Document:

Exhibit
10.1

 

January 31, 2008

 

Mark A. Hess

 

Dear Mark:

 

We are pleased to extend
you an offer of employment with Geokinetics in the position of Vice President &
Chief Accounting Officer.  This offer
shall supersede any and all previous offers, agreements or understandings, if
any, between you and Geokinetics.

 

The key components of
your employment with Geokinetics are as follows:

 

·                  Your position will be Vice President & Chief Accounting Officer and you
will report to Scott McCurdy, Chief Financial Officer.  You will devote substantially all of your
business time, attention and best efforts to the affairs of the Company.

 

·                  Your starting base salary will be 14,166.67 per month, which amounts to $170,000
on an annual basis.   Your salary will be
reviewed annually.

 

·                  In addition to your salary, you will be
eligible to participate in a bonus plan with
an annual target of 37.5% (0 - 75%)
of your annual base salary.  This will be
paid in accordance with the Company’s Total Compensation Program.  You must be employed at the time of payment
in order to receive your annual bonus.

 

·                  You will be eligible for a sign-on bonus
in the amount of $30,000, to be paid within thirty
(30) days of your start date.  Should you
resign within twelve (12) months of your start date, you will be required to
repay the amount of the sign-on bonus paid to you.

 

·                  You will be eligible for a grant of 3500 shares of restricted stock, subject to the
approval by Geokinetics’ Board of Directors.  
Restrictions on this stock will be lifted in three equal, yearly,
installments beginning one (1) year from the Effective Date, which will be
May 15, 2008.  The grant will be subject
to all of the provisions of the 2007 Stock Awards Plan (including change of
control provisions).

 

·                  You will also be eligible to participate
in our employee benefits program (including 401k, medical and dental, etc.) in
accordance with the terms of each Plan’s provisions.   You will receive full-reimbursement for all
business-related expenses including CPA fees, licenses, training, etc.  You will also be entitled to four (4) weeks of  vacation
annually.  On your first day of
employment, please bring verifying documentation (i.e.,
Social Security numbers and dates of birth) if you have dependents for whom you
wish to have covered under the Company’s benefits program.

 

·                  Should the Company terminate your
employment, other than for cause, you will be entitled to receive as
compensation a sum equal to .75 times your annual base salary.  This would be paid in accordance with the
Company’s policy in place at the time.

 

·                  Following the occurrence of a Change in
Control (as defined in the Geokinetics Inc. 2002 Stock Awards Plan) that
results in a dimunition of your duties, responsibilities or position in the
management of the Company and/or results in a material negative impact on your
renumeration (“a Material Negative Event”), you will have the right to
terminate the Agreement 

 

 

by written notice
to the Company within 90 days following the occurrence of the Material Negative
Event by giving 60 days notice.  If you
make the election to terminate the Agreement under this section and have given
the required notice, then you shall be entitled to receive as compensation a
sum equal to your annual base salary. 
Such amount shall be paid in a single lump sum on your employment termination
date.  This would be paid in accordance
with the Company’s policy in place at the time.

 

·                  Notwithstanding anything to the contrary
in this Agremeent, to the extent that you, in your individual capacity, or your
advisors determine that you are deemed to be a “specified employee” for
purposes of Section 409A(a)(2)(B) of the Internal Revenue Code of
1986, as amended (the “Code”) and that compliance with Section 409A of the
Code so requires, you and the Company agree that any non-qualified deferred
compensation payments due to you under this Agreement in connection with a
termination of your employment which do not constitue short-term deferrals and
would otherwise have been payable to you at any time during the six-month
period immediately following such termination of employment shall not be paid
prior to, and shall instead be payable in a lump sum, immediately following,
the expiration of such six-month period.

 

·                  As with all compensation and benefits
programs, the Company reserves the right to change, amend or discontinue them
at any time.

 

·                  It is agreed that your hiring is
confidential and shall not be disclosed by you, other than to fulfill
obligations to your current employer and by the Company, other than to arrange
for necessary steps to your beginning employment until your start date.  Upon your start date, which will be deemed
your hire date, if you are designated as a Section 16 Officer, the Company
will make a public announcement of your hire.

 

·                  In the course of performing your duties,
you will be handling information concerning the Company, including, but not
limited to, financial accounting, statistical and personnel information.  All such information is confidential and
shall not be disclosed, directly or indirectly, to any person other than
authorized agents of the Company.  Upon
your release or resignation, you agree not to remove, retain, copy, or utilize
andy confidential, privileged or proprietary information or property of the
Company.  All discoveries, inventions or
techniques developed in the course of your employment belong to the Company and
will be disclosed and assigned to it by you. 
You will be required to execute the Company’s standard forms with
regards to the above upon hire and periodically thereafter.

 

·                  Your anticipated start date will be April 1,
2008.

 

Your employment is on an “at-will”
basis, meaning that both you and the Company are free to terminate the
employment relationship at any time, for any reasons, with or without notice,
and with or without cause.

 

This offer of employment,
and your continued employment with the Company, is conditioned upon the
following: In the event one or more conditions are not satisfied nor or in the
future, this offer may be rescinded or your employment terminated if it has
already commenced:

 

·                  Satisfactory results of a standard
background check which may include verification of education, verification of
previous employment, satisfactory references, review of your credit report, a
drug screen, and a criminal history report. Appropriate authorization forms are
included with this letter for you to sign and return.  Given the nature of your position, you also
agree that these checks may be performed periodically over the course of your
employment in accordance with the Company’s policies for senior financial
personnel.

 

2

 

·                  Confirmation by you that you have not
entered into any contracts, agreements or covenants with any prior employer
that would prevent you from working in the capacity for which you have been
offered employment.

 

·                  Your execution of the Company’s Patent and
Confidentiality Agreement, which is included with this letter for you sign and
return.

 

·                  Verification of your legal right to work in
the United States. Proof of employability is required on or before your start
date. Included with this letter is a list that sets forth acceptable documents
to satisfy this requirement.

 

·                  Execution of the Company’s standard
Employment Application, which is included with this letter for you to complete
and return. If you have submitted a complete Employment Application within the
past twelve (12) months, you do not need to complete and submit a new
Employment Application.

 

We look forward to having
you as a member of our team and are confident that you will find your
employment here rewarding.  If all of the
foregoing is acceptable, please sign below and return one copy of this letter
to the undersigned along with the other requested documentation.

 

Sincerely,

 

	
   /s/ Scott McCurdy

  	
   

  	
   /s/ David N. Barbee

  
	
  Scott McCurdy

  	
   

  	
  David N. Barbee

  
	
  Vice
  President & CFO

  	
   

  	
  Vice President, Human
  Resources

  

 

 

	
  AGREED and ACCEPTED:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   /s/ Mark A. Hess

  	
   

  
	
  Mark A. Hess

  	
   

  
	
   

  	
   

  
	
     3/17/08

  	
   

  
	
  Date

  	
   

  

 

3Exhibit 10.1

 

EXECUTION COPY

 

PARTNERSHIP INTEREST
PURCHASE AGREEMENT

dated as of

April 1, 2008

among

AUTOMATIC LAUNDRY COMPANY, LTD.,

THE PARTNERS LISTED ON THE SIGNATURE PAGES HERETO

MAC-GRAY NEWCO, LLC

 

AND

MAC-GRAY SERVICES, INC.

 

 

Table of Contents

 

	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE I DEFINITIONS

  	
   

  
	
   

  	
  1.01

  	
  Definitions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II PURCHASE AND SALE

  	
  8

  
	
   

  	
  2.01

  	
  Purchase and Sale

  	
  8

  
	
   

  	
  2.02

  	
  Purchase Price Determination

  	
  8

  
	
   

  	
  2.03

  	
  Additional Purchase Price
  Adjustments

  	
  9

  
	
   

  	
  2.04

  	
  Closing

  	
  12

  
	
   

  	
  2.05

  	
  Payments at Closing

  	
  12

  
	
   

  	
  2.06

  	
  Proration of Certain Items

  	
  13

  
	
   

  	
  2.07

  	
  Certain Commission Payments

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III REPRESENTATIONS AND WARRANTIES RELATING TO THE
  COMPANY

  	
  15

  
	
   

  	
  3.01

  	
  Limited Partnership Existence and
  Power

  	
  15

  
	
   

  	
  3.02

  	
  Limited Partnership Authorization

  	
  15

  
	
   

  	
  3.03

  	
  Governmental Authorization;
  Consents

  	
  15

  
	
   

  	
  3.04

  	
  Non-Contravention

  	
  16

  
	
   

  	
  3.05

  	
  Capital Structure

  	
  16

  
	
   

  	
  3.06

  	
  Laundry Leases

  	
  16

  
	
   

  	
  3.07

  	
  Equipment

  	
  17

  
	
   

  	
  3.08

  	
  Subsidiaries

  	
  17

  
	
   

  	
  3.09

  	
  Financial Statements

  	
  17

  
	
   

  	
  3.10

  	
  Absence of Certain Changes

  	
  18

  
	
   

  	
  3.11

  	
  Personal Property

  	
  19

  
	
   

  	
  3.12

  	
  Real Property

  	
  20

  
	
   

  	
  3.13

  	
  No Undisclosed Liabilities

  	
  20

  
	
   

  	
  3.14

  	
  Litigation

  	
  21

  
	
   

  	
  3.15

  	
  Material Contracts

  	
  21

  
	
   

  	
  3.16

  	
  Technology and Intellectual
  Property

  	
  22

  
	
   

  	
  3.17

  	
  Insurance Coverage

  	
  23

  
	
   

  	
  3.18

  	
  Compliance with Laws; Permits; No
  Defaults

  	
  23

  
	
   

  	
  3.19

  	
  Employees and Labor Matters

  	
  23

  
	
   

  	
  3.20

  	
  Environmental Compliance

  	
  25

  
	
   

  	
  3.21

  	
  Customers and Suppliers

  	
  26

  
	
   

  	
  3.22

  	
  Transactions with Affiliates;
  Intercompany Arrangements

  	
  27

  
	
   

  	
  3.23

  	
  Finders’ Fees

  	
  27

  
	
   

  	
  3.24

  	
  Taxes

  	
  27

  
	
   

  	
  3.25

  	
  Bank Accounts

  	
  28

  
	
   

  	
  3.26

  	
  Sufficiency of Assets

  	
  28

  
	
   

  	
  3.27

  	
  Illegal Payments

  	
  28

  
	
   

  	
  3.28

  	
  Employee Benefits

  	
  29

  
	
   

  	
  3.29

  	
  Inventory

  	
  31

  
	
   

  	
  3.30

  	
  Other Information

  	
  32

  
	
   

  	
  3.31

  	
  Disclaimer of Other Representations
  and Warranties

  	
  32

  

 

 

	
  ARTICLE IV REPRESENTATIONS AND WARRANTIES RELATING TO
  SELLERS

  	
  32

  
	
   

  	
  4.01

  	
  Title to and Validity of
  Partnership Interests

  	
  32

  
	
   

  	
  4.02

  	
  Authority

  	
  32

  
	
   

  	
  4.03

  	
  No Violation

  	
  33

  
	
   

  	
  4.04

  	
  Consents and Approvals

  	
  33

  
	
   

  	
  4.05

  	
  Brokers’, Finders’ Fees, etc.

