage Period will
commence (a “Non-Payment Default Notice”), which notice shall state that the
Non-Payment Default Notice is being delivered pursuant to this Section 4, and
ending on the earliest to occur of: (A) the date that is 179 consecutive days
after such date, (B) the date on which the Senior Financing Obligations are
Paid-in-Full, and (C) the date on which such Non-Payment Default is cured or
waived in writing by the Representative.

 

Subject to the provisions contained in the first paragraph of this
Section 4(d) and Section 4(b) hereof, unless the holders of the Senior Financing
Obligations or the Representative shall have accelerated the maturity of the
Senior Financing Obligations or a Payment Default has occurred and is
continuing, the Maker shall be permitted to resume paying the Note after the end
of such Payment Blockage Period.  However, in no event shall the total number of
days during which any Payment Blockage Period or Periods on the Note is in
effect exceed 179 days in the aggregate during any consecutive 360-day period,
and there must be at least 181 days during any consecutive 360-day period during
which no Payment Blockage Period is in effect.  Notwithstanding the foregoing,
however, no Non-Payment Default that existed or was continuing on the date of
commencement of any Payment Blockage Period with respect to the Senior Financing
Obligations and that was the basis for the initiation of such Payment Blockage
Period shall be, or be made, the basis for a subsequent Payment Blockage Period
by the Representative unless such default shall have been cured or waived for a
period of not less than 90 consecutive days (it being acknowledged that any
subsequent action, or any breach of any financial covenants during the period
after the date of delivery of such initial Non-Payment Default Notice, that, in
either case, would give rise to a Non-Payment Default pursuant to any provisions
under which a Non-Payment Default previously existed or was continuing shall
constitute a new Non-Payment Default for this purpose).

 

If a Payment Default or a Non-Payment Default under the Senior Financing
Agreement occurs, the Maker shall promptly give a copy to the Payee of any
notice of default under the Senior Financing Agreement; provided that the
failure to give such copy to the Payee shall not affect the provisions of this
Section 4; provided further that the failure of the holder of any Senior
Financing Obligation to give the Payee notice of a default under the Senior
Financing Agreement shall not affect the provisions of this Section 4 (except as
explicitly stated in this Note).

 

(E)                                  SUBROGATION.  AFTER THE PAYMENT IN FULL OF
THE SENIOR FINANCING OBLIGATIONS AND UNTIL THE NOTE IS PAID IN FULL, THE PAYEE
SHALL BE SUBROGATED TO THE RIGHTS OF HOLDERS OF THE SENIOR FINANCING OBLIGATIONS
TO RECEIVE DISTRIBUTIONS APPLICABLE TO THE SENIOR FINANCING OBLIGATIONS.  A
DISTRIBUTION MADE UNDER THIS SECTION 4 TO HOLDERS OF THE SENIOR FINANCING
OBLIGATIONS WHICH OTHERWISE WOULD HAVE BEEN MADE TO PAYEE IS NOT, AS BETWEEN THE
MAKER AND PAYEE, A PAYMENT BY THE MAKER ON THE SENIOR FINANCING OBLIGATIONS.

 

(F)                                    TURNOVER.  IF, NOTWITHSTANDING THE
PROVISIONS OF SECTION 4 OF THIS NOTE, ANY PAYMENT OR DISTRIBUTION OF ANY KIND OR
CHARACTER (WHETHER IN CASH, SECURITIES OR OTHER PROPERTY) OR ANY SECURITY SHALL
BE RECEIVED BY THE HOLDER OF THIS NOTE IN CONTRAVENTION OF THIS SECTION 4 AND
BEFORE ALL THE SENIOR FINANCING OBLIGATIONS SHALL HAVE BEEN PAID-IN-

 

