exv10w1






Exhibit 10.1




     Execution version



AMENDED AND RESTATED LOAN AGREEMENT




Dated as of October 1, 2008




among




G&K RECEIVABLES CORP., as Borrower,




G&K SERVICES, INC., as initial Servicer,




THREE PILLARS FUNDING LLC, as Lender,




and 




SUNTRUST ROBINSON HUMPHREY, INC., as Administrator





 









 








TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	ARTICLE I. DEFINITIONS	 	 	1	 
	 
	 	 	 	 	 	 
	Section 1.1
	 	Defined Terms	 	 	1	 
	Section 1.2
	 	Other Definitional Provisions	 	 	19	 
	Section 1.3
	 	Other Terms	 	 	19	 
	Section 1.4
	 	Computation of Time Periods	 	 	19	 
	 
	 	 	 	 	 	 
	ARTICLE II. THE LENDER’S COMMITMENT, BORROWING PROCEDURES AND LENDER NOTE	 	 	20	 
	 
	 	 	 	 	 	 
	Section 2.1
	 	Lender’s Commitment	 	 	20	 
	Section 2.2
	 	Borrowing Procedures	 	 	20	 
	Section 2.3
	 	Funding	 	 	20	 
	Section 2.4
	 	Representation and Warranty	 	 	20	 
	Section 2.5
	 	Extension of Lender’s Commitment	 	 	21	 
	Section 2.6
	 	Voluntary Termination of Lender’s Commitment; Reduction of Facility Limit	 	 	21	 
	Section 2.7
	 	Note	 	 	21	 
	Section 2.8
	 	Concentration Accounts	 	 	22	 
	 
	 	 	 	 	 	 
	ARTICLE III. INTEREST, FEES, ETC.	 	 	22	 
	 
	 	 	 	 	 	 
	Section 3.1
	 	Interest Rates	 	 	22	 
	Section 3.2
	 	Interest Payment Dates	 	 	22	 
	Section 3.3
	 	Interest Allocations	 	 	23	 
	Section 3.4
	 	Fees	 	 	23	 
	Section 3.5
	 	Computation of Interest and Fees	 	 	23	 
	 
	 	 	 	 	 	 
	ARTICLE IV. REPAYMENTS AND PREPAYMENTS; DISTRIBUTION OF COLLECTIONS	 	 	24	 
	 
	 	 	 	 	 	 
	Section 4.1
	 	Repayments and Prepayments	 	 	24	 
	Section 4.2
	 	Application of Collections	 	 	24	 
	Section 4.3
	 	Application of Certain Payments	 	 	25	 
	Section 4.4
	 	Due Date Extension	 	 	26	 
	Section 4.5
	 	Making of Payments	 	 	26	 
	 
	 	 	 	 	 	 
	ARTICLE V. SECURITY INTEREST	 	 	26	 
	 
	 	 	 	 	 	 
	Section 5.1
	 	Grant of Security	 	 	26	 
	Section 5.2
	 	Administrator Appointed Attorney-in-Fact	 	 	27	 
	Section 5.3
	 	Administrator May Perform	 	 	27	 
	Section 5.4
	 	Release of Collateral	 	 	28	 






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	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	ARTICLE VI. INCREASED COSTS, ETC.	 	 	28	 
	 
	 	 	 	 	 	 
	Section 6.1
	 	Increased Costs	 	 	28	 
	Section 6.2
	 	Funding Losses	 	 	29	 
	Section 6.3
	 	Withholding Taxes	 	 	29	 
	 
	 	 	 	 	 	 
	ARTICLE VII. CONDITIONS TO BORROWING	 	 	30	 
	 
	 	 	 	 	 	 
	Section 7.1
	 	Initial Loan	 	 	30	 
	 
	 	7.1.1     Resolutions	 	 	30	 
	 
	 	7.1.2     Consents, etc	 	 	30	 
	 
	 	7.1.3     Incumbency and Signatures	 	 	30	 
	 
	 	7.1.4     Good Standing Certificates	 	 	30	 
	 
	 	7.1.5     Financing Statements	 	 	30	 
	 
	 	7.1.6     Search Reports	 	 	31	 
	 
	 	7.1.7     Fee Letter; Payment of Fees	 	 	31	 
	 
	 	7.1.8     Receivables Sale Agreement	 	 	31	 
	 
	 	7.1.9     Opinions of Counsel	 	 	31	 
	 
	 	7.1.10   Lender Note	 	 	31	 
	 
	 	7.1.11   Borrowing Base Certificate	 	 	31	 
	 
	 	7.1.12   Concentration Account Agreements	 	 	31	 
	 
	 	7.1.13   Releases	 	 	31	 
	 
	 	7.1.14   Other	 	 	31	 
	Section 7.2
	 	All Loans	 	 	31	 
	 
	 	7.2.1     No Default, etc.	 	 	31	 
	 
	 	7.2.2     Borrowing Request, etc.	 	 	32	 
	 
	 	7.2.3     Commitment Termination Date	 	 	32	 
	 
	 	7.2.4     Collateral Review	 	 	32	 
	 
	 	7.2.5     Accounts	 	 	32	 
	 
	 	 	 	 	 	 
	ARTICLE VIII. REPRESENTATIONS AND WARRANTIES	 	 	32	 
	 
	 	 	 	 	 	 
	Section 8.1
	 	Existence and Power	 	 	32	 
	Section 8.2
	 	Power and Authority; Due Authorization, Execution and Delivery	 	 	32	 
	Section 8.3
	 	No Conflict	 	 	33	 
	Section 8.4
	 	Governmental Authorization	 	 	33	 
	Section 8.5
	 	Actions, Suits	 	 	33	 
	Section 8.6
	 	Binding Effect	 	 	33	 
	Section 8.7
	 	Accuracy of Information	 	 	33	 
	Section 8.8
	 	Margin Regulations; Use of Proceeds	 	 	34	 
	Section 8.9
	 	Good Title	 	 	34	 
	Section 8.10
	 	Perfection	 	 	34	 
	Section 8.11
	 	Places of Business and Locations of Records	 	 	34	 
	Section 8.12
	 	Accounts	 	 	34	 
	Section 8.13
	 	No Material Adverse Effect	 	 	34	 
	Section 8.14
	 	Names	 	 	34	 
	Section 8.15
	 	Ownership of Borrower; No Subsidiaries	 	 	35	 






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	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	Section 8.16
	 	Not a Holding Company or an Investment Company	 	 	35	 
	Section 8.17
	 	Compliance with Credit and Collection Policy	 	 	35	 
	Section 8.18
	 	Solvency	 	 	35	 
	Section 8.19
	 	Eligible Receivables	 	 	35	 
	Section 8.20
	 	Accuracy of Information	 	 	35	 
	Section 8.21
	 	Sales by Originators	 	 	35	 
	 
	 	 	 	 	 	 
	ARTICLE IX. COVENANTS OF BORROWER AND SERVICER	 	 	35	 
	 
	 	 	 	 	 	 
	Section 9.1
	 	Affirmative Covenants	 	 	35	 
	 
	 	9.1.1     Compliance with Laws, Etc	 	 	36	 
	 
	 	9.1.2     Preservation of Legal Existence	 	 	36	 
	 
	 	9.1.3     Performance and Compliance with Receivables	 	 	36	 
	 
	 	9.1.4     Credit and Collection Policy	 	 	36	 
	 
	 	9.1.5     Reporting Requirements	 	 	36	 
	 
	 	9.1.6     Use of Proceeds	 	 	38	 
	 
	 	9.1.7     Separate Legal Entity	 	 	38	 
	 
	 	9.1.8     Adverse Claims on Receivables	 	 	39	 
	 
	 	9.1.9     Further Assurances	 	 	39	 
	 
	 	9.1.10   Servicing	 	 	40	 
	 
	 	9.1.11   Inspection	 	 	40	 
	 
	 	9.1.12   Cooperation	 	 	40	 
	 
	 	9.1.13   Facility	 	 	41	 
	 
	 	9.1.14   Accounts	 	 	41	 
	Section 9.2
	 	Negative Covenants	 	 	41	 
	 
	 	9.2.1     Sales, Liens, Etc	 	 	41	 
	 
	 	9.2.2     Mergers, Acquisitions, Sales, Subsidiaries, etc	 	 	41	 
	 
	 	9.2.3     Change in Business; Change in Credit and Collection Policy	 	 	42	 
	 
	 	9.2.4     Other Debt	 	 	42	 
	 
	 	9.2.5     Organizational Documents	 	 	42	 
	 
	 	9.2.6     Jurisdiction of Organization; Location of Records	 	 	42	 
	 
	 	9.2.7     Financing Statements	 	 	42	 
	 
	 	9.2.8     Business Restrictions	 	 	43	 
	 
	 	9.2.9     Other Agreements	 	 	43	 
	 
	 	 	 	 	 	 
	ARTICLE X. SIGNIFICANT EVENTS AND THEIR EFFECT	 	 	43	 
	 
	 	 	 	 	 	 
	Section 10.1
	 	Events of Default	 	 	43	 
	 
	 	10.1.1   Non-Payment of Loans, Etc	 	 	43	 
	 
	 	10.1.2   Non-Compliance with Other Provisions	 	 	43	 
	 
	 	10.1.3   Breach of Representations and Warranties	 	 	43	 
	 
	 	10.1.4   Bankruptcy	 	 	44	 
	 
	 	10.1.5   Tax Liens	 	 	44	 
	Section 10.2
	 	Amortization Events	 	 	44	 
	 
	 	10.2.1   Servicer Event of Default	 	 	44	 
	 
	 	10.2.2   Borrowing Base Deficit	 	 	44	 
	 
	 	10.2.3   Default Ratio	 	 	44	 






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	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	 
	 	10.2.4   Dilution Ratio	 	 	44	 
	 
	 	10.2.5   Delinquency Ratio	 	 	44	 
	 
	 	10.2.6   Accounts Receivable Turnover Ratio	 	 	44	 
	 
	 	10.2.7   Event of Default	 	 	44	 
	 
	 	10.2.8   Validity of Transaction Documents	 	 	44	 
	 
	 	10.2.9   Termination Date	 	 	45	 
	 
	 	10.2.10  Change of Control	 	 	45	 
	Section 10.3
	 	Effect of Significant Event	 	 	45	 
	 
	 	 	 	 	 	 
	ARTICLE XI. THE SERVICER	 	 	46	 
	 
	 	 	 	 	 	 
	Section 11.1
	 	G&K as Initial Servicer	 	 	46	 
	Section 11.2
	 	Certain Duties of Servicer	 	 	46	 
	 
	 	11.2.1    Authorization to Act as Borrower’s Agent	 	 	46	 
	 
	 	11.2.2    Servicer to Act as Servicer	 	 	46	 
	 
	 	11.2.3    Collections	 	 	48	 
	 
	 	11.2.4    Concentration Accounts	 	 	49	 
	Section 11.3
	 	Servicing Compensation	 	 	49	 
	Section 11.4
	 	Agreement Not to Resign	 	 	49	 
	Section 11.5
	 	Designation of Servicer	 	 	50	 
	Section 11.6
	 	Termination	 	 	50	 
	Section 11.7
	 	Servicer Events of Default	 	 	50	 
	 
	 	11.7.1    Failure to Make Payments and Deposits	 	 	50	 
	 
	 	11.7.2    Non-Compliance with Other Provisions	 	 	50	 
	 
	 	11.7.3    Delegation	 	 	50	 
	 
	 	11.7.4    Breach of Representations and Warranties	 	 	50	 
	 
	 	11.7.5    Bankruptcy	 	 	50	 
	 
	 	11.7.6    Judgments	 	 	50	 
	 
	 	11.7.7    Cross-Default to Material Debt	 	 	51	 
	 
	 	 	 	 	 	 
	ARTICLE XII. ADMINISTRATOR	 	 	51	 
	 
	 	 	 	 	 	 
	Section 12.1
	 	Authorization and Action	 	 	51	 
	Section 12.2
	 	Administrator and Affiliates	 	 	51	 
	 
	 	 	 	 	 	 
	ARTICLE XIII. ASSIGNMENTS	 	 	52	 
	 
	 	 	 	 	 	 
	Section 13.1
	 	Restrictions on Assignments	 	 	52	 
	Section 13.2
	 	Documentation	 	 	52	 
	Section 13.3
	 	Rights of Assignee	 	 	52	 
	Section 13.4
	 	Notice of Assignment	 	 	52	 
	 
	 	 	 	 	 	 
	ARTICLE XIV. INDEMNIFICATION	 	 	53	 
	 
	 	 	 	 	 	 
	Section 14.1
	 	General Indemnity of Borrower	 	 	53	 
	Section 14.2
	 	Indemnity of Servicer	 	 	53	 






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	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	ARTICLE XV. MISCELLANEOUS	 	 	53	 
	 
	 	 	 	 	 	 
	Section 15.1
	 	No Waiver; Remedies	 	 	53	 
	Section 15.2
	 	Amendments, Etc.	 	 	54	 
	Section 15.3
	 	Notices, Etc.	 	 	54	 
	Section 15.4
	 	Costs, Expenses and Taxes	 	 	54	 
	Section 15.5
	 	Binding Effect; Survival	 	 	55	 
	Section 15.6
	 	Captions and Cross References	 	 	55	 
	Section 15.7
	 	Severability	 	 	55	 
	Section 15.8
	 	Governing Law	 	 	55	 
	Section 15.9
	 	Counterparts	 	 	56	 
	Section 15.10
	 	Submission to Jurisdiction; Waiver of Trial by Jury	 	 	56	 
	Section 15.11
	 	No Recourse Against Lender	 	 	56	 
	Section 15.12
	 	No Proceedings	 	 	56	 
	Section 15.13
	 	Confidentiality	 	 	57	 
	Section 15.14
	 	Entire Agreement	 	 	57	 
	Section 15.15
	 	Limitation on Payments	 	 	57	 






	 	 	 
	
EXHIBITS AND SCHEDULES
	 
	 	 
	EXHIBIT A
	 	Form of Borrowing Request
	EXHIBIT B
	 	Form of Lender Note
	EXHIBIT C
	 	Form of Monthly Report
	EXHIBIT D
	 	Form of Borrowing Base Certificate
	EXHIBIT E
	 	Forms of Concentration Account Agreement
	SCHEDULE 8.12
	 	Deposit Accounts and Concentration Accounts
	SCHEDULE 9.1.5
	 	Collateral Review Requirements
	SCHEDULE 15.3
	 	Notice Addresses







vi











 





AMENDED AND RESTATED LOAN AGREEMENT




          THIS AMENDED AND RESTATED LOAN AGREEMENT is made and entered into as of October 1, 2008, among
G&K RECEIVABLES CORP., a Minnesota corporation (“Borrower”), G&K SERVICES, INC., a Minnesota
corporation, in its capacity as the initial servicer (in such capacity, together with its
successors and permitted assigns in such capacity, “Servicer”), THREE PILLARS FUNDING LLC, a
Delaware limited liability company (together with its successors and permitted assigns, “Lender”),
and SUNTRUST ROBINSON HUMPHREY, INC., a Tennessee corporation, as agent and administrator for
Lender (in such capacity, together with its successor and assigns in such capacity,
“Administrator”).




BACKGROUND





     1. The parties hereto are party to that certain Loan Agreement dated as of
November 17, 2004 (as amended, restated, supplemented or otherwise modified prior to
the date hereof, the “Existing Agreement”) and wish to amend and restate the
Existing Agreement.




     2. Borrower desires that Lender extend financing to Borrower on the terms and
subject to the conditions set forth herein.




     3. Lender is willing to provide such financing on the terms and subject to the
conditions set forth herein.



          NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained,
the parties hereto agree to amend and restate the Existing Agreement as follows:




ARTICLE I.

DEFINITIONS




          Section 1.1 Defined Terms. As used in this Agreement, (a) capitalized terms used and not otherwise defined herein are
used with the meanings attributed thereto in the Receivables Sale Agreement (hereinafter defined)
regardless of whether those capitalized terms are listed below, and (b) the following terms have
the following meanings:




          “Accounts Receivable Turnover Ratio” means, on any date of determination, the ratio computed
as of the most recent Calculation Date by dividing (a) the aggregate amount of Credit Sales during
the 12 fiscal months ending on such Calculation Date by (b) the average fiscal month-end amount of
the Aggregate Unpaid Balance of Receivables during the 12 fiscal months ending on such Calculation
Date.




          “Administrator” has the meaning set forth in the preamble to this Agreement.




          “Administrator’s Account” has the meaning set forth in Section 4.5.




          “Advance Rate” means the percentage equal to (a) 100% minus (b) the Reserve Percentage.




1









 








          “Adverse Claim” has the meaning specified in the Receivables Sale Agreement.




          “Affected Party” means each of Lender, any Liquidity Bank, any permitted assignee of Lender or
any Liquidity Bank, any Support Provider and any holder of a participation interest in the rights
and obligations of any Liquidity Bank or Credit Bank under the Liquidity Agreement or the Credit
Agreement, as the case may be, Administrator and any holding company of Bank.




          “Affiliate” of any Person means any other Person that (i) directly or indirectly controls, is
controlled by or is under common control with such Person or (ii) is an officer or director of such
Person. A Person shall be deemed to be “controlled by” another Person if such other Person
possesses, directly or indirectly, power (a) to vote 5% or more of the securities (on a fully
diluted basis) having ordinary voting power for the election of directors or managing partners of
such other Person, or (b) to direct or cause the direction of the management and policies of such
other Person whether by contract or otherwise. The word “Affiliated” has a correlative meaning.




          “Aggregate Dilution Reserve” means, on any date of determination, the sum of the Short
Dilution Reserve and the Long Dilution Reserve.




          “Aggregate Unpaid Balance” means, on any date of determination, the aggregate Unpaid Balance
of all Eligible Receivables at such time.




          “Agreement” means this Amended and Restated Loan Agreement, as it may be amended,
supplemented, restated or otherwise modified from time to time in accordance with the terms hereof.




          “Allocations” has the meaning set forth in Section 3.3.




          “Alternative Rate” means, for any Interest Period, an interest rate per annum equal to either
(a) the LIBOR Rate or (b) if the LIBOR Rate is unavailable for any reason or there is less than
three (3) Business Days’ prior notice to the Liquidity Banks of any funding by them, the Base Rate.




          “Alternative Rate Allocation” has the meaning set forth in Section 3.3.




          “Amortization Event” means any of the events described in Section 10.2.




          “Applicable Margin” has the meaning specified in the Fee Letter.




          “Bank” means SunTrust Bank, a Georgia banking corporation.




          “Bankruptcy Code” means the Bankruptcy Code, 11 U.S.C. § 101, et seq., as amended.




          “Base Rate” means, on any date of determination, a fluctuating rate of interest per annum
equal to the higher of (i) the Prime Rate, or (ii) the Federal Funds Rate most recently determined
by Bank plus 0.50% per annum.




2









 








          “Borrower” has the meaning set forth in the preamble to this Agreement.




          “Borrowing Base” means, on any date of determination, an amount equal to the product of (a)
the Advance Rate as of the more recent to occur of the Interim Calculation Date or the Calculation
Date times (b) the excess, if any, of (i) the Aggregate Unpaid Balance as of the more
recent to occur of the Interim Calculation Date or Calculation Date immediately preceding such date
of determination, over (ii) the Excess Concentration Amount for all Obligors as of the last
Business Day of the most recent Interim Calculation Date or Calculation Date.




          “Borrowing Base Certificate” means a certificate, substantially in the form of Exhibit
D hereto, duly executed by an authorized officer of Servicer.




          “Borrowing Base Deficit” means, on any date of determination, an amount equal to the excess,
if any, of (a) the aggregate principal amount of all outstanding Loans at such time over
(b) the Borrowing Base (as reflected in the most recent Borrowing Base Certificate or Monthly
Report).




          “Borrowing Request” has the meaning set forth in Section 2.2.




          “Business Day” means any day on which (a) Bank is not authorized or required to be closed for
business in Atlanta, Georgia, and The Depository Trust Company of New York is open for business,
and (b) commercial banks in New York City are not authorized or required to be closed and, in the
case of a Rate Setting Date for Loans bearing interest by reference to the LIBOR Rate, banks are
open for business in London, England.




          “Calculation Date” means the last Business Day of each Calculation Period.




          “Calculation Period” means a fiscal month.




          “Charge-Off” means a Receivable not previously deemed a Defaulted Receivable that is
written-off by Servicer or should, in accordance with the Credit and Collection Policy, be
written-off.




          “Closing Date” means the later to occur of (a) November 18, 2004, or (b) the date of the first
Loan hereunder.




          “Collateral” has the meaning set forth in Section 5.1(a).




          “Collateral Review” means a report of Commercial Lending Consultants or another firm
acceptable to Administrator which satisfies the requirements set forth on Schedule 9.1.5.




          “Collections” has the meaning set forth in the Receivables Sale Agreement.




          “Commercial Paper Notes” means short-term promissory notes issued by Lender to fund its Loans
or investments in receivables or other financial assets.




3









 








          “Commercial Paper Rate” means, for any day, the per annum rate equivalent to the weighted
average of the per annum rates paid or payable by the Lender from time to time as interest on or
otherwise (by means of interest rate hedges or otherwise taking into consideration any incremental
carrying costs associated with short-term promissory notes issued by the Lender maturing on dates
other than those certain dates on which the Lender is to receive funds) in respect of the
promissory notes issued by the Lender that are allocated, in whole or in part, by Administrator (on
behalf of the Lender) to fund or maintain any Loan during such period, as determined by
Administrator (on behalf of the Lender) and reported to Borrower, which rates shall reflect and
give effect to (a) the commissions of placement agents and dealers in respect of such promissory
notes, to the extent such commissions are allocated, in whole or in part, to such promissory notes
by Administrator (on behalf of the Lender) and (b) other borrowings by the Lender, including,
without limitation, borrowings to fund small or odd dollar amounts that are not easily accommodated
in the commercial paper market; provided, however, that if any component of such rate is a discount
rate, in calculating the Commercial Paper Rate, Administrator shall, for such component, use the
rate resulting from converting such discount rate to an interest bearing equivalent rate per annum.




          “Commitment Termination Date” means the earliest to occur of (i) the Scheduled Commitment
Termination Date, (ii) the date of any termination of the Lender’s Commitment pursuant to
Section 2.6, (iii) the effective date on which the Lender’s Commitment is terminated
pursuant to Section 10.3, (iv) the Liquidity Termination Date, (v) termination of the
Credit Banks’ commitments under the Credit Agreement, and (vi) the date on which any purchase or
other funding is made pursuant to the Liquidity Agreement.




          “Concentration Account” means each of the accounts designated as a concentration account on
Schedule 8.12 hereto maintained in Borrower’s name.




          “Concentration Account Agreement” means an agreement by and among Borrower, Administrator and
the bank at which a Concentration Account is maintained, in substantially the form of one of the
agreements attached hereto as Exhibit E (or as otherwise approved by Administrator),
specifying the rights of Lender and Administrator in a Concentration Account.




          “Concentration Limit” means:





     (a) for any other Obligor whose short term unsecured debt ratings are at least
both “A-1” from S&P and “P-1” from Moody’s, 4.0% of the Aggregate Unpaid
Balance; or




     (b) for all municipal and state Government Obligors in the aggregate, 3.0% of
the Aggregate Unpaid Balance; and




     (c) for any other Obligor, 2.0% of the Aggregate Unpaid Balance;


provided that (1) the limitations set forth in the foregoing clauses (a), (b) and (c) shall apply
to each specified Obligor and its Affiliates, considered as if they were one and the same Person.




          “Contract” has the meaning set forth in the Receivables Sale Agreement.




4









 








          “Covered Taxes” means Taxes other than Excluded Taxes.




          “CP Allocation” has the meaning set forth in Section 3.3.