  	
  33

  
	
   

  	
  4.06

  	
  Disclosure

  	
  33

  
	
   

  	
  4.07

  	
  Disclaimer of Other Representations
  and Warranties

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER

  	
  33

  
	
   

  	
  5.01

  	
  Organization and Existence

  	
  34

  
	
   

  	
  5.02

  	
  Corporate Authorization

  	
  34

  
	
   

  	
  5.03

  	
  Governmental Authorization;
  Consents

  	
  34

  
	
   

  	
  5.04

  	
  Non-Contravention

  	
  34

  
	
   

  	
  5.05

  	
  Finders’ Fees

  	
  35

  
	
   

  	
  5.06

  	
  Investment Representations

  	
  35

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI ADDITIONAL AGREEMENTS

  	
  35

  
	
   

  	
  6.01

  	
  Confidentiality

  	
  35

  
	
   

  	
  6.02

  	
  Tax Matters

  	
  35

  
	
   

  	
  6.03

  	
  Further Assurances

  	
  38

  
	
   

  	
  6.04

  	
  Seller Releases

  	
  38

  
	
   

  	
  6.05

  	
  Accounts Receivable

  	
  39

  
	
   

  	
  6.06

  	
  Insurance

  	
  40

  
	
   

  	
  6.07

  	
  Terminated Contracts

  	
  41

  
	
   

  	
  6.08

  	
  Sellers’ Net Worth

  	
  41

  
	
   

  	
  6.09

  	
  Software Licenses

  	
  41

  
	
   

  	
  6.10

  	
  Re-Hiring of Terminated Employees

  	
  41

  
	
   

  	
  6.11

  	
  Company’s 2007 Audit

  	
  41

  
	
   

  	
  6.12

  	
  Colorado Springs Location

  	
  41

  
	
   

  	
  6.13

  	
  Sale of Machines

  	
  42

  
	
   

  	
  6.14

  	
  Certain Employee Benefits

  	
  42

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII CONDITIONS TO CLOSING

  	
  42

  
	
   

  	
  7.01

  	
  Conditions to the Obligations of
  Each Party

  	
  42

  
	
   

  	
  7.02

  	
  Conditions to Obligation of Buyer

  	
  42

  
	
   

  	
  7.03

  	
  Conditions to Obligation of Sellers

  	
  43

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII INDEMNIFICATION

  	
  43

  
	
   

  	
  8.01

  	
  Indemnification by Sellers

  	
  43

  
	
   

  	
  8.02

  	
  Limitations on Indemnification by
  Sellers

  	
  44

  
	
   

  	
  8.03

  	
  Indemnification by Buyer and Newco

  	
  45

  
	
   

  	
  8.04

  	
  Limitations on Indemnification by
  Buyer and Newco

  	
  46

  
	
   

  	
  8.05

  	
  Notice; Defense of Claims

  	
  46

  
	
   

  	
  8.06

  	
  No Subrogation

  	
  48

  
	
   

  	
  8.07

  	
  Limited Right of Set-Off

  	
  48

  
	
   

  	
  8.08

  	
  Exclusive Remedy

  	
  49

  
	
   

  	
  8.09

  	
  No Punitive Damages

  	
  49

  
	
   

  	
  8.10

  	
  Tax Treatment

  	
  49

  

 

2

 

	
  ARTICLE IX SELLERS’ REPRESENTATIVE

  	
  49

  
	
   

  	
  9.01

  	
  Appointment of Sellers’
  Representative

  	
  49

  
	
   

  	
  9.02

  	
  Limitation on Actions

  	
  51

  
	
   

  	
  9.03

  	
  Indemnification

  	
  51

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X MISCELLANEOUS

  	
  51

  
	
   

  	
  10.01

  	
  Notices

  	
  51

  
	
   

  	
  10.02

  	
  Amendments; No Waivers

  	
  52

  
	
   

  	
  10.03

  	
  Expenses

  	
  52

  
	
   

  	
  10.04

  	
  Successors and Assigns

  	
  53

  
	
   

  	
  10.05

  	
  Further Assurances

  	
  53

  
	
   

  	
  10.06

  	
  Governing Law

  	
  53

  
	
   

  	
  10.07

  	
  Counterparts; Effectiveness

  	
  53

  
	
   

  	
  10.08

  	
  Entire Agreement

  	
  53

  
	
   

  	
  10.09

  	
  Captions

  	
  53

  
	
   

  	
  10.10

  	
  Jurisdiction

  	
  53

  
	
   

  	
   

  	
   

  
	
  Schedules

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule
  1.01(a)

  	
  Assumed Contracts

  	
   

  
	
  Schedule
  1.01(b)

  	
  New Machines and Purchase Price for New
  Machines

  	
   

  
	
  Schedule
  1.01(c)

  	
  Bonus and Up Front Payments

  	
   

  
	
  Schedule
  1.01(d)

  	
  Excluded Assets

  	
   

  
	
  Schedule
  1.01(e)

  	
  Employment Expenses

  	
   

  
	
  Schedule
  2.01

  	
  List of Partners; Purchase Price

  	
   

  
	
  Schedule
  2.03(a)

  	
  Closing Equipment Count

  	
   

  
	
  Schedule
  2.03(b)

  	
  Laundry Leases

  	
   

  
	
  Schedule
  3.03

  	
  Required Consents

  	
   

  
	
  Schedule
  3.06

  	
  Laundry Leases

  	
   

  
	
  Schedule
  3.09

  	
  Financial Statements

  	
   

  
	
  Schedule
  3.10

  	
  Certain Changes

  	
   

  
	
  Schedule
  3.12(b)

  	
  Leases

  	
   

  
	
  Schedule
  3.13

  	
  Liabilities

  	
   

  
	
  Schedule
  3.14

  	
  Litigation

  	
   

  
	
  Schedule
  3.15

  	
  Material Contracts

  	
   

  
	
  Schedule
  3.16

  	
  Intellectual Property

  	
   

  
	
  Schedule
  3.17

  	
  Insurance

  	
   

  
	
  Schedule
  3.18

  	
  Permits

  	
   

  
	
  Schedule
  3.19

  	
  Employees

  	
   

  
	
  Schedule
  3.20

  	
  Environmental Matters

  	
   

  
	
  Schedule
  3.24

  	
  Taxes

  	
   

  
	
  Schedule
  3.25

  	
  Bank Accounts

  	
   

  
	
  Schedule
  3.28

  	
  Employee Benefits

  	
   

  
	
  Schedule
  3.29

  	
  Equipment Inventory

  	
   

  
	
  Schedule
  6.02(f)

  	
  Allocation of Purchase Price

  	
   

  
	
  Schedule
  6.07

  	
  Terminated Contracts

  	
   

  
	
   

  	
   

  
	
  Exhibits

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  Form of Note

  	
   

  
	
  Exhibit B

  	
  Form of Escrow Agreement

  	
   

  
						

 

3

 

PARTNERSHIP INTEREST
PURCHASE AGREEMENT

 

PARTNERSHIP INTEREST PURCHASE AGREEMENT
(the “Agreement”) dated as of April 1, 2008 among Automatic Laundry
Company, Ltd., a Texas limited partnership (the “Company”), the partners
of the Company listed on the signature pages hereto (“Sellers”),
Mac-Gray Newco, LLC, a Delaware limited liability company (“Newco”), and
Mac-Gray Services, Inc., a Delaware corporation (the “Buyer”).

 

R E C I T A L S:

 

WHEREAS, as of the
date hereof, the Sellers legally and beneficially own all of the partnership
interests of the Company as reflected on Schedule 2.01 attached hereto
(collectively, the “Partnership Interests”);

 

WHEREAS,
each of Newco and the Buyer desires to purchase from Sellers all of the
outstanding Partnership Interests as reflected on Schedule 2.01 attached
hereto; and

 

WHEREAS,
each Seller desires to sell to Newco and the Buyer all of the Partnership
Interests owned by such Seller as reflected on Schedule 2.01 attached
hereto;

 

NOW,
THEREFORE, the parties hereto agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

1.01        Definitions.  (a)  The following terms, as used
herein, have the following meanings:

 

“Accountant”
shall have the meaning set forth in Section 2.02(b).

 

“Affiliate”
means, with respect to any Person, any Person directly or indirectly
controlling, controlled by, or under common control with such Person.

 

“Assumed
Contracts” means the contracts set forth on Schedule 1.01(a) attached
hereto.

 

“Assumed
Liabilities” means (a) the obligations of the Company under the
Laundry Leases (including without limitation, the obligation to make any
required commission payments, revenue sharing payments or route rental payments
under any Laundry Lease with respect to amounts collected or received by Buyer)
and the rental and other payments specified in any Laundry Lease) and the
Assumed Contracts, but only to the extent such obligations: (i) arise on
or after the Closing Date and, in the case of any Assumed Contracts, prior to
the time such Assumed Contract becomes a Terminated Contract in accordance with
Section 6.07 of this Agreement; (ii) do not arise from or relate to
any breach by the Company prior to the Closing of any provision of any Laundry
Lease or Assumed Contract; (iii) do not arise from or relate to any event,
circumstance or condition occurring or existing prior to the Closing Date that,
with notice 

 

 

or lapse of time or both, would
constitute or result in a breach by the Company, Buyer or any of their
respective Affiliates of any provision of any Laundry Lease or Assumed
Contract; and (iv) are ascertainable solely by reference to the express
terms of the Laundry Leases and Assumed Contracts, and (b)(i) the
obligation of the Company to pay the purchase price for new Machines ordered
but not delivered prior to Closing, for the new Machines and up to the purchase
price therefor as set forth on Schedule 1.01(b) hereto, (ii) bonus
and up front payments for new Laundry Leases committed but not yet due and
payable in the ordinary course of business until after the Closing, not to
exceed the amounts set forth on Schedule 1.01(c) hereto, (iii) accrued
vacation and sick leave pay (if any) for employees retained by the Company after
Closing (except Seller Expenses), (iv) the direct administrative costs of
terminating the Automatic Laundry Company, Ltd. 401(k) Retirement Plan
(the “Company 401(k) Plan”), (v) liabilities for the matter
set forth as item (2) on Schedule 3.13, and (vi) liabilities
for rent and common area maintenance charges arising from and after the Closing
under items [6] and [7] on Schedule 3.12(b) up to $61,846.70.

 

“Balance Sheet”
means the unaudited balance sheet of the Company as of the Balance Sheet Date
found in Schedule 3.09.

 

“Balance Sheet
Date” means December 31, 2007.

 

“Closing
Adjustment” means the arithmetic sum (positive or negative) of the
Indebtedness Adjustment, plus the Seller Expense Adjustment, plus the
Liabilities Adjustment.

 

“Closing Date”
means the date of the Closing.

 

“Code”
means the Internal Revenue Code of 1986, as amended.

 

“Equipment
Adjustment” means the adjustment pursuant to Section 2.03(a) hereof.

 

“Equipment
Inventory” means all new, used and refurbished Machines and related tools,
parts, equipment and accessories which are not located at the Laundry Lease
locations.

 

“Estimated Indebtedness” means the estimated
Indebtedness of the Company as of immediately prior to the Closing and as set
forth on the Closing Certificate.

 

“Estimated Liabilities” means the reasonably
estimable Liabilities of the Company as of immediately prior to the Closing and
as set forth on the Closing Certificate.

 

“Estimated
Seller Expenses” mean the estimated Seller Expenses as of immediately prior
to the Closing and as set forth on the Closing Certificate.

 

“Excluded
Assets” means the assets set forth on Schedule 1.01(d).

 

“Excluded Liabilities” means all obligations and liabilities of
the Company or any Affiliate of the Company (except for the Assumed Liabilities)
of any kind or nature whatsoever, whether known, unknown, accrued, absolute,
contingent or otherwise, now existing or hereafter arising, including but not
limited to obligations and liabilities relating to or arising from (i) the
operation of the Company’s business and/or the ownership of the Company’s
assets prior to the 

 

4

 

Closing, including in
connection with events commencing or occurring or circumstances existing prior
to the Closing (including without limitation, the obligation to make any
required commission payments, revenue sharing payments or route rental payments
under any Laundry Lease with respect to amounts collected or received by the
Company prior to the Closing Date and any liability under any Environmental
Law), (ii) any event, act, omission, condition or any other state of facts
occurring or existing prior to the Closing, (iii) any contract other than
the Laundry Leases and the Assumed Contracts, (iv) Taxes of the Company or
Taxes attributable to the Company’s assets for any portion of any period or
partial period ending up to but excluding the Closing Date, (v) the
employment of employees of the Company (except wages and other benefits
accruing on and after the Closing Date, but not including Seller Expenses), (vi) any
matter set forth on Schedules 3.10 or 3.14 and under item 1 of Schedule
3.13 of the disclosure schedule attached hereto, (vii) the Company’s
401(k) Plan and Excess Benefit Plan, (viii) any Excluded Asset and
the transfer of any such Excluded Asset from the Company, (ix) any
Excluded Taxes, and (x) obligations under Section 6.07 of this
Agreement in respect of Terminated Contracts.

 

“Excluded Tax” means any and all
Taxes incurred as a result of the transactions contemplated by this
Agreement.

 

“GAAP”
means generally accepted accounting principles of the United States,
consistently applied.