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FULL, SUCH PAYMENT, DISTRIBUTION OR SECURITY SHALL BE HELD IN TRUST FOR THE
BENEFIT OF, AND SHALL BE IMMEDIATELY PAID OVER OR DELIVERED OR TRANSFERRED TO,
THE HOLDERS OF THE SENIOR FINANCING OBLIGATIONS OR THEIR DULY APPOINTED AGENTS
FOR APPLICATION ACCORDING TO THE PRIORITIES OF THE SENIOR FINANCING
OBLIGATIONS.  IN THE EVENT OF THE FAILURE OF ANY HOLDER OF THIS NOTE TO ENDORSE
OR ASSIGN ANY SUCH PAYMENT, DISTRIBUTION OR SECURITY, EACH HOLDER OF ANY SENIOR
FINANCING OBLIGATIONS IS HEREBY IRREVOCABLY AUTHORIZED TO ENDORSE OR ASSIGN THE
SAME. IF ANY HOLDER OF THE SENIOR FINANCING OBLIGATIONS IS REQUIRED IN
CONNECTION WITH ANY PROCEEDING OR OTHERWISE TO DISGORGE, TURNOVER OR OTHERWISE
PAY ANY AMOUNT TO THE ESTATE OF THE MAKER OR ANY OF ITS SUBSIDIARIES, BECAUSE
SUCH AMOUNT WAS AVOIDED OR ORDERED TO BE PAID OR DISGORGED FOR ANY REASON,
INCLUDING WITHOUT LIMITATION BECAUSE IT WAS FOUND TO BE A FRAUDULENT OR
PREFERENTIAL TRANSFER (A “RECOVERY”), WHETHER RECEIVED AS PROCEEDS OF SECURITY,
ENFORCEMENT OF ANY RIGHT OF SET-OFF OR OTHERWISE, THEN THE SENIOR FINANCING
OBLIGATIONS SHALL BE REINSTATED TO THE EXTENT OF SUCH RECOVERY AND DEEMED TO BE
OUTSTANDING AS IF SUCH PAYMENT HAD NOT OCCURRED AND THE SENIOR FINANCING
OBLIGATIONS, SHALL BE DEEMED NOT TO HAVE BEEN PAID.

 

(G)                                 REMEDIES.  NO HOLDER OF THIS NOTE (INCLUDING
THE PAYEE) SHALL EXERCISE ANY REMEDIES UNLESS SUCH HOLDER SHALL HAVE GIVEN
WRITTEN NOTICE TO THE MAKER AND THE REPRESENTATIVE (1) THAT IT IS PRESENTLY
ENTITLED TO EXERCISE REMEDIES AND (2) THAT IT INTENDS TO EXERCISE SUCH REMEDIES,
AND A PERIOD OF AT LEAST 150 DAYS SHALL HAVE ELAPSED FROM THE RECEIPT OF SUCH
NOTICE (THE “REMEDIES NOTICE”) BY THE REPRESENTATIVE; PROVIDED, THAT THE PERIOD
DURING WHICH THE HOLDER SHALL BE PROHIBITED FROM EXERCISING REMEDIES SHALL
TERMINATE UPON THE EARLIEST TO OCCUR OF SUCH 150-DAY PERIOD (THE “STANDSTILL
PERIOD”), OR ANY OF THE FOLLOWING: (A) THE ACCELERATION OF THE SENIOR FINANCING
OBLIGATIONS, (B) THE FILING OF ANY VOLUNTARY PROCEEDING RELATING TO THE MAKER,
(C) THE FILING OF ANY INVOLUNTARY PROCEEDING RELATING TO THE MAKER WHICH IS NOT
DISMISSED WITHIN 60 DAYS, OR (D) THE PAYMENT-IN-FULL OF THE SENIOR FINANCING
OBLIGATIONS.  UPON THE TERMINATION OF ANY STANDSTILL PERIOD, THEN THE HOLDER
MAY, AT ITS SOLE ELECTION, EXERCISE ANY AND ALL REMEDIES (INCLUDING ACCELERATION
OF THE MATURITY OF THIS NOTE) AVAILABLE TO IT; PROVIDED THAT THE PAYMENT
BLOCKAGE PERIOD OR AN INDEFINITE BLOCKAGE PERIOD UNDER A PAYMENT DEFAULT, AS THE
CASE MAY BE, (IF NOT ALSO TERMINATED) SHALL CONTINUE FOR ITS APPLICABLE PERIOD
NOTWITHSTANDING THE TERMINATION OF THE STANDSTILL PERIOD.