          “Credit Advance” means a drawing under a letter of credit issued pursuant to a Credit
Agreement for the account of Lender, a loan to Lender under a Credit Agreement or any other advance
or disbursement of funds to Lender or for Lender’s account pursuant to a Credit Agreement or any
such letter of credit, in each case to the extent such drawing, loan, advance or disbursement has
not been repaid or reimbursed to Credit Bank in accordance with the related Credit Agreement.




          “Credit Agreement” means and includes any program-wide agreement entered into by any Credit
Bank providing for the issuance of one or more letters of credit for the account of Lender, the
issuance of one or more surety bonds for which Lender is obligated to reimburse the applicable
Credit Bank for any drawings hereunder, the sale by Lender to any Credit Bank of receivables or
other financial assets owned or held by Lender (or portions thereof) and/or the making of loans
and/or other extensions of credit to Lender in connection with its commercial paper program,
together with any cash collateral agreement, letter of credit, surety bond or other agreement or
instrument executed and delivered in connection therewith (but excluding the Liquidity Agreement,
or similar agreement, or any voluntary advance agreement).




          “Credit and Collection Policy” has the meaning set forth in the Receivables Sale Agreement




          “Credit Bank” means and includes Bank and any other or additional bank or other Person (other
than Borrower or other customer of Lender or any liquidity provider as such) now or hereafter
extending credit or a purchase commitment to or for the account of Lender or issuing a letter of
credit, surety bond or other instrument, in each case to support any obligations arising under or
in connection with Lender’s commercial paper program.




          “Credit Sales” means, for any period of determination, the Outstanding Balance of all
Receivables originated by the Originators during such period.




          “Days Sales Outstanding Ratio” means, on any date of determination, the ratio computed as of
the most recent Calculation Date by dividing (a) 360 by (b) the Accounts Receivable Turnover Ratio
for the Calculation Period ending on such Calculation Date.




          “Debt” of any Person means, without duplication, (i) all indebtedness of such Person for
borrowed money, (ii) all indebtedness of such Person for the deferred purchase price of property or
services (other than property and services purchased, and expense accruals and deferred
compensation items arising, in the ordinary course of business), (iii) all obligations of such
Person evidenced by notes, bonds, debentures or other similar instruments (other than performance,
surety and appeal bonds arising in the ordinary course of business), (iv) all indebtedness of such
Person created or arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession or sale of such
property), (v) all obligations of such Person under leases which have been or should be, in
accordance with GAAP, recorded as capital leases, to the extent required to be so recorded,




5









 







(vi) all reimbursement, payment or similar obligations of such Person, contingent or otherwise,
under acceptance, letter of credit or similar facilities (other than letters of credit in support
of trade obligations or in connection with workers’ compensation, unemployment insurance, old-age
pensions and other social security benefits in the ordinary course of business), (vii) all net
obligations of such Person in respect of interest rate swap, cap, collar, swaption, option or
similar agreements, (viii) all obligations arising in connection with a sale or other transfer of
any of such Person’s financial assets which are, or are intended to be, classified as loans for
federal tax purposes, (ix) all Debt referred to in clauses (i) through (viii) above
guaranteed directly or indirectly by such Person, or in effect guaranteed directly or indirectly by
such Person through an agreement (A) to pay or purchase such Debt or to advance or supply funds for
the payment or purchase of such Debt, (B) to purchase, sell or lease (as lessee or lessor)
property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make
payment of such Debt or to assure the holder of such Debt against loss in respect of such Debt, (C)
to supply funds to or in any other manner invest in the debtor (including any agreement to pay for
property or services irrespective of whether such property is received or such services are
rendered) or (D) otherwise to assure a creditor against loss in respect of such Debt, and (x) all
Debt referred to in clauses (i) through (viii) above secured by (or for which the
holder of such Debt has an existing right, contingent or otherwise, to be secured by) any lien,
security interest or other charge or encumbrance upon or in property (including, without
limitation, accounts and contract rights) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Debt.




          “Default Rate” has the meaning set forth in Section 3.1(c).




          “Default Ratio” means, on any date of determination, the ratio (expressed as a percentage)
computed as of the most recent Calculation Date by dividing (a) the Aggregate Unpaid Balance of
Receivables that became Defaulted Receivables during the Calculation Period ending on such
Calculation Date, by (b) Credit Sales for the Calculation Period ending 4 fiscal months prior to
such Calculation Date.




          “Defaulted Receivable” means, as of any date of determination, any Receivable (i) which
Servicer has or should have charged-off or deemed uncollectible in accordance with the Credit and
Collection Policy after taking a reasonable time to apply Collections received to applicable
invoices and reconcile the amount of such Receivable, (ii) as to which, as of such date of
determination, any payment, or part thereof, remains unpaid for 121 days or more past the Invoice
Date for such payment, determined by reference to the original contractual payment terms of such
Receivable or (iii) as to which the Obligor thereon has suffered an Event of Bankruptcy.




          “Delinquency Ratio” means, as of any date of determination, the ratio (expressed as a
percentage) computed as of the last day of the Calculation Period then most recently ended, by
dividing (a) the Unpaid Balance of Receivables that are Delinquent Receivables as of the last day
of such Calculation Period by (b) an amount equal to the Aggregate Unpaid Balance as of the last
day of such Calculation Period, minus the aggregate Excess Concentration Amount as of the last day
of such Calculation Period.




6









 








          “Delinquent Receivable” means, as of any date of determination, any Receivable (other than a
Defaulted Receivable) as to which, as of such date of determination, any payment, or part thereof,
remains unpaid for 91 days or more past the Invoice Date for such payment.




          “Deposit Account” means any depositary account of Borrower (other than a Concentration
Account) which is listed on Schedule 8.12 hereto into which proceeds of Receivables are
deposited and from which all available funds are swept each Business Day into a Concentration
Account.




          “Deposit Date” has the meaning set forth in Section 11.2.4(b).




          “Designated Obligor” means, at any time, each Obligor and its Affiliates; provided, however,
that any Obligor shall cease to be a Designated Obligor three (3) Business Days after notice is
given by Administrator.




          “Dilutions” means, for any period of determination, the aggregate amount of returns,
allowances, net credits and any other non-cash reductions to the Credit Sales during such period.




          “Distribution Date” means the 22nd day of each calendar month after the Closing Date (or, if
such day is not a Business Day, the Business Day immediately thereafter).




          “Documents” means all documentation relating to the Receivables including, without limitation,
the Contracts, billing statements and computer records and programs.




          “Dollar(s)” and the sign “$” shall mean lawful money of the United States of America.




          “Eligible Receivable” means each Receivable that meets the following criteria:





     (a) that was created by the applicable Originator in compliance, in all
material respects, with its Credit and Collection Policy, in the regular and
ordinary course of the business of such Originator;




     (b) the Obligor of which is a Designated Obligor;




     (c) that was documented in all material respects in compliance with the
applicable Originator’s standard administration and documentation policies and
procedures;




     (d) is not a Defaulted Receivable or a Delinquent Receivable;




     (e) as to which, at the time of the sale or contribution of such Receivable to
Borrower, the transferring Originator was the sole owner thereof and had good and
marketable title thereto, free and clear of all Adverse Claims, and which was sold
or contributed to Borrower pursuant to the Receivables Sale Agreement free and clear
of all Adverse Claims other than in favor of Administrator;



7









 






     (f) the assignment of which by the applicable Originator to Borrower pursuant
to the Receivables Sale Agreement does not contravene or conflict with any law, rule
or regulation or any contractual or other restriction, limitation or encumbrance,
and the sale or assignment of which does not require the consent of the Obligor
thereof;




     (g) which is denominated and payable in Dollars and is only payable in the
United States of America;




     (h) the Obligor of which is a resident of the United States;




     (i) the Obligor of which is not an officer, director or Affiliate of any
Originator or Borrower and is not the United States government or any agency
thereof;




     (j) that is in full force and effect and constitutes the legally valid and
binding payment obligation of the Obligor with respect thereto, enforceable against
such Obligor in accordance with its terms and is not subject to any right of
rescission, setoff, counterclaim or defense (including the defense of usury) or to
any repurchase obligation or return right;




     (k) that does not contravene any applicable requirements of law (including
without limitation all laws, rules and regulations relating to truth in lending,
fair credit billing, fair credit reporting, fair debt collection practices and
privacy) and which complies with all applicable requirements of law and with respect
to which all consents, licenses, approvals or authorizations of, or registrations or
declarations with, any governmental authority required to be obtained, effected or
given by the related Originator in connection with the creation or the execution,
delivery and performance of such Receivable, have been duly obtained, effected or
given and are in full force and effect;




     (l) that complies with all applicable requirements of the applicable Credit and
Collection Policy;




     (m) as to which each of Borrower’s and Administrator’s (for the benefit of the
Secured Parties) first priority security interest in such Receivable has been
perfected under the applicable Uniform Commercial Code and other applicable laws;




     (n) as to which Servicer is in possession of the related Receivable File;




     (o) which provides for repayment in full of the Unpaid Balance thereof within
30 days of the date of the creation thereof;




     (p) the terms of which have not been modified or waived except as permitted
under the Credit and Collection Policy and this Agreement;



8









 






     (q) which constitutes an “account” or a “payment intangible” under and as
defined in Article 9 of the Uniform Commercial Code of all applicable jurisdictions;




     (r) which is not subject to any dispute, right of rescission, set-off,
counterclaim or any other defense (including defenses arising out of violations of
usury laws) of the applicable Obligor against any Originator or any other Adverse
Claim, and the Obligor thereon holds no right as against such Originator to cause
such Originator to repurchase the goods the sale of which shall have given rise to
such Receivable (except with respect to sale discounts effected pursuant to the
Contract, or goods returned in accordance with the terms of the Contract);




     (s) the applicable Originator has satisfied and fully performed all obligations
on its part with respect to such Receivable required to be fulfilled by it, and no
further action is required to be performed by any Person with respect thereto other
than payment thereon by the applicable Obligor; and




     (t) is not a bill-and-hold Receivable.



          “Event of Bankruptcy” shall be deemed to have occurred with respect to a Person if either:





     (a) a case or other proceeding shall be commenced, without the application or
consent of such Person, in any court, seeking the liquidation, reorganization, debt
arrangement, dissolution, winding up, or composition or readjustment of debts of
such Person, the appointment of a trustee, receiver, custodian, liquidator,
assignee, sequestrator or the like for such Person or all or substantially all of
its assets, or any similar action with respect to such Person under any law relating
to bankruptcy, insolvency, reorganization, winding up or composition or adjustment
of debts and, solely in the case of the Borrower, such case or proceeding shall
continue undismissed, or unstayed and in effect, for a period of 60 consecutive
days; or an order for relief in respect of such Person shall be entered in an
involuntary case under the federal bankruptcy laws or other similar laws now or
hereafter in effect; or




     (b) such Person shall commence a voluntary case or other proceeding under any
applicable bankruptcy, insolvency, reorganization, debt arrangement, dissolution or
other similar law now or hereafter in effect, or shall consent to the appointment of
or taking possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) for such Person or for any substantial part
of its property, or shall make any general assignment for the benefit of creditors,
or shall fail to, or admit in writing its inability to, pay its debts generally as
they become due, or, if a corporation or similar entity, its board of directors
shall vote to implement any of the foregoing.



          “Event of Default” means any of the events described in Section 10.1.




9









 








          “Excess Concentration Amount” means, on any date of determination, with respect to any Obligor
and its Affiliates considered as if they were one and the same Obligor, the amount, if any, by
which the Aggregate Unpaid Balance of such Obligor and its Affiliates at such time exceeds the
Concentration Limit for such Obligor and its Affiliates at such time.




          “Excluded Taxes” means, in the case of any Indemnified Party, taxes imposed on its overall net
income, and franchise taxes and branch profit taxes based on net income, imposed on it by (i) the
jurisdiction under the laws of which such Indemnified Party is organized or (ii) the jurisdiction
in which such Indemnified Party’s principal executive office is located.




          “Expected Long Dilution Ratio” means, (a) on any date of determination prior to February 28,
2009, the average Long Dilution Ratio for the period commencing on March 1,
2008 and ending on the most recent Calculation Date and (b) on any date of determination
thereafter, the rolling twelve-fiscal-month average Long Dilution Ratio for the twelve-fiscal-month
period ending on the most recent Calculation Date.




          “Expected Short Dilution Ratio” means, (a) on any date of determination prior to February 28,
2009, the average Short Dilution Ratio for the period commencing on March 1, 2008 and ending on the
most recent Calculation Date and (b) on any date of determination thereafter, the rolling
twelve-fiscal-month average Short Dilution Ratio for the twelve-fiscal-month period ending on the
most recent Calculation Date.




          “Extension Fee” has the meaning provided in the Fee Letter.




          “Facility Limit” means $60,000,000.




          “Federal Funds Rate” means, for any day, the greater of (i) the average rate per annum as
determined by Bank at which overnight Federal funds are offered to Bank for such day by major banks
in the interbank market, and (ii) if Bank is borrowing overnight funds from a Federal Reserve Bank
that day, the average rate per annum at which such overnight borrowings are made on that day. Each
determination of the Federal Funds Rate by Bank shall be conclusive and binding on Borrower and
Servicer except in the case of manifest error.




          “Fee Letter” has the meaning set forth in Section 3.4.




          “Fees” means all fees and other amounts payable by Borrower to Administrator or Lender
pursuant to the Fee Letter.




          “G&K” means G&K Services, Inc., a Minnesota corporation, and its successors.




          “GAAP” has the meaning set forth in the Receivables Sale Agreement.




          “Government Obligor” means any Obligor that is a Governmental Authority.




          “Governmental Authority” has the meaning set forth in the Receivables Sale Agreement.




          “Indemnified Amounts” has the meaning set forth in Section 14.1.




10









 








          “Indemnified Party” has the meaning set forth in Section 14.1.





     “Interest Period” means, with respect to any Alternative Rate Allocation, (i)
initially, the period commencing on the date of the initial establishment of such
Allocation and ending on (but excluding) the Business Day immediately preceding the
next following Scheduled Interest Payment Date, and (ii) thereafter, each period
commencing on (and including) the Business Day immediately preceding a Scheduled
Interest Payment Date and ending on (but excluding) the Business Day immediately
preceding the next following Scheduled Interest Payment Date; provided, however,
that if any Interest Period for any Allocation that commences before the Commitment
Termination Date would otherwise end on a date occurring after such Commitment
Termination Date, such Interest Period shall end on such Commitment Termination Date
and the duration of each
such Interest Period that commences on or after the Commitment Termination
Date, if any, shall be of such duration as shall be selected by Administrator.



          “Interim Calculation Date” means the last Business Day of the first three fiscal weeks in each
Calculation Period.




          “Invoice Date” means the date of creation of a Receivable.




          “Lender” has the meaning set forth in the preamble to this Agreement.




          “Lender Note” has the meaning set forth in Section 2.7.




          “Lender’s Commitment” has the meaning set forth in Section 2.1.




          “Liabilities” means, with respect to any Person, all obligations of such Person which would,
in accordance with GAAP, be classified on a balance sheet as liabilities, including, without
limitation, (i) Debt secured by liens against property of such Person whether or not such Person is
liable for the payment thereof and (ii) deferred liabilities.




          “LIBOR Rate” means, for any Interest Period, the rate per annum on the Rate Setting Day of
such Interest Period appearing on a Bloomberg L.P. terminal, displayed under the address “US0001M
<Index> Q <Go>” as of 11:00 a.m. (London time) on the Rate Setting Day; provided that
in the event no such rate is shown, the LIBOR Rate shall be the rate per annum (rounded upwards, if
necessary, to the nearest 1/16th of one percent) based on the rates at which Dollar deposits for
one month are displayed on page “LIBOR” of the Reuters Screen as of 11:00 a.m. (London time) on the
Rate Setting Day (it being understood that if at least two (2) such rates appear on such page, the
rate will be the arithmetic mean of such displayed rates); provided further, that in the event
fewer than two (2) such rates are displayed, or if no such rate is relevant, the LIBOR Rate shall
be the rate per annum equal to the average of the rates at which deposits in Dollars are offered by
Administrator at approximately 11:00 a.m. (London time) on the Rate Setting Day to prime banks in
the London interbank market for a one-month period.




          “Liquidity Agreement” means and includes (a) the Amended and Restated Liquidity Asset Purchase
Agreement (regarding G&K Receivables Corp.), dated as of October 1, 2008 among Lender, as borrower,
Bank, as liquidity agent for the Liquidity Banks,




11









 







Administrator, and the Liquidity Banks, or (b)
any other agreement hereafter entered into by Lender providing for the sale by Lender of Loans (or
portions thereof), or the making of loans or other extensions of credit to Lender secured by
security interests in the Loans (or portions thereof), to support all or part of Lender’s payment
obligations under the Commercial Paper Notes or to provide an alternate means of funding Lender’s
investments in accounts receivable or other financial assets, in each case as amended,
supplemented, restated or otherwise modified from time to time.




          “Liquidity Bank” means and includes Bank and the various financial institutions as are, or may
become, parties to the Liquidity Agreement, as purchasers thereunder.




          “Liquidity Premium” has the meaning specified in the Fee Letter.




          “Liquidity Termination Date” means the earlier to occur of (a) September 30, 2009, as such
date may be extended from time to time by the Liquidity Banks in accordance with
the Liquidity Agreement, and (b) the occurrence of an Event of Bankruptcy with respect to
Lender.




          “Loan” means any amount disbursed as principal by Lender to Borrower under this Agreement.




          “Long Dilution Horizon Ratio” means, on any date of determination, the ratio computed by
dividing (a) the sum of (i) Credit Sales for the Calculation Period then most recently ended
plus (ii) 53% of Credit Sales for the Calculation Period immediately preceding such most
recently ended Calculation Period, by (b) an amount equal to the Aggregate Unpaid Balance as of the
last day of such most recently ended Calculation Period, minus the aggregate Excess Concentration
Amount as of the last day of such most recently ended Calculation Period.




          “Long Dilution Ratio” means, as of any date of determination, the ratio (expressed as a
percentage) computed as of the most recent Calculation Date by dividing (a) Long Dilutions for the
Calculation Period ending on such Calculation Date by (b) Credit Sales for the Calculation Period
ending 1 fiscal month prior to such Calculation Date.




          “Long Dilution Reserve” means, on any date of determination, the product computed as of the
most recent Calculation Date, of (a) the sum of (i) the product of (x) the Stress Factor
times (y) the Expected Long Dilution Ratio plus (ii) the product of (x) the
positive difference, if any, between (1) the Long Dilution Spike Rate less (2) the Expected Long
Dilution Ratio times (y) a ratio computed by dividing (1) the Long Dilution Spike Rate by
(2) the Expected Long Dilution Ratio times (b) the Long Dilution Horizon Ratio.




          “Long Dilution Spike Rate” means, (a) on any date of determination prior to February 28, 2009,
the highest Long Dilution Ratio over the period commencing on March 1, 2008 and ending on the most
recent Calculation Date and (b) on any date of determination thereafter, the highest Long Dilution
Ratio over the twelve-fiscal-month period ending on the most recent Calculation Date.




          “Long Dilutions” means, for any period of determination, all Dilutions other than Short
Dilutions.




12









 








          “Loss Horizon Ratio” means, on any date of determination, the ratio computed as of the most
recent Calculation Date by dividing (a) Credit Sales for the most recent four (4) Calculation
Periods, by (b) an amount equal to the Aggregate Unpaid Balance as of such Calculation Date,
minus the aggregate Excess Concentration Amount as of such Calculation Date.




          “Loss Reserve” means, on any date of determination, the product of (a) the highest rolling
3-fiscal-month average Default Ratio over the 12 fiscal months ending on the most recent
Calculation Date, times (b) the Loss Horizon Ratio as of such Calculation Date,
times (c) the Stress Factor.




          “Material Adverse Effect” means a material adverse effect on (a) on the business, property,
condition (financial or otherwise) or results of operations or prospects of (i) Servicer and its
Subsidiaries taken as a whole, or (ii) Borrower, (b) the ability of Borrower or Servicer to perform
its respective obligations under the Agreement or any other Transaction Document to which it is a
party, (c) the legality, validity or enforceability of the Agreement or any other
Transaction Document, (d) the existence, validity, perfection or priority of (i)
Administrator’s (for the benefit of the Secured Parties) security interest in the Collateral, or
(ii) Borrower’s ownership interest in the Receivables; or (e) the validity, enforceability or
collectibility of the Receivables generally or of any material portion of the Receivables.




          “Material Debt” has the meaning specified in Section 11.7.7.




          “Monthly Report” means a report, substantially in the form of Exhibit C or in such
other form acceptable to Administrator, prepared by Servicer as of the Calculation Date then most
recently occurring signed by an authorized officer of Servicer.




          “Moody’s” means Moody’s Investors Service, Inc.




          “Obligations” means all obligations (monetary or otherwise) of Borrower to Lender,
Administrator, any Affected Party or any Indemnified Party and their respective successors,
permitted transferees and assigns arising under or in connection with this Agreement, the Lender
Note and each other Transaction Document, in each case however created, arising or evidenced,
whether direct or indirect, absolute or contingent, now or hereafter existing, or due or to become
due.




          “Obligor” means, with respect to any Receivable, each Person obligated to make payments with
respect to such Receivable, including any guarantor thereof.




          “Organizational Documents” has the meaning specified in the Receivables Sale Agreement.




          “Originator” has the meaning specified in the Receivables Sale Agreement.




          “Outstanding Balance” has the meaning specified in the Receivables Sale Agreement.




          “Permitted Investment” means, at any time:




13









 









     (i) marketable obligations issued by, or the full and timely payment of which
is directly and fully guaranteed or insured by, the United States government or any
other government with an equivalent rating, or any agency or instrumentality thereof
when such marketable obligations are backed by the full faith and credit of the
United States government or such other equivalently rated government, as the case
may be, but excluding any securities which are derivatives of such obligations;




     (ii) time deposits, bankers’ acceptances and certificates of deposit of any
domestic commercial bank or any United States branch or agency of a foreign
commercial bank which (x) has capital, surplus and undivided profits in excess of
$100,000,000 and which has a commercial paper or certificate of deposit rating
meeting the requirements specified in clause (iii) below (or equivalent
rating from the Rating Agencies) or (y) is set forth in a list (which may be updated
from time to time) (A) approved by Administrator and (B) with respect to which a
written statement has been obtained from each of the Rating Agencies to the effect
that
the rating of the Commercial Paper Notes will not be downgraded or withdrawn
solely as a result of the acquisition of such investments;




     (iii) commercial paper which is (x) rated at least as high as the Commercial
Paper Notes by the Rating Agencies, or (y) set forth in a list (which may be updated
from time to time) (A) approved by Administrator and (B) with respect to which a
written statement has been obtained from each of the Rating Agencies to the effect
that the rating of the Commercial Paper Notes will not be downgraded or withdrawn
solely as a result of the acquisition of such investments;




     (iv) secured repurchase obligations for underlying securities of the types
described in clauses (i) and (ii) above entered into with
any bank of the type described in clause (ii) above; and




     (v) freely redeemable shares in money market funds which invest solely in
obligations, bankers’ acceptances, time deposits, certificates of deposit,
repurchase agreements and commercial paper of the types described in
clauses(i) through (iv) above, without regard to the limitations as
to the maturity of such obligations, bankers’ acceptances, time deposits,
certificates of deposit, repurchase agreements or commercial paper set forth below,
which are rated at least “AAm” or “AAmg” or their equivalent by both Rating
Agencies, provided that there is no “r-highlighter” affixed to such rating.



          “Person” has the meaning set forth in the Receivables Sale Agreement




          “Prime Rate” means as of any date of determination, the rate of interest most recently
announced by Bank at its principal office in Atlanta, Georgia as its prime rate (it being
understood that at any one time there shall exist only one such prime rate so announced, which rate
is not necessarily intended to be the lowest rate of interest determined by Bank in connection with
extensions of credit).