 

“HSR Act”
means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

 

“Indebtedness”
means without duplication, all obligations, contingent or otherwise, of the
Company on a consolidated basis (i) for borrowed money; (ii) evidenced
by notes, bonds, debentures or similar instruments; (iii) for the deferred
purchase price of goods or services; (iv) all liabilities under capitalized
leases, conditional sale or other title retention agreements (whether
characterized as current liabilities or long-term liabilities); (v) for
reimbursement obligations, whether contingent or matured, with respect to
letters of credit (whether drawn or undrawn), bankers’ acceptances, surety
bonds or interest rate cap agreements, interest rate swap agreements, foreign
currency exchange contracts or other hedging contracts; (vi) in the nature
of guarantees of the types of obligations described in (i)-(v) above; (vii) for
all accrued and unpaid interest on or any fees, premiums, penalties or other
amounts due with respect to any of the obligations described in (i)-(vi) above,
including any and all premiums, penalties and other amounts due assuming
payment in full of all such Indebtedness as of immediately prior to the
Closing; and (viii) all liabilities for reserves for any of the foregoing.

 

“Indebtedness
Adjustment” means the difference between the Estimated Indebtedness and the
Indebtedness, as finally determined pursuant to Section 2.02.  If the Estimated Indebtedness exceeds the
Indebtedness as finally determined pursuant to Section 2.02, then the
Indebtedness Adjustment is a positive number equal to such excess.  If the Indebtedness as finally determined
pursuant to Section 2.02 exceeds the Estimated Indebtedness, then the
Indebtedness Adjustment is a negative number equal to such excess.

 

“Intellectual
Property Rights” has the meaning set forth in Section 3.16.

 

5

 

“Interested Person” has the meaning set forth in Section 3.22.

 

“to the Company’s Knowledge”, “Known to the Company” and
words of similar import means the actual knowledge of any of Joe K. Pace, Gary
Pace, Margaret P. Sykes, Tom L. Burgett, Brian Cox, Al Losey, Adrian Madera and
Lynn Kabrud.

 

“Laundry Leases” means all leases, contracts, agreements
and arrangements, whether written or oral and including any tenancy at will,
for the installation, placement, servicing or leasing of Machines (including
without limitation leases of laundry facility premises and leases of Machines
to apartment owners in exchange for rental payments from the apartment owner).

 

“Laundry Lease
Adjustment” means the adjustment pursuant to Section 2.03(b) hereof.

 

“Liabilities”
means all liabilities of the Company of any kind whatsoever, whether current,
long-term, accrued, contingent, absolute, determined, determinable or
otherwise, as of the Closing (whether or not required to be reflected on a
balance sheet under GAAP), including but not limited to accounts payable, accrued expenses,
Indebtedness (including capital leases), and liabilities relating to the
Terminated Contracts, but excluding the Assumed Liabilities.

 

“Liabilities Adjustment” means the difference between the
Estimated Liabilities and the reasonably estimable Liabilities, as finally
determined pursuant to Section 2.02. 
If the Estimated Liabilities exceed the reasonably estimable Liabilities
as finally determined pursuant to Section 2.02, then the Liabilities Adjustment
is a positive number equal to such excess. 
If the reasonably estimable Liabilities exceed the Estimated Liabilities
as finally determined pursuant to Section 2.02, then the Liabilities
Adjustment is a negative number equal to such excess.

 

“Lien”
means, with respect to any asset, any mortgage, lien, pledge, charge, security
interest, restriction or encumbrance of any kind in respect of such asset.

 

“Machines”
means all laundry machines, washers, dryers, change machines, debit-card and
smart-card add-value stations, detergent, soap, bleach and softener dispensers
and similar machines and equipment of the Company.

 

“Material
Adverse Change” means a material adverse change in the business, assets,
financial condition or results of operations of the Company, except a change
resulting from one or more of the matters listed in clause (i) through (vi) of
the definition of Material Adverse Effect.

 

“Material
Adverse Effect” means any change, effect, event, occurrence, state of facts
or development that is materially adverse to the business, financial condition
or results of operations of the Company; provided, however, that none of the
following shall be deemed in themselves, either alone or in combination, to
constitute, and none of the following shall be taken into account in
determining whether there has been or will be, a Material Adverse Effect: (i) any
failure by the Company to meet internal projections or forecasts or published
revenue or earnings predictions for any period ending (or for which revenues or
earnings are released) on or after the date of this Agreement; (ii) any
change or effect resulting from the public announcement of the transactions
contemplated by this Agreement (including any reduction in sales, any
disruption in supplier or similar relationships or any loss of employees); (iii) any
change in conditions 

 

6

 

affecting the industries in
which the Company participates, the U.S. economy as a whole or local economies
in any locations where the Company has material operations, provided, that,
any such change does not affect the Company in a disproportionate manner
compared to other companies operating in the same industries in which the
Company operates; (iv) the payment of any amounts due to, or the provision
of any other benefits to, any officers or employees under employment contracts,
employee benefit plans, severance arrangements or other arrangements in
existence as of the date of this Agreement; (v) any change or effect
resulting from any taking of any action specifically required by, this
Agreement; or (vi) any change in accounting requirements or principles or
any change in applicable law, or the interpretation thereof.

 

“Noncompetition
Agreements” has the meaning set forth in Section 7.02(e).

 

“Person”
means an individual, corporation, partnership, association, trust or other
entity or organization, including a government or political subdivision or an
agency or instrumentality thereof.

 

“Route
Equipment” means all Machines located at the Laundry Lease locations.

 

“Seller Expense
Adjustment” means the difference between the Estimated Seller Expenses and
the Seller Expenses, as finally determined pursuant to Section 2.02.  If the Estimated Seller Expenses exceed the
Seller Expenses as finally determined pursuant to Section 2.02, then the
Seller Expense Adjustment is a positive number equal to such excess.  If the Seller Expenses exceed the Estimated
Seller Expenses as finally determined pursuant to Section 2.02, then the
Seller Expense Adjustment is a negative number equal to such excess.

 

“Seller
Expenses” means (i) all unpaid fees, costs and expenses incurred by
any Seller, the Company or any of their respective Affiliates for which the
Company is liable in connection with the preparation of, or the transactions
contemplated by, the Transaction Documents, including, but not limited to, all
fees, costs and expenses payable to Kelly Hart & Hallman LLP, Ernst &
Young L.L.P. and Clifton Gunderson LLP, except as provided in Section 6.11,
and (ii) all costs
and expenses described on Schedule 1.01(e).

 

“Seller’s
Fraction” means the fraction for each Seller as set forth on Schedule
2.01.

 

“Subsidiary”
means any entity of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of directors or other
persons performing similar functions are owned directly or indirectly by
another entity.

 

“Taxes”
means any and all U.S., state, local and foreign taxes, assessments and other
governmental charges, duties, impositions and liabilities, including without
limitation those based upon or measured by gross receipts, income, profits,
sales, use and occupation, and value added, ad valorem, transfer, franchise,
withholding, payroll, recapture, employment, excise and property taxes,
together with all interest, penalties and additions imposed with respect to
such amounts.

 

“Terminated
Contracts” has the meaning set forth in Section 6.07.

 

7

 

“Transaction
Document” means this Agreement and each agreement, document, schedule,
certificate or other instrument executed or delivered in connection with this
Agreement, including each document or instrument of conveyance contemplated by Schedule
3.10(b) hereto.

 

“WARN Act” means the Worker Adjustment and
Retraining Act of 1988.

 

ARTICLE II

PURCHASE AND SALE

 

2.01        Purchase and Sale.  Upon the terms and subject to the conditions
of this Agreement, each Seller, severally but not jointly, shall sell to Buyer
and Newco, and Buyer and Newco shall purchase from each such Seller in
accordance with Schedule 2.01, at the Closing, all right, title and
interest of such Seller in and to the Partnership Interests as set forth
opposite such Seller’s name on Schedule 2.01, free and clear of all
claims, Liens, restrictions and encumbrances and on the terms and subject to
the conditions set forth in this Agreement.

 

2.02        Purchase Price Determination.

 

(a)           The aggregate purchase
price for the Partnership Interests is equal to the sum of (i) 115,552,166.00,
plus (ii) the Post Closing Net Cash Amount, minus (iii) the
Indebtedness as of immediately prior to the Closing, minus (iv) all
reasonably estimable Liabilities, minus
(v) all Seller Expenses, minus (vi) the Equipment Adjustment, if any,
minus (vii) the Laundry Lease Adjustment, if any (the “Purchase
Price”).

 

(b)           The Purchase Price will
be allocated among the Sellers pro rata in accordance with each Seller’s
Fraction set forth in Schedule 2.01. 
Within ninety days (90) days after the Closing Date, Buyer will deliver
to the Seller’s Representative a closing statement, which shall set forth the
Closing Adjustment, the Indebtedness, the Indebtedness Adjustment, the Seller
Expenses, the Seller Expense Adjustment, the reasonably estimable Liabilities
and the Liabilities Adjustment (the “Closing Statement”).  The Buyer will make available to the Sellers’
Representative all records and work papers used in preparing the Closing
Statement that are reasonably necessary for the Sellers’ Representative to
confirm the Buyer’s computations therein. 
If the Sellers’ Representative disagrees with the calculations contained
in the Closing Statement, the Sellers’ Representative may, within thirty (30)
days after receipt of the Closing Statement, deliver a written notice (an “Objection
Notice”) to the Buyer setting forth the Sellers’ Representative’s
computation of the Closing Adjustment, the Indebtedness, the Indebtedness
Adjustment, the Seller Expenses, the Seller Expense Adjustment, the reasonably
estimable Liabilities and the Liabilities Adjustment as the case may be, and
information, arguments and support for such computation.  If the Buyer has not received an Objection
Notice within thirty (30) days after the Sellers’ Representative has received
the Closing Statement, then the parties will be deemed to have agreed to the
Closing Adjustment, the Indebtedness, the Indebtedness Adjustment, the Seller
Expenses, the Seller Expense Adjustment, the reasonably estimable Liabilities
and the Liabilities 

 

8

 

Adjustment as
set forth in the Closing Statement.  The
Buyer and the Sellers’ Representative will attempt, in good faith, to resolve
any disputes, as set forth in the Objection Notice, as to the computation of
the Closing Adjustment, the Indebtedness, the Indebtedness Adjustment, the
Seller Expenses, the Seller Expense Adjustment, the reasonably estimable
Liabilities and the Liabilities Adjustment. 
If the Buyer and the Sellers’ Representative do not achieve final
resolution within twenty (20) days after the Buyer has received the Objection
Notice, then the Buyer and the Sellers will retain Ernst & Young LLP
(the “Accountant”) to resolve any remaining disputes. The Accountant
will consider only those items and amounts in the Closing Statement set forth
in the Objection Notice which the Buyer and the Sellers’ Representative are
unable to resolve.  The Buyer and the
Sellers’ Representative shall each make a submission to the Accountant within
twenty (20) days after the Accountant’s engagement, which submission shall
contain a computation of the Closing Adjustment, the Indebtedness, the
Indebtedness Adjustment, the Seller Expenses, the Seller Expense Adjustment,
the reasonably estimable Liabilities and the Liabilities Adjustment and
information, arguments, and support for such computation.  The Accountant shall review such submissions
and base its determination solely on such submissions (without an independent
review).  In resolving any disputed item,
the Accountant may not assign a value to any item greater than the greatest
value for such item claimed by the Buyer or the Sellers’ Representative or less
than the smallest value for such item claimed by the Buyer or the Sellers’
Representative.  The Accountant’s
determination will be based on the definitions of the Closing Adjustment, the
Indebtedness, the Indebtedness Adjustment, the Seller Expenses, the Seller
Expense Adjustment, the reasonably estimable Liabilities and the Liabilities
Adjustment in this Agreement.  The
determination of the Accountant will be conclusive and binding upon the
parties.  The Accountant shall reach a
decision not later than six (6) months after a dispute is submitted to
it.  The costs of such Accountant’s
review (including reasonable attorney’s fees of counsel providing a legal
opinion to, and at the request of, the Accountant, if any) shall be borne 50%
by Buyer and 50% by Sellers.