 

(H)                                 SECURITY.  UNTIL PAYMENT-IN-FULL OF THE
SENIOR FINANCING OBLIGATIONS, THE HOLDER OF THIS NOTE WILL NOT ASK, DEMAND,
ACCEPT, RECEIVE OR RETAIN (I) ANY GUARANTEE OF THIS NOTE FROM ANY PERSON (EXCEPT
AS AND TO THE EXTENT CONTEMPLATED BY ANY SELLER SUBORDINATED NOTE REFINANCING
INDEBTEDNESS UNDER THE SENIOR FINANCING AGREEMENT), OR (II) ANY COLLATERAL
SECURITY FOR THE PAYMENT OF THIS NOTE, OR ANY OTHER FORM OF PAYMENT ASSURANCE
(OTHER THAN ANY GUARANTEE CONTEMPLATED UNDER CLAUSE (I) ABOVE) AS TO THIS NOTE,
FROM THE MAKER OR ANY OTHER PERSON.

 

(I)                                     OBLIGATIONS.  THE PROVISIONS OF THIS
SECTION 4 ARE SOLELY FOR THE PURPOSE OF DEFINING THE RELATIVE RIGHTS OF THE
HOLDERS OF SENIOR FINANCING OBLIGATIONS, ON THE ONE HAND, AND THE HOLDER OF THIS
NOTE ON THE OTHER, AGAINST THE MAKER AND ITS ASSETS, AND NOTHING HEREIN IS
INTENDED TO OR SHALL IMPAIR, AS BETWEEN THE MAKER AND THE HOLDER OF THIS NOTE,
THE OBLIGATIONS OF THE MAKER WHICH ARE ABSOLUTE AND UNCONDITIONAL, TO PAY TO THE
HOLDER THE PRINCIPAL AND INTEREST ON THIS NOTE AS AND WHEN THEY BECOME DUE AND
PAYABLE

 

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IN ACCORDANCE WITH THEIR TERMS, OR IS INTENDED TO OR WILL AFFECT THE RELATIVE
RIGHTS OF THE HOLDER OF THIS NOTE AND CREDITORS OF THE MAKER OTHER THAN THE
HOLDERS OF THE SENIOR FINANCING OBLIGATIONS, NOR, EXCEPT AS PROVIDED IN THIS
SECTION 4, WILL ANYTHING HEREIN OR THEREIN PREVENT THE HOLDER OF THIS NOTE FROM
EXERCISING ALL REMEDIES OTHERWISE PERMITTED BY APPLICABLE LAW UPON DEFAULT UNDER
THIS NOTE.

 

(J)                                     THIRD PARTY BENEFICIARY.  THE HOLDERS OF
SENIOR FINANCING OBLIGATIONS HAVE MADE LOANS AND EXTENDED CREDIT TO THE MAKER IN
RELIANCE ON THIS SECTION 4 AND ARE ENTITLED TO THE BENEFITS OF THE PROVISIONS
HEREOF AND ARE EXPRESS THIRD PARTY BENEFICIARIES OF THESE PROVISIONS. 
ACCORDINGLY, ANY HOLDER OF SENIOR FINANCING OBLIGATIONS SHALL BE ENTITLED TO
ENFORCE ANY PROVISIONS OF SUCH SECTIONS AGAINST THE PAYEE OR THE MAKER.  NO
PRESENT OR FUTURE HOLDER OF SENIOR FINANCING OBLIGATIONS SHALL BE PREJUDICED IN
ITS RIGHT TO ENFORCE THE PROVISIONS OF SECTION 4 OF THIS NOTE BY ANY ACT OR
FAILURE TO ACT ON THE PART OF THE MAKER.