14









 








          “Program Documents” means the Liquidity Agreement, the Credit Agreement, the Voluntary Advance
Agreement, the documents under which Administrator performs its obligations with respect to
Lender’s commercial paper program and the other documents to be executed and delivered in
connection therewith, as amended, supplemented, restated or otherwise modified from time to time.




          “Purchase Price Credit” has the meaning set forth in the Receivables Sale Agreement




          “Rate Setting Day” means, for any Interest Period, two (2) Business Days prior to the
commencement of such Interest Period. In the event such day is not a Business Day, then the Rate
Setting Day shall be the immediately preceding Business Day.




          “Rating Agencies” means S&P and Moody’s.




          “Receivable” has the meaning specified in the Receivables Sale Agreement.




          “Receivable File” means with respect to a Receivable, (i) the Contract giving rise to the
Receivable and other evidences of the Receivable including, without limitation, tapes, discs, punch
cards and related property and rights and (ii) each UCC financing statement related thereto, if
any.




          “Receivables Sale Agreement” means the Receivables Sale Agreement, dated as of November 17,
2004, by and among Originators, as sellers, and Borrower, as buyer, as such Receivables Sale
Agreement may be amended, supplemented, restated or otherwise modified from time to time with the
prior written consent of Administrator.




          “Regulatory Change” means, relative to any Affected Party:





     (a) any change in (or the adoption, implementation, change in the phase-in or
commencement of effectiveness of) any: (i) United States federal, state or municipal
law or foreign law applicable to such Affected Party, (ii) regulation,
interpretation, directive, requirement or request (whether or not having the force
of law) applicable to such Affected Party of (A) any court or government authority
charged with the interpretation or administration of any law referred to in
clause (a)(i), or of (B) any fiscal, monetary or other authority having
jurisdiction over such Affected Party, or (iii) GAAP or regulatory accounting
principles applicable to such Affected Party and affecting the application to such
Affected Party of any law, regulation, interpretation, directive, requirement or
request referred to in clause (a)(i) or (a)(ii) above;




     (b) any change in the application to such Affected Party of any existing law,
regulation, interpretation, directive, requirement, request or accounting principles
referred to in clause (a)(i), (a)(ii) or (a)(iii) above; or




     (c) the issuance, publication or release of any regulation, interpretation,
directive, requirement or request of a type described in clause (a)(ii)
above to the effect that the obligations of any Liquidity Bank under the



15









 






Liquidity Agreement are not entitled to be included in the zero percent category of
off-balance sheet assets for purposes of any risk-weighted capital guidelines
applicable to such Liquidity Bank or any related Affected Party.



          For the avoidance of doubt, any change in accounting standards (including, without limitation,
FASB Statements of Financial Account Standards 140 and 156 and FASB Interpretation No. 46R) or the
issuance of any other pronouncement, release or interpretation (or revisions to the foregoing) that
causes or requires the consolidation of all or a portion of the assets and liabilities of Borrower
or Lender with the assets and liabilities of any Affected Party shall constitute a Regulatory
Change with respect to such Affected Party.




          “Related Security” has the meaning specified in the Receivables Sale Agreement.




          “Required Capital Amount” has the meaning specified in the Receivables Sale Agreement.




          “Requirements of Law” for any Person or any of its property shall mean the Organizational
Documents of such Person or any of its property, and any statute, law, treaty, rule or regulation,
or determination of an arbitrator or Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or businesses or to which
such Person or any of its property or businesses is subject, whether federal, state or local.




          “Reserve Floor” means, for any Calculation Period, the sum of (a) 10% plus (b) the product of
(i) the Expected Short Dilution Ratio and (ii) the Short Dilution Horizon Ratio plus (c) the
product of (i) the Expected Long Dilution Ratio and (ii) the Long Dilution Horizon Ratio.




          “Reserve Percentage” means the percentage equal to the greater of (a) the sum of (i) the Loss
Reserve, (ii) the Aggregate Dilution Reserve, (iii) the Yield Reserve, and (iv) the Servicing
Reserve, and (b) the Reserve Floor.




          “S&P” means Standard & Poor’s Ratings Group, a division of The McGraw-Hill Companies, Inc.




          “Scheduled Commitment Termination Date” means September 27, 2011, as extended from time to
time by mutual agreement of the parties hereto.




          “Scheduled Interest Payment Date” means, with respect to each Loan, each Distribution Date
hereafter.




          “Secured Obligations” has the meaning set forth in Section 5.1(b).




          “Secured Parties” means Lender, Administrator and each Indemnified Party, and the successors
and permitted assigns of each of the foregoing.




          “Servicer” means G&K, or any successor Servicer appointed as provided in Section 11.5.




16









 








          “Servicer Event of Default” shall have the meaning specified in Section 11.7.




          “Servicing Fee” means, as to any Calculation Period, the fee payable to Servicer which, so
long as G&K or one of its Affiliates is Servicer, shall be equal to the Servicing Fee Rate divided
by 12 multiplied by the Aggregate Unpaid Balance at the beginning of such Calculation Period. The
Servicing Fee for any successor Servicer shall be equal to the fee reasonably agreed to by
Administrator and such successor Servicer.




          “Servicing Fee Rate” means 2.40%.




          “Servicing Reserve” means, on any date of determination, the product of: (a) the highest Day
Sales Outstanding Ratio during the 12 fiscal months ending on the most recent Calculation Date, (b)
the Stress Factor, (c) 2.40%, and (d) 1/360.




          “Short Dilution Horizon Ratio” means, on any date of determination, the ratio computed by
dividing (a) 33% of Credit Sales for the Calculation Period then most recently ended by (b) an
amount equal to the Aggregate Unpaid Balance as of the last day of such most recently ended
Calculation Period, minus the aggregate Excess Concentration Amount as of the last day of such most
recently ended Calculation Period.




          “Short Dilution Ratio” means, as of any date of determination, the ratio (expressed as a
percentage) computed as of the most recent Calculation Date by dividing (a) Short Dilutions for the
Calculation Period ending on such Calculation Date by (b) Credit Sales for the Calculation Period
ending 1 fiscal month prior to such Calculation Date.




          “Short Dilution Reserve” means, on any date of determination, the product computed as of the
most recent Calculation Date, of (a) the sum of (i) the product of (x) the Stress Factor
times (y) the Expected Short Dilution Ratio plus (ii) the product of (x) the
positive difference, if any, between (1) the Short Dilution Spike Rate less (2) the Expected Short
Dilution Ratio times (y) a ratio computed by dividing (1) the Short Dilution Spike Rate by
(2) the Expected Short Dilution Ratio times (b) the Short Dilution Horizon Ratio.




          “Short Dilution Spike Rate” means, (a) on any date of determination prior to February 28,
2009, the highest Short Dilution Ratio over the period commencing on March 1, 2008 and ending on
the most recent Calculation Date and (b) on any date of determination thereafter, the highest Short
Dilution Ratio over the twelve-fiscal-month period ending on the most recent Calculation Date.




          “Short Dilutions” means, for any period of determination, the aggregate amount of all
Dilutions that are net credit invoices and that have been applied within ten (10) Business Days of
the creation of such Dilutions during such period.




          “Significant Event” means any Amortization Event or Event of Default.




          “Solvent” means with respect to any Person that as of the date of determination both (A)(i)
the then fair saleable value of the property of such Person is (y) greater than the total amount of
liabilities (including contingent liabilities) of such Person and (z) not less than the amount that
will be required to pay the probable liabilities on such Person’s then existing debts




17









 







as they become absolute and matured considering all financing alternatives and potential asset sales
reasonably available to such Person; (ii) such Person’s capital is not unreasonably small in
relation to its business or any contemplated or undertaken transaction; and (iii) such Person does
not intend to incur, or believe (nor should it reasonably believe) that it will incur, debts beyond
its ability to pay such debts as they become due; and (B) such Person is “solvent” within the
meaning given that term and similar terms under applicable laws relating to fraudulent transfers
and conveyances. For purposes of this definition, the amount of any contingent liability at any
time shall be computed as the amount that, in light of all of the facts and circumstances existing
at such time, represents the amount that can reasonably be expected to become an actual or matured
liability.




          “Stress Factor” means 2.0.




          “Subordinated Note” has the meaning specified in the Receivables Sale Agreement.




          “Subsidiary” means, with respect to any Person, a corporation of which such Person and/or its
other Subsidiaries own, directly or indirectly, such number of outstanding shares as have more than
50% of the ordinary voting power for the election of directors.




          “Support Provider” means and includes any entity now or hereafter extending credit or
liquidity support or having a commitment to extend credit or liquidity support to or for
the account of, or to make loans to or purchases from, Lender or issuing a letter of credit,
surety bond or other instrument to support any obligations arising under or in connection with the
commercial paper program of Lender.




          “Taxes” means any and all present or future taxes, duties, levies, imposts, deductions,
charges or withholdings, and any and all liabilities (including but not limited to interest and
penalties) with respect to the foregoing, imposed by any Governmental Authority.




          “Transaction Documents” means this Agreement, the Receivables Sale Agreement, the Lender Note,
the Fee Letter, the Subordinated Note, and the other instruments, certificates, agreements, reports
and documents to be executed and delivered under or in connection with this Agreement or the
Receivables Sale Agreement (except the Program Documents), as any of the foregoing may be amended,
supplemented, amended and restated, or otherwise modified from time to time in accordance with this
Agreement.




          “UCC” means the Uniform Commercial Code as from time to time in effect in the applicable
jurisdiction or jurisdictions.




          “Unmatured Servicer Event of Default” means any event that, if it continues uncured, will,
with lapse of time or notice or lapse of time and notice, constitute a Servicer Event of Default.




          “Unmatured Significant Event” means any event that, if it continues uncured, will, with lapse
of time or notice or lapse of time and notice, constitute a Significant Event.




18









 








          “Unpaid Balance” means, with respect to any Receivable, the sum of (a) the Outstanding Balance
thereof, plus (without duplication), (b) the aggregate amount required to repay in full all
interest, finance, prepayment and other fees or charges of any kind payable in respect of, such
Outstanding Balance.




          “Voluntary Advance Agreement” means the Voluntary Advance Agreement, dated as of March 11,
1999, among Lender, Administrator and Bank, as it may be amended, supplemented, restated or
otherwise modified from time to time.




          “Yield Reserve” means, on any date of determination, the product of (a) the highest Day Sales
Outstanding Ratio during the 12 fiscal months ending on the most recent Calculation Date, (b) the
Stress Factor, (c) the Prime Rate as in effect on such Calculation Date and (d) 1/360.




          Section 1.2 Other Definitional Provisions.





     (a) Unless otherwise specified therein, all terms defined in this Agreement have the
meanings as so defined herein when used in the Lender Note or any other Transaction
Document, certificate, report or other document made or delivered pursuant hereto.




     (b) Each term defined in the singular form in Section 1.1 or elsewhere in this
Agreement shall mean the plural thereof when the plural form of such term is used in this
Agreement, the Lender Note or any other Transaction Document, certificate, report or other
document made or delivered pursuant hereto, and each term defined in the plural
form in Section 1.1 shall mean the singular thereof when the singular form of
such term is used herein or therein.




     (c) The words “hereof”, “herein”, “hereunder” and similar terms when used in this
Agreement shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and article, section, subsection, schedule and exhibit references herein are
references to articles, sections, subsections, schedules and exhibits to this Agreement
unless otherwise specified.



          Section 1.3 Other Terms. All accounting terms not specifically defined herein shall be construed in accordance with
GAAP. All terms used in Article 9 of the UCC and not specifically defined herein, are used herein
as defined in such Article 9.




          Section 1.4 Computation of Time Periods. Unless otherwise stated in this Agreement, in the computation of a period of time from a
specified date to a later specified date, the word “from” means “from and including” and the words
“to” and “until” each means “to but excluding”.





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ARTICLE II.

THE LENDER’S COMMITMENT, BORROWING PROCEDURES AND LENDER

NOTE




          Section 2.1 Lender’s Commitment. On the terms and subject to the conditions set forth in this Agreement, Lender agrees to
make loans to Borrower on a revolving basis from time to time (the “Lender’s Commitment”) before
the Commitment Termination Date in such amounts as may be from time to time requested by Borrower
pursuant to Section 2.2; provided, however, that the aggregate principal amount of all
Loans from time to time outstanding hereunder shall not exceed the lesser of (a) the Facility Limit
and (b) the Borrowing Base. Within the limits of the Lender’s Commitment, Borrower may borrow and
(subject to Section 4.1(a)) prepay and reborrow under this Section 2.1.




          Section 2.2 Borrowing Procedures. Borrower (or Servicer on its behalf) may request a Loan hereunder by giving notice to
Administrator of a proposed borrowing not later than 2:00 p.m. (Atlanta, Georgia time), (a) three
(3) Business Days prior to the proposed date of any borrowing that will accrue interest at the
LIBOR Rate and (b) two (2) Business Days prior to the proposed date of any other borrowing (or such
lesser period of time as Lender may consent). Each such notice (herein called a “Borrowing
Request”) shall be in the form of Exhibit A (or, if acceptable to Administrator, the
information required therein may be given by telephone) and shall include the date and amount of
such proposed borrowing. Any Borrowing Request given by Borrower (or Servicer on its behalf)
pursuant to this Section 2.2 shall be irrevocable and binding on Borrower. Any Borrowing
Request may be delivered by facsimile transmission or by electronic mail message attaching a
portable data format or “.pdf” file containing an image of the signed request, provided, however,
that no such transmission or electronic mail message shall be deemed to be delivered unless and
until Borrower (or Servicer on its behalf) confirms Administrator’s actual receipt thereof by
telephone.




          Section 2.3 Funding. Subject to the satisfaction of the conditions precedent set forth in Article VII
with respect to such Loan and the limitations set forth in Section 2.1, Lender shall make
the proceeds of such requested Loan available to Administrator at its office in Atlanta, Georgia in
immediately available funds on the proposed date of borrowing. Upon receipt by Administrator of
such funds, Administrator will make such funds available to Borrower at such office on such date.
Each borrowing shall be on a Business Day and shall be in an amount of at least $1,000,000 and in
integral multiples of $500,000 (or in such other amounts as Lender or Administrator may approve).




          Section 2.4 Representation and Warranty. Each request for a borrowing pursuant to Section 2.2 shall automatically constitute
a representation and warranty by Borrower to Administrator and Lender that on the requested date of
such borrowing (a) the representations and warranties contained in Article VIII
will be true and correct as of such requested date as though made on such date, (b) no
Significant Event or Unmatured Significant Event has occurred and is continuing or will result from
such borrowing, and (c) after giving effect to such requested borrowing, the aggregate principal
balance of the outstanding Loans hereunder will not exceed the lesser of the Borrowing Base and the
Facility Limit.




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          Section 2.5 Extension of Lender’s Commitment. The Lender’s Commitment shall terminate on the Commitment Termination Date.
Notwithstanding the foregoing:





     (a) Lender or Administrator, on Lender’s behalf, shall use reasonable effort to
give Borrower not less than 60 days’ prior notice of any scheduled termination of
the Credit Banks’ commitments under the Credit Agreement and shall promptly notify
Borrower of any extension thereof,




     (b) Not more than 60 days prior to the Liquidity Termination Date in effect
from time to time, Borrower may request that Lender or Administrator, on Lender’s
behalf, seek the Liquidity Banks’ consent to extend the Liquidity Termination Date
for a period which, when aggregated with the number of days remaining until the
existing Liquidity Termination Date would not cause the Liquidity Banks’ commitments
under the Liquidity Agreement as so extended to exceed 364 days in toto, and




     (c) Not more than 60 days prior to the Scheduled Commitment Termination Date in
effect from time to time, Borrower may request that Lender consent to extend the
Scheduled Commitment Termination Date for an additional 364-day period.


Administrator shall advise Borrower in writing whether each request made pursuant to the foregoing
clause (b) or clause (c) has been granted within thirty (30) days after such request has been made
and whether such consent is subject to satisfaction of any conditions precedent. If any such
request is not granted within thirty (30) days after such request has been made, the Liquidity
Termination Date or Scheduled Commitment Termination Date, as the case may be, shall remain
unchanged. If any such request is granted within thirty (30) days after such request has been
made, the Liquidity Termination Date or Scheduled Commitment Termination Date, as the case may be,
shall be extended as provided in Administrator’s written notice upon satisfaction of any conditions
precedent specified therein (including, without limitation, payment of the Extension Fee).




          Section 2.6 Voluntary Termination of Lender’s Commitment; Reduction of Facility
Limit. Borrower may, in its sole discretion for any reason upon at least 10 days’ notice to
Administrator (with a copy to Lender), terminate the Lender’s Commitment in whole, or, reduce in
part the unused portion of the Facility Limit; provided, however that (a) each such partial
reduction will be in a minimum amount of $5,000,000 or a higher integral multiple of
$1,000,000 and shall not reduce the Facility Limit below $40,000,000, and (b) in connection
therewith Borrower shall comply with Section 3.2(b) and Section 4.1(b).




          Section 2.7 Note. Each Loan from Lender shall be evidenced by a single promissory grid note (herein, as
amended, modified, extended or replaced from time to time, called the “Lender Note”) substantially
in the form set forth in Exhibit B, with appropriate insertions, payable to the order of
Lender. Borrower hereby irrevocably authorizes Administrator in connection with the Lender Note to
make (or cause to be made) appropriate notations on the grid attached to the Lender Note (or on any
continuation of such grid, or at Administrator’s option, in its records), which notations, if made,
shall evidence, inter alia, the



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date of, the outstanding principal of, and the interest rate and
Interest Period applicable to the Loans evidenced thereby. Such notations shall be rebuttably
presumptive evidence of the subject matter thereof, absent manifest error; provided, however, that
the failure to make any such notations shall not limit or otherwise affect any Obligations of
Borrower.




          Section 2.8 Concentration Accounts. Borrower will ensure that each of the Concentration Accounts has been transferred into
Borrower’s name on or before the Closing Date, and will ensure that all available funds from each
of the Deposit Accounts are swept on a daily basis into a Concentration Account.




ARTICLE III.

INTEREST, FEES, ETC.




          Section 3.1 Interest Rates. Borrower hereby promises to pay interest on the unpaid principal amount of each Loan (or
each portion thereof) for the period commencing on the date of such Loan until such Loan is paid in
full, as follows:





     (a) for each day while the making or maintenance of such Loan (or the
applicable portion thereof) by Lender is funded by the issuance of Commercial Paper
Notes of Lender, at a rate per annum equal to the sum of (i) the Commercial Paper
Rate applicable to such day, plus (ii) the Applicable Margin;




     (b) at all times while the making or maintenance of such Loan (or the
applicable portion thereof) by Lender is funded during each Interest Period pursuant
to the Liquidity Agreement or the Voluntary Advance Agreement, at a rate per annum
equal to the sum of (i) the Alternative Rate applicable to such Interest Period,
plus (ii) the Liquidity Premium; and




     (c) notwithstanding the provisions of the preceding clauses (a) and (b), in the
event that a Significant Event or an Unmatured Significant Event has occurred and is
continuing, at a rate per annum (the “Default Rate”) equal to the Base Rate
applicable from time to time (but not less than the interest rate in effect
for such Loan as at the date of such Significant Event or Unmatured Significant
Event), plus the Applicable Margin applicable during the existence and continuance
of an Event of Default. After the date any principal amount of any Loan is due and
payable (whether on the Scheduled Commitment Termination Date, upon acceleration or
otherwise) or after any other monetary Obligation of Borrower arising under this
Agreement shall become due and payable, Borrower shall pay (to the extent permitted
by law, if in respect of any unpaid amounts representing interest) interest (after
as well as before judgment) on such amounts at a rate per annum equal to the Default
Rate. No provision of this Agreement or the Lender Note shall require the payment
or permit the collection of interest in excess of the maximum permitted by
applicable law.



          Section 3.2 Interest Payment Dates. Interest accrued on each Allocation shall be payable, without duplication:




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     (a) on each Scheduled Interest Payment Date prior to the Scheduled Commitment
Termination Date, for the period since the creation of such Allocation (in the case
of the first Scheduled Interest Payment Date thereafter) or since the prior
Scheduled Interest Payment Date (in the case of any subsequent Scheduled Interest
Payment Date);




     (b) on the date of any payment or prepayment (in whole or in part) of principal
outstanding in such Allocation, on the amount paid or prepaid if requested by the
Lender (it being understood that, regardless of any such request by the Lender, any
prepayment shall be accompanied by any amounts owing under Section 6.2);




     (c) in full, on the Scheduled Commitment Termination Date (whether at scheduled
maturity or upon acceleration thereof pursuant to Section 10.3); and




     (d) from and after the Scheduled Commitment Termination Date, upon demand.



          Section 3.3 Interest Allocations. Administrator shall from time to time and in its sole discretion determine whether interest
in respect of the Loans then outstanding, or any portion thereof, shall be calculated by reference
to the Commercial Paper Rate (such portion being herein called a “CP Allocation”) or an Alternative
Rate (such portion being herein called an “Alternative Rate Allocation”, and together with a CP
Allocation individually called an “Allocation”, and collectively, “Allocations”); provided,
however, that, Administrator shall use its reasonable efforts to allocate all or substantially all
of the Loans from Lender to a CP Allocation (it being understood that if Lender is not able to
issue sufficient Commercial Paper Notes to fund all of its assets at such time and no Significant
Event or Unmatured Significant Event has occurred and is continuing, Lender and Administrator
shall, at least, fund the Loans pro rata with its other non-defaulted assets with Commercial Paper
Notes); provided further, however, that Administrator may determine, at any time and in its sole
discretion, that the Commercial Paper Rate is
unavailable or otherwise not desirable, in which case the Loans from Lender will be allocated
to an Alternative Rate Allocation (unless the Default Rate is in effect).




          Section 3.4 Fees. Borrower agrees to pay Administrator and Lender certain Fees in the amounts and on the
dates set forth in the letter agreement executed in connection herewith between Borrower,
Administrator and Lender (as the same may be amended, supplemented, restated or otherwise modified,
the “Fee Letter”).




          Section 3.5 Computation of Interest and Fees. All interest, Fees and Servicing Fees shall be computed on the basis of the actual number
of days (including the first day but excluding the last day) occurring during the period for which
such interest, Fee or Servicing Fee is payable over a year comprised of 360 days.




23









 








ARTICLE IV.

REPAYMENTS AND PREPAYMENTS; DISTRIBUTION OF COLLECTIONS




          Section 4.1 Repayments and Prepayments. Borrower shall repay in full the unpaid principal amount of each Loan on the Scheduled
Commitment Termination Date. Prior thereto, Borrower:





     (a) may, from time to time on any Business Day, make a prepayment, in whole or
in part, of the outstanding principal amount of any Loans; provided, however, that,
(i) unless otherwise consented to by Administrator, all such voluntary prepayments
shall require at least two (2) Business Days’ (or, in the case of a voluntary
prepayment of $10,000,000 or more, at least seven (7) Business Days’) prior written
notice to Administrator, (ii) unless otherwise consented to by Administrator, all
such voluntary partial prepayments shall be in a minimum amount of $1,000,000 and an
integral multiple of $100,000, and (iii) unless and until the aggregate outstanding
principal balance of the Loans hereunder is less than 10% of the highest amount ever
borrowed hereunder, no such prepayment may be made with any funds other than (A)
Collections and (B) the Borrower’s initial paid-in cash capital (if any then
remains);




     (b) shall, on each date when any reduction in the Facility Limit shall become
effective pursuant to Section 2.6, make a prepayment of the Loans in an
amount equal to the excess, if any, of the aggregate outstanding principal amount of
the Loans over the Facility Limit as so reduced;




     (c) shall, immediately upon any acceleration of the Scheduled Commitment
Termination Date of any Loans pursuant to Section 10.3, repay all Loans,
unless, pursuant to Section 10.3(a), only a portion of all Loans is so
accelerated, in which event Borrower shall repay the accelerated portion of the
Loans; and




     (d) shall, immediately upon discovering that a Borrowing Base Deficit exists,
make a prepayment of the Loans in an amount equal to such Borrowing Base Deficit.
Each such prepayment shall be subject to the payment of any amounts required by
Section 6.2.