 

2.03        Additional Purchase
Price Adjustments.

 

(a)           Equipment Adjustment.  Within 120 days after the Closing Date, Buyer
shall determine, as of the Closing Date, the number of all washers and dryers
located at the Laundry Lease locations (the “Closing Equipment Count”)
and shall deliver to the Sellers’ Representative a schedule reflecting such
count.  The Sellers’ Representative shall
be deemed to accept the Closing Equipment Count unless the Sellers’
Representative delivers a notice of objection to Buyer within thirty (30) days
following receipt of the Closing Equipment Count.  If the Sellers’ Representative provides a
notice of objection to Buyer, the Sellers’ Representative and Buyer shall first
use commercially reasonable efforts to resolve such dispute.  If the parties are able to resolve such
dispute, the Closing Equipment Count shall be revised to the extent necessary
to reflect such resolution and shall be conclusive and binding upon all parties
and shall not be subject to dispute or review. 
If the parties are unable to resolve the dispute within twenty (20) days
after delivery of a notice of objection by the Sellers’ Representative, either
party may submit the dispute to the Accountant for resolution, which shall be
subject to the procedures and limitations described in Section 2.02(b).  The Closing Equipment Count 

 

9

 

as determined
by the Accountant shall be conclusive and binding upon all parties and shall
not be subject to dispute or review.  If
the Closing Equipment Count as finally determined is less than the “Equipment
Target” set forth on Schedule 2.03(a) (the “Equipment Target”),
then Sellers shall pay to Buyer an amount in cash equal to (i) the
Equipment Target minus the Closing Equipment Count multiplied by (ii) the “Equipment
Multiple” set forth on Schedule 2.03(a) (the “Equipment Multiple”),
and the Purchase Price shall be reduced by such amount.  Any amount due from Sellers to Buyer under
this Section 2.03(a) shall bear interest in accordance with Section 2.05(d) from
the date the Closing Equipment Count is finally determined.  If the Closing Equipment Count as finally
determined equals or exceeds the Equipment Target, then no payment shall be
required from Sellers to Buyer under this Section 2.03(a).  For purposes of calculating the Closing
Equipment Count, each stacked washer and/or stacked dryer unit and 25 lb. or
more washer or tumbler dryer shall be counted as two (2) machines, and
each other washer and dryer shall be counted as one (1) machine.  The Purchase Price shall be adjusted as
necessary to reflect any payment made pursuant to this Section 2.03(a).

 

(b)           Laundry Lease
Adjustment.

 

(i)            Within ten (10) days after July 30,
2008, Buyer shall prepare and deliver to the Sellers’ Representative a schedule
(the “Lease Schedule”) listing each Restricted Laundry Lease for which
the required consents to the assignment to Buyer of such Restricted Laundry
Lease have not been obtained by July 30, 2008 (each a “Non-Assigned
Lease” and collectively, the “Non-Assigned Leases”); provided that
if Buyer does not deliver the Lease Schedule within the period described above
then there shall be no Laundry Leases Adjustment (as defined below).  The Sellers’ Representative shall be deemed
to accept the Lease Schedule unless the Sellers’ Representative delivers a
notice of objection to Buyer within thirty (30) days following receipt of the
Lease Schedule.  If the Sellers’
Representative provides a notice of objection to Buyer, the Sellers’
Representative and Buyer shall first use commercially reasonable efforts to
resolve such dispute.  If the parties are
able to resolve such dispute, the Lease Schedule shall be revised to the extent
necessary to reflect such resolution and shall be conclusive and binding upon
all parties and shall not be subject to dispute or review.  If the parties are unable to resolve the
dispute within twenty (20) days after delivery of a notice of objection by the
Sellers’ Representative, either party may submit the dispute to the Accountant
for resolution, which shall be subject to the procedures and limitations
described in Section 2.02(b).  The
Lease Schedule as determined by the Accountant shall be conclusive and binding
upon all parties and shall not be subject to dispute or review.  The Lease Schedule shall specify for each
Non-Assigned Lease listed, an amount equal to the Equipment Multiple multiplied
by the number of Machines subject to such Non-Assigned Lease and the sum of all
such amounts listed on such Lease Schedule for all Non-Assigned Leases (the “Total
Non-Assigned Lease Amount”).  The
Sellers shall only pay Buyer to the extent the Total Non-Assigned Lease Amount
exceeds the “Threshold Amount” set forth on Schedule 2.03(b) hereto,
and then only to the extent of such excess (the “Laundry Lease Adjustment”).  For purposes of this Agreement, “Restricted
Laundry Lease” means a Laundry Lease which, as a 

 

10

 

result of the
transactions contemplated by this Agreement, requires the consent or approval
of a third party to transfer or assign such Laundry Lease to Buyer.  A Laundry Lease that requires a third party
consent or approval to assign such Laundry Lease from the Company to another
party shall not constitute a Restricted Laundry Lease unless the transactions
contemplated by this Agreement are deemed to constitute an assignment under the
express terms of such Laundry Lease or Laundry Lease otherwise has express
terms requiring consent to, or approval of, the transactions contemplated
hereby by a third party.

 

(ii)           Any amount due from Sellers to Buyer under
this Section 2.03(b) shall bear interest in accordance with Section 2.05(d) from
the date the Laundry Lease Adjustment is finally determined.  The Purchase Price shall be reduced by an
amount equal to the Laundry Lease Adjustment.

 

(c)           Route Cash.

 

(i)            For purposes of this Agreement, “Post-Closing
Net Cash Amount” for a Laundry Lease location means the sum of (a) all
undeposited collections made by the Company from such location prior to
Closing, whether in transit to banks, in counting rooms or in vehicles at the
time of Closing, less the aggregate amount of commissions, revenue sharing
payments and route rental payments in respect of such undeposited collections,
and (b) (i) the aggregate amount of cash collected by Buyer from such
Laundry Lease location from the first collection by Buyer of such location
after the Closing less the aggregate amount of commissions, revenue sharing
payments and route rental payments payable in respect of such cash collection
multiplied by (ii) a fraction, the numerator of which is the number of
days from and including the last date on which the Company collected from such
Laundry Lease location prior to the Closing Date (as reflected on Schedule
3.06 hereto) to but excluding the Closing Date, and the denominator of
which is the number of days from and including the last date on which the
Company collected from such Laundry Lease location prior to the Closing Date
(as reflected on Schedule 3.06 hereto) to but excluding the first date
that Buyer collects from such location on or following the Closing.  The costs of collections made pursuant to
this Section 2.03(c) will be borne by the Buyer.

 

(ii)           Within sixty (60) days after the Closing
Date, Buyer will deliver to the Sellers’ Representative a schedule setting
forth a calculation of the Post-Closing Net Cash Amount for each Laundry Lease
location (the “Net Cash Settlement Statement”).  Unless the Sellers’ Representative notifies
Buyer in writing within thirty (30) days after receipt of the Net Cash
Settlement Statement that the Sellers’ Representative disagrees with such
statement (and provides reasonable detail of the nature of each disputed item),
such Net Cash Settlement Statement shall be deemed the “Final Net Cash
Settlement Statement,” shall be binding upon all parties and shall not be
subject to dispute or review.  If the
Sellers’ Representative does provide such notice to Buyer within such
thirty-day period, Buyer and the Sellers’ Representative shall first use
commercially reasonable efforts to resolve such dispute and, if the parties are
able to resolve 

 

11

 

such dispute,
the Net Cash Settlement Statement shall be revised to the extent necessary to
reflect such resolution, shall be deemed the “Final Net Cash Settlement
Statement” and shall be conclusive and binding upon all parties and shall
not be subject to dispute or review.  If
the parties are unable to resolve the dispute within thirty (30) days after
Buyer’s receipt of the Sellers’ Representative’s notice, either party may
submit the dispute to the Accountant for resolution, which shall be subject to
the procedures and limitations described in Section 2.02(b).  The Net Cash Settlement Statement as
determined by the Accountant shall be deemed the “Final Net Cash Settlement
Statement,” shall be conclusive and binding upon all parties and shall not
be subject to dispute or review.  If the
Sellers’ Representative does not dispute the Final Net Cash Settlement
Statement, then Buyer shall remit to Sellers the amount allocated to Sellers on
such Statement within ninety-five (95) days of the Closing Date.  If the Sellers’ Representative disputes the
Final Net Cash Settlement Statement, then Buyer shall promptly remit to Sellers
the amount, if any, that is not in dispute and remit any additional amount
allocated to Sellers pursuant to a final resolution reached by agreement
between the parties or determined by the Accountant, as soon as reasonably
practical after the dispute is resolved.

 

(iii)          Any amount due from Buyer to the Sellers’
Representative under this Section 2.03(c) shall bear interest in
accordance with Section 2.05(d) from the date the Closing Net Cash
Amount is finally determined.

 

(d)           The costs of the
Accountant’s review under any of clauses (a), (b) or (c) of this Section 2.03
(including reasonable attorney’s fees of counsel providing a legal opinion to,
and at the request of, the Accountant, if any), shall be borne 50% by Buyer and
50% by Sellers.

 

2.04        Closing.  The closing of the purchase and sale provided
for in this Agreement (the “Closing”) shall be held at the offices of
Goodwin Procter LLP, Exchange Place, Boston, MA 
02109 on the date hereof, or at such other place or later date as may be
fixed by mutual agreement of Buyer and the Sellers’ Representative (the “Closing
Date”).

 

2.05        Payments at Closing.

 

(a)           On the Closing Date,
the Buyer and Newco will cause to be paid to each Seller an amount equal to
such Seller’s pro rata portion (based on each Seller’s Fraction) of the
Estimated Purchase Price.  The cash
portion of the Estimated Purchase Price shall be paid by wire transfer of
immediately available funds to an account designated by each Seller at least
two (2) business days prior to the Closing Date.  The Estimated Purchase Price shall be paid
$105,538,166.00  in cash and $10,000,000  in the form of an unsecured promissory note of the Buyer
(the “Note”), all as set forth on Schedule 2.01 opposite each
Seller’s name.  The form of promissory
note is attached hereto as Exhibit A.  The “Estimated Purchase Price” means an
amount equal to the sum of (i) $115,552,166.00, minus (ii) the
Estimated Indebtedness, minus (iv) the Estimated Seller Expenses, minus (v) the
Estimated Liabilities.

 

12

 

(b)           Closing Certificate.  At least three (3) business days prior
to the Closing Date, the Seller’s Representative shall deliver to the Buyer the
Closing Certificate, which shall set forth a reasonable, good faith estimate of
the Estimated Indebtedness, Estimated Seller Expenses and the Estimated
Liabilities, in each case as mutually agreed to by the Buyer and the Sellers’
Representative.

 

(c)           Closing Adjustment.  The Closing Adjustment shall be computed in
accordance with the terms of this Agreement or by the written agreement of the
Buyer and Sellers’ Representative, as the case may be, immediately after the
final determination of the Indebtedness Adjustment, the Seller Expense
Adjustment and the Liabilities Adjustment pursuant to Section 2.02(b) and
shall be paid within five (5) business days thereafter in immediately
available funds.  If the Closing
Adjustment is a positive number, the Closing Adjustment shall be paid by the
Buyer to the Sellers pro rata in accordance with each Seller’s Fraction as
set forth on Schedule 2.01.  If
the Closing Adjustment is a negative number, the Closing Adjustment shall be
paid by the Sellers to Buyer.

 

(d)           Interest Payments.  Sums payable pursuant to Sections 2.03(a),
2.03(b), 2.03(c) and 2.05(c) shall bear interest from the date such
payment is due pursuant to the applicable section to the date of payment at the
rate which is equal to the Prime Rate as published, from time to time, in the Wall
Street Journal under “Money Rates,” computed on the basis of a 365-day year
and paid for the actual number of days elapsed. 
Interest calculated in accordance with this Section 2.05(d) shall
be due and payable to Buyer or the Sellers, as the case may be, on the date on
which the corresponding payment is due.

 

2.06        Proration of Certain Items.  The Sellers and the Buyer agree to prorate
the following costs and expenses and any other items mutually agreed to by such
parties.

 

(a)           Employee
Commissions, Wages and Benefits. 
Except as provided herein for the Seller Expenses, (i) the Sellers
shall be responsible for all commissions, wages and other benefits payable in
respect of services performed by the Company’s employees up to but excluding
the Closing Date, and (ii) the Buyer shall be responsible for all
commissions, wages and other benefits payable in respect of services performed
by the Company’s employees on or after the Closing Date.