 

(K)                                  AMENDMENTS.  PRIOR TO PAYMENT-IN-FULL OF
THE SENIOR FINANCING OBLIGATIONS, THIS NOTE MAY NOT BE AMENDED, MODIFIED,
REPLACED OR RESTATED IN WHOLE OR IN PART WITHOUT THE PRIOR WRITTEN CONSENT OF
THE REPRESENTATIVE (EXCEPT AS AND TO THE EXTENT CONTEMPLATED BY ANY SELLER
SUBORDINATED NOTE REFINANCING INDEBTEDNESS UNDER THE SENIOR FINANCING
AGREEMENT).  THE HOLDERS OF SENIOR FINANCING OBLIGATIONS MAY, AT ANY TIME, IN
THEIR DISCRETION, RENEW, AMEND, INCREASE, EXTEND OR OTHERWISE MODIFY THE TERMS
AND PROVISIONS OF SENIOR FINANCING OBLIGATIONS SO HELD OR EXERCISE ANY OF THEIR
RIGHTS UNDER THE SENIOR FINANCING OBLIGATIONS INCLUDING, WITHOUT LIMITATION, THE
WAIVER OF DEFAULTS THEREUNDER AND THE AMENDMENT OF ANY OF THE TERMS OR
PROVISIONS THEREOF (OR ANY NOTICE EVIDENCING OR CREATING THE SAME), ALL WITHOUT
NOTICE TO OR ASSENT FROM THE HOLDER OF THIS NOTE.  NO COMPROMISE, ALTERATION,
AMENDMENT, RENEWAL OR OTHER CHANGE OF; OR WAIVER, CONSENT OR OTHER ACTION IN
RESPECT OF ANY LIABILITY OR OBLIGATION UNDER OR IN RESPECT OF; ANY TERMS,
COVENANTS OR CONDITIONS OF THE SENIOR FINANCING OBLIGATIONS (OR ANY INSTRUMENT
EVIDENCING OR CREATING THE SAME), WHETHER OR NOT SUCH RELEASE IS IN ACCORDANCE
WITH THE PROVISIONS OF THE SENIOR FINANCING OBLIGATIONS (OR ANY INSTRUMENT
EVIDENCING OR CREATING THE SAME), SHALL IN ANY WAY ALTER OR AFFECT ANY OF THE
SUBORDINATION PROVISIONS OF THIS NOTE.

 

(L)                                     COMMUNICATION WITH REPRESENTATIVE. 
MAKER AUTHORIZES PAYEE TO COMMUNICATE WITH THE REPRESENTATIVE (I) AT ANY TIME
AND FROM TIME TO TIME FOR THE PURPOSE OF OBTAINING A COPY OF THE SENIOR
FINANCING AGREEMENT (AND THE REPRESENTATIVE IS AUTHORIZED TO DELIVER A COPY,
WHEN REQUESTED, TO THE PAYEE), AND (II) AT ANY TIME AFTER RECEIVING A
NON-PAYMENT DEFAULT NOTICE FOR THE PURPOSE OF ASCERTAINING THE STATUS OF ANY
DEFAULT AND A DETAILED DESCRIPTION OF THE EVENTS GIVING RISE TO SUCH DEFAULT
(AND THE REPRESENTATIVE IS AUTHORIZED TO DISCLOSE SUCH MATTERS TO PAYEE).

 

SECTION 5.                                          DEFINITIONS.  FOR PURPOSES
OF THESE DEFINITIONS AND THEIR USE IN THIS NOTE, THE TERM “MAKER” SHALL INCLUDE
THE MAKER AND ITS PARENT COMPANY, MAC-GRAY CORPORATION.

 

(A)                                  “AFFILIATE” MEANS, WITH RESPECT TO ANY
PERSON (THE “SUBJECT PERSON”), (I) ANY OTHER PERSON (A “CONTROLLING PERSON”)
THAT DIRECTLY, OR INDIRECTLY THROUGH ONE OR MORE INTERMEDIARIES, CONTROLS THE
SUBJECT PERSON OR (II) ANY OTHER PERSON WHICH IS

 

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CONTROLLED BY OR IS UNDER COMMON CONTROL WITH A CONTROLLING PERSON; PROVIDED,
HOWEVER, THAT THE HOLDER AND ITS AFFILIATES SHALL NOT BE DEEMED AFFILIATES OF
THE MAKER.