          Section 4.2 Application of Collections.





     (a) All Collections deposited in each Concentration Account shall be
distributed by Servicer at such times and in the order of priority set forth in this
Section 4.2.




     (b) On each Distribution Date prior to the Commitment Termination Date,
Servicer shall distribute from Collections on deposit in the Concentration Accounts
on such Distribution Date, if any, the following amounts, without duplication in the
following order of priority:



24









 






     first, to the extent due and owing under this Agreement or any other
Transaction Document, the accrued Servicing Fee payable for the prior Calculation
Period (plus, if applicable, the amount of Servicing Fee payable for any
prior Calculation Period to the extent such amount has not been distributed to
Servicer);




     second, interest accrued on the Loans pursuant to Section 3.1 during the period
from the most recent Distribution Date to the current Distribution Date
(plus, if applicable, the amount of interest on the Loans accrued for any
prior period to the extent such amount has not been paid, and to the extent
permitted by law, interest thereon);




     third, to the extent due and owing under any Transaction Document, all Fees
accrued during the prior Calculation Period (plus, if applicable, the amount
of Fees accrued for any prior Calculation Period to the extent such amount has not
been distributed to Lender or Administrator);




     fourth, as a repayment of principal of the Loans, an amount equal to the
Borrowing Base Deficit, if any;




     fifth, to the extent due and owing under any Transaction Document on such
Distribution Date, all other Secured Obligations owed to any Secured Party;




     sixth, to the extent due and owing under this Agreement or any other
Transaction Document on such Distribution Date, all other obligations then payable
by Borrower to Administrator or Lender; and




     seventh, the balance, if any, to Borrower.




     (c) On each Distribution Date from and after the Commitment Termination Date,
Servicer shall distribute from Collections, if any, on deposit in
each Concentration Account on such Distribution Date the following amounts,
without duplication in the following order of priority:




     first, the accrued but unpaid Servicing Fee due and owing on such Distribution
Date;




     second, all other Secured Obligations due and owing on such Distribution Date;
and




     third, once all amounts described in clauses first and second above have been
paid in full, the balance, if any, to Borrower.



          Section 4.3 Application of Certain Payments. Each payment of principal of the Loans shall be applied to such Loans as Borrower shall
direct or, in the absence of such notice or during the existence of a Significant Event or after
the Commitment Termination Date, as Administrator shall determine in its discretion.




25









 








          Section 4.4 Due Date Extension. If any payment of principal or interest with respect to any Loan falls due on a day which
is not a Business Day, then such due date shall be extended to the next following Business Day, and
additional interest shall accrue at the applicable interest rate and be payable for the period of
such extension.




          Section 4.5 Making of Payments. All payments of principal of, or interest on, the Loans and of all Fees, and all amounts to
be deposited by Borrower or Servicer hereunder, shall be made by Borrower or Servicer, as
applicable, no later than 12:00 noon (Atlanta, Georgia time), on the day when due in lawful money
of the United States of America in immediately available funds to Bank, as Administrator,
Reference: Three Pillars Funding LLC/G&K Receivables Corp. Transaction, Account No. 8800171236, ABA
No. 061000104, at Bank’s office at 303 Peachtree Street, NE, 23rd Floor, in Atlanta, Georgia, Attn:
James Watkins (the “Administrator’s Account”). Funds received by Administrator after 12:00 noon
(Atlanta, Georgia time), on the date when due, will be deemed to have been received by
Administrator on its next following Business Day.




ARTICLE V.

SECURITY INTEREST




          Section 5.1 Grant of Security.




          (a) Borrower hereby assigns and pledges to Administrator (for the benefit of the Secured
Parties), and hereby grants to Administrator (for the benefit of the Secured Parties) a security
interest in all of Borrower’s right, title and interest in and to the following, whether now or
hereafter existing and wherever located:





     (i) all Receivables, Related Security and Receivable Files;




     (ii) all of Borrower’s rights, remedies, powers and privileges in respect of
the Receivables Sale Agreement, including, without limitation, its rights to receive
Purchase Price Credits and indemnity payments thereunder;




     (iii) the Concentration Account and all funds on deposit therein, together with
all certificates and instruments, if any, from time to time evidencing such accounts
and funds on deposit; and




     (iv) all products and proceeds (including, without limitation, insurance
proceeds) of, and additions, improvements and accessions to, and books and records
describing or used in connection with, all and any of the property described above
(items (i) through (iii) are collectively referred to as the “Collateral”).



          (b) This grant of security secures the payment and performance of all Obligations of Borrower
now or hereafter existing or arising under, or in connection with, this Loan Agreement, the Lender
Note and each other Transaction Document, whether for principal, interest, costs, Fees, Indemnified
Amounts, expenses or otherwise (all such Obligations of Borrower being called the “Secured
Obligations”).




26









 








          (c) This grant of security shall create a continuing security interest in the Collateral and
shall:





     (i) remain in full force and effect until Administrator’s (for the benefit of
the Secured Parties) interest in the Collateral shall have been released in
accordance with Section 5.4;




     (ii) be binding upon Borrower, its successors, transferees and assigns; and




     (iii) inure, together with the rights and remedies of Administrator (for the
benefit of the Secured Parties) hereunder, to the benefit of Administrator and each
Secured Party and their respective successors, transferees and assigns.



          Section 5.2 Administrator Appointed Attorney-in-Fact. Borrower hereby irrevocably appoints Administrator (for the benefit of the Secured Parties)
as Borrower’s attorney-in-fact, with full authority in the place and stead of Borrower and in the
name of Borrower or otherwise, from time to time in Administrator’s discretion, after the
occurrence and during the continuation of a Significant Event to take any action and to execute any
instrument which Administrator may deem necessary or advisable to accomplish the purposes of the
Transaction Documents, including, without limitation:





     (a) to ask, demand, collect, sue for, recover, compromise, receive and give
acquittance and receipts for moneys due and to become due under or in respect of any
of the Collateral;




     (b) to receive, endorse, and collect any drafts or other instruments, documents
and chattel paper, in connection with clause (a) above;




     (c) to file any claims or take any action or institute any proceedings which
Administrator may deem necessary or desirable for the collection of any of the
Collateral or otherwise to enforce the rights of Administrator (for the benefit of
the Secured Parties) with respect to any of the Collateral;




     (d) to sell, transfer, assign or otherwise deal in or with the Collateral or
any part thereof pursuant to the terms and conditions hereunder; and




     (e) to perform the affirmative obligations of Borrower under the Transaction
Documents. Administrator agrees to give Borrower and Servicer written notice of the
taking of any such action, but the failure to give such notice shall not affect the
rights, power or authority of Administrator with respect thereto. Borrower hereby
acknowledges, consents and agrees that the power of attorney granted pursuant to
this Section 5.2 is irrevocable and coupled with an interest.



          Section 5.3 Administrator May Perform. If Borrower fails to perform any agreement contained herein, Administrator (for the benefit
of the Secured Parties) may itself perform, or cause performance of such agreement, and the
expenses of Administrator incurred in connection therewith shall be payable by Borrower.




27









 








          Section 5.4 Release of Collateral. Administrator’s (for the benefit of the Secured Parties) right, title and interest in the
Collateral shall be released effective on the date occurring after the Commitment Termination Date
on which all Secured Obligations shall have been finally and fully paid and performed.




ARTICLE VI.

INCREASED COSTS, ETC.




          Section 6.1 Increased Costs. If any change in Regulation D of the Board of Governors of the Federal Reserve System, or
any Regulatory Change, in each case occurring after the date hereof:





     (a) shall subject any Affected Party to any tax, duty or other charge with
respect to any Loan made or funded by it, or shall change the basis of taxation of
payments to such Affected Party of the principal of or interest on any Loan owed to
or funded by it or any other amounts due under this Agreement in respect of any Loan
made or funded by it (except for changes in the rate of tax on the overall net
income of such Affected Party imposed by the jurisdiction in which such Affected
Party’s principal executive office is located); or




     (b) shall impose, modify or deem applicable any reserve (including, without
limitation, any reserve imposed by the Board of Governors of the Federal Reserve
System, but excluding any reserve included in the determination of interest rates
pursuant to Section 3.1), special deposit or similar requirement against
assets of, deposits with or for the account of, or credit extended by, any Affected
Party; or




     (c) shall change the amount of capital maintained or required or requested or
directed to be maintained by any Affected Party; or




     (d) shall impose on any Affected Party any other condition affecting any Loan
made or funded by any Affected Party;


and the result of any of the foregoing is or would be to (i) increase the cost to or to impose a
cost on (I) an Affected Party funding or making or maintaining any Loan (including extensions of
credit under the Liquidity Agreement, the Voluntary Advance Agreement or any Credit Advance, or any
commitment of such Affected Party with respect to any of the foregoing), or (II) Administrator for
continuing its or Borrower’s relationship with Lender, (ii) to reduce the amount of any sum
received or receivable by an Affected Party under this Agreement, the Lender Note, the Liquidity
Agreement, the Voluntary Advance Agreement or the Credit Agreement with respect thereto, or (iii)
in the good faith determination of such Affected Party, to reduce the rate of return on the capital
of an Affected Party as a consequence of its obligations hereunder, or under the Liquidity
Agreement, the Voluntary Advance Agreement or Credit Agreement, or arising in connection herewith
or therewith to a level below that which such Affected Party could otherwise have achieved, then
after demand by such Affected Party to Borrower (which demand shall be accompanied by a written
statement setting forth the basis of such demand), Borrower shall pay such Affected Party such
additional amount or amounts as


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will (in the reasonable determination of such Affected Party)
compensate such Affected Party for such increased cost or such reduction. Such written statement
(which shall include calculations in reasonable detail) shall, in the absence of manifest error, be rebuttably presumptive evidence
of the subject matter thereof.




          Section 6.2 Funding Losses. Borrower hereby agrees that upon demand by any Affected Party (which demand shall be
accompanied by a statement setting forth the basis for the calculations of the amount being
claimed), Borrower will indemnify such Affected Party against any net loss or expense which such
Affected Party may sustain or incur (including, without limitation, any net loss or expense
incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such
Affected Party to fund or maintain any Allocation made by Lender to Borrower), as reasonably
determined by such Affected Party, as a result of (a) any payment or prepayment (including any
mandatory prepayment) of any Allocation on a date other than the last day of the Interest Period
for such Allocation, or (b) any failure of Borrower to borrow any Loan on a date specified therefor
in a related Borrowing Request. Such written statement shall, in the absence of manifest error, be
rebuttably presumptive evidence of the subject matter thereof.




          Section 6.3 Withholding Taxes.




          (a) All payments made by Borrower hereunder (or by Servicer, on behalf of Borrower, hereunder)
shall be made free and clear of, and without reduction or withholding for or on account of, any
present or future Covered Taxes, now or hereafter imposed, levied, collected, withheld or assessed
by any Governmental Authority or other taxing authority. If any Covered Taxes are required to be
withheld from any amounts payable to Administrator or Lender, the amounts so payable to
Administrator or Lender shall be increased to the extent necessary to yield to Administrator or
Lender (after payment of all such Covered Taxes) all such amounts payable hereunder at the rates or
in the amounts specified herein. Whenever any Covered Taxes are payable by Borrower, as promptly
as possible thereafter, Borrower shall send to Administrator for its own account or for the account
of Lender, as the case may be, a certified copy of an original official receipt received by
Borrower showing payment thereof. If Borrower fails to pay any Covered Taxes when due to the
appropriate taxing authority or fails to remit to Administrator the required documentary evidence,
Borrower shall indemnify Administrator and Lender for such Covered Taxes and any incremental taxes
that may become payable by Administrator or Lender as a result of any such failure.




          (b) At least five (5) Business Days prior to the first date on which any payments, including
discount or Fees, are payable hereunder for the account of Lender, if Lender is not organized under
the laws of the United States, Lender agrees to deliver to each of Borrower and Administrator two
(2) duly completed copies of (i) United States Internal Revenue Service Form W-8BEN or W-8ECI (or
successor applicable form) certifying that such Lender is entitled to receive payments hereunder
without deduction or withholding of any United States federal income taxes or (ii) United States
Internal Revenue Service Form W-8 or W-9 (or successor applicable form) to establish an exemption
from United States backup withholding tax. Lender shall replace or update such forms as is
necessary or appropriate to maintain any applicable exemption or as is requested by Administrator
or Borrower. If Lender does not deliver the forms described in this Section 6.3(b),
Borrower or Administrator shall withhold United States federal



29









 






income taxes from any payments made hereunder at the statutory rate applicable to payments
made to Lender. Lender agrees to indemnify and hold Borrower and Administrator harmless for any
United States federal income taxes, penalties, interest and other costs and losses incurred or
payable by Borrower or Administrator as a result of either (x) Lender’s failure to submit any form
required to be provided pursuant to this Section 6.3(b) or (y) Borrower’s or
Administrator’s reliance on any form that Lender has provided pursuant to this Section
6.3(b).




ARTICLE VII.

CONDITIONS TO BORROWING




          Section 7.1 Initial Loan. The obligation of Lender to make the initial Loan hereunder is subject to the conditions
precedent that Administrator shall have received all of the following, each duly executed and dated
the date of such Loan (or such earlier date as shall be satisfactory to Administrator), in form and
substance satisfactory to Administrator:





          7.1.1 Resolutions. Certified copies of resolutions of the Boards of Directors of Borrower and
the Originators authorizing or ratifying the execution, delivery and performance,
respectively, of the Transaction Documents to which it is a party, together with a
certified copy of its Organizational Documents.




          7.1.2 Consents, etc. Certified copies of all documents evidencing any necessary consents and
governmental approvals (if any) with respect to the Transaction Documents.




          7.1.3 Incumbency and Signatures. A certificate of the Secretary or an Assistant Secretary of Borrower,
Servicer and each Originator certifying the names of its officer or officers
authorized to sign the Transaction Documents to which it is a party.




          7.1.4 Good Standing Certificates. Good standing certificates for Borrower, Servicer and each Originator issued
as of a recent date acceptable to Administrator by (a) the Secretary of State of the
jurisdiction of such Person’s organization, and (b) the Secretary of State of the
jurisdiction where such Person’s chief executive office and principal place of
business are located.




          7.1.5 Financing Statements. (i) Acknowledgment copies of proper financing statements (Form UCC-1), filed
on or prior to the date of the initial Loan, naming Borrower as debtor and
Administrator (for the benefit of the Secured Parties) as the secured party as may
be necessary or, in the opinion of Administrator, desirable under the UCC to
perfect Administrator’s (for the benefit of the Secured Parties) security interest
in the Collateral, (ii) acknowledgment copies of proper financing statements, filed
on or prior to the date of the initial Loan, naming each Originator, as
seller/debtor, Borrower as assigning secured party and Administrator as total
assignee of secured party as may be necessary or, in the opinion of Administrator,
desirable under the UCC to perfect Borrower’s ownership interest in the Receivables,
and (iii) executed copies of proper Uniform Commercial Code Form UCC-3 termination
statements, if any, necessary to



30









 







release all liens and other Adverse Claims of any
Person in the Collateral granted by Borrower or any Originator.




          7.1.6 Search Reports. A written search report provided to Administrator by a search service
acceptable to Administrator listing all effective financing statements that name
Borrower or any Originator as debtor or assignor and that are filed in the
jurisdictions in which filings were made pursuant to Section 7.1.5 above and
in such other jurisdictions that Administrator shall reasonably request, together
with copies of such financing statements (none of which shall cover any Collateral
or interests therein or proceeds of any thereof), and tax and judgment lien search
reports from a Person satisfactory to Administrator showing no evidence of such lien
filed against Borrower or any Originator.




          7.1.7 Fee Letter; Payment of Fees. The Fee Letter, together with all outstanding Fees payable pursuant to the
Fee Letter.




          7.1.8 Receivables Sale Agreement. (i) Duly executed and delivered counterparts of each of the Receivables Sale
Agreement and all documents, agreements and instruments contemplated thereby, and
(ii) evidence that each of the conditions precedent to the execution and delivery of
the Receivables Sale Agreement has been satisfied to Administrator’s satisfaction,
and that the initial assignments and transfers under the Receivables Sale Agreement
have been consummated.




          7.1.9 Opinions of Counsel. Opinions of counsel to Borrower, Servicer and each Originator in form and
substance satisfactory to Administrator.




          7.1.10 Lender Note. The Lender Note, duly executed by Borrower.




          7.1.11 Borrowing Base Certificate. A Borrowing Base Certificate, duly executed by an officer of Servicer on
Borrower’s behalf showing a calculation of the Borrowing Base as of the date of such
initial Loan.




          7.1.12 Concentration Account Agreements. A Concentration Account Agreement with respect to each Concentration
Account, duly executed by all of the parties thereto.




          7.1.13 Releases. Releases and termination statements duly executed by each Person, other than
Borrower, that has an interest in the Receivables.




          7.1.14 Other. Such other documents, certificates and opinions as Administrator may
request.



          Section 7.2 All Loans. The making of each Loan, including without limitation, the initial Loan, is subject to the
conditions precedent that:





          7.2.1 No Default, etc. (i) No Significant Event, Unmatured Significant Event or Servicer Event of
Default has occurred and is continuing or will result



31









 







from the making of such Loan,
(ii) the representations and warranties of Borrower contained in Article
VIII are true and correct as of the date of such requested Loan, with the same
effect as though made on the date of such Loan, and (iii) after giving effect to
such Loan, the aggregate unpaid balance of the Loans will not exceed the Borrowing
Base or the Facility Limit. By making a Borrowing Request, Borrower shall be deemed
to have represented and warranted that items (i), (ii) and
(iii) in the preceding sentence are true and correct.




          7.2.2 Borrowing Request, etc. Administrator shall have received a Borrowing Request for such Loan in
accordance with Section 2.2, together with all items required to be
delivered in connection therewith.




          7.2.3 Commitment Termination Date. The Commitment Termination Date shall not have occurred.




          7.2.4 Collateral Review. Administrator shall have received the most-recent Collateral Review pursuant
to Section 9.1.5(c).




          7.2.5 Accounts. The Concentration Accounts shall be subject to valid and perfected first
priority security interest in favor of Administrator for the benefit of the Secured
Parties. Each of the Concentration Accounts shall have been transferred into
Borrower’s name, and each of the Deposit Accounts shall be subject to an automatic
sweep each Business Day into a Concentration Account.



ARTICLE VIII.

REPRESENTATIONS AND WARRANTIES




          In order to induce Lender and Administrator to enter into this Agreement and, in the case of
Lender, to make Loans hereunder, Borrower hereby represents and warrants to Administrator and
Lender as to itself as follows, and Servicer hereby represents and warrants to Administrator and
Lender as to itself as follows:




          Section 8.1 Existence and Power. Servicer is a corporation duly organized under the laws of the State of Minnesota.
Borrower is a corporation duly organized under the laws of the State of Minnesota. Each of
Servicer and Borrower is validly existing and in good standing under the laws of its state of
organization and is duly qualified to do business and is in good standing as a foreign corporation,
and has and holds all power and all governmental licenses, authorizations, consents and approvals
required to carry on its business in each jurisdiction in which its business is conducted except
where the failure to so qualify or so hold could not reasonably be expected to have a Material
Adverse Effect.




          Section 8.2 Power and Authority; Due Authorization, Execution and Delivery. The execution and delivery by each of Servicer and Borrower of this Agreement and each
other Transaction Document to which it is a party, and the performance of its obligations hereunder
and thereunder, and Borrower’s use of the proceeds of the Loans made hereunder, are within its
powers and authority and have been duly authorized by all necessary corporate action on its part.
This Agreement and each other Transaction Document to which Servicer or Borrower is a party has
been duly executed and delivered by Servicer or Borrower, as the case may be.




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          Section 8.3 No Conflict. The execution and delivery by each of Borrower and Servicer of this Agreement and each
other Transaction Document to which it is a party, and the performance of its obligations hereunder
and thereunder do not contravene or violate (i) its Organizational Documents, (ii) any law, rule or
regulation applicable to it, (iii) any restrictions under any agreement, contract or instrument to
which it is a party or by which it or any of its property is bound, or (iv) any order, writ,
judgment, award, injunction or decree binding on or affecting it or
its property, and do not result in the creation or imposition of any Adverse Claim on its
assets (except as created under the Transaction Documents) except, in any case, where such
contravention or violation could not reasonably be expected to have a Material Adverse Effect; and
no transaction contemplated hereby requires compliance with any bulk sales act or similar law.




          Section 8.4 Governmental Authorization. Other than the filing of the financing statements required hereunder, no authorization or
approval or other action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution and delivery by Servicer or Borrower of this
Agreement and each other Transaction Document to which it is a party and the performance of its
obligations hereunder and thereunder.




          Section 8.5 Actions, Suits. There is no litigation, arbitration, governmental investigation, proceeding or inquiry
pending or, to the knowledge of any of their officers, threatened against or affecting Borrower,
Servicer or any of Servicer’s Subsidiaries which could reasonably be expected to have a Material
Adverse Effect or which seeks to prevent, enjoin or delay the making or repayment of any Loans.
Other than any liability incident to any litigation, arbitration or proceeding which could not
reasonably be expected to have a Material Adverse Effect, Servicer and its Subsidiaries have no
material contingent obligations not provided for or disclosed in the footnotes to its financial
statements delivered prior to the Closing Date.




          Section 8.6 Binding Effect. This Agreement and each other Transaction Document to which G&K (as Servicer) or Borrower
is a party constitute the legal, valid and binding obligations of G&K or Borrower, as the case may
be, enforceable against it in accordance with their respective terms, except as such enforcement
may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating
to or limiting creditors’ rights generally and by general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).




          Section 8.7 Accuracy of Information. All information heretofore furnished by Borrower, Servicer or any of their respective
Affiliates for purposes of or in connection with this Agreement, any of the other Transaction
Documents or any transaction contemplated hereby or thereby is, and all such information hereafter
furnished by Borrower, Servicer or any of their respective Affiliates will be, true and accurate in
every material respect on the date such information is stated or certified and does not and will
not contain any material misstatement of fact or omit to state a material fact or any fact
necessary to make the statements contained therein, taken as a whole, not misleading.




33









 








          Section 8.8 Margin Regulations; Use of Proceeds. Borrower is not engaged in the business of extending credit for the purpose of purchasing
or carrying margin stock, and no proceeds of any Loans, directly or indirectly, will be used for a
purpose that violates, or would be inconsistent with, Regulations T, U and X promulgated by the
Federal Reserve Board from time to time. No portion of the proceeds of any Loan hereunder will be
used for a purpose that violates, or would be inconsistent with, any other law, rule or regulation
applicable to Borrower.




          Section 8.9 Good Title. Borrower (i) is the legal and beneficial owner of the Receivables and (ii) is the legal and
beneficial owner of the Related Security with respect thereto or possesses a valid and perfected
security interest therein, in each case, free and clear of any Adverse Claim, except as created by
the Transaction Documents and except for the GE Lighting Lien. There have been duly filed all
financing statements or other similar instruments or documents necessary under the UCC (or any
comparable law) of all appropriate jurisdictions to perfect Borrower’s ownership interest in each
such Receivable, its Collections and the Related Security.




          Section 8.10 Perfection. This Agreement is effective to create a valid security interest in the Collateral favor of
Administrator, for the benefit of the Secured Parties. There have been duly filed all financing
statements or other similar instruments or documents necessary under the UCC (or any comparable
law) of all appropriate jurisdictions to perfect Administrator’s security interest, for the benefit
of the Secured Parties, in the Collateral. The Collateral is free of any Adverse Claim except as
created under the Transaction Documents.