 

(b)           Software Licenses.  Subject to Section 6.09, the Sellers
shall be responsible for all payments payable under existing software licenses
held by the Company up to but excluding the Closing Date, and the Buyer shall
be responsible for all payments payable under existing software licenses held
by the Company on or after the Closing Date.

 

(c)           Real Property Leases.  With respect to the real property leases set
forth as items [1], [2], [3], [4] and [5] of Schedule 3.12(b), (i) the
Sellers shall be responsible for all rent, utilities, common area maintenance
and other similar costs and obligations under such leases that relate to a
period both before and after the Closing Date based on a fraction, the
numerator of which is the number of days to which such cost or obligation
relates to the period prior to the Closing Date and the denominator of which is
the total 

 

13

 

number of days
to which such cost or obligation relates, and (ii) the Buyer shall be
responsible for all rent, utilities, common area maintenance and other similar
costs and obligations under such leases that relate to a period both before and
after the Closing Date based on a fraction, the numerator of which is the
number of days to which such cost or obligation relates to the period on or
after the Closing Date and the denominator of which is the total number of days
to which such cost or obligation relates.

 

(d)           Within sixty (60) days after the Closing,
Buyer will deliver to the Sellers’ Representative a schedule of proposed
prorations (the “Proration Schedule”). Unless the Sellers’
Representative notifies Buyer in writing within thirty (30) days after receipt
of the Prorations Schedule that the Sellers’ Representative disagrees with such
statement (and provides reasonable detail of the nature of each disputed item),
such Prorations Schedule shall be deemed the “Final Prorations Schedule,”
shall be binding upon all parties and shall not be subject to dispute or
review.  If the Sellers’ Representative
does provide such notice to Buyer within such thirty-day period, Buyer and the
Sellers’ Representative shall first use commercially reasonable efforts to
resolve such dispute and, if the parties are able to resolve such dispute, the
Prorations Schedule shall be revised to the extent necessary to reflect such
resolution, shall be deemed the “Final Prorations Schedule” and shall be
conclusive and binding upon all parties and shall not be subject to dispute or
review.  If the parties are unable to
resolve the dispute within thirty (30) days after Buyer’s receipt of the
Sellers’ Representative’s notice, either party may submit the dispute to the
Accountant for resolution, which shall be subject to the procedures and limitations
described in Section 2.02(b).  The
Prorations Schedule as determined by the Accountant shall be deemed the “Final
Prorations Schedule,” shall be conclusive and binding upon all parties and
shall not be subject to dispute or review. 
If the Sellers’ Representative does not dispute the Prorations Schedule,
then Buyer or the Sellers, as the case may be, shall remit to the other party
the amount reflected on such schedule as being owed to such party within
ninety-five (95) days after the Closing Date.  If the Sellers’ Representative disputes the
Prorations Schedule, then Buyer or the Sellers, as the case may be, shall remit
to the other party the amount, if any, that is not in dispute and any
additional amounts owed will be paid in accordance with a final resolution
reached by agreement between the parties or determined by the Accountant, as
soon as reasonably practical after the dispute is resolved.

 

(e)           Any amount due under this Section 2.06
shall bear interest in accordance with Section 2.05(d) from the date
the Final Prorations Schedule is finally determined.  The costs of the Accountant’s review under
this Section 2.06 (including reasonable attorney’s fees of counsel
providing a legal opinion to, and at the request of, the Accountant, if any),
shall be borne 50% by Buyer and 50% by Sellers. 
Notwithstanding anything to the contrary in this Section 2.06, any
prorations and adjustments pursuant to this Section 2.6 shall not include
an adjustment for any Excluded Liability, which Excluded Liabilities shall
remain the sole responsibility of the Sellers.

 

2.07        Certain Commission Payments.       After the Closing the Company or Buyer will make certain commission
payments for the month ended March 31, 2008 related to cash collected and
deposited by the Company prior to the Closing Date.  Such commission payments 

 

14

 

are Excluded Liabilities and
the Sellers will, by wire transfer of immediately available funds, reimburse
the Company and Buyer for such payments on the date such payments are made.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES RELATING TO 

THE COMPANY

 

Except as set forth in the disclosure schedules dated
as of the date hereof and delivered herewith to Buyer and Newco (which
disclosure schedules identify the section and subsection to which each
disclosure therein relates), the Company hereby represents and warrants to
Buyer and Newco as of the date hereof and as of the Closing Date that:

 

3.01        Limited Partnership Existence and Power.  The Company is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Texas, and has all limited partnership powers and all governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted.  The Company is duly qualified
to do business as a foreign limited partnership and is in good standing in each
jurisdiction where the character of the property owned or leased by it or the
nature of its activities makes such qualification necessary, except for those
jurisdictions where the failure to be so qualified would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse
Effect.  The Company has heretofore
delivered to Buyer true and complete copies of the organizational documents of
the Company as currently in effect.

 

3.02        Limited Partnership Authorization.  The execution, delivery and performance by
the Company of this Agreement and each Transaction Document to which the
Company is a party, and the consummation by the Company of the transactions
contemplated hereby and thereby, are within the Company’s limited partnership
powers and have been duly authorized by all necessary limited partnership
action on the part of the Company.  Each
of this Agreement and each Transaction Document to which the Company is a party
has been duly executed and delivered by the Company and constitutes a valid and
binding agreement of the Company, enforceable in accordance with its terms,
except as enforcement may be limited in bankruptcy or by equitable principles.

 

3.03        Governmental Authorization; Consents.  The execution, delivery and performance by
the Company and Sellers of this Agreement require no action by or in respect
of, or filing with, any governmental body, agency, official or authority other
than compliance with any applicable requirements of the HSR Act.  Except as set forth in Schedule 3.03
and except as required under any Laundry Lease, no material consent, approval,
waiver or other action (a “Required Consent”) by any Person (other than
any governmental body, agency, official or authority) under any contract,
agreement, indenture, lease, instrument or other document to which the Company
is a party or by which it is bound is required or necessary for the execution, delivery
and performance by the Company of this Agreement and each Transaction Document
to which the Company is a party, or for the consummation of the transactions
contemplated hereby or thereby.

 

15

 

3.04        Non-Contravention.  The execution, delivery and performance by
the Company of this Agreement and each Transaction Document to which the
Company is a party, and the consummation of the transactions contemplated
hereby and thereby, do not and will not (i) contravene or conflict with
the organizational documents of the Company, (ii) assuming compliance with
the HSR Act, contravene or conflict in any material respect with any provision
of any law, regulation, judgment, injunction, order, Permit or decree binding
upon or applicable to the Company; (iii) assuming the receipt of all
Required Consents, constitute a material default (with or without notice or
lapse of time, or both) under or give rise to any right of termination,
cancellation or acceleration of any material right or obligation of the Company
or to a loss of any material benefit to which the Company is entitled under any
provision of any agreement, contract or other instrument binding upon the
Company or by which any of its assets may be bound or (iv) result in the
creation or imposition of any Lien on any asset of the Company.

 

3.05        Capital Structure.  The Partnership Interests represent the only
outstanding equity or ownership interests in the Company.  The Partnership Interests have been duly
authorized and validly issued, and were not issued in violation of any
Law.  There are no options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights or
other contracts or commitments that could require the Company to issue, sell or
cause to become outstanding any additional ownership interests or other
securities in the Company.  Except as set
forth in the Company’s Limited Partnership Agreement, there are no restrictions
on the transfer of the Partnership Interests, other than those imposed by
relevant state and federal securities laws, and there are no co-sale rights,
rights of first refusal, voting agreements or other agreements relating to the
issuance, sale, registration or voting of the Partnership Interests.  None of the Partnership Interests has been
issued and owned or held in violation of any preemptive right.  The Partnership Interests set forth opposite
of each Seller’s name on Schedule 2.01 hereto are owned of record and
beneficially by such Seller free and clear of all Liens, claims, encumbrances,
voting trusts or restrictions of any kind (except as set forth in the Company’s
Limited Partnership Agreement), and the transfer and delivery of the
Partnership Interests to the Buyer by the Sellers as contemplated by this Agreement
will be sufficient to transfer good and valid record and beneficial title and
ownership in such Partnership Interests to the Buyer free and clear of all
Encumbrances (except as set forth in the Company’s Limited Partnership
Agreement).

 

3.06        Laundry Leases.  Schedule 3.06 hereto contains a true,
correct and complete list of the Laundry Leases as of the date of this
Agreement, including: (i) the location of each Laundry Lease, (ii) the
expiration date of each Laundry Lease, (iii) the number and type of each
Machine (including only laundry machines, washers and dryers) at each Laundry
Lease location, (iv) the vend prices at each Laundry Lease location, and (v) the
commission payments and net revenues after commission for each Laundry Lease
location for each of the years ended December 31, 2006 and 2007.  The Company has not changed its collection
schedule or collection practices for any Laundry Lease location since January 1,
2006, except in the ordinary course of business.  Schedule 3.06 also lists each Laundry
Lease that generated more than $10,000 of net revenue on an annualized basis
that, since November 30, 2007, (i) has been terminated by the Company
or any third party, or (ii) has been entered into by the Company.  True and correct copies of all the Laundry
Leases have been delivered or made available to Buyer prior to the date
hereof.  Each of the Laundry Leases is
valid, in full force and effect and binding upon the Company and the other
parties thereto in accordance with its respective terms, 

 

16

 

subject to bankruptcy and
limitations on equitable remedies. 
Neither the Company nor, to the Knowledge of the Company, any other
party is in default under or in arrears in the performance, payment or satisfaction
of any agreement or condition on its part to be performed or satisfied under
any Laundry Lease, nor, to the Company’s Knowledge, does any condition exist
that with notice or lapse of time or both would constitute such a default, and
no waiver or indulgence has been granted under any Laundry Lease.  Except as set forth on Schedule 3.06,
the Company has not received any written notice of and the Company has no
Knowledge of (i) any fact which would result in the termination,
amendment, modification or breach of any Laundry Lease and (ii) any desire
or intention of any party to renegotiate, terminate, amend, modify or
materially reduce the services of the Company under any Laundry Lease.  Except for consents, approvals and notices
required under the Laundry Leases, no consent or approval of or prior notice to
any third party is required in order to assign all of the Laundry Leases to
Buyer or otherwise as a result of the consummation of the transactions
contemplated by this Agreement.  Assuming
all of such consents and approvals are obtained, after giving effect to the
transactions contemplated by this Agreement, each of the Laundry Leases will be
valid and effective in accordance with its terms, and enforceable by the
Company against the other party thereto. 
Schedule 3.06 sets forth a correct and complete list of all bonds
(performance or other), letters of credit, guarantees and similar arrangements
relating to the Laundry Leases.

 

3.07        Equipment.  The Route Equipment and the Equipment
Inventory constitute all of the Machines used or held for use by the Company in
its business.  All of the Route Equipment
and Equipment Inventory is in good operating condition, ordinary wear and tear
excepted, in each case taking into account age, and has been maintained in a
manner consistent with the past maintenance practices of the Company.  The Equipment Inventory is of the type,
quantity and quality necessary to conduct the business of the Company in a
manner consistent with past practices. 
All of the items included in the Equipment Inventory are of a quality
and quantity saleable or usable in the ordinary course of business of the
Company consistent with past practices.

 

3.08        Subsidiaries.  The Company does not have and never
has had any Subsidiaries or any ownership or equity interest in or control of
(direct or indirect) any other Person.

 

3.09        Financial Statements.

 

(a)           Attached as Schedule
3.09 are true and complete copies of:

 

(i)            the balance sheet and
the related audited statements of operations and cash flows for the 12 months
ended December 31, 2006 and the audited balance sheet of the Company as of
December 31, 2005 and the related audited statements of operations and
cash flows of the Company for the 12 months then ended; and

 

(ii)           the unaudited Balance
Sheet of the Company as of December 31, 2007 and the related unaudited
statements of income and cash flows of the Company for the fiscal year ended December 31,
2007 ((i) and (ii) collectively referred to as the “Financial
Statements”).