 

(B)                                 “CONTROL” (INCLUDING, WITH CORRELATIVE
MEANINGS, THE TERMS “CONTROLLING,” “CONTROLLED BY” AND “UNDER COMMON CONTROL
WITH”), AS USED WITH RESPECT TO ANY PERSON, MEANS THE POSSESSION, DIRECTLY OR
INDIRECTLY, OF THE POWER TO DIRECT OR CAUSE THE DIRECTION OF THE MANAGEMENT AND
POLICIES OF THAT PERSON, WHETHER THROUGH THE OWNERSHIP OF VOTING SECURITIES OR
INTERESTS, BY CONTRACT OR OTHERWISE.

 

(C)                                  “DEFAULT” MEANS ANY EVENT OR CONDITION
WHICH CONSTITUTES AN EVENT OF DEFAULT OR WHICH WITH THE GIVING OF NOTICE OR
LAPSE OF TIME OR BOTH WOULD, UNLESS CURED WITHIN THE STATED TIME PERIOD OR
WAIVED, BECOME AN EVENT OF DEFAULT.

 

(D)                                 “LETTER OF CREDIT” MEANS A LETTER OF CREDIT
ISSUED BY BANK OF AMERICA, N.A. OR ANY AFFILIATE OF BANK OF AMERICA, N.A., FOR
THE ACCOUNT OF THE MAKER.

 

(E)                                  “PAID-IN-FULL” OR “PAYMENT-IN-FULL” SHALL
MEAN WITH RESPECT TO THE SENIOR FINANCING OBLIGATIONS, (I) THE PAYMENT IN FULL
IN CASH OF ALL OUTSTANDING SENIOR FINANCING OBLIGATIONS (OTHER THAN CONTINGENT
INDEMNITY, COST OR REIMBURSEMENT OBLIGATIONS TO THE EXTENT THAT NO CLAIM GIVING
RISE THERETO HAS BEEN ASSERTED), (II) THE TERMINATION OF ALL COMMITMENTS TO
EXTEND CREDIT THAT WOULD CONSTITUTE SENIOR FINANCING OBLIGATIONS AND (III) THE
TERMINATION OR CASH COLLATERALIZATION OF LETTERS OF CREDIT (IN AN AMOUNT NOT TO
EXCEED 101% OF THE FACE AMOUNT OF SUCH OBLIGATIONS); PROVIDED THAT IN NO EVENT
SHALL A REFINANCING OR RESTATEMENT OF THE SENIOR FINANCING OBLIGATIONS
CONSTITUTE PAYMENT-IN-FULL OR PAID-IN-FULL OF SUCH SENIOR FINANCING OBLIGATIONS.

 

(F)                                    “PERSON” MEANS AN INDIVIDUAL OR A
CORPORATION, COMPANY, PARTNERSHIP, TRUST, INCORPORATED OR UNINCORPORATED
ASSOCIATION, JOINT VENTURE, JOINT STOCK COMPANY, LIMITED LIABILITY COMPANY,
GOVERNMENT (OR ANY AGENCY OR POLITICAL SUBDIVISION THEREOF) OR OTHER ENTITY OF
ANY KIND.

 

(G)                                 “PURCHASE AGREEMENT” MEANS THAT CERTAIN
PARTNERSHIP INTEREST PURCHASE AGREEMENT DATED AS OF APRIL 1, 2008 AMONG
AUTOMATIC LAUNDRY COMPANY, LTD., A TEXAS LIMITED PARTNERSHIP, THE PARTNERS OF
THE COMPANY LISTED ON THE SIGNATURE PAGES THERETO MAC-GRAY NEWCO, LLC, A
DELAWARE LIMITED LIABILITY COMPANY, AND THE MAKER.