          Section 8.11 Places of Business and Locations of Records. The principal place of business and chief executive office of each of Borrower and Servicer
is located at its address referred to on Schedule 15.3 to this Agreement (or at such other
locations, notified to Administrator in jurisdictions where all action required to perfect or
maintain the perfection of Administrator’s security interest in the Collateral has been taken).
Borrower’s Federal Employer Identification Number is20-1571890 , and its Minnesota organizational
identification number is 1028127-2.




          Section 8.12 Accounts. Borrower represents and warrants that (a) Schedule 8.12 hereto is a complete and
accurate listing, as of the Closing Date, of the Deposit Accounts and Concentration Accounts, (b)
each of the Concentration Accounts has been transferred into Borrower’s name, and (c) each of the
banks maintaining a Deposit Account has been instructed to sweep all available cash in such Deposit
Account to a Concentration Account each Business Day. Neither Servicer nor Borrower has granted
any interest in any Deposit Account or Concentration Account to any Person other than, in the case
of the Concentration Accounts, Administrator. Administrator has exclusive control of the
Concentration Accounts.




          Section 8.13 No Material Adverse Effect. Since March 27, 2004, no event has occurred that could reasonable be expected to have a
Material Adverse Effect.




          Section 8.14 Names. The name in which Borrower has executed this Agreement is identical to the name of Borrower
as indicated on the public record of the State of Minnesota. Borrower has not used any legal name,
trade name or assumed name other than the name in which it has executed this Agreement.




34









 








          Section 8.15 Ownership of Borrower; No Subsidiaries. All of the issued and outstanding equity interests of Borrower are owned beneficially and
of record by G&K, free and clear of any Adverse Claim. Such equity interests are validly issued,
fully paid and nonassessable, and there are no options, warrants or other rights to acquire
securities of Borrower. Borrower has no Subsidiaries.




          Section 8.16 Not a Holding Company or an Investment Company. Neither Borrower nor Servicer is a “holding company” or a “subsidiary holding company” of a
“holding company” within the meaning of the Public Utility Holding Company Act of 1935, as amended,
or any successor statute. Neither Borrower nor Servicer is an “investment company” within the
meaning of the Investment Company Act of 1940, as amended, or any successor statute.




          Section 8.17 Compliance with Credit and Collection Policy. Each of Borrower and Servicer has complied in all material respects with the applicable
Credit and Collection Policy with regard to each Receivable and the related Contract, and has not
made any change to such Credit and Collection Policy, except such material change as to which
Administrator has given its prior written consent.




          Section 8.18 Solvency. Both before and after giving effect to each Loan, Borrower is Solvent.




          Section 8.19 Eligible Receivables. Each Receivable included in the Borrowing Base as an Eligible Receivable as of the date of
(a) any Borrowing Base Certificate, (b) any Monthly Report or (c) the making of any Loan, is an
Eligible Receivable on such date.




          Section 8.20 Accuracy of Information. All information heretofore furnished by, or on behalf of, Borrower or Servicer to
Administrator or Lender in connection with any Transaction Document, or any transaction
contemplated thereby, is true and accurate in every material respect (without omission of any
information necessary to prevent such information from being materially misleading).




          Section 8.21 Sales by Originators. Each sale of Receivables by an Originator to Borrower shall have been effected under, and
in accordance with the terms of, the Receivables Sale Agreement, including the payment by Borrower
to such Originator of an amount equal to the purchase price therefor as described in the
Receivables Sale Agreement, and each such sale shall have been made for “reasonably equivalent
value” (as such term is used under § 548 of the United States Bankruptcy Code) and not for or on
account of “antecedent debt” (as such term is used under § 547 of the United States Bankruptcy
Code) owed by Borrower to such Originator.




ARTICLE IX.

COVENANTS OF BORROWER AND SERVICER




          Section 9.1 Affirmative Covenants. From the date hereof until the first day, following the Commitment Termination Date, on
which all Obligations shall have been finally and fully paid and performed, each of Borrower and
Servicer hereby covenants and agrees with Lender and Administrator that as to itself, as follows:




35









 









          9.1.1 Compliance with Laws, Etc. Each of Borrower and Servicer will comply in all material respects with all
applicable laws, rules, regulations and orders of all governmental authorities
(including those which relate to the Receivables).




          9.1.2 Preservation of Legal Existence. Each of Borrower and Servicer will preserve and maintain its existence
rights, franchises and privileges in the jurisdiction of its organization, and
qualify and remain qualified in good standing as a foreign entity in the
jurisdiction where its principal place of business and its chief executive office
are located and in each other jurisdiction where the failure to preserve and
maintain such existence, rights, franchises, privileges and qualifications would
have a Material Adverse Effect.




          9.1.3 Performance and Compliance with Receivables. Each of Borrower and Servicer will timely and fully perform and comply with
all provisions, covenants and other promises required to be observed by it under the
Receivables and all other agreements related to such Receivables.




          9.1.4 Credit and Collection Policy. Each of Borrower and Servicer will comply in all material respects with the
Credit and Collection Policy.




          9.1.5 Reporting Requirements. Each of Borrower and Servicer will furnish to Administrator and Lender:




               (a) Financial Statements.




     (i) as soon as available, and in any event within 95 days after the end of each
year, a copy of the balance sheet of Borrower, in each case, as at the end of such
year, together with the related statement of earnings for such year, certified by
the chief executive officer, chief financial officer or controller of Borrower
(which certification shall state that such balance sheet and statement or earnings
fairly present the financial condition and results of operations for such year in
accordance with GAAP except for the absence of footnotes), together with a
certificate of such officer stating that such officer has obtained no knowledge that
a Significant Event or Unmatured Significant Event has occurred and is continuing,
or if, in the opinion of such officer, such a Significant Event or Unmatured
Significant Event has occurred and is continuing, a statement as to the nature
thereof;




     (ii) as soon as available and in any event within 95 days after the end of each
year, a balance sheet of G&K as of the end of such year and statements of income and
retained earnings and of source and application of funds of G&K, along with
consolidating statements, for the period commencing at the end of the previous year
and ending with the end of such year, in each case setting forth comparative figures
for the previous year, certified without material qualification in a manner
satisfactory to Administrator by nationally recognized independent public
accountants; and



36









 






     (iii) as soon as available and in any event within 50 days after the end of
each fiscal quarter, quarterly balance sheets and quarterly statements of source and
application of funds and quarterly statements of income and retained earnings of
G&K, certified by the chief executive or financial officer or controller of G&K
(which certification shall state that such balance sheets and statements fairly
present the financial condition and results of operations for such fiscal quarter,
subject to year-end audit adjustments), delivery of which balance sheets and
statements shall be accompanied by a certificate of such chief financial officer or
controller to the effect that no Significant Event or Unmatured Significant Event
has occurred and is continuing.




               (b) Borrowing Base Certificates and Monthly Reports.




     (i) [intentionally omitted]; and




     (ii) On or before the second Business Day preceding each Distribution Date,
Servicer shall prepare and deliver to Administrator and Lender a Monthly Report as
of the last day of the fiscal month then most recently ended, signed by an
authorized officer of Servicer.




               (c) Significant Events. As soon as possible but in any event within one (1) Business Day after any
officer of Borrower or Servicer becomes aware of the occurrence of a Significant
Event or an Unmatured Significant Event, Borrower or Servicer, as the case may be,
will deliver to Administrator and Lender an officer’s certificate of Borrower
setting forth details of such event and the action that Borrower or Servicer, as the
case may be, proposes to take with respect thereto.




               (d) Servicing Certificate. Servicer shall deliver, or cause to be delivered, to Administrator, on or
before the date that is 95 days after the end of each year, an officer’s certificate
signed by the president, chief executive officer or any vice president of Servicer,
dated as of the last day of the preceding year, stating that (a) a review of the
activities of Servicer during the preceding 12-fiscal-month period and of its
performance under this Agreement has been made under such officer’s supervision and
(b) to the best of such officer’s knowledge, based on such review, Servicer has
fulfilled its obligations under the Agreement throughout such year and has complied
in all respects with the Credit and Collection Policy, or, if there has been a
default in the fulfillment of any such obligation, specifying each such default
known to such officer and the nature and status thereof.




               (e) Collateral Review. On or before the Closing Date, and annually thereafter, a report of
Commercial Lending Consultants or another firm acceptable to Administrator (each
such report, a “Collateral Review”) which satisfies the requirements set forth on
Schedule 9.1.5.




               (f) Other. Promptly, from time to time, such other information,



37









 







documents, records or reports respecting the Collateral, the Receivables or the condition or operations,
financial or otherwise, of Borrower or any Originator as Administrator may from time
to time reasonably request in order to protect the interests of Administrator or
Lender under or as contemplated by this Agreement or the other Transaction
Documents.




          9.1.6 Use of Proceeds. Borrower will use the proceeds of the Loans made hereunder solely in
connection with the acquisition or funding of Receivables.




          9.1.7 Separate Legal Entity. Borrower hereby acknowledges that Lender and Administrator are entering into
the transactions contemplated by this Agreement and the other Transaction Documents
in reliance upon Borrower’s identity as a legal entity separate from any other
Person. Therefore, from and after the date hereof, Borrower shall take all
reasonable steps to continue Borrower’s identity as a separate legal entity and to
make it apparent to third Persons that Borrower is an entity with assets and
liabilities distinct from those of any other Person, and is not a division of any
Originator or other Person. Without limiting the generality of the foregoing and in
addition to and consistent with the covenant set forth in Section 9.1.2,
Borrower shall take such actions as shall be required in order that:




     (a) Borrower will be a limited purpose company whose primary activities are
restricted in its certificate of organization to owning the Receivables and Related
Security and financing the acquisition thereof and conducting such other activities
as it deems necessary or appropriate to carry out its primary activities;




     (b) Not less than one member of Borrower’s Board of Directors (each, an
“Independent Director”) shall be an individual who is not, and during the past five
(5) years has not been, a director, officer, employee or 5% beneficial owner of the
outstanding common stock of any Person or entity beneficially owning any outstanding
shares of common stock of G&K or any Affiliate thereof; provided, however, that an
individual shall not be deemed to be ineligible to be an Independent Director solely
because such individual serves or has served in the capacity of an “independent
director” or similar capacity for special purpose entities formed by G&K or any of
its Affiliates. The certificate of organization of Borrower shall provide that (i)
the Board of Directors shall not approve, or take any other action to cause the
filing of, a voluntary bankruptcy petition with respect to Borrower unless the
Independent Directors shall approve the taking of such action in writing prior to
the taking of such action, and (ii) such provision cannot be amended without the
prior written consent of the Independent Directors;




     (c) Any employee, consultant or agent of Borrower will be compensated from
funds of Borrower, as appropriate, for services provided to Borrower;



38









 






     (d) Borrower will allocate and charge fairly and reasonably overhead expenses
shared with any other Person. To the extent, if any, that Borrower and any other
Person share items of expenses such as legal, auditing and other professional
services, such expenses will be allocated to the extent practical on the basis of
actual use or the value of services rendered, and otherwise on a basis reasonably
related to the actual use or the value of services rendered; Borrower’s operating
expenses will not be paid by any other Person except as permitted under
the terms of this Agreement or otherwise consented to by Administrator and
Lender;




     (e) Borrower’s books and records will be maintained separately from those of
any other Person;




     (f) All audited financial statements of any Person that are consolidated to
include Borrower will contain detailed notes clearly stating that (A) all of
Borrower’s assets are owned by Borrower, and (B) Borrower is a separate legal
entity;




     (g) Borrower’s assets will be maintained in a manner that facilitates their
identification and segregation from those of any other Person;




     (h) Borrower will strictly observe corporate formalities in its dealings with
all other Persons, and funds or other assets of Borrower will not be commingled with
those of any other Person;




     (i) Borrower shall not, directly or indirectly, be named or enter into an
agreement to be named, as a direct or contingent beneficiary or loss payee, under
any insurance policy with respect to any amounts payable due to occurrences or
events related to any other Person; and




     (j) Any Person that renders or otherwise furnishes services to Borrower will be
compensated thereby at market rates for such services it renders or otherwise
furnishes thereto. Borrower will not hold itself out to be responsible for the
debts of any other Person or the decisions or actions respecting the daily business
and affairs of any other Person.




          9.1.8 Adverse Claims on Receivables. Each of Borrower and Servicer will, and will require the Originators to,
defend each Receivable against all claims and demands of all Persons at any time
claiming the same or any interest therein adverse to Administrator and the Secured
Parties.




          9.1.9 Further Assurances. At its expense, each of Borrower and Servicer will perform all acts and
execute all documents reasonably requested by Administrator at any time to evidence,
perfect, maintain and enforce the title or the security interest of Administrator in
the Receivables and the priority thereof. Each of Borrower and Servicer will, at
the reasonable request of Administrator, execute and deliver financing statements
relating to or covering the Collateral and, where permitted by law, Borrower shall
authorize Administrator to file one



39









 







or more financing statements signed only by
Administrator. Borrower shall, and shall cause each Originator to, cause its
computer records, master data processing records and other books and records
relating to the Receivables to be marked, with a legend
stating that the Receivables have been sold to Borrower and that the Collateral
has been pledged to Administrator for the benefit of the Secured Parties.




          9.1.10 Servicing. Servicer shall use all reasonable measures to prevent or minimize any loss
being realized on a Receivable and shall take all reasonable steps to recover the
full amount of such loss. Borrower and Servicer shall, at their own expense, take
such steps as are necessary to maintain perfection of the security interest created
by each Receivable in the related goods and merchandise subject thereto. Servicer
shall use its best efforts, consistent with prudent servicing procedures, to
repossess or otherwise convert the ownership of the goods or merchandise securing
any Receivable which becomes a Defaulted Receivable. Servicer shall follow such
practices and procedures for servicing the Receivables as would be customary and
usual for a prudent servicer under similar circumstances, including using reasonable
efforts to realize upon any recourse to the Obligors and selling the goods securing
a Receivable at a public or private sale.




          9.1.11 Inspection. Each of Borrower and Servicer shall permit Lender, Administrator or their
duly authorized representatives, attorneys or auditors to inspect the Receivables,
the Receivable Files, Documents and the related accounts, records and computer
systems, software and programs used or maintained by Borrower or Servicer at such
times as Lender or Administrator may reasonably request. Upon instructions from
Lender or Administrator, each of Borrower and Servicer shall release any document in
its possession related to any Receivables to Lender or Administrator, as the case
may be, or to Servicer, if requested by Lender or Administrator.




          9.1.12 Cooperation. Each of Borrower and Servicer shall provide such cooperation, information
and assistance, and prepare and supply Administrator with such data regarding the
performance by the Obligors of their obligations under the Receivables and the
performance by Borrower and Servicer of their respective obligations under the
Transaction Documents, as may be reasonably requested by Administrator from time to
time.




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          9.1.13 Facility. Servicer shall maintain its facility from which it services the Receivables
in its present condition, ordinary wear and tear excepted, or such other facility of
similar quality, security and safety as Servicer may select from time to time.
Servicer shall make all property tax payments, lease payments and all other payments
with respect to such facility. Servicer shall (i) ensure that Administrator shall
have complete and unrestricted access, at Servicer’s expense, to such facility and
all computers and other systems relating to the servicing of the Receivables and all
persons employed at such facility, (ii) use its best efforts to retain the employees
based at such facility to provide assistance to Administrator and (iii) continue to
store on a daily basis all back-up files relating to the Receivables and the
servicing of the Receivables at Servicer’s facilities, or such other storage
facility of similar quality, security and safety as Servicer may select from time to
time, in the case of each of clauses (i), (ii) and
(iii) until the receipt of all Collections in respect of all Receivables or
all Receivables have been written off in accordance with the Credit and Collection
Policy.




          9.1.14 Accounts. Borrower shall not maintain any bank accounts other than the accounts
described on Schedule 8.12. Except as set forth in the last sentence of
Section 11.2.3(b), neither Borrower nor Servicer shall make, nor will either
of them permit any Originator to make, any change in its instructions to banks
maintaining Deposit Accounts regarding the daily sweep of available balances thereto
into a Concentration Account. Neither Borrower nor Servicer will, nor will either
of them permit any Originator to (a) close any Concentration Account, or (b) add any
Concentration Account to those listed on Schedule 8.12 unless Administrator
shall have consented thereto and received a copy of a duly executed Concentration
Account Agreement with respect to such added account.



          Section 9.2 Negative Covenants. From the date hereof until the first day, following the Commitment Termination Date, on
which all Obligations shall have been finally and fully paid and performed, each of Borrower and
Servicer hereby covenants and agrees as to itself as follows:





          9.2.1 Sales, Liens, Etc. Except pursuant to, or as contemplated by, the Transaction Documents,
Borrower shall not sell (and shall not permit Servicer, acting on Borrower’s behalf
to), assign (by operation of law or otherwise) or otherwise dispose of, or create or
suffer to exist voluntarily or involuntarily any Adverse Claims upon or with respect
to any of its assets, including, without limitation, the Collateral, any interest
therein or any right to receive any amount from or in respect thereof.




          9.2.2 Mergers, Acquisitions, Sales, Subsidiaries, etc. Borrower shall not:




     (a) be a party to any merger or consolidation, or directly or indirectly
purchase or otherwise acquire all or substantially all of the assets or any stock of
any class of, or any partnership or joint venture interest in, any other Person,
except for Permitted Investments, or sell, transfer, assign, convey or lease any of



41









 







its property and assets (or any interest therein) other than pursuant to, or as
contemplated by, this Agreement or the other Transaction Documents;




     (b) make, incur or suffer to exist an investment in, equity contribution to,
loan or advance to, or payment obligation in respect of the deferred purchase price
of property from, any other Person, except for Permitted Investments or pursuant to
the Transaction Documents;




     (c) create any direct or indirect Subsidiary or otherwise acquire direct or
indirect ownership of any equity interests in any other Person other than pursuant
to the Transaction Documents; or




     (d) enter into any transaction with any Affiliate except for the transactions
contemplated by the Transaction Documents and other transactions upon fair and
reasonable terms materially no less favorable to Borrower than would be obtained in
a comparable arm’s length transaction with a Person not an Affiliate.




          9.2.3 Change in Business; Change in Credit and Collection Policy. Borrower will not make any change in the character of its business. Neither
Borrower nor Servicer will make any change in the Credit and Collection Policy that
could adversely affect the collectibility of any Receivable.




          9.2.4 Other Debt. Borrower will not incur any Debt to any Person other than pursuant to this
Agreement, the Receivables Sale Agreement or otherwise in connection with a
transaction involving Lender, Bank, any Credit Bank, any Liquidity Bank or any other
Persons providing liquidity or credit support to Lender.




          9.2.5 Organizational Documents. Borrower shall not amend its Organizational Documents.




          9.2.6 Jurisdiction of Organization; Location of Records. Borrower shall not change its jurisdiction of organization or permit the
documents and records evidencing the Receivables to be moved unless (i) Borrower or
Servicer, as the case may be, shall have given to Administrator prior written notice
thereof, clearly describing the new location, and (ii) Borrower shall have taken
such action, satisfactory to Administrator, to maintain the title or ownership of Borrower and any security interest of Administrator in the
Collateral at all times fully perfected and in full force and effect. Servicer
shall not, in any event, move the location where it conducts the servicing and
collection of the Receivables from the address referred to on Schedule 15.3
to this Agreement, without the prior written consent of Administrator, which consent
shall not be unreasonably withheld or delayed.




          9.2.7 Financing Statements. Borrower shall not execute any effective financing statement (or similar
statement or instrument of registration under the



42









 







laws of any jurisdiction) or statements relating to any Receivables other than the financing statements described
in Section 7.1.5.




          9.2.8 Business Restrictions. Borrower shall not (i) engage in any business other than the acquisition,
financing and collection of Receivables and other Collateral, (ii) engage in any
transactions or be a party to any documents, agreements or instruments, other than
the Transaction Documents and those incidental to the purposes thereof, or (iii)
incur any trade payables (other than for professional fees incurred in the ordinary
course of business) or other liabilities not constituting Debt permitted under
Section 9.2.4 if such the aggregate outstanding balance of such trade payables and
other liabilities would at any time equal or exceed $12,300.




          9.2.9 Other Agreements. Borrower will not amend, restate, supplement, cancel, terminate or otherwise
modify the Receivables Sale Agreement, or give any consent, waiver, directive or
approval thereunder or waive any default, action, omission or breach under any of
the foregoing or otherwise grant any indulgence thereunder, without (in each case)
the prior written consent of Administrator.



ARTICLE X.

SIGNIFICANT EVENTS AND THEIR EFFECT




          Section 10.1 Events of Default. Each of the following shall constitute an “Event of Default” under this Agreement:





          10.1.1 Non-Payment of Loans, Etc. Borrower shall fail to make any payment when due of any principal of or
interest on any Loan, or payment of any other Obligation payable by Borrower
hereunder or under the other Transaction Documents, including, without limitation,
any Fees and Indemnified Amounts, or shall fail to make any deposit
required to be made hereunder when due and, in each of the foregoing cases,
such failure shall continue for two (2) Business Days.




          10.1.2 Non-Compliance with Other Provisions. Borrower shall:




     (a) fail to perform or observe any covenant contained in Section 9.2 of
this Agreement and such failure shall remain unremedied for two (2) Business Days
after the earlier to occur of (i) Borrower’s having knowledge thereof and (ii)
Borrower’s having received written notice thereof from the Lender or Administrator,
or




     (b) fail to perform or observe any other term, covenant or agreement contained
in this Agreement or any other Transaction Document on its part to be performed or
observed and any such failure shall remain unremedied for thirty (30) days.




          10.1.3 Breach of Representations and Warranties. Any representation, warranty, certification or statement made by Borrower in
this Agreement, any



43









 







other Transaction Document to which Borrower is a party or in any other document delivered pursuant hereto or thereto shall prove to have been
incorrect in any material respect when made or deemed made; provided that the
materiality threshold in the preceding clause shall not be applicable with respect
to any representation or warranty which itself contains a materiality threshold.




          10.1.4 Bankruptcy. An Event of Bankruptcy shall have occurred and remained continuing with
respect to Borrower or Servicer.




          10.1.5 Tax Liens. The Internal Revenue Service shall file notice of a lien pursuant to § 6323
of the Internal Revenue Code with regard to any of the assets of Borrower, and such
lien shall not have been released within fifteen (15) Business Days.



          Section 10.2 Amortization Events. Each of the following shall constitute an “Amortization Event” under this Agreement:





          10.2.1 Servicer Event of Default. A Servicer Event of Default shall have occurred and remained continuing.




          10.2.2 Borrowing Base Deficit. A Borrowing Base Deficit shall exist and such condition shall continue
unremedied for two (2) Business Days.




          10.2.3 Default Ratio. The Default Ratio shall equal or exceed 1.75% on a rolling
three-fiscal-month average basis at any time on or after the date hereof.




          10.2.4 Dilution Ratio. The Short Dilution Ratio shall equal or exceed 4.75% on a rolling
three-fiscal-month average basis at any time on or after the date hereof or the Long
Dilution Ratio shall equal or exceed 5.3% on a rolling three-fiscal-month average
basis at any time on or after the date hereof.




          10.2.5 Delinquency Ratio. The Delinquency Ratio shall equal or exceed 2.50% on a rolling
three-fiscal-month average basis at any time on or after the date hereof.




          10.2.6 Accounts Receivable Turnover Ratio. The Accounts Receivable Turnover Ratio shall be less than 9.50 to 1 for any
Calculation Period.




          10.2.7 Event of Default. An Event of Default shall have occurred and be continuing.




          10.2.8 Validity of Transaction Documents. (a) Any Transaction Document, or any lien or security interest granted
thereunder, shall (except in accordance with its terms), in whole or in part,
terminate, cease to be effective or cease to be the legally valid, binding and
enforceable obligation of Borrower, Servicer or any Originator party to such
Transaction Document, (b) Borrower, any Originator or Servicer shall, directly or
indirectly, contest in any manner such effectiveness, validity, binding nature or
enforceability or (c) any security interest



44









 







securing any Secured Obligation shall,
in whole or in part, cease to be a perfected first priority security interest.