 

17

 

(b)           Each of the balance
sheets included in the Financial Statements fairly presents in all material
respects the financial position of the Company as of its date, and the other
statements included in the Financial Statements fairly present in all material
respects the results of operations and cash flows, as the case may be, of the
Company for the periods therein set forth, in each case in accordance with
generally accepted accounting principles consistently applied during the periods
involved and, without limiting the generality of the foregoing, have been
prepared in accordance with GAAP and, except in the case of the unaudited
financial statements, for the omission of footnote disclosure and, to the
extent consistent with generally accepted accounting principles, normally
recurring year-end audit adjustments.

 

3.10        Absence of Certain Changes.  Since the Balance Sheet Date, except as
reflected in the unaudited Financial Statements or in Schedule 3.10 and
except for actions contemplated by this Agreement, the Company has conducted
its business in the ordinary course consistent with past practices and there
has not been any:

 

(a)           Material Adverse Change
or any event, occurrence, development or state of circumstances or facts which
could reasonably be expected to result in a Material Adverse Change, or any
condition, event or occurrence which, individually or in the aggregate, could
reasonably be expected to prevent or materially delay Sellers’ ability to
consummate the transactions contemplated by this Agreement or perform their
obligations hereunder or under the Transaction Documents;

 

(b)           declaration, setting
aside or payment of any dividend or other distribution with respect to any
outstanding equity securities of, or other ownership interests in, the Company,
or any repurchase, redemption or other acquisition by the Company of any
outstanding equity securities of, or other ownership interests in, the Company;

 

(c)           payment or grant of any
right by the Company to any Interested Person, or any charge by any Interested
Person to the Company, or other transaction between the Company and any
Interested Person, except in any such case for employee compensation payments
in the ordinary course of business of the Company consistent with past practice.

 

(d)           amendment of any
outstanding security of the Company;

 

(e)           incurrence, assumption
or guarantee by the Company of any indebtedness for borrowed money not
exceeding $5,000;

 

(f)            creation or assumption
by the Company of any Lien on any asset;

 

(g)           making of any loan,
advance or capital contributions to or investment in any Person;

 

(h)           damage, destruction or
other casualty loss (whether or not covered by insurance) affecting the
business or assets of the Company in an amount greater than $25,000;

 

18

 

(i)            transaction or
commitment made, or any contract or agreement entered into, by the Company
relating to its assets or business (including the acquisition or disposition of
any assets) or any relinquishment by the Company of any contract or other
right, in either case, material to the Company, other than transactions and
commitments in the ordinary course of business consistent with past practices
and those contemplated by this Agreement;

 

(j)            change in any method
of Tax or financial accounting or accounting practice or any making of a Tax
election or change of an existing election by the Company;

 

(k)           (i) grant of any
severance or termination pay to any partner, director, officer or employee of
the Company, (ii) entering into of any employment, deferred compensation
or other similar agreement (or any amendment to any such existing agreement)
with any partner, director, officer or employee of the Company, (iii) change
in benefits payable under existing severance or termination pay policies of the
Company or employment agreements to which the Company is a party or (iv) change
in compensation, bonus or other benefits payable to partners, directors,
officers or employees of the Company,  other than in
the ordinary course of business consistent with past practice;

 

(l)            labor dispute, other
than routine individual grievances, or any activity or proceeding by a labor
union or representation thereof to organize any employees of the Company;

 

(m)          employee terminations
(other than for poor performance or for cause) and/or layoffs, and the Company
has preserved intact and kept available the services of present employees, in
each case in accordance with past practice;

 

(n)           capital expenditure, or
commitment for a capital expenditure, for additions or improvements to property,
plant and equipment in an amount greater than $25,000;

 

(o)           action which, if it had
been taken or occurred after the execution of this Agreement, would have
required the consent of Buyer pursuant to this Agreement; or

 

(p)           agreement, undertaking
or commitment to do any of the foregoing.

 

3.11        Personal
Property.

 

(a)           The Company has good
and transferable title to, or in the case of leased personal property has valid
leasehold interests in, all personal property (including machinery and
equipment, inventory, receivables and furniture) (whether tangible or
intangible) reflected on the Balance Sheet or acquired after the Balance Sheet
Date (the “Personal Property”). 
None of such Personal Property is subject to any Liens, other than:

 

(i)            Liens for Taxes not
yet due and payable (and for which adequate accruals or reserves have been
established on the Balance Sheet); or

 

19

 

(ii)           Liens that do not
materially detract from the value of the Personal Property as now used, or
materially interfere with any present or intended use of the Personal Property.

 

(b)           The Personal Property
has no material defects, is in reasonable commercial operating condition and
repair (ordinary wear and tear excepted), and is generally adequate for the
uses to which it is being put.

 

(c)           The Personal Property
owned or leased by the Company, or which it otherwise has the right to use,
constitutes all of the Personal Property held for use or used in connection
with the business of the Company and is generally adequate to conduct such
business as currently conducted.

 

3.12        Real
Property.

 

(a)           The Company does not
own any real property.  All real property
used or held for use by the Company in connection with the business of the
Company is leased by the Company as lessee or sublessee.

 

(b)           Schedule 3.12(b) completely
and accurately describes all leases and subleases of real property used by or
held for use by the Company in connection with the business of the Company (the
“Leases”), together with a description of all buildings and material
fixtures and improvements erected thereon.

 

(c)           The Leases are in good
standing and are valid, binding and enforceable in accordance with their
respective terms, except as enforcement may be limited in bankruptcy or by
equitable principles, and there does not exist under any such Lease any default
by the Company or, to the Company’s Knowledge, by any other Person, or any
event that, with notice or lapse of time or both, would constitute a default by
the Company or, to the Company’s Knowledge, by any other Person.  The Company has delivered to Buyer complete
and accurate copies of all Leases, including all amendments and agreements
related thereto.  All rent and other
charges currently due and payable under the Leases have been paid.

 

(d)           The Company is the
holder of the lessee’s interest under the Leases and has not assigned the
Leases nor subleased all or any portion of the premises leased thereunder.  The Company has not made any alterations,
additions or improvements to the premises leased under the Leases that are
required to be removed (or of which lessor could require removal) at the
termination of the respective Lease terms.

 

3.13        No
Undisclosed Liabilities. 
Except as disclosed in the Balance Sheet or set forth in Schedule
3.13, there are no liabilities of the Company of any kind whatsoever,
whether accrued, contingent, absolute, determined, determinable or otherwise,
and to the Company’s Knowledge, there is no existing condition, situation or
set of circumstances which could reasonably be expected to result in such a
liability, other than liabilities incurred in the ordinary course of business
consistent with past practice since the Balance Sheet Date, which in the
aggregate are not material to the Company.

 

20

 

3.14        Litigation.  Except as disclosed in Schedule 3.14,
there is no claim, action, suit, investigation or proceeding (or to the
Knowledge of the Company, any basis therefor) pending against or, to the
Company’s Knowledge, threatened against or affecting, the Company or any of its
properties or the transactions contemplated hereby before any court or
arbitrator or any governmental body, agency, official or authority.

 

3.15        Material Contracts.

 

(a)           Except for the Laundry
Leases and except as disclosed in Schedule 3.15, as of the date of this
agreement, there are no agreements, arrangements, understandings, instruments,
contracts, leases, plans or commitments to which the Company is a party or by
which it is bound, including but not limited to any:

 

(i)            lease;

 

(ii)           contract or agreement
involving aggregate payments by or obligations of the Company in an amount
equal to $25,000 or more, including any such contract or agreement for the
purchase of materials, supplies, goods, services, equipment or other assets;

 

(iii)          contract or agreement
involving aggregate payments to the Company in an amount equal to $25,000 or
more, including any sales, distribution or other similar agreement;

 

(iv)          partnership, joint venture
or other similar contract, arrangement or agreement;

 

(v)           contract relating to
indebtedness for borrowed money or the deferred purchase price of property
(whether incurred, assumed, guaranteed or secured by any asset);

 

(vi)          employment, severance or
consulting agreement;

 

(vii)         license, technology
transfer, franchise or other agreement in respect of any Intellectual Property
or other property owned or used by the Company;

 

(viii)        agency, dealer, sales
representative or other similar agreement;

 

(ix)           contract or other
document that limits the freedom of the Company to compete in any line of
business or with any Person or in any area or which would so limit the freedom
of the Company after the Closing Date;

 

(x)            contract or commitment
with or for the benefit of any Interested Person; or

 

(xi)           other contract or
commitment not made in the ordinary course of business or otherwise material to
the Company.

 

21

 

(b)           Each agreement,
arrangement, understanding, instrument, contract, lease plan or commitment
disclosed in any schedule to this Agreement or required to be disclosed
pursuant to Section 3.15(a) is a valid and binding agreement of the
Company and is in full force and effect, and neither the Company nor, to the
Company’s Knowledge, any other party thereto is in default in any material
respect under the terms of any such agreement, contract, plan, lease,
arrangement or commitment, nor, to the Knowledge of the Company, has any event
or circumstance occurred that, with notice or lapse of time or both, would
constitute an event of default thereunder.

 

3.16        Technology
and Intellectual Property. 
Schedule 3.16 contains a complete and accurate list of all
registered and material unregistered copyrights and applications therefor
(including renewals) (the “Copyrights”), registered and material
unregistered trademarks, service marks and trade names and any applications
therefor (including renewals) (the “Trademarks”), patents, patent
applications (including renewals), patent disclosures (together with all
re-issuances, continuations, continuations in part, revisions and extensions),
patent rights (collectively, (the “Patents”), material inventions and
discoveries (whether or not patentable and whether or not reduced to practice),
trade dress and corporate names (together with all translations, adaptations,
derivations and combinations thereof) (the “Trade Dress”) or other
material similar rights used or useable in the Company’s business, all whether
or not owned or licensed); and all licenses, sublicenses, agreements and
permissions to or from third parties with respect to the foregoing or rights
related thereto (collectively, the “Intellectual Property Rights”).  Except as set forth in Schedule 3.16:

 

(a)           the Company owns or
possesses adequate and enforceable rights to use, without payment to a third
party, all of the Company’s Intellectual Property Rights (including, without
limitation, all material Patents, Trademarks, Copyrights and Trade Secrets (as
defined below)), that are material to the Company’s business, free and clear of
all encumbrances;

 

(b)           all Patents, Trademarks
and Copyrights included in the Company’s Intellectual Property Rights which are
issued by or registered with, as applicable, the U.S. Patent and Trademark
Office or the U.S. Copyright Office are currently in compliance in all material
respects with formal legal requirements and are valid and enforceable;

 

(c)           there are no pending,
or, to the Knowledge of the Company, threatened claims against the Company
alleging that any of the Company’s Intellectual Property Rights infringes or
conflicts with the rights of others (“Third Party Rights”);

 

(d)           to the Knowledge of the
Company, neither the Company’s business nor the Company’s Intellectual Property
Rights infringes or conflicts with any Third Party Right;

 

(e)           the Company has not
received any written communications alleging that the Company has violated or,
by conducting its business, would violate any Third Party Rights or that any of
the Company’s Intellectual Property Rights are invalid or unenforceable;

 

22

 

(f)            to the Knowledge of
the Company, no third party is violating or infringing any of the Company’s
Intellectual Property Rights; and

 

(g)           with respect to
Intellectual Property Rights which are licensed, the Company is in compliance
with any and all license agreements, and has received no notice of breach,
default or other non-compliance; and the transaction contemplated herein will
not result in a breach of or default under any such licenses.

 

(h)           the Company has taken
all reasonable security measures to protect the secrecy, confidentiality and
value of any trade secrets it may own (the “Trade Secrets”).  To the Knowledge of the Company, the Trade
Secrets have not been disclosed by the Company to any person or entity other
than employees or contractors performing services for the Company who had a
need to know and use such Trade Secrets in the course of their employment or
contract performance.  The Company has
the right to use, free and clear of claims of third parties, all of the Trade
Secrets.  To the Knowledge of the
Company, no third party has asserted that the use by the Company of any of the
Trade Secrets violates any Third Party Rights.

 

3.17        Insurance
Coverage.  Schedule
3.17 lists all of the insurance policies and fidelity bonds covering the
assets, business, equipment, properties, operations, employees, officers and
directors of the Company.  The Company
has furnished to Buyer true and complete copies of all insurance policies and
fidelity bonds listed in Schedule 3.17. 
Such policies of insurance and bonds (or other policies and bonds
providing substantially similar insurance coverage) have been in effect since January 1,
2003 and remain in full force and effect.