 

(H)                                 “REMEDIES” SHALL MEAN, WITH RESPECT TO A
“DEFAULT” OR AN “EVENT OF DEFAULT” AS DEFINED IN THIS NOTE, THE ACCELERATION OF
ANY OF THIS NOTE OR THE EXERCISE OF ANY REMEDIES IN RESPECT OF SUCH DEFAULT OR
EVENT OF DEFAULT (INCLUDING, WITHOUT LIMITATION, THE RIGHT TO SUE THE MAKER OR
THE RIGHT TO FILE OR PARTICIPATE IN ANY INVOLUNTARY BANKRUPTCY PROCEEDING
AGAINST THE MAKER BUT EXCLUDING THE IMPOSITION OF DEFAULT INTEREST RATE).

 

(I)                                     “REPRESENTATIVE” MEANS THE
ADMINISTRATIVE AGENT FROM TIME TO TIME UNDER THE SENIOR FINANCING AGREEMENT. 
THE CURRENT REPRESENTATIVE IS BANK OF AMERICA, N.A., WHOSE ADDRESS IS 231 S.
LASALLE ST., CHICAGO, IL 60604.  MAKER SHALL NOTIFY PAYEE OF ANY CHANGE OF THE
REPRESENTATIVE OR ITS ADDRESS FOR NOTICE.

 

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(J)                                     “SENIOR FINANCING AGREEMENT” MEANS THAT
CERTAIN SENIOR SECURED TERM LOAN AND REVOLVING CREDIT FACILITY, DATED THE DATE
HEREOF, AMONG THE MAKER, BANK OF AMERICA, N.A., AS ADMINISTRATIVE AGENT, AND THE
FINANCIAL INSTITUTIONS FROM TIME TO TIME PARTY AS LENDERS THERETO, INCLUDING ANY
NOTES, MORTGAGES, GUARANTEES, COLLATERAL DOCUMENTS, INSTRUMENTS AND AGREEMENTS
EXECUTED IN CONNECTION THEREWITH, AND ANY AMENDMENTS, SUPPLEMENTS,
MODIFICATIONS, EXTENSIONS, REPLACEMENTS, RENEWALS, RESTATEMENTS, REFUNDINGS OR
REFINANCINGS THEREOF AND ANY ONE OR MORE INDENTURES OR CREDIT FACILITIES OR
COMMERCIAL PAPER FACILITIES WITH BANKS OR OTHER INSTITUTIONAL LENDERS OR
INVESTORS THAT EXTEND, REPLACE, REFUND, REFINANCE, RENEW OR DEFEASE ANY PART OF
THE LOANS, NOTES, OTHER CREDIT FACILITIES OR COMMITMENTS THEREUNDER, OTHER THAN
ANY SUCH REPLACEMENT, REFUNDING OR REFINANCING FACILITY OR INDENTURE THAT
INCREASES THE AMOUNT BORROWABLE THEREUNDER AND WHETHER BY THE SAME OR ANY OTHER
AGENT, LENDER OR GROUP OF LENDERS.

 

(K)                                  “SENIOR FINANCING OBLIGATIONS” MEANS
(I) (A) ALL INDEBTEDNESS, OBLIGATIONS AND LIABILITIES, WHETHER NOW EXISTING OR
HEREAFTER ARISING, OF THE MAKER, FOR OR IN CONNECTION WITH MONEY BORROWED OR
OTHER CREDIT OR FINANCIAL ACCOMMODATIONS EXTENDED (WHETHER IN THE FORM OF LOANS
OR OTHERWISE) FROM TIME TO TIME UNDER THE SENIOR FINANCING AGREEMENT, UNDER
LETTERS OF CREDIT, OR OTHERWISE, INCLUDING (X) ALL PRINCIPAL OF AND INTEREST
(INCLUDING POST-PETITION INTEREST IN A BANKRUPTCY OR SIMILAR PROCEEDING WHETHER
OR NOT ALLOWED) ON ALL SUCH BORROWINGS AND OTHER CREDIT OR FINANCIAL
ACCOMMODATIONS EXTENDED UNDER THE SENIOR FINANCING AGREEMENT, (Y) ALL FEES,
CHARGES, PREMIUMS (IF ANY) AND COSTS OF COLLECTION, ATTORNEYS’ FEES AND OTHER
EXPENSES PAYABLE BY THE MAKER AND ALL OTHER AMOUNTS PAYABLE BY THE MAKER UNDER,
AND ALL OTHER CLAIMS (INCLUDING WITHOUT LIMITATION CLAIMS ARISING OUT OF
BREACHES OF REPRESENTATIONS, WARRANTIES OR COVENANTS) PAYABLE BY THE MAKER
ARISING OUT OF, THE SENIOR FINANCING AGREEMENT AND (Z) ANY SUCH INDEBTEDNESS,
OBLIGATIONS AND LIABILITIES PAYABLE BY THE MAKER AS FROM TIME TO TIME ARISE IN
CONNECTION WITH ANY COLLATERAL FOR OR GUARANTIES OF SUCH BORROWINGS AND OTHER
CREDIT OR FINANCIAL ACCOMMODATIONS, AND (B) ANY DEFERRALS, RENEWALS AND
EXTENSIONS OF ANY OF THE FOREGOING.