          10.2.9 Termination Date. The “Termination Date” under and as defined in the Receivables Sale
Agreement shall occur.




          10.2.10 Change of Control. (a) During any period of twelve consecutive calendar months, (i) more than 50% of
the members of the Board of Directors of G&K who were members on the first day of such
period shall have resigned or been removed or replaced, other than as a result of death,
disability, or change in personal circumstances, or (ii) any Person or “Group” (as defined
in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, but excluding (A)
any employee benefit or stock ownership plans of G&K, and (B) members of the Board of
Directors and executive officers of G&K as of the date of this Agreement, members of the
immediate families of such members and executive officers, and family trusts and
partnerships established by or for the benefit of any of the foregoing individuals) shall
have acquired more than 50% of the outstanding voting equity interests of G&K, or (b) G&K
shall cease to own, directly or indirectly through one or more wholly-owned Subsidiaries,
100% of the equity interests of the Borrower and, if G&K is not Servicer, of Servicer.



          Section 10.3 Effect of Significant Event.




          (a) Optional Termination. Upon the occurrence of a Significant Event (other than an Event of Default described in
Section 10.1.4), Administrator may, and at the request of Lender shall, by notice to
Borrower (a copy of which shall be promptly forwarded by Administrator to each Rating Agency),
declare all or any portion of the outstanding principal amount of the Loans and other Obligations
to be due and payable and/or the Lender’s Commitment (if not theretofore terminated) to be
terminated by declaring the Commitment Termination Date to have occurred, whereupon the full unpaid
amount of such Loans and other Obligations which shall be so declared due and payable shall be and
become immediately due and payable, without further notice, demand or presentment, and/or, as the
case may be, the Lender’s Commitment shall terminate.




          (b) Automatic Termination. Upon the occurrence of an Event of Default described in Section 10.1.4), the
Commitment Termination Date shall be deemed to have occurred automatically, and all outstanding
Loans and all other Obligations shall become immediately and automatically due and payable, all
without presentment, demand, protest, or notice of any kind.




          (c) Notice to Rating Agencies. Administrator shall notify each Rating Agency of the occurrence of any continuing
Significant Event, promptly following its actual knowledge thereof.




          (d) Limitation on Funds Available for Payments. Unless and until the aggregate outstanding principal balance of the Loans hereunder is less
than 10% of the highest amount ever borrowed hereunder, no repayment of the Obligations may be made
with any funds other than (A) Collections and (B) the Borrower’s initial paid-in cash capital (if
any then remains).




45









 








ARTICLE XI.

THE SERVICER




          Section 11.1 G&K as Initial Servicer. The servicing, administering and collection of the Receivables shall be conducted by the
Person designated from time to time as Servicer under this Agreement. Until such time following
the occurrence of a Servicer Event of Default or an Amortization Event as Administrator shall
notify G&K and Borrower in writing of the revocation of such power and authority, Borrower, Lender
and Administrator hereby appoint G&K to act as Servicer under the Transaction Documents.




          Section 11.2 Certain Duties of Servicer.





          11.2.1 Authorization to Act as Borrower’s Agent. Borrower hereby appoints Servicer as its agent for the following purposes:
(i) selecting the amount of each requested Loan and executing Borrowing Requests on
behalf of Borrower, (ii) making transfers among, deposits to and withdrawals from
all deposit accounts of Borrower for the purposes described in the Transaction
Documents, (iii) arranging payment by Borrower of all Fees, expenses, other
Obligations and other amounts payable under the Transaction Documents, (iv) causing
the repayment and prepayment of the Loans as required and permitted pursuant to
Section 4.1 and (v) executing and preparing the Monthly Reports; provided,
however, that Servicer shall act in such capacity only as an agent of Borrower and
shall incur thereby no additional obligations with respect to any Loan, and nothing
herein shall be deemed to authorize Servicer to take any action as Borrower’s agent
which Borrower is precluded from taking itself. Borrower irrevocably agrees that
(A) it shall be bound by all proper actions taken by Servicer pursuant to the
preceding sentence, and (B) Lender, Administrator and the banks holding all deposit
accounts of Borrower are entitled to accept submissions, determinations, selections,
specifications, transfers, deposits and withdrawal requests, and payments from
Servicer on behalf of Borrower.




          11.2.2 Servicer to Act as Servicer.




     (a) Servicer shall service and administer the Receivables on behalf of Borrower
and Administrator (for the benefit of the Secured Parties) and shall have full power
and authority, acting alone and/or through subservicers as provided in Section
11.2.2(c), to do any and all things which it may deem reasonably necessary or
desirable in connection with such servicing and administration and which are
consistent with this Agreement. Consistent with the terms of this Agreement,
Servicer may waive, modify or vary any term of any Receivable or consent to the
postponement of strict compliance with any such term or in any manner, grant
indulgence to any Obligor if, in Servicer’s reasonable determination, such waiver,
modification, postponement or indulgence is not materially adverse to the interests of Borrower or Administrator (for the
benefit of



46









 







the Secured Parties); provided, however, that Servicer may not permit any
modification with respect to any Receivable that would reduce the Unpaid Balance
(except for actual payments thereof), or extend the due date thereof, except that
Servicer may take such actions with respect to Defaulted Receivables if such actions
will, in Servicer’s reasonable business judgment, maximize the Collections thereof.
Without limiting the generality of the foregoing, Servicer in its own name or in the
name of Borrower is hereby authorized and empowered by Borrower when Servicer
believes it appropriate in its best judgment to execute and deliver, on behalf of
Borrower, any and all instruments of satisfaction or cancellation, or of partial or
full release or discharge and all other comparable instruments, with respect to the
Receivables.




     (b) Servicer shall service and administer the Receivables by employing such
procedures (including collection procedures) and degree of care, in each case
consistent with applicable law, with the Credit and Collection Policy and with
prudent industry standards, as are customarily employed by Servicer in servicing and
administering receivables owned or serviced by Servicer comparable to the
Receivables. Servicer shall not take any action to impair Administrator’s (for the
benefit of the Secured Parties) security interest in any Receivable, except to the
extent allowed pursuant to this Agreement or required by law.




     (c) Servicer may perform any of its duties pursuant to this Agreement,
including those delegated to it pursuant to this Agreement, through subservicers
appointed by Servicer, provided that such subservicing arrangements may be
terminated, at Administrator’s discretion, upon the replacement of G&K as Servicer.
Such subservicers may include Affiliates of Servicer. Notwithstanding any such
delegation of a duty, Servicer shall remain obligated and liable for the performance
of such duty as if Servicer were performing such duty.




     (d) Servicer may take such actions as are necessary to discharge its duties as
Servicer in accordance with this Agreement, including the power to execute and
deliver on behalf of Borrower such instruments and documents as may be customary,
necessary or desirable in connection with the performance of Servicer’s duties under
this Agreement (including consents, waivers and discharges relating to the
Receivables).




     (e) Servicer shall keep separate records covering the transactions contemplated
by this Agreement, including the identity and collection status of each Receivable
purchased by Borrower from an Originator and the Purchase Price Credits.



47









 






          11.2.3 Collections.




     (a) On or prior to the Closing Date, Borrower and Servicer shall have
established and shall maintain thereafter the following system of collecting and
processing Collections of Receivables: The Originators shall deposit all payments
on the Receivables into a Deposit Account which is swept each Business Day into a
Concentration Account.




     (b) On or prior to the Closing Date, Administrator shall have received a
Concentration Account Agreement with respect to each Concentration Account.
Servicer’s right of access to each Concentration Account shall be revocable at the
option of Administrator upon the occurrence of Unmatured Significant Event or
Significant Event. In addition, after the occurrence of any Unmatured Significant
Event or any Significant Event, Servicer agrees that it shall, upon the written
request of Administrator, notify all Obligors under Receivables to make payment
thereof to (i) one or more bank accounts and/or post-office boxes designated by
Administrator and specified in such notice or (ii) any successor Servicer appointed
hereunder.




     (c) [Reserved].




     (d) All Collections received by an Originator or Servicer in respect of
Receivables will, pending remittance to a Concentration Account as provided in
Section 11.2.4, be held by an Originator or Servicer in trust for the
exclusive benefit of Administrator, and shall not be commingled with any other funds
or property of any Originator or Servicer.




     (e) Borrower and Servicer hereby irrevocably waive any right to set-off or
otherwise deduct any amount owing by or to them from any Collections received by
them prior to remittance thereof in accordance with this Agreement.




     (f) In performing its duties and obligations hereunder, Servicer (i) shall not
impair the rights of Borrower or Administrator in any Receivable, (ii) shall not
amend the terms of any Receivable other than in accordance with the Credit and
Collection Policy and this Agreement, (iii) shall not release any goods securing a
Receivable from the lien created by such Receivable except as specifically provided
for herein, and (iv) shall be entitled to commence or settle any legal action to
enforce collection of any Receivable or to foreclose upon or repossess any goods
securing such Receivable. In the event that Servicer shall breach any of its
covenants set forth in clause (i), (ii) or (iii) of this
Section 11.2.3(f), Servicer shall pay the Unpaid Balance of each Receivable
affected thereby on the Distribution Date following the Calculation Period in which
such event occurs. For the purposes of Section 11.7 hereof, Servicer shall
not be deemed to have breached its obligations under this Section 11.2.3(f)
unless it shall fail to make such payment with respect to any Receivable affected by
Servicer’s noncompliance with clause (i), (ii) or (iii) of
this Section 11.2.3(f).



48









 






     (g) All payments or other amounts collected or received by Servicer in respect
of a Receivable shall be applied to the Unpaid Balance of such Receivable.




          11.2.4 Concentration Accounts.




     (a) On any Business Day, Borrower may withdraw, or permit Servicer to withdraw,
funds that are on deposit in the Concentration Accounts, provided that (i) no
Significant Event or Unmatured Significant Event has occurred and is continuing,
(ii) the Commitment Termination Date has not occurred, and (iii) after giving effect
to such withdrawal, no Borrowing Base Deficit has occurred or will result therefrom
and there are funds in the Concentration Accounts at least equal to the interest on
the Loans and the Fees accrued through such date.




     (b) Prior to 3:00 p.m., Atlanta, Georgia time, on the Business Day preceding
each Distribution Date (a “Deposit Date”): (i) Servicer shall deposit or cause to
be deposited in a Concentration Account, to the extent not already on deposit
therein, an amount equal to, without duplication, the lesser of (A) the sum of (1)
the aggregate amount of all Collections received during the immediately preceding
Calculation Period, plus (2) the aggregate amounts due from Servicer on such
Distribution Date pursuant to Section 11.2.3(f) hereof, plus (3) the
aggregate amount of Purchase Price Credits, if any, required to be made in cash on
such Distribution Date in accordance with the Receivables Sale Agreement, and (B)
the amounts due on such Distribution Date pursuant to clauses first through sixth of
Section 4.2(b), provided that if a Significant Event or Unmatured
Significant Event shall exist on such Distribution Date or the Commitment
Termination Date has occurred, then Servicer shall deposit all of the amounts
described in the foregoing clause (A) in a Concentration Account on such
Deposit Date.




     (c) Servicer shall distribute the amounts on deposit in the Concentration
Accounts in accordance with Section 4.2 hereof.



          Section 11.3 Servicing Compensation. Servicer, as compensation for its activities hereunder, shall be entitled to receive the
Servicing Fee, which shall be payable by Borrower on each Distribution Date from funds on deposit
in the Concentration Accounts in accordance with Section 4.2. Servicer shall be required
to pay all expenses incurred by it in connection with its servicing activities hereunder (including
payment of the fees and expenses of any subservicer) and shall not be entitled to reimbursement
therefor except as specifically provided herein.




          Section 11.4 Agreement Not to Resign. G&K acknowledges that Lender and Administrator have relied on G&K’s agreement to act as
Servicer hereunder in their respective decisions to execute and deliver the respective Transaction
Documents to which they are parties. In recognition of the foregoing, G&K agrees not to resign as
Servicer voluntarily, except as required by law (as evidenced by the delivery of an outside opinion of counsel to Administrator,


49









 







in form and substance satisfactory to Administrator), without the prior written consent of Administrator.




          Section 11.5 Designation of Servicer. Borrower agrees not to designate any Person other than G&K as Servicer without the prior
written consent of Administrator.




          Section 11.6 Termination. The authorization of Servicer to act on behalf of Borrower under this Agreement and the
other Transaction Documents shall terminate at the sole discretion of Administrator upon the
replacement of Servicer by a successor Servicer selected by Administrator.




          Section 11.7 Servicer Events of Default. Each of the following shall constitute a “Servicer Event of Default” under this Agreement:





          11.7.1 Failure to Make Payments and Deposits. Servicer shall fail to make any payment or deposit required to be made by it
hereunder on the date when due and such failure shall continue for two (2) Business
Days.




          11.7.2 Non-Compliance with Other Provisions. Servicer shall fail to perform or observe any provision of Section 9.1.5(b)
and such failure shall continue for two (2) Business Days, or Servicer shall fail to
perform or observe any other term, covenant or agreement contained in this Agreement
or any other Transaction Document on its part to be performed or observed and any
such failure shall remain unremedied for thirty (30) days.




          11.7.3 Delegation. Servicer shall delegate any of its duties hereunder, except as expressly
permitted in accordance with the terms hereof.




          11.7.4 Breach of Representations and Warranties. Any representation, warranty, certification or statement made by Servicer in
this Agreement, any other Transaction Document to which Servicer is a party or in
any Borrowing Base Certificate, Monthly Report or other document delivered pursuant
hereto or thereto shall prove to have been incorrect in any material respect when
made or deemed made; provided that the materiality threshold in the preceding clause
shall not be applicable with respect to any representation or warranty which itself
contains a materiality threshold.




          11.7.5 Bankruptcy. An Event of Bankruptcy shall have occurred and remained continuing with
respect to Servicer.




          11.7.6 Judgments. A final judgment or judgments for the payment of money of $12,300 or more in
the aggregate shall have been rendered against Borrower, or in excess of $10,000,000
in the aggregate shall have been rendered against Servicer, after deducting (a) the
amount with respect to which Servicer is insured and with respect to which the
insurer has assumed responsibility in writing, and (b) the amount for which Servicer
is otherwise indemnified if the terms of such indemnification are satisfactory to
Lender (or its assigns), and the same shall have remained unsatisfied and in effect,
without stay of execution, for



50









 







a period of thirty (30) consecutive days after the
period for appellate review shall have elapsed.




          11.7.7 Cross-Default to Material Debt. (a) Failure of Servicer to pay any Debt in excess of $10,000,000 in
aggregate principal amount (“Material Debt”) when due; or (b) the default by
Servicer in the performance of any term, provision or condition contained in any
agreement under which any Material Debt was created or is governed, the effect of
which is to cause, or to permit the holder or holders of such Material Debt to
cause, such Indebtedness to become due prior to its stated maturity; or (c) any
Material Debt of Servicer shall be declared to be due and payable or required to be
prepaid (other than by a regularly scheduled payment) prior to the date of maturity
thereof, in each case described in the foregoing clause (a), (b) or (c), whether or
not waived.


At any time during the continuance of any Servicer Event of Default, Administrator may, in its sole
discretion, notify Servicer in writing of the revocation of its appointment as Servicer hereunder.
Upon revocation of Servicer’s appointment hereunder, Administrator shall appoint a successor
Servicer. Servicer agrees that upon receipt of written notification from Administrator of the
revocation of Servicer’s appointment as Servicer hereunder, Servicer shall upon the written request
of Administrator (which request may be contained in the notification of revocation) (i) notify all
Obligors under the Receivables to make payment thereof to a bank account(s) or post office box
designated by Administrator and specified in such notice, and (ii) pay to Administrator (or its
designee) immediately all Collections then held or thereafter received by Servicer or the
applicable Originator of Receivables, together with all other payment obligations of Servicer
hereunder owing to Lender or Administrator. Servicer shall, at its sole cost and expense,
cooperate with and assist the successor Servicer (including, without limitation, providing access
to, and transferring, all Receivable Files and all records (including data-processing records)
relating thereto (which shall be held in trust for the benefit of the parties hereto in accordance
with their respective interests)) and allowing the successor Servicer to use all licenses, hardware
or software necessary or desirable to collect the Receivables). G&K irrevocably agrees to act (if
requested to do so) as the data-processing agent for the successor
Servicer (in substantially the same manner as G&K conducted such data-processing functions while it
acted as Servicer).




ARTICLE XII.

ADMINISTRATOR




          Section 12.1 Authorization and Action. Lender hereby appoints SunTrust Robinson Humphrey, Inc. as its Administrator for purposes
of the Transaction Documents and authorizes SunTrust Robinson Humphrey, Inc. in such capacity to
take such action on its behalf under each Transaction Document and to exercise such powers
hereunder and thereunder as are delegated to SunTrust Robinson Humphrey, Inc., as Administrator, by
the terms hereof and thereof, together with such powers as are reasonably incidental thereto.




          Section 12.2 Administrator and Affiliates. Bank and any of its Affiliates may generally engage in any kind of business with Borrower,
Bank, Servicer, any Obligor, any of their respective Affiliates and any Person who may do business
with or own securities of


51









 







Borrower, Bank, Servicer, any Obligor or any of their respective
Affiliates, all as if SunTrust Robinson Humphrey, Inc. were not Administrator and without any duty
to account therefor to Lender.




ARTICLE XIII.

ASSIGNMENTS




          Section 13.1 Restrictions on Assignments. Neither Borrower nor Servicer may assign its rights hereunder or any interest herein
without the prior written consent of Administrator and Lender. Lender may not assign all or any
portion of Lender’s Commitment to any Person other than the Liquidity Bank(s) without the prior
written consent of Borrower and Administrator. Nothing herein shall be deemed to preclude Lenders
from pledging or assigning all or any portion of any Loan or the Lender Note:





     (a) to Credit Bank, any Liquidity Bank (or any successor of any thereof by
merger, consolidation or otherwise), any Affiliate of Credit Bank or any Liquidity
Bank in connection with a draw under the Liquidity Agreement or a Credit Advance
(which may then assign all or any portion thereof so assigned or any interest
therein to such party or parties as it may choose); or




     (b) to any other Person proposed by Lender and consented to by Administrator.


Administrator shall promptly provide notice of any assignment to each Rating Agency. Subject to
Section 13.2, all of the aforementioned assignments shall be upon such terms and conditions
as Lender and the assignee may mutually agree.




          Section 13.2 Documentation. Lender shall deliver to each assignee an assignment, in such form as Lender and the related
assignee may agree, duly executed by Lender, assigning any such Loan to the assignee, and Lender
shall promptly execute and deliver all further instruments and documents, and take all further
action, that the assignee may reasonably request, in order to perfect, protect or more fully
evidence the assignee’s right, title and interest in and to such Loan, and to enable the assignee
to exercise or enforce any rights hereunder or under the Lender Note evidencing such Loan.




          Section 13.3 Rights of Assignee. Upon the foreclosure of any assignment of any Loans made for security purposes, or upon any
other assignment of any Loan from Lender pursuant to this Article XIII, the respective
assignee receiving such assignment shall have all of the rights of Lender hereunder to the extent
of such assignment with respect to such Loans and all references to Lender in Section 6.1
shall be deemed to apply to such assignee to the extent of such assignment.




          Section 13.4 Notice of Assignment. Lender shall provide notice to Borrower of any assignment hereunder by Lender to any
assignee. Lender authorizes Administrator to, and Administrator agrees that it shall, endorse the
Lender Note to reflect any assignments made pursuant to this Article XIII or otherwise.




52









 








ARTICLE XIV.

INDEMNIFICATION




          Section 14.1 General Indemnity of Borrower. Without limiting any other rights which any such Person may have hereunder or under
applicable law, Borrower hereby agrees to indemnify Administrator, Lender, Servicer, each Liquidity
Bank, each Credit Bank, Bank, each of Bank’s Affiliates and each of their respective successors,
transferees, participants and assigns and all officers, directors, shareholders, controlling
persons, employees and agents of any of the foregoing (each of the foregoing Persons being
individually called an “Indemnified Party”), forthwith on demand, on an after-tax basis, from and
against any and all damages, losses, claims, liabilities and related costs and expenses, including
reasonable attorneys’ fees and disbursements (all of the foregoing being collectively called
“Indemnified Amounts”) awarded against or incurred by any of them arising out of or relating to any
Transaction Document or the transactions contemplated thereby, any commingling of funds (whether or
not permitted hereunder), or the use of proceeds therefrom by Borrower, including (without
limitation) in respect of the funding of any Loan or in respect of any Receivable; excluding,
however, (a) Indemnified Amounts to the extent a final judgment of a court of competent
jurisdiction holds that such Indemnified Amounts resulted from gross negligence or willful
misconduct on the part of the Indemnified Party seeking indemnification, and (b) Excluded Taxes.




          Section 14.2 Indemnity of Servicer. Without limiting any other rights which any such Person may have hereunder or under
applicable law, G&K as Servicer, hereby agrees to indemnify each Indemnified Party forthwith on
demand, on an after-tax basis, from and against any and all Indemnified Amounts awarded against or
incurred by any of them arising from, or related to, the negligence or willful misconduct of G&K,
the inaccuracy of any representation or warranty of G&K, or the failure of G&K to perform its
obligations under any Transaction Document; excluding, however, (a) Indemnified Amounts to the
extent determined by a court of competent jurisdiction to have resulted from gross negligence or
willful misconduct on the part of such Indemnified Party, (b) Indemnified Amounts to the extent
solely due to non-payment by any Obligor of an amount due and payable with respect to a Receivable
for credit reasons, and (c) any tax upon or measured by net income on any Indemnified Party.
Anything contained in this Section 14.2 to the contrary notwithstanding: (1) the foregoing
indemnification is not intended to, and shall not, constitute a guarantee of the collectibility or
payment of the Receivables, and (2) nothing in this Section 14.2 shall require Servicer to
indemnify any Indemnified Party for Receivables which are not collected, not paid or are otherwise
uncollected on account of the insolvency, bankruptcy, lack of creditworthiness or financial
inability to pay of the applicable Obligor.




ARTICLE XV.

MISCELLANEOUS




          Section 15.1 No Waiver; Remedies. No failure on the part of Lender, Administrator, any Indemnified Party or any Affected
Party to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise by any of them of any right, power or
remedy hereunder preclude any other or further exercise thereof, or the exercise of any other
right, power or remedy. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.


53









 







Without limiting the foregoing, each of Bank, each Credit Bank and each
Liquidity Bank is hereby authorized by Borrower at any time and from time to time, to the fullest
extent permitted by law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any time owing by Bank,
such Credit Bank or such Liquidity Bank to or for the credit or the account of Borrower, now or
hereafter existing under this Agreement, to Administrator, any Affected Party, any Indemnified
Party, or Lender or their respective successors and assigns.




          Section 15.2 Amendments, Etc. No amendment, modification or waiver of, or consent with respect to, any provision of this
Agreement and any Schedules hereto, or the Lender Note shall in any event be effective unless the
same shall be in writing and signed and delivered by (i) Borrower, Servicer, Administrator and
Lender (with respect to an amendment), or (ii) Administrator and Lender (with respect to a waiver
or consent by them) or Servicer or Borrower (with respect to a waiver or consent by them), as the
case may be, and then any such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided, however, that no material amendment of this
Agreement (other than an amendment to extend the Scheduled Commitment Termination Date) shall be
effective unless the Lender (or Administrator on its behalf) shall have received written
confirmation by the Rating Agencies that such amendment shall not cause the rating on the then outstanding Commercial Paper Notes to be
downgraded or withdrawn. Administrator shall provide each Rating Agency with a copy of each
amendment to or consent or waiver under this Agreement promptly following the effective date
thereof.