 

3.18        Compliance
with Laws; Permits; No Defaults.

 

(a)           The Company is not in
violation in any material respect of, and has not since January 1, 2005  violated in any material respect, any applicable provisions
of any laws, statutes, ordinances or regulations.

 

(b)           Schedule 3.18
correctly describes each governmental license, permit, concession or franchise
(a “Permit”) material to the business of the Company, together with the
name of the governmental agency or entity issuing such Permit.  Such Permits are valid and in full force and
effect, and none of such Permits will be terminated or impaired or become
terminable as a result of the transactions contemplated hereby.

 

(c)           The Company is not in
default under, and, to the Company’s Knowledge, no condition exists that with
notice or lapse of time or both would constitute a default under, any judgment,
order or injunction of any court, arbitrator or governmental body, agency,
official or authority.

 

3.19        
Employees and Labor Matters.

 

(a)           Schedule 3.19(a) sets
forth, with respect to each employee of the Company (including any employee who
is on a leave of absence or on layoff status subject to recall) (i) the
name of such employee and the date as of which such employee was originally
hired by the Company, and whether the employee is on an active or 

 

23

 

inactive status; (ii) such
employee’s title; (iii) such employee’s annualized compensation as of the
date of this Agreement, including base salary, vacation and/or paid time off
accrual amounts, bonus and/or commission potential, equity vesting schedule,
severance pay potential, and any other compensation forms; (iv) each
current benefit plan in which such employee participates or is eligible to
participate; and (v) any governmental authorization that is held by such
employee and that is used in connection with the Company’s business.  Except as disclosed in Schedule 3.19(a),
the employment of each of its employees is terminable by the Company at will.

 

(b)           Schedule 3.19(b) lists
all Persons who have performed in the past twelve (12) months or are currently
performing services for the Company who are classified as “consultants” or “independent
contractors,” the compensation of each such Person and whether the Company is
party to an agreement with such Person (whether or not in writing).  Any such agreements are listed on Schedule
3.15 and have been delivered (or, in the case of agreements that are not in
writing, a summary thereof has been delivered) to Buyer.  All Persons engaged by the Company as
independent contractors, rather than employees, have been properly classified
as such and have been engaged in accordance with all applicable foreign,
federal, state and/or local laws.

 

(c)           The Company is not and
has never been a party to or bound by any union contract, collective bargaining
agreement or similar contract.  There has
never been any lockout, strike, slowdown, work stoppage, labor dispute or union
organizing activity, or any similar activity or dispute, affecting the Company
or any of its employees.

 

(d)           Schedule 3.19(d) lists
all current employee manuals and handbooks, employment policy statements,
employment agreements, and other materials relating to the employment of the
current employees of the Company.  The
Company has delivered to Buyer complete copies of all such documents.

 

(e)           Except as disclosed in Schedule
3.19(e), (i) none of the employees of the Company has notified or
otherwise indicated to the Company that he or she intends to terminate his or
her employment with the Company, or not to accept employment with Buyer; (ii) the
Company does not have a present intention to terminate the employment of any
employee; (iii) to the Company’s Knowledge, no employee of the Company has
received an offer of employment from any other Person; (iv) to the Company’s
Knowledge, no employee of the Company is a party to or is bound by any
employment contract, patent disclosure agreement, noncompetition agreement or
other restrictive covenant or other contract with any third party that would be
likely to affect in any way (A) the performance by such employee of any of
his or her duties or responsibilities as an employee, or (B) the business
or operations of the Company; (v) to the Knowledge of the Company, no
employee of the Company is in violation of any term of any employment contract,
patent disclosure agreement, noncompetition agreement, or any other restrictive
covenant to a former employer relating to the right of any such employee to be
employed by the Company; and (vi) the Company is not and never has been
engaged in any dispute or litigation with an employee or former employee
regarding Intellectual Property matters.

 

24

 

(f)            Except as disclosed in
Schedule 3.19(f), (i) the Company does not have an established
severance pay practice or policy; (ii) no employee of the Company is
entitled to any severance pay, bonus compensation, acceleration of payment or
vesting of any equity interest, or other payment from the Company or Buyer
(other than accrued salary, vacation, or other paid time off in accordance with
the policies of the Company) as a result of or in connection with the
transactions contemplated by this Agreement or any of the Transaction Documents
or as a result of any termination by the Company on or after the Closing of any
Person employed by the Company on or prior to the Closing Date.

 

(g)           The Company is in
compliance in all material respects with all applicable laws and regulations
respecting labor, employment, fair employment practices, work place safety and
health, terms and conditions of employment, wages and hours.  There are no, and within the last three (3) years
there have been no formal or informal grievances, complaints or charges with
respect to employment or labor matters (including, without limitation,
allegations of employment discrimination, retaliation or unfair labor
practices) pending or, to the Company’s Knowledge, threatened against the
Company in any judicial, regulatory or administrative forum, under any private
dispute resolution procedure or internally. 
The Company is not engaged, and to the Company’s Knowledge has never
engaged, in any unfair labor practice of any nature.  The employees of the Company have been, and
currently are, properly classified under the Fair Labor Standards Act of 1938,
as amended, and under any applicable state law. 
The Company has not failed to pay any of its employees, consultants or
contractors for any wages (including overtime), salaries, commissions, bonuses,
benefits or other direct compensation for any services performed by them to the
date hereof or amounts required to be reimbursed to such individuals.  The Company is not, and within the last three
(3) years the Company has not been, subject to any order, decree,
injunction or judgment by any governmental authority or private settlement
contract in respect of any labor or employment matters.  The Company is in material compliance with
the requirements of the Immigration Reform Control Act of 1986.

 

(h)           The Company and, to the
Company’s Knowledge, each employee of the Company, is in compliance in all
material respects with all applicable visa and work permit requirements, and,
to the Company’s Knowledge, no visa or work permit held by an employee of the
Company will expire during the six month period following the date of this
Agreement.

 

(i)            The Company is not
subject to any affirmative action obligations under any law, including without
limitation, Executive Order 11246, and is not a government contractor or
subcontractor for purposes of any law with respect to the terms and conditions
of employment, including without limitation, the Service Contracts Act or
prevailing wage laws.

 

3.20        Environmental
Compliance.

 

(a)           Environmental
Definitions.  The following terms, as
used herein, have the following meanings:

 

25

 

“Environmental Law” means any and all
applicable federal, state, local and foreign law, principles of common law,
by-law, regulation, rule, ordinance, code, decree, order, license, permit,
condition, judicial interpretation thereof, judgments, ruling, directive, or
judicial or administrative order, and any requirement of any governmental
agency or authority having jurisdiction with respect thereto relating to (i) the
protection of human health or safety, natural resources or the environment, (ii) the
release of any Hazardous Substance into the environment, or (iii) the
manufacture, processing, distribution, use, treatment, storage, disposal, transport
or handling of any Hazardous Substance or the containment, removal or
remediation thereof.

 

“Hazardous Substance” means any compound, chemical, contaminant,
pollutant, toxic substance, hazardous waste, hazardous material, or hazardous
substance as defined, identified, or regulated under or pursuant to any
Environmental Law, including without limitation any asbestos,
asbestos-containing material, polychlorinated biphenyl, oil, waste oil,
petroleum or petroleum product or mold, the presence of which could reasonably
be expected to pose a risk to human health or safety or the environment
or result in an obligation under any Environmental Law to report, investigate,
monitor, manage, test, sample, contain, remove, remediate, or take any response
action concerning the same.

 

“Remedial Action” means any reporting,
investigation, monitoring, management, testing, sampling, containment, removal
(including without
limitation the removal of underground storage tanks), clean-up, remediation,
corrective action, or response action with respect to any Hazardous Substance,
required by, or ordered by any governmental authority in accordance with,
applicable Environmental Law.

 

(b)           Environmental
Representations and Warranties.  The
Company currently is in compliance, and in its operation of its business during
the past five (5) years it has complied, with all applicable Environmental
Laws, except where failure to comply would not reasonably be expected to have a
Material Adverse Effect.  To the Company’s
Knowledge, no Hazardous Substance is present or has been released by the
Company on any real property now owned or leased, or ever owned or leased, by
the Company, as to which Remedial Action, as of the date hereof, is required
under applicable Environmental Laws, or as to which, to the Company’s
Knowledge, any Remedial Action would reasonably be expected to be required in
the future under existing and applicable Environmental Laws.  The Company has not during the past five (5) years
received any written notice, demand, letter, claim or request for information
alleging that it may be in violation of, liable under, or required to take any
Remedial Action under any Environmental Law and, to the Company’s Knowledge, no
such written notice, demand, letter, claim or request for information is
impending or would reasonably be expected to be forthcoming.

 

3.21        Customers
and Suppliers.  The
Company has not received written notice from or is not otherwise aware that (a) any
customer (or group of customers under common ownership or control) that
accounted for a material percentage of the aggregate products and services
furnished by the Company during the past 18 months has stopped or intends to
stop purchasing the products or services of the Company or (b) any
supplier (or group of suppliers under 

 

26

 

common ownership or control)
that accounted for a material percentage of the aggregate supplies purchased by
the Company during the past 18 months has stopped or intends to stop supplying
products or services to the Company.

 

3.22        Transactions
with Affiliates; Intercompany Arrangements.  Except as shall be terminated at or prior to
the Closing or as listed on Schedule 3.22, there are no agreements,
loans, leases, royalty agreements or other continuing transactions between the
Company and (i) any officer, director or partner of the Company or any of
their Affiliates or (ii) any member of any officer, director or partner of
the Company’s family or any of their Affiliates (“Interested Person”).  To the Knowledge of the Company, no Interested
Person (x) has any material direct or indirect interest in any entity that
does business with the Company or (y) has any direct or indirect interest
in any property, asset or right that is used by the Company in the conduct of
its business, in each case that will continue following the Closing.  No Interested Person has any contractual
relationship (including that of creditor or debtor) with the Company that will
continue after the Closing other than such relationships as result solely from
being an officer, director or partner of the Company or its general partner.

 

3.23        Finders’
Fees.  There is no
investment banker, broker, finder or other intermediary that has been retained
by or is authorized to act on behalf of Sellers or the Company who might be
entitled to any fee or commission from Buyer, the Company or any of their
respective Affiliates upon consummation of the transactions contemplated by
this Agreement.

 

3.24        Taxes.

 

(a)           All U.S., state, local,
and foreign Tax returns required to be filed by or on behalf of the Company
have been duly and timely filed.  All
such Tax returns are correct and complete in all material respects and were
prepared in substantial compliance with all applicable laws and regulations.  All Taxes due and owing by the Company
(whether or not shown on any Tax return) have been paid in full.  Adequate provision has been made in the
unaudited Financial Statements, in accordance with GAAP, for all Taxes for
which the Company is liable but that have not yet become due.  The Company is not currently the beneficiary
of any extension of time within which to file any Tax return.  No claim has ever been made or threatened by
an authority in a jurisdiction where the Company does not file Tax returns
claiming that the Company is or may be subject to taxation by that
jurisdiction.  There are no Liens for
Taxes (other than Taxes not yet due and payable) upon any of the assets of the
Company.

 

(b)           The Company has
withheld and paid all Taxes required to have been withheld and paid in
connection with any amounts paid or owing to any employee, independent
contractor, creditor, partner, or other third party.

 

(c)           No governmental
authority has proposed (tentatively or definitely), asserted or assessed or, to
the Knowledge of the Company, threatened to propose or assert or assess any
deficiency, assessment or claim for Taxes and, to the Knowledge of the Company,
there is no basis for any such proposal, assertion or assessment.  The Company has delivered to Buyer correct
and complete copies of all Tax returns, 

 

27

 

examination reports, and
statements of deficiencies assessed against or agreed to by the Company filed
or received since January 1, 2002.

 

(d)           The Company is not
required to file Tax returns (other than for sales or property Taxes) or pay
Taxes (other than sales or property Taxes) any place other than  Alabama, Arizona, Arkansas, Colorado,
Florida, Georgia, Louisiana, Mississippi, Missouri, New Mexico, Tennessee,
Texas, Utah, Washington and Wyoming.

 

(e)           The Company does not
have any interest in any trust, partnership, corporation, LLC, or other
business entity.