 

SECTION 6.                                          ADDITIONAL PROVISIONS.

 

(A)                                  MAKER AGREES TO PAY ALL COSTS OF COLLECTION
HEREOF WHEN INCURRED, INCLUDING REASONABLE ATTORNEYS’ FEES, WHETHER OR NOT ANY
ACTION SHALL BE INSTITUTED TO ENFORCE THIS NOTE.

 

(B)                                 IT IS EXPRESSLY STIPULATED AND AGREED TO BE
THE INTENT OF MAKER AND PAYEE TO COMPLY AT ALL TIMES WITH THE APPLICABLE LAW NOW
OR HEREAFTER GOVERNING BOTH THE TERMS OF THIS NOTE AND THE INTEREST PAYABLE ON
THIS NOTE.  IF THE APPLICABLE LAW IS EVER REVISED, REPEALED, OR JUDICIALLY
INTERPRETED SO AS TO RENDER ANY PROVISION OF THIS NOTE INVALID, OR SO AS TO
RENDER USURIOUS ANY AMOUNT CALLED FOR UNDER THIS NOTE, OR CONTRACTED FOR,
CHARGED, TAKEN, RESERVED OR RECEIVED WITH RESPECT TO THE LOAN EVIDENCED BY THIS
NOTE, OR IF PAYEE’S EXERCISE OF THE OPTION HEREIN CONTAINED TO ACCELERATE THE
MATURITY OF THIS NOTE OR IF ANY PREPAYMENT BY MAKER RESULTS IN MAKER HAVING PAID
ANY INTEREST IN EXCESS OF THAT PERMITTED BY LAW (AFTER TAKING INTO ACCOUNT ALL
PAYMENTS, CHARGES, AND CALCULATIONS DEEMED TO BE INTEREST UNDER APPLICABLE LAW),
THEN IT IS MAKER’S AND PAYEE’S EXPRESS INTENT THAT ALL EXCESS AMOUNTS
THERETOFORE COLLECTED BY PAYEE BE CREDITED ON THE PRINCIPAL

 

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BALANCE OF THIS NOTE (OR, IF THE NOTE HAS BEEN PAID IN FULL, REFUNDED TO MAKER),
AND THAT THE INVALID PROVISIONS OF THIS NOTE IMMEDIATELY BE DEEMED REFORMED AND
THE AMOUNTS THEREAFTER COLLECTIBLE HEREUNDER AND THEREUNDER REDUCED, WITHOUT THE
NECESSITY OF THE EXECUTION OF ANY NEW DOCUMENT, SO AS TO COMPLY WITH THE THEN
APPLICABLE LAW, BUT SO AS TO PERMIT THE RECOVERY OF THE GREATEST AMOUNT
OTHERWISE CALLED FOR HEREUNDER AND THEREUNDER.