          Section 15.3 Notices, Etc. All notices and other communications provided for hereunder shall, unless otherwise stated
herein, be in writing (including facsimile communication) and shall be personally delivered or sent
by certified mail, postage prepaid, or by facsimile, to the intended party at the address or
facsimile number of such party set forth opposite its name on Schedule 15.3 hereto or at
such other address or facsimile number as shall be designated by such party in a written notice to
the other parties hereto. All such notices and communications shall be effective, (a) if
personally delivered, when received, (b) if sent by certified mail, three Business Days after
having been deposited in the mail, postage prepaid, (c) if sent by overnight courier, one Business
Day after having been given to such courier, and (d) if transmitted by facsimile, when sent,
receipt confirmed by telephone or electronic means, except that notices and communications pursuant
to Section 2.2 shall not be effective until received.




          Section 15.4 Costs, Expenses and Taxes. In addition to its obligations under Section 14.1, Borrower agrees to pay on demand:





     (a) all costs and expenses incurred by Administrator, Lender, each Liquidity
Bank, each Credit Bank and Servicer in connection with (i) the preparation,
execution, delivery, administration and enforcement of, or any breach of, this
Agreement, the Lender Note, the other Transaction Documents, the Liquidity Agreement
and, to the extent directly related to this Agreement, the Program Documents
(including any amendments or modifications of or supplements to the Program
Documents directly related to this Agreement), including, without limitation, the
reasonable fees and expenses of counsel to any of such Persons incurred in
connection therewith, (ii) the perfection of



54









 







Administrator’s security interest in
the Collateral, (iii) the maintenance of the Concentration Accounts and the Deposit
Accounts, (iv) the audit of the books, records and procedures of Originators,
Servicer and Borrower by Administrator’s auditors (which may be employees of
Administrator), and (v) Rating Agency fees related to the transactions contemplated
by this Agreement; and




     (b) all stamp and other transactional or filing taxes and fees payable or
determined to be payable in connection with the execution, delivery, filing and
recording of this Agreement, the Lender Note, the other Transaction Documents, or
(to the extent directly related to this Agreement) the Program Documents, and agrees
to indemnify each Indemnified Party against any liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes and fees.



          Section 15.5 Binding Effect; Survival. This Agreement shall be binding upon and inure to the benefit of Borrower, Bank, Lender,
Administrator, and their respective successors and assigns, and the provisions of Article
VI and Article XIV shall inure to the benefit of the Affected Parties and the
Indemnified Parties, respectively, and their respective successors and assigns; provided, however,
nothing in the foregoing shall be deemed to authorize any assignment not permitted by Article
XIII. This Agreement shall create and constitute the continuing obligations of the parties
hereto in accordance with its terms, and shall remain in full force and effect until such time,
after the Commitment Termination Date, when all Obligations have been finally and fully paid and
performed. The rights and remedies with respect to any breach of any representation and warranty
made by Borrower or Servicer pursuant to Article VIII and the indemnification and payment
provisions of Article XIV and Article VI, Sections 15.4, 15.11 and
15.12 shall be continuing and shall survive any termination of this Agreement and any
termination of G&K’s rights to act as Servicer hereunder or under any other Transaction Document.




          Section 15.6 Captions and Cross References. The various captions (including, without limitation, the table of contents) in this
Agreement are provided solely for convenience of reference and shall not affect the meaning or
interpretation of any provision of this Agreement. Unless otherwise indicated, references in this
Agreement to any Section, Appendix, Schedule or Exhibit are to such Section of or Appendix,
Schedule or Exhibit to this Agreement, as the case may be, and references in any Section,
subsection, or clause to any subsection, clause or subclause are to such subsection, clause or
subclause of such Section, subsection or clause.




          Section 15.7 Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.




          Section 15.8 Governing Law. THIS AGREEMENT SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF (OTHER THAN SECTION
5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW) EXCEPT TO THE EXTENT THAT THE LAWS OF ANOTHER
JURISDICTION GOVERN THE PERFECTION, OR THE EFFECT OF





55











 




PERFECTION OR NONPERFECTION, OF THE SECURITY INTERESTS OF ADMINISTRATOR, FOR THE BENEFIT OF THE
SECURED PARTIES.




          Section 15.9 Counterparts. This Agreement may be executed by the parties hereto in several counterparts, each of which
shall be deemed to be an original but all of which shall constitute together but one and the same
agreement.




          Section 15.10 Submission to Jurisdiction; Waiver of Trial by Jury.





     (a) Each of Borrower and Servicer hereby submits to the nonexclusive
jurisdiction of any United States District Court for the Southern District of New
York and of any New York state court sitting in New York, New York for purposes of
all legal proceedings arising out of, or relating to, the Transaction Documents or
the transactions contemplated thereby. Each of Borrower and Servicer hereby
irrevocably waives, to the fullest extent possible, any objection it may now or
hereafter have to the venue of any such proceeding and any claim that any such
proceeding has been brought in an inconvenient forum. Nothing in this Section
15.10 shall affect the right of Administrator or Lender to bring any action or
proceeding against Borrower or Servicer or their respective properties in the courts
of other jurisdictions.




     (b) TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO IRREVOCABLY
WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING
OUT OF, OR IN CONNECTION WITH, ANY TRANSACTION DOCUMENT OR ANY MATTER ARISING
THEREUNDER.



          Section 15.11 No Recourse Against Lender. The obligations of the Lender under this Agreement are solely the limited liability company
obligations of Lender. No recourse shall be had for any obligation, covenant or agreement
(including, without limitation, the payment of any amount owing in respect to this Agreement or the
payment of any Fee hereunder or for any other obligation or claim) arising out of or based upon
this Agreement or any other agreement, instrument or Transaction Document entered into pursuant
hereto or in connection herewith against any member, employee, officer, director, manager,
administrator, partner or organizer of Lender, as such, by the enforcement of any assessment or by
any legal or equitable proceeding, by virtue of any statute or otherwise.




          Section 15.12 No Proceedings. Each of the parties hereto hereby agree that it will not institute against Lender, or join
any other Person in instituting against Lender, any insolvency proceeding (namely, any proceeding
of the type referred to in the definition of Event of Bankruptcy) so long as any Commercial Paper
Notes issued by Lender shall be outstanding and there shall not have elapsed one year plus one day
since the last day on which any such Commercial Paper Notes shall be outstanding. The provisions
of this Section 15.12 shall survive the termination hereof.




56









 








          Section 15.13 Confidentiality.




          (a) Unless otherwise consented to by Administrator or required by any applicable law, rule,
regulation, direction, request or order of any judicial, administrative or regulatory authority or
proceedings, each of Borrower and Servicer hereby agrees that it shall maintain and shall cause
each of its employees and officers to maintain the confidentiality of the Fee Letter and the other
confidential or proprietary information with respect to Administrator and Lender and their
respective businesses obtained by it or them in connection with the structuring, negotiating and
execution of the transactions contemplated herein, except that each of Borrower, Servicer and their
respective officers and employees may disclose such information to their external accountants,
attorneys and other advisors and as required by any applicable law, rule, direction, request or
order of any judicial, administrative or regulatory authority or proceeding (whether or not having
the force or effect of law). The restrictions in this Section 15.13(a) shall not apply to
any information which is or becomes generally available to the public other than as a result of
disclosure by Borrower, Servicer or one of their respective Affiliates.




          (b) Each of Borrower and Servicer hereby consents to the disclosure of any nonpublic
information with respect to it (i) to Administrator, the Liquidity Banks or Lender by each other,
(ii) as required by or pursuant to any applicable law, rule, regulation, direction, request or
order of any judicial, administrative or regulatory authority or proceedings (whether or not having
the force or effect of law), (iii) to any prospective or actual assignee or participant of any of
the Persons described in clause (i), and (iv) to any Rating Agency, Commercial Paper Note dealer,
Credit Bank or Support Provider to Lender or any entity organized for the purpose of purchasing, or
making loans secured by, financial assets for which Administrator acts as the administrative agent
or administrator and to any officers, directors, employees, outside accountants and attorneys of
any of the foregoing, provided each Person described in the foregoing clauses (iii) and (iv) is
informed of the confidential nature of such information.




          (c) Notwithstanding any other express or implied agreement to the contrary, the parties hereto
agree and acknowledge that each of them and each of their employees, representatives and other
agents may disclose to any and all persons, without limitation of any kind, the tax treatment and
tax structure of the transaction contemplated by this Agreement and the other Transaction Documents
and all materials of any kind (including opinions or other tax analyses) that are provided to any
of them relating to such tax treatment and tax structure, except to the extent that confidentiality
is reasonably necessary to comply with U.S. federal or state securities laws. For the purposes of
this Section 15.13(c), the terms “tax treatment” and “tax structure” shall have the
meanings specified in Treasury Regulation section 1.6011-4(c).




          Section 15.14 Entire Agreement. This Agreement and the other Transaction Documents executed and delivered herewith
represent the final agreement among the parties hereto and thereto and may not be contradicted by
evidence of prior, contemporaneous or subsequent oral agreements of the parties. There are no
unwritten oral agreements among the parties.




          Section 15.15 Limitation on Payments. Notwithstanding any provisions contained in this Agreement to the contrary, the Lender
shall not, and shall not be obligated to, pay any amount pursuant to this Agreement unless (a) the
Lender has received funds which may




57









 







be used to make such payment and which funds are not required to repay the Commercial Paper Notes and advances under the Voluntary Advance Agreement when due and
(b) after giving effect to such payment, either (i) there is sufficient liquidity availability
(determined in accordance with the Program Documents), under all of the liquidity facilities for
the Lender’s commercial paper program, to pay the “Face Amount” (as defined below) of all
outstanding Commercial Paper Notes and advances under the Voluntary Advance Agreement when due or
(ii) all Commercial Paper Notes and advances under the Voluntary Advance Agreement are paid in
full. Any amount which the Lender does not pay pursuant to the operation of the preceding sentence
shall not constitute a claim (as defined in §101 of the Bankruptcy Code) against or corporate
obligation of the Lender for any such insufficiency unless and until such payment may be made in
accordance with clauses (a) and (b) above. The agreements in this Section
15.15 shall survive termination of this Agreement and payment of all obligations hereunder. As
used in this Section 15.15, the term “Face Amount” means, with respect to outstanding
Commercial Paper Notes or advances under the Voluntary Advance Agreement, (x) the face amount of
any such Commercial Paper Notes issued on a discount basis, and (y) the principal amount of, plus
the amount of all interest accrued and to accrue thereon to the stated maturity date of, any such
Commercial Paper Notes issued on an interest-bearing basis or any such advances under the Voluntary
Advance Agreement.




[Signatures follow]




58









 





          IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective
officers thereunto duly authorized as of the day and year first above written.



	 	 	 	 	 
	G&K RECEIVABLES CORP., as Borrower

 	 	 
	By:  	/s/ Jeffrey L. Wright
 	 	 
	 	Name:  	Jeffrey L. Wright 	 	 
	 	Title:  	Chief Financial Officer 	 	 
	 




	 	 	 	 	 
	G&K SERVICES, INC., as initial Servicer
	 	 
	 	 	 
	By:  	/s/ Jeffrey L. Wright
 	 	 
	 	Name:  	Jeffrey L. Wright 	 	 
	 	Title:  	Chief Financial Officer 	 	 













 








	 	 	 	 	 
	THREE PILLARS FUNDING LLC, as Lender
	 	 
	 	 	 
	By:  	/S/ Doris J. Hearn
 	 	 
	 	Name:  	Doris J. Hearn 	 	 
	 	Title:  	Vice President 	 	 













 





	 	 	 	 	 
	SUNTRUST ROBINSON HUMPHREY, INC., as Administrator
	 	 
	 	 	 
	By:  	/S/ Joseph R. Franke
 	 	 
	 	Name:  	Joseph R. Franke 	 	 
	 	Title:  	Director 	 	 
	 




 









 








EXHIBIT A




BORROWING REQUEST




[Date]




	 	 	 
	To:

	 	Three Pillars Funding LLC (“Lender”)
	 	 
	From:

	 	G&K Receivables Corp. (“Borrower”)
	 	 
	Re:

	 	Amended and Restated Loan Agreement dated as of October 1, 2008,
among Borrower, Lender and SunTrust Robinson Humphrey, Inc., as
Administrator (the “Agreement”)






	 	 	 	 	 	 	 
	A

	(i)	Pursuant to Section 2.2 of the Agreement,
the undersigned hereby requests a Loan from
Lender in an amount equal to the following (at
least $1,000,000 or a larger integral multiple
of $500,000):
	 	$		
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	(ii)	The date such Loan is requested is:	 	 	
	 
	 	 	 	 	 	 
	 

	(iii)	The requested maturity date of the Loan
is:	 	 	
	 
	 	 	 	 	 	 
	 

	(iv)	The aggregate principal amount of Loans
outstanding under the Agreement, after giving
effect to the requested Loan under (i) above,
will equal:
	 	$	 	
	 
	 	 	 	 	 	 
	 

	(v)	The amount in (ii) above does not exceed
the Facility Limit which equals:
	 	$	60,000,000	 






	 	 	 
	B.

	 	As of the date hereof and the date of making of such Loan, each of the representations and
warranties contained in Article VIII of the Agreement shall be true and correct on and as of
the date hereof and, if applicable, the date of such Loan, and no Significant Event or
Unmatured Significant Event has occurred and is continuing or shall exist after giving effect
to the Loan requested hereby.
	 
	 	 
	 

	 	Capitalized terms used but not defined herein shall have the meanings given to them in the
Agreement.
	 
	 	 
	 

	 	The undersigned certifies to the accuracy of the foregoing.






	 	 	 	 	 
	 	G&K RECEIVABLES CORP.

 	 
	Date:
	By:  	 	 
	 	 	Title:
	 
	 	 	 	 
	 






62











 





EXHIBIT B




AMENDED AND RESTATED LENDER NOTE




			
	 	 	 
	$60,000,000.00
	 	June 2, 2006






          FOR VALUE RECEIVED, G&K RECEIVABLES CORP., A MINNESOTA CORPORATION (the “Borrower”), promises
to pay to the order of THREE PILLARS FUNDING LLC, a Delaware limited liability company (the
“Lender”) on or before the Scheduled Commitment Termination Date, the principal sum of Sixty
Million and no/100 Dollars ($60,000,000.00) or, if less, the aggregate unpaid principal amount of
all Loans shown on the schedule attached hereto (and/or any continuation thereof and/or in the
records of the Lender) made by the Lender pursuant to that certain Loan Agreement, dated as of
November 17, 2004 (together with all amendments and other modifications, if any, from time to time
thereafter made thereto, the “Loan Agreement”), among Borrower, G&K Services, Inc., as servicer,
the Lender and SunTrust Capital Markets, Inc., as Administrator (the “Administrator”). This note
amends and restates in its entirety that certain Lender Note dated November 17, 2004.




          Borrower also promises to pay interest on the unpaid principal amount hereof from time to time
outstanding from the date hereof until maturity (whether by acceleration or otherwise) and, after
maturity, until paid, at the rates per annum and on the dates specified in the Loan Agreement.




          Payments of both principal and interest are to be made in lawful money of the United States of
America in immediately available funds to the account designated by Administrator pursuant to the
Loan Agreement.




          This promissory note is the “Lender Note” referred to in, and evidences indebtedness incurred
under, the Loan Agreement, and the holder hereof is entitled to the benefits of the Loan Agreement,
to which reference is made for a description of the security for this Lender Note and for a
statement of the terms and conditions on which Borrower is permitted and required to make
prepayments and repayments of principal of the indebtedness evidenced hereby and on which such
indebtedness may be declared to be immediately due and payable. Unless otherwise defined,
capitalized terms used herein have the meanings provided in the Loan Agreement.




          All parties hereto, whether as makers, endorsers, or otherwise, severally waive presentment
for payment, demand, protest and notice of dishonor.




          THIS LENDER NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS
OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY OTHERWISE APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS
(OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW).




63









 








	 	 	 	 	 
	 	G&K RECEIVABLES CORP.

 	 
	 	By  	 	 
	 	 	Name:  	Jeffrey L. Wright, CFO 	 
	 	 	Title:  	Chief Financial Officer 	 



64









 






	 	 	 	 	 



Schedule attached to

Amended and Restated Lender Note dated June 2, 2006 of

G&K Receivables Corp.

payable to the order of Three Pillars Funding LLC




	 	 	 	 	 
	Date of

Loan
	 	Amount of

Loan
	 	Amount of

Repayment
	 
	 	 
	 	 
	 	 	 	 	 





65









 






EXHIBIT C




FORM OF MONTHLY REPORT









66









 





EXHIBIT D




FORM OF BORROWING BASE CERTIFICATE










67











 





EXHIBIT E




FORMS OF CONCENTRATION ACCOUNT AGREEMENT




ACCOUNT CONTROL AGREEMENT




November 17, 2004




Regions Bank

417 North 20th Street

National Corporate Banking — 8th floor

Birmingham, AL 35203

Attn: Jay Ingram




     Re: G&K Receivables Corp.



Ladies and Gentlemen:




     G&K Receivables Corp., a Minnesota corporation (“Borrower”) has entered or is about to enter
into certain financing arrangements with Three Pillars Funding LLC (the “Lender”) for whom SunTrust
Robinson Humphrey, Inc. acts as agent and administrator (“Agent”), pursuant to which Lender may
from time to time make loans and advances and provide other financial accommodations to Borrower
secured by, among other collateral, Borrower’s deposit and other bank accounts, including (without
limitation) the following accounts maintained with you (the “Accounts”):



	 	 	 	 	 
	Description of Account 


	 	Account Number 


	 
	 	 	 	 
	G & K Receivables Corp., (SPE),

a subsidiary of G & K Services Inc.

	 	0305023688	 	 






     Upon actual receipt by Jay Ingram (or his successor or designee) by facsimile transmission
from Agent of the Notice of Default, in substantially the form attached hereto as Attachment 1 (the
“Notice”), none of the officers, agents or other representatives of Borrower shall have any
authority to withdraw any amounts from, to draw upon or otherwise exercise any authority or powers
with respect to any of the Accounts or any amounts held therein. Accordingly, after the
transmission of the Notice, and the actual receipt by you thereof, and a after a reasonable
opportunity for you to act upon such Notice, the Accounts shall be under the sole dominion and
control of Agent, and Borrower shall not give, and you shall not honor, any instructions with
respect to any of the Accounts other than those approved in writing by Agent or as otherwise
required by legal process or court order. In any event, after your receipt of the Notice, you
shall be authorized to rely upon and execute, without further consent by Borrower, any oral or
written instructions directing the disposition of funds in the Accounts which are given by any
person representing himself or herself as, and reasonably believed by you to be, an authorized
representative of Agent, and Borrower and Agent will comply with all such instructions given to you
by any such person directing disposition of such funds in the Accounts



68









 




without further consent by Borrower. You shall further be authorized, upon your receipt of the
Notice, to disclose any and all information regarding the Accounts to Agent.




     You shall not be liable to Borrower, Agent or Lender, or any other parties to the financing
arrangements involving Borrower, in any way for any item paid from or charged to any Account by you
in good faith whether such transaction occurs before, during, or after receipt by you of the
Notice, and in any event you shall have a reasonable period of time within which to act upon the
Notice and any instructions received regarding the Accounts. You shall have the right to
interplead the funds on deposit in the Accounts (or any of them) at any time, in your discretion,
in a court of competent jurisdiction, and in such event, you shall be reimbursed from the Accounts
for any and all of your reasonable costs and reasonable expenses (including, without limitation,
reasonable attorneys’ fees) incurred in participating in any such interpleader action. Except as
specifically provided in this letter, the Accounts remain, and shall remain after your receipt of
the Notice, subject to the terms and provisions of any and all of your deposit, funds transfer and
other account agreements respectively affecting the Accounts, as the same may be amended from time
to time.



     Notwithstanding your receipt of the Notice, you may in any event charge the Accounts for any
and all fees, charges and reasonable expenses regarding the routine maintenance and operation of
the Accounts, as provided in the respective deposit agreements, as amended, governing the Accounts,
and you also may charge-back the Accounts for any returned or unpaid items deposited to the
Accounts. If, after your receipt of the Notice, the available funds in the Accounts shall be
insufficient to cover any returned items or any fees, charges or expenses chargeable to the
Accounts, and if Borrower shall fail to reimburse you for the deficiency, Agent, on behalf of the
Lender, shall reimburse you in full for the deficiency up to the amount of funds actually received
by Agent from the Accounts. Otherwise, you agree that the Accounts will not be subject to
deduction, set-off, banker’s lien, or any other right in favor of you. Borrower and Agent
acknowledge that you make no representation or warranty of any kind, express or implied, as to the
rights, remedies or interests of any party or parties with respect to the Accounts, including
(without limitation) any representation or warranty as to the attachment, perfection, or priority
of the interest of Agent or Lender in and to the Accounts.



     You may terminate your obligations and responsibilities hereunder at any time upon not less
than 30 days’ prior written notice delivered to each of Borrower and Agent at their respective
addresses set forth in this letter; provided, that the provisions hereof relating to reimbursement
of you for returned items, expenses, fees and charges, and the provisions hereof relating to
indemnification of you shall survive the termination of the agreements and arrangements hereunder.
Upon the effective date of such termination, each Account shall be subject to the control of the
depositor in whose name the Account has been established.



     You shall have no liability to Borrower, Agent, Lender, or any other parties to the financing
arrangements involving Borrower, for any loss or damage that any or all of such parties may claim
to have suffered or incurred, either directly or indirectly, by reason of the agreements set forth
herein or any transaction or service contemplated by the provisions hereof, unless occasioned by
your breach of this agreement, gross negligence or willful misconduct. In no event shall you be
liable for losses or delays resulting from computer malfunction, interruption



69









 







of commission facilities, labor difficulties or other causes beyond your reasonable control or for
indirect, special or consequential damages. Borrower agrees to indemnify you, and from and after
delivery of the Notice, Agent and Borrower, jointly and severally, agree to indemnify you, and hold
you harmless from and against any and all claims, other than those ultimately determined to be
founded on your breach of this agreement, gross negligence or willful misconduct, and from and
against any damages, penalties, judgments, liabilities, losses or expenses (including reasonable
attorney’s fees and disbursements) incurred as a result of the assertion of any claim, by any
person or entity, arising out of, or otherwise related to, any transaction conducted or service
provided by you through the use of the Accounts (or any of them) pursuant to the procedures and/or
instructions provided for or contemplated herein.



     You agree to use reasonable efforts to give Agent and Borrower, at their respective addresses
set forth herein, notice if any Account shall become subject to any writ, judgment, warrant of
attachment, execution or similar process, but you shall in no way be liable for failure to give
such notice, except to the extent such failure results from your breach of this agreement, gross
negligence or intentional misconduct. You shall not be liable for complying with any writ,
judgment, warrant of attachment, execution or similar process prior to giving notice thereof to
Agent and Borrower.



     Except as otherwise provided herein, any notice, demand or other communication required or
permitted to be given hereunder shall be in writing. For the purposes hereof, the addresses of the
parties hereto shall be as set forth below each party’s name below, or, as to each party, at such
other address as may be designated by such party in a written notice to the other parties.



     The terms of this letter shall be binding upon and inure to the benefit of each of the parties
hereto and their respective successors and assigns and shall in any event be subject to the
requirements of applicable law, including (without limitation) laws relating to bankruptcy and
insolvency.



     Please agree to the terms of, and acknowledge receipt of, this Account Control Agreement by
signing in the space provided below.



70









 





	 	 	 	 	 
	 	Very truly yours,



G&K RECEIVABLES CORP.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



	 	 	 	 	 
	 	G&K Receivables Corp.

5995 Opus Parkway, Suite 550

Minnetonka, MN 55343

Attention:   Glenn Stolt, Treasurer

Phone:         952-912-5870

Fax:             912-912-5950

 	 



	 	 	 	 	 
	 	SUNTRUST ROBINSON HUMPHREY,
 INC., AS AGENT

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



	 	 	 	 	 
	 	SunTrust Robinson Humphrey, Inc.