 

(f)            Since its formation in 1991, the Company (A) has
never been a member of an Affiliated Group filing a combined, consolidated, or unitary
Tax Return and (B) has no liability for
the Taxes of any Person under Treasury Regulation § 1.1502-6 (or any
similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.

 

(g)           The Company is not and has not been a party to any
Tax sharing agreement or arrangement.

 

(h)           Neither the Company nor the Sellers are foreign
persons within the meaning of Code Section 1445.

 

(i)            The Company has not engaged in any “listed transaction”
within the meaning of Code Section 6707A that could affect the income Tax
liability for any taxable year not closed by the applicable statute of
limitations.

 

(j)            Since its formation in 1991, the Company is,
and has always been, a partnership for federal, state and local income tax
purposes.

 

3.25        Bank
Accounts.  Schedule
3.25 sets forth (a) a true and complete list of the names and
locations of all banks, trust companies, securities brokers and other financial
institutions at which the Company has an account or safe deposit box or
maintains a banking, custodial, trading or other similar relationship; and (b) a
true and complete list and description of each such account, box and
relationship, indicating in each case the account number and the names of the
respective officers, employees, agents or other similar representatives of the
Company having signatory power with respect thereto.

 

3.26        Sufficiency
of Assets.  The assets of
the Company include all assets used or held for use in the conduct of the
business as currently conducted by the Company and such assets are sufficient
to permit the Company to conduct such business as currently conducted.  All tangible assets of the Company are in
reasonable commercial condition and repair (ordinary wear and tear excepted).

 

3.27        Illegal
Payments.  Neither the
Company nor, to the Knowledge of the Company, any Person affiliated with the
Company has ever offered, made or received on behalf of the Company any illegal
payment or contribution of any kind, directly or indirectly, including, without
limitation, payments, gifts or gratuities, to any person, entity, or United
States or foreign 

 

28

 

national, state or local
government officials, employees or agents or candidates therefor or other
persons.

 

3.28        Employee
Benefits.

 

(a)           The following terms, as
used herein, have the following meanings:

 

“Benefit Arrangement”
means an employment, severance or similar contract, arrangement or policy
(written or oral) and each plan or arrangement providing for severance,
insurance coverage (including any self-insured arrangements), workers’
compensation, disability benefits, supplemental unemployment benefits, vacation
benefits, pension or retirement benefits or for deferred compensation,
profit-sharing, bonuses, phantom stock, stock options, stock appreciation
rights or other forms of incentive compensation or post-retirement insurance,
compensation or benefits or any co-employment agreement that (i) is not an
Employee Plan, (ii) is entered into, maintained or contributed to, as the
case may be, by the Company or any of its ERISA Affiliates or any

Co-Employer and (iii) covers any Employee or former Employee of the
Company.

 

“Co-Employer”
means any entity that is or was considered to be a co-employer with the
Company.

 

“Employee” for
purposes of this Article VII means any partner or employee of the Company,
including any employee Co-employed by the Company and Co-Employer.

 

“Employee Plan”
means each “employee benefit plan,” as such term is defined in Section 3(3) of
ERISA, that (i) is subject to any provision of ERISA and (ii) is
maintained or contributed to by the Company or any of its ERISA Affiliates or
any

Co-Employer, as the case may be.

 

“ERISA” means the
Employee Retirement Income Security Act of 1974, as amended.

 

“ERISA Affiliate”
of any entity means any other entity that, together with such entity, would be
treated as a single employer under Section 414 of the Code or Section 4001
of ERISA.

 

“Multiemployer Plan”
means each Employee Plan that is a multiemployer plan, as defined in Section 4001(a)(3) of
ERISA.

 

(b)           Employee Benefits
Representations and Warranties.

 

(i)            Schedule 3.28
lists each Employee Plan that covers any Employee, copies of all of which, and
a summary plan description of each, have previously been furnished to
Buyer.  With respect to each Employee
Plan, all annual reports (Form 5500) required to be filed with the
Internal Revenue Service or Department of Labor have been properly filed on a
timely basis and the Company has provided the most recently filed Form 5500.

 

29

 

(ii)           Schedule 3.28
also includes a list of each Benefit Arrangement of the Company, copies or
descriptions of which have been made available or furnished previously to
Buyer.

 

(iii)          With respect to each
Employee Plan and Benefit Arrangement listed on Schedule 3.28, the
Company has provided to the Buyer a current, accurate and complete copy (or, to
the extent no such copy exists, an accurate description) thereof and, to the
extent applicable:  (i) any related
trust agreement or other funding instrument; (ii) the most recent
determination or opinion letter, if applicable; (iii) any summary plan
description and other written communications (or a description of any oral
communications) by the Company, the Sellers or any

Co–Employer to the Employees concerning the extent of the benefits provided
under an Employee Plan or Benefit Arrangement; (iv) a summary of any
proposed amendments or changes anticipated to be made to the Employee Plans or
Benefit Arrangements at any time within the twelve months immediately following
the date hereof, and (v) for the two most recent years (A) the Form 5500
and attached schedules, (B) audited financial statements and (C) actuarial
valuation reports.

 

(iv)          None of the Employee
Plans or Benefit Arrangements listed on Schedule 3.28 is subject to the
laws of any jurisdiction outside the United States.

 

(v)           No non-exempt “prohibited
transaction,” as defined in Section 406 of ERISA or Section 4975 of
the Code, has occurred with respect to any Employee Plan.

 

(vi)          Neither the Company nor
any ERISA Affiliate maintains or has ever maintained or contributed to or
expects to incur liability with respect to any Multiemployer Plan or Employee
Plan subject to Title IV of ERISA. 
Neither the Company nor any ERISA Affiliate has incurred nor does it
reasonably expect to incur any liability with respect to any transaction
described in Section 4069 of ERISA.

 

(vii)         Each Employee Plan which
is intended to be qualified under Section 401(a) of the Code is so
qualified and has been so qualified during the period from its adoption to
date, and each trust forming a part thereof is exempt from tax pursuant to Section 501(a) of
the Code.  Each Employee Plan or Benefit
Arrangement has been established, administered and maintained in material
compliance with its terms and with the applicable requirements prescribed by
any and all statutes, orders, rules and regulations.

 

(viii)        With respect to the
Employees and former Employees, there are no employee post-retirement health or
welfare plans in effect, except as required by Section 4980B of the Code
or applicable state law.  No tax under Section 4980B
or 4980D of the Code has been incurred in respect of any Employee Plan that is
a group health plan, as defined in Section 5000(b)(1) of the Code.

 

30

 

(ix)           All contributions and
payments accrued under each Employee Plan and Benefit Arrangement, determined
in accordance with prior funding and accrual practices, as adjusted to include
proportional accruals for the period ending on the day prior to the Closing
Date, will be discharged and paid prior to the Closing Date, except to the
extent reflected in the Financial Statements. 
There has been no amendment to, written interpretation of or
announcement (whether or not written) by the Company or any of its ERISA
Affiliates relating to, or change in employee participation or coverage under,
any Employee Plan or Benefit Arrangement that would increase materially the
expense of maintaining such Employee Plan or Benefit Arrangement above the
level of the expense incurred in respect thereof for the fiscal year ended
prior to the date hereof.

 

(x)            Except as set forth on
Schedule 3.28 no Employee will become entitled to any material bonus,
retirement, severance acceleration of payment or vesting or any other similar payment
or benefit or enhanced payment or benefit as a result of the transactions
contemplated hereby (whether alone or in connection with any subsequent
event(s)) whether under any Employee Plan or Benefit Arrangement or otherwise.

 

(xi)           To the Company’s Knowledge,
there are no (i) actions, suits or claims (other than routine claims for
benefits) or (ii) administrative investigations, audits or other
administrative proceedings, pending or, to the Knowledge of the Company,
threatened in writing involving any Employee Plan or Benefit Arrangement, and,
to the Company’s Knowledge, no facts exist which could give rise to any
actions, suits or claims (other than routine claims for benefits).

 

(xii)          The Company may amend or
terminate any Employee Plan at any time without incurring any liability
thereunder other than in respect of claims incurred prior to such amendment or
termination.

 

(xiii)         All Employee Plans and
Benefit Arrangements that are “nonqualified deferred compensation plans”
(within the meaning of Section 409A of the Code) have been maintained and
administered in good faith compliance with the requirements of Section 409A
of the Code and any regulations or other guidance issued thereunder.

 

(xiv)        The Company has withdrawn
as a participating employer in, and has no liability under, the J.C. Pace Ltd.
Excess Benefit Plan.

 

(xv)         The Company has taken all
necessary actions to terminate the Company’s 401(k) Plan and the
participation of all participants therein as of March 31, 2008.

 

3.29        Inventory.  All of the Equipment Inventory of the Company
as of December 31, 2007 is listed in Schedule 3.29 attached
hereto.  The Equipment Inventory is of
the type, quantity and quality necessary to conduct the business of the Company
in a manner consistent with past practices. 
Except as disclosed in Schedule 3.29, the Equipment Inventory is
owned free and 

 

31

 

clear of all Liens.  As of the date hereof, the Equipment
Inventory includes, without limitation, at least an aggregate of 1,400 new
laundry machines, washers and dryers and 1,000 used laundry machines, washers
and dryers.

 

3.30        Other Information.  None of this Agreement, the Transaction
Documents and the schedules, exhibits and other documents delivered in
connection herewith and therewith, when read together as a whole, knowingly
contains any untrue statement of a material fact or knowingly omits to state a
material fact necessary in order to make the statements contained therein not
misleading.

 

3.31        Disclaimer
of Other Representations and Warranties.  Except as expressly set
forth in this Agreement and the Transaction Documents, neither the Company nor
the Sellers make any representation or warranty, express or implied, at law or
in equity, in respect of the Company or the Sellers, and any such other
representations or warranties are hereby expressly disclaimed.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES 

RELATING TO SELLERS

 

Each Seller, jointly and severally, represents and
warrants to, and agrees with, Buyer and Newco as follows:

 

4.01        Title to and Validity of Partnership Interests.  Each Seller now has, and on the Closing Date
will have, sole legal and beneficial ownership of, good and transferable title
to and unrestricted power to vote and sell the Partnership Interests designated
as owned by such Seller opposite such Seller’s name on Schedule 2.01,
free and clear of any Lien and, upon purchase and payment therefor and delivery
to Buyer thereof in accordance with the terms of this Agreement, each of Buyer
and Newco will obtain good and transferable title to such Partnership Interests
free and clear of any Lien.  All
Partnership Interests owned by such Seller have been duly authorized and
validly issued and are fully paid.  All
Partnership Interests to be sold by such Seller are registered in the name of
such Seller.

 

4.02        Authority.  Such Seller has the legal power, right and
authority to enter into and perform this Agreement and each Transaction
Document to which it is a party, and to perform each of his obligations
hereunder.  This Agreement has been duly
executed and delivered by such Seller and constitutes a valid and binding
obligation of such Seller, enforceable in accordance with its terms.  The execution, delivery and performance of
this Agreement and such Transaction Documents by such Seller (a) require
no action by or in respect of, or filing with, or consent of, any governmental
body, agency or official or any other Person other than compliance with any
applicable requirements of the HSR Act and (b) to such Seller’s knowledge,
do not contravene, or constitute a default under, any provision of applicable
law or regulation or of any agreement, judgment, injunction, order, decree or
any other instrument binding upon such Seller.

 

4.03        No
Violation.  Except as set
forth in Sections 3.03 and 3.04, the execution and delivery of this Agreement
and all Transaction Documents executed and delivered by any Seller 

 

32

 

pursuant hereto and the
consummation of the transactions contemplated hereby and thereby do not and
will not (i) violate or result in a violation of, conflict with or
constitute or result in a violation of or default (whether after the giving of
notice, lapse of time or both) under, accelerate any obligation under, or give
rise to a right of termination of, any contract, agreement, obligation, permit,
license or authorization to which the Company or such Seller is a party or by
which any of them or their respective assets are bound, or any provision of such
Seller’s organizational documents, if applicable; (ii) violate or result
in a violation of, or constitute a default (whether after the giving of notice,
lapse of time or both) under, any provision of any law, or any order of, or any
restriction imposed by, any governmental authority applicable to the Company or
such Seller; or (iii) except for filings required under the HSR