 

(C)                                  ALL SUMS PAID OR AGREED TO BE PAID TO PAYEE
FOR THE USE, FORBEARANCE OR DETENTION OF THE INDEBTEDNESS EVIDENCED HEREBY
SHALL, TO THE EXTENT PERMITTED BY APPLICABLE LAW, BE AMORTIZED, PRORATED,
ALLOCATED AND SPREAD THROUGHOUT THE FULL TERM OF SUCH INDEBTEDNESS UNTIL PAYMENT
IN FULL SO THAT THE RATE OR AMOUNT OF INTEREST ON ACCOUNT OF SUCH INDEBTEDNESS
DOES NOT EXCEED THE USURY CEILING FROM TIME TO TIME IN EFFECT AND APPLICABLE TO
THE LOAN EVIDENCED HEREBY FOR SO LONG AS THE DEBT IS OUTSTANDING UNDER THE LOAN.

 

(D)                                 ANY NOTICE REQUIRED OR PERMITTED TO BE GIVEN
HEREUNDER BY ONE PARTY TO THE OTHER SHALL BE IN WRITING AND THE SAME SHALL BE
GIVEN AND SHALL BE DEEMED TO HAVE BEEN SERVED AND GIVEN IF DELIVERED IN PERSON
TO THE ADDRESS SET FORTH HEREINAFTER FOR THE PARTY TO WHOM THE NOTICE IS GIVEN,
OR IF PLACED IN THE UNITED STATES MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO
THE PARTY AT THE ADDRESS HEREINAFTER SPECIFIED.  THE ADDRESSES OF PAYEE AND
MAKER FOR ALL PURPOSES UNDER THIS NOTE AND ALL NOTICES HEREUNDER SHALL BE AS SET
FORTH BELOW.  FROM TIME TO TIME EITHER PARTY MAY DESIGNATE ANOTHER ADDRESS
WITHIN THE UNITED STATES OF AMERICA FOR ALL PURPOSES OF THIS NOTE BY GIVING THE
OTHER PARTY NOT LESS THAN FIFTEEN (15) DAYS’ ADVANCE WRITTEN NOTICE OF SUCH
CHANGE OF ADDRESS IN ACCORDANCE WITH THE PROVISIONS HEREOF.

 

Payee:

 

Maker:

 

 

 

Paceco Investors, L.P.
420 Throckmorton Street,
Suite 710
Fort Worth Texas 76102

 

Mac-Gray Services, Inc.
404 Wyman Street, Suite 400
Waltham, Massachusetts
02451-1212

 

(E)                                  THIS NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.  ANY
DISPUTE UNDER THIS NOTE THAT IS NOT SETTLED BY MUTUAL CONSENT SHALL BE FINALLY
ADJUDICATED BY ANY FEDERAL OR STATE COURT SITTING IN THE STATE OF DELAWARE, AND
THE MAKER CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS (OR ANY
APPELLATE COURT THEREFROM) OVER ANY SUCH DISPUTE. THE MAKER HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE FEDERAL AND DELAWARE STATE
COURTS LOCATED IN THE STATE OF DELAWARE IN CONNECTION WITH ANY SUIT, ACTION OR
PROCEEDING

 

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RELATED TO THIS NOTE OR ANY OF THE MATTERS CONTEMPLATED HEREBY, IRREVOCABLY
WAIVES ANY DEFENSE OF LACK OF PERSONAL JURISDICTION AND IRREVOCABLY AGREES THAT
ALL CLAIMS IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT.  THE MAKER IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

[Signature Page Follows Next]

 

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THIS NOTE AND THE PURCHASE AGREEMENT REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AS TO THE OBLIGATIONS EVIDENCED HEREBY AND THEREBY AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.

 

 

MAC-GRAY SERVICES, INC.

 

 

 

 

 

By:

/s/ Michael J. Shea

 

 

Michael J. Shea, Executive Vice President,

 

 

CFO and Treasurer

 

 

 

 

 

“MAKER”

 

 

EXECUTED BY PAYEE FOR THE SOLE PURPOSE

OF ACKNOWLEDGING THIS NOTE AND THE

 

PURCHASE AGREEMENT AS THE FINAL

AGREEMENT OF THE PARTIES

 

PACECO INVESTORS, L.P.

 

By:

Paceco Investors Genpar, LLC,

 

its general partner

 

 

 

 

By:

/s/ Joe K. Pace

 

 

 Joe K. Pace, President

 

 

 

“PAYEE”

 

[Signature Page to Note]

 

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