303 Peachtree Street, NE

24th Floor, MC 3950

Atlanta, Georgia 30308

Attention:   TPF Asset Management

Phone:         404/658-4568

Fax:             404/813-5000

 	 



71









 






	 	 	 	 	 



	 	 	 	 	 
	ACKNOWLEDGED AND AGREED

THIS 29th DAY OF OCTOBER, 2004:



REGIONS BANK

 	 	 
	 
	By:  	 	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



	 	 	 	 	 
	Regions Bank

417 North 20th Street

National Corporate Banking — 8th floor

Birmingham, AL 35203

Attention: Jay Ingram
 	 	 
	Fax: _______________________	 	 
	 	
 	 	 
	 	 	 



72









 






	 	 	 	 	 



ATTACHMENT 1




[FORM OF NOTICE OF DEFAULT]




VIA FACSIMILE TRANSMISSION




	 	 	 	 	 
	TO: 

DATED: 

ATTENTION:

	 	REGIONS BANK


[Date]


_______________ (or successor)
	 	 






     Re:
_______________ Accounts (the “Accounts”):
_______________
_______________

_______________



Dear _______________(or successor):




     Pursuant to the Account Control Agreement among G&K Receivables Corp. (the “Borrower”), the
undersigned and Regions Bank, dated as of November 17, 2004, we hereby give you notice that, as of
the date of your receipt of this notice and upon your reasonable opportunity to act on this notice,
none of the officers, agents or other representatives of Borrower shall have any authority to
withdraw any amounts from, to draw upon or otherwise exercise any authority or powers with respect
to any of the Accounts or any amounts held therein. You are instructed to comply with no
instructions or orders regarding the Accounts other than those given by any person reasonably
believed by you to be our authorized representative. We represent and warrant to you that this
notice is lawful and authorized.



     This notice and all actions taken pursuant hereto are subject in all respects to the terms and
provisions of the Account Control Agreement.



	 	 	 	 	 
	 	SUNTRUST ROBINSON HUMPHREY, INC., as Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



ACKNOWLEDGED THIS _____ DAY OF __________, 200_:




REGIONS BANK




	 	 	 	 	 
	 	 	 
	By:  	 	 	 
	 	Name:  	 	 	 
	 	Title:  	 	 	 
	 




73











 





MULTI PARTY BLOCKED ACCOUNT AGREEMENT

(With Activation)




          THIS AGREEMENT is entered into as of November 17, 2004 among G&K Services, Inc., a Minnesota
corporation (“Company”), G&K Receivables Corp., a Minnesota corporation (“SPE”), SunTrust Robinson
Humphrey, Inc., as agent and administrator (“Administrator”), and Bank of America, N.A. (“Bank”),
with respect to the following:




          A. Company and certain of its affiliates have sold or otherwise transferred to SPE, all of
their right title and interest in and to, inter alia, the checks and other payment instruments
(“Checks”) and balances from time to time in account no. 3750835894 maintained with Bank (the
“Account”). The name of the Account has been changed to “G&K Receivables Corp.”




          B. SPE, as borrower, Company, as servicer, Three Pillars Funding LLC (“Lender”) and
Administrator are parties to a Loan Agreement dated as of November 17, 2004 (as amended from time
to time, the “Loan Agreement”), pursuant to which SPE has granted to Administrator, for the benefit
of Lender, a security interest in, inter alia, the Checks to secure payment of all amounts now or
hereafter due and owing to Administrator and Lender under the Loan Agreement and related documents
(collectively, the “Obligations”).




          C. SPE, Company, Administrator and Bank are entering into this Agreement to
provide for the disposition of net proceeds of Checks and other cash deposited in
the Account.




Accordingly, Company, SPE, Administrator and Bank agree as follows:




          1. Bank is hereby authorized:




          (a) to charge the Account for all returned Checks
deposited therein, service charges, and other fees and
charges associated with this Agreement;




          (b) to follow its usual procedures in the event the Account or any check, draft or other order
for payment of money should be or become the subject of any writ, levy, order or other similar
judicial or regulatory order or process;




          (c) during the Activation Period (hereinafter defined): to transfer all collected and
available balances in the Account (i) on the first day of the Activation Period and (ii) from time
to time thereafter during the Activation Period, in each case, directly to the following account of
Administrator (or otherwise in accordance with Administrator’s written instructions given as
provided in the last sentence of this section, which written instructions shall take precedence
over the following wiring instructions):




74









 








	 	 	 
	Bank Name:
	 	SunTrust Bank
	Location:
	 	25 Park Place, in Atlanta, Georgia
	ABA Routing No.:
	 	061000104
	For credit to:
	 	Three Pillars Funding LLC Account No. 880171236
	Reference:
	 	G&K Receivables Corp. Transaction
	Attention:
	 	Mary Hinsberg





The “Activation Period” means the period which commences within a reasonable period of time not to
exceed two (2) Business Days after Bank’s receipt of a written notice from Administrator in the
form of Attachment I (the “Notice”) and ends upon receipt by Bank of a written notice from
Administrator advising Bank that the Activation Period is no longer required. At all times other
than during an Activation Period, Bank may permit Company to operate and transact business through
the Account in its normal fashion, including making withdrawals from the Account. Funds are not
available if, in the reasonable determination of Bank, they are subject to a hold, dispute or legal
process preventing their withdrawal. “Business Day” means each Monday through Friday, excluding
Bank holidays. Administrator will give Bank sufficient advance written notice of any change in the
instructions for Bank to act upon such changes.




          2. (a) If the balances in the Account are not sufficient to pay Bank for any returned Check
and Company has not paid Bank within five (5) Business Days of its written demand to do so,
Administrator agrees to pay Bank on demand any amounts received by Administrator with respect to
such returned Check.




          (b) If the balances in the Account are not sufficient to compensate Bank for any fees or
charges due Bank under this Agreement, the Company agrees to pay Bank on demand the amount due
Bank. The Company will have breached this Agreement if it has not paid Bank, within 30 days after
the demand, the amount due Bank.




          (c) Company hereby authorizes Bank, without prior notice, from time to time to debit any other
account Company may have with Bank for the amount or amounts due Bank under subsection 2(a) or
2(b).




          (d) Bank agrees it shall not offset against the Account, except as permitted under this
Agreement, until it has been advised in writing by Administrator that the Obligations are paid in
full and any commitment to create additional Obligations has been terminated. Administrator shall
notify Bank promptly in writing upon payment in full of the Obligations, and this Agreement shall
automatically terminate upon receipt of such notice.




          3. Termination of this Agreement shall be as follows:




          (a) Bank may terminate this Agreement upon 30 days’ prior written notice to Company and
Administrator. Administrator may terminate this Agreement upon 30 days’ prior written notice to
Company and Bank. Neither Company nor SPE may terminate this Agreement except with the written
consent of Administrator and upon 30 days’ prior written notice to Bank and Administrator.




75









 








          (b) Notwithstanding subsection 3(a), Bank may terminate this Agreement at any time by written
notice to SPE, Company and Administrator if Company or SPE, on the one hand, or Administrator, on
the other hand, breaches any of the terms of this Agreement and fails to cure same within the
period of grace (if any) provided elsewhere in this Agreement.




          (c) Notwithstanding subsections 3(a) and 3(b), Bank may also terminate this Agreement at any
time if Company or SPE (i) breaches any other agreement with Bank or any agreement involving the
borrowing of money or extension of credit; (ii) liquidates, dissolves, merges with or into or
consolidates with another entity or sells, leases or disposes of a substantial portion of its
business or assets; (iii) terminates its business, fails generally or admits in writing its
inability to pay its debts as they become due; any bankruptcy, reorganization, arrangement,
insolvency, dissolution or similar proceeding is instituted with respect to Company or SPE; Company
or SPE makes any assignment for the benefit of creditors or enters into any composition with
creditors or takes any action in furtherance of any of the foregoing; or (iv) any material adverse
change occurs in Company’s or SPE’s financial condition, results of operations or ability to
perform its obligations under this Agreement. Each of Company and SPE shall promptly give written
notice to Bank of the occurrence of any of the foregoing events as it applies to it.




          4. (a) Bank will not be liable to Company, SPE or Administrator for any expense, claim, loss,
damage or cost (“Damages”) arising out of or relating to its performance under this Agreement other
than those Damages which result directly from its acts or omissions constituting negligence or
intentional misconduct.




          (b) In no event will Bank be liable for any special, indirect, exemplary or consequential
damages, including but not limited to lost profits.




          (c) Bank will be excused from failing to act or delay in acting, and no such failure or delay
shall constitute a breach of this Agreement or otherwise give rise to any liability of Bank, if (i)
such failure or delay is caused by circumstances beyond Bank’s reasonable control, including but
not limited to legal constraint, emergency conditions, action or inaction of governmental, civil or
military authority, fire, strike, lockout or other labor dispute, war, riot, theft, flood,
earthquake or other natural disaster, breakdown of public or private or common carrier
communications or transmission facilities, equipment failure, or act, negligence or default of
Company, SPE or Administrator or (ii) such failure or delay resulted from Bank’s reasonable belief
that the action would have violated any guideline, rule or regulation of any governmental
authority.




          5. Company and SPE, jointly and severally, shall indemnify Bank against, and hold it harmless
from, any and all liabilities, claims, costs, expenses and damages of any nature (including but not
limited to reasonable allocated costs of staff counsel, other reasonable attorney’s fees and any
fees and expenses actually incurred in enforcing this Agreement) in any way arising out of or
relating to disputes or legal actions concerning this Agreement. This section does not apply to
any liabilities, claims, costs, expenses, or damages attributable to the negligence or intentional
misconduct of Bank. Company’s and SPE’s joint and several obligations under this section shall
survive termination of this Agreement.




76









 








          6. (a) Each of the parties hereto represents and warrants to each of the other parties hereto
that (i) this Agreement constitutes its duly authorized, legal, valid, binding and enforceable
obligation; (ii) the performance of its obligations under this Agreement and the consummation of
the transactions contemplated hereunder will not (A) constitute or result in a breach of its
certificate or articles of incorporation, formation or association, by-laws or limited liability
company or partnership agreement, as applicable, or the provisions of any material contract to
which it is a party or by which it is bound or (B) result in the violation of any law, regulation,
judgment, decree or governmental order applicable to it; and (iii) all approvals and authorizations
required to permit the execution, delivery, performance and consummation of this Agreement and the
transactions contemplated hereunder have been obtained.




          (b) Each of Company, SPE and Administrator agrees that it shall be deemed to make and renew
each representation and warranty in subsection 6(a) on and as of each day on which SPE uses the
service.




          7. SPE represents and warrants that it has not assigned or granted a security interest in the
Account or any Checks or funds now or hereafter deposited therein, except to Administrator.




          8. Each of Company and SPE agrees that:




          (a) During the Activation Period, it cannot, and will not, withdraw any monies from the
Account, and Administrator will have exclusive ownership of and access to the Account and neither
SPE nor any of its affiliates (including Company) will have any control of the Account or access
thereto until such time as Administrator advises Bank in writing that Administrator no longer
claims any interest in the Account and the monies deposited and to be deposited in the foregoing;
and




          (b) It will not permit the Account to become subject to any other pledge, assignment, lien,
charge or encumbrance of any kind, nature or description, other than Administrator’s security
interests referred to herein or such other pledge, assignment, lien, charge or encumbrance as shall
be approved of by Administrator.




          9. Administrator acknowledges and agrees that Bank has the right to charge the Account from
time to time, as set forth in this Agreement, and the account agreements, as said agreements are
amended from time to time, and that Administrator has no right to the sums so withdrawn by Bank.




          10. In addition to the original Bank statement which will be provided to SPE, Bank will
provide Administrator with a duplicate statement and such other account information reasonably
requested by Administrator. Each of SPE and Company authorizes Bank to provide any account
information requested by Administrator with respect to the Account.




          11. Company and SPE, jointly and severally, agree to pay to Bank, upon receipt of Bank’s
invoice, all costs, expenses and reasonable attorneys’ fees (including reasonable allocated costs
for in-house legal services) actually incurred by Bank in connection with the enforcement of this
Agreement and any instrument or agreement required hereunder, including but not limited to any such
costs, expenses and fees arising out of the resolution of any



77









 






conflict, dispute, motion regarding entitlement to rights or rights of action, or other action
to enforce Bank’s rights in a case arising under Title 11, United States Code, to the extent Bank
is awarded such costs, expenses or fees by a court of competent jurisdiction. Company and SPE,
jointly and severally, agree to pay Bank, upon receipt of Bank’s invoice, all costs, expenses and
reasonable attorneys’ fees (including reasonable allocated costs for in-house legal services)
incurred by Bank in the preparation and administration of this Agreement (including any amendments
hereto or instruments or agreements required hereunder).




          12. Notwithstanding any of the other provisions in this Agreement, in the event of the
commencement of a case pursuant to Title 11, United States Code, filed by or against Company, or in
the event of the commencement of any similar case under then applicable federal or state law
providing for the relief of debtors or the protection of creditors by or against Company, Bank may
act as Bank deems necessary to comply with all applicable provisions of governing statutes and
shall be held harmless from any claim of any of the parties for so doing.




          13. This Agreement may be amended only by a writing signed by Company, SPE, Administrator and
Bank; except that Bank’s charges are subject to change by Bank upon 30 days’ prior written notice
to SPE.




          14. This Agreement may be executed in counterparts; all such counterparts shall constitute but
one and the same agreement.




          15. Any written notice or other written communication to be given under this Agreement shall
be addressed to each party at its address set forth on the signature page of this Agreement or to
such other address as a party may specify in writing. Except as otherwise expressly provided
herein, any such notice shall be effective upon receipt.




          16. This Agreement controls in the event of any conflict between this Agreement and any other
document or written or oral statement. This Agreement supersedes all prior understandings,
writings, proposals, representations and communications, oral or written, of any party relating to
the subject matter hereof.




          17. None of Company, SPE, or Administrator may assign any of its rights under this Agreement
without the prior written consent of Bank; provided, however, that Bank won’t unreasonably withhold
or delay its consent to any assignment by Administrator to any successor Administrator under the
Loan Agreement or by Company to any successor servicer under the Loan Agreement. Subject to the
preceding sentence, this Agreement shall be binding upon each of the parties hereto and their
respective successor and assigns, and shall inure to the benefit of, and be enforceable by,
Administrator, each of the parties hereto and their respective successor and assigns.




          18. Nothing contained in this Agreement shall create any agency, fiduciary, joint venture or
partnership relationship between Company, SPE, Administrator and/or Bank.




          19. This Agreement shall be interpreted in accordance with the laws of the State of North
Carolina. The parties hereto agree that the Account shall be deemed to be located in the State of
North Carolina for all purposes under the Uniform Commercial Code.




78









 








          20. SPE hereby agrees that in the event that Company makes any payment to Bank pursuant to
Section 5 or 11 of this Agreement, SPE will reimburse Company therefor, upon demand, together with
interest on such amount until reimbursed in full at a rate per annum equal to the sum of (i) the
Prime Rate (as defined in the Loan Agreement), plus (ii) 2% per annum.




<signature pages follow>




79









 








     IN WITNESS WHEREOF, the parties hereto have executed this Agreement by their duly authorized
officers as of the day and year first above written.



	 	 	 	 	 
	 	G&K SERVICES, INC.,

a Minnesota corporation (“Company”)

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 	
Address:

G&K Services, Inc.

5995 Opus Parkway

Suite 500

Minnetonka, MN 55343

Attention: Glenn Stolt, Treasurer

Phone: 952-912-5870
Fax:      912-912-5950
 	 
	 
	 	G&K RECEIVABLES CORP.,

a Minnesota corporation (“SPE”)

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 	
Address:


G&K Receivables Corp.

5995 Opus Parkway

Suite 550

Minnetonka, MN 55343

Attention: Glenn Stolt, Treasurer

Phone: 952-912-5870
Fax:      912-912-5950 	 



80









 






	 	 	 	 	 
	 	SUNTRUST ROBINSON HUMPHREY, INC., 
as
Administrator

(“Administrator”)

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 	
Address:  	
SunTrust Robinson Humphrey, Inc.

Mail Code 3950

303 Peachtree Street, 24th Floor

Atlanta, GA 30308

Attention:  TPF Asset Admin.


Facsimile:    (404) 658-4568

Telephone:  (404) 813-5000 	 



81









 






	 	 	 	 	 
	 	BANK OF AMERICA, N.A.

(“Bank”)

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 	
Address:   	
Bank of America, N. A.

Attn:  Clayton T. (Clay) Bill

Vice President

Mail Code: IL1-231-20-32
 231 S LA SALLE ST

CHICAGO IL 60604

Phone: 312.828.8016

Fax: 312.974.0113


Attn:  Christine Wynimko

Mail Code: IL1-231-14-30

231 S LA SALLE ST

CHICAGO IL 60604

Phone: 312.828.6221

Fax: 877.803.0997


Attn:  Candy E. Jones

Assistant Vice President

Mail Code: IL1-231-20-49

231 S LA SALLE ST

CHICAGO IL 60604

Phone: 312.828.1384

Fax: 312.828.2347 	 
	 




82











 





ATTACHMENT I

TO MULTI PARTY BLOCKED ACCOUNT AGREEMENT




[Letterhead of Administrator]




[Date]




	 	 	 
	To:

	 	Bank of America, N.A.

Attn: Clayton T. (Clay) Bill

Vice President

Mail Code: IL1-231-20-32

231 S LA SALLE ST

CHICAGO IL 60604

Phone: 312.828.8016

Fax: 312.974.0113
	 
	 	 
	 

	 	Attn: Christine Wynimko

Mail Code: IL1-231-14-30

231 S LA SALLE ST

CHICAGO IL 60604

Phone: 312.828.6221

Fax: 877.803.0997
	 
	 	 
	 

	 	Attn: Candy E. Jones

Assistant Vice President

Mail Code: IL1-231-20-49

231 S LA SALLE ST

CHICAGO IL 60604

Phone: 312.828.1384

Fax: 312.828.2347






Re:
G&K Receivables Corp.’s Account No. 3750835894 (the
“Account”)




     Ladies and Gentlemen:



          Reference is made to the Multi Party Blocked Account Agreement dated as of November 17, 2004
(the “Agreement”) among G&K Services, Inc., a Minnesota corporation (“Company”), G&K Receivables
Corp., a Minnesota corporation, SunTrust Robinson Humphrey, Inc., a Tennessee corporation, as agent
and administrator for Three Pillars Funding LLC (“Administrator”), and you, regarding the Account.
Capitalized terms used and not otherwise defined herein are used with the meanings ascribed thereto
in the Agreement.



          In accordance with Section 1(c) of the Agreement, Administrator hereby gives you notice of our
exercise of control of the Account and we hereby instruct you to transfer all collected and
available balances in the Account (i) on the first day of the Activation Period and



83









 







(ii) from time to time thereafter during the Activation Period, in each case, directly to the
following account of Administrator:



	 	 	 	 
	 	Bank Name:
	 	 
	 	Location:
	 	 
	 	ABA Routing No.:

	 	For credit to:
	 	Reference:

	 	G&K Receivables Corp. Transaction
	 	Attention:
	 	 






	 	 	 	 	 
	 	Very truly yours,



SUNTRUST ROBINSON HUMPHREY, INC., as Administrator

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



84









 






	 	 	 	 	 



SCHEDULE 8.12




Deposit Accounts and Concentration Accounts




	 	 	 	 	 	 	 	 	 
	Bank Name	 	Bank Account	 	DPC Name	 	Bank Branch Address
	Wells Fargo Bank, N.A.

	 	4945078129	 	 	Wells Fargo Master
	 	6th & Marquette

Minneapolis, MN
	Wells Fargo Bank, N.A.

	 	39036	 	 	Concentration
	 	6th & Marquette

Minneapolis. MN
	US Bank, N.A.

	 	153910091070	 	 	US Bank Master
	 	800 Nicollet Mall

Minneapolis, MN
	Bank of America

	 	3750835894	 	 	Bank of America Master
	 	231 S. LaSalle Street

Chicago, IL
	Regions Bank

	 	305023688	 	 	Regions Master
	 	417 North 20th Street

Birmingham, AL







85









 








SCHEDULE 9.1.5




COLLATERAL REVIEW REQUIREMENTS




          I. Initial Report of Commercial Lending Consultants




          (a) shall be titled the “Initial Report of Commercial Lending Consultants on Agreed Upon
Procedures”;




          (b) shall be addressed to G&K Services, Inc., as Servicer and to SunTrust Robinson Humphrey,
Inc. as Administrator, at their respective addresses set forth on Schedule 15.3 to the Loan
Agreement;




          (c) the review and subsequent report shall be conducted by                        ;




          (d) the report shall be delivered within thirty (30) days after this transaction’s Closing
Date; and




          (e) randomly select a sample of 100 accounts included in the receivable schedule delivered by
Borrower pursuant to the initial funding and perform the following:





     (i) agree account information including: receivables balance and repayment
terms to the receivable servicing system;




     (ii) verify that the Receivable Files and G&K’s computer records have been
marked or stamped as required by the Loan Agreement (Section 9.1.9); and




     (iii) verify that the Receivable Files have been segregated and stored as
required by the Loan Agreement.



          II. Reports of Commercial Lending Consultants




          (a) shall be titled “Report of Commercial Lending Consultants on Agreed Upon Procedures”;




          (b) shall be addressed as detailed in item I above;




          (c) the reviews and subsequent reports shall be conducted by                        ;




          (d) the reports shall be delivered within thirty (30) days after each annual period following
this transaction’s Closing Date; and




          (e) each report will verify the following:




86









 






     (i) agree data from three (3) randomly selected Borrowing Base Certificates
over the most recent semi-annual period to the system reports and accounting records
used in the compilation of those Borrowing Base Certificates;




     (ii) verify mathematical accuracy of calculations in the Borrowing Base
Certificates in item (i) above and ensure that calculations comply with the
requirements specified in the Loan Agreement;




     (iii) randomly select a sample of 100 accounts included in the receivable
schedules delivered by Borrower pursuant to the subsequent findings during the most
recent semi-annual period and perform the following:




     (A) agree account information including: receivable balance and repayment
terms to the receivable servicing system;




     (B) verify that the receivable files and G&K’s computer records have been
marked or stamped as required by the Loan Agreement;




     (C) verify that the receivable files have been segregated and stored as
required by the Loan Agreement;




     (D) verify data included in Dilutions;




     (iv) confirm that the Concentration Account Agreements remain in place and are
in effect with respect to each of the Concentration Accounts; and




     (v) randomly select a sample of 15 Business Days during the most recent
semi-annual period and verify that the Collections are being concentrated into one
of the Concentration Accounts on each Business Day such Collected are received.




87









 








Schedule 15.3




NOTICE ADDRESSES




Borrower:



G&K Receivables Corp.

5995 Opus Parkway

Minnetonka, MN 55343

Attention:   Thomas J. Rooney, Vice President and Treasurer

Phone:         952-912-5870

Fax:             912-912-5950




Servicer:



G&K Services, Inc.

5995 Opus Parkway

Minnetonka, MN 55343

Attention:   Thomas J. Rooney, Vice President and Treasurer

Phone:         952-912-5870

Fax:             912-912-5950




Lender:



Three Pillars Funding LLC

c/o AMACAR Group, L.L.C.

6525 Morrison Boulevard, Suite 318

Charlotte, NC 28211

Attention:    Doris Hearn

Phone:         704-365-0569

Fax:             704-365-1362




Administrator:



SunTrust Robinson Humphrey, Inc.

23rd Floor, MC3950

303 Peachtree Street

Atlanta, GA 30308

Attention:     Kecia Howson

Telephone:   404-813-5207

Facsimile:    404-813-5000





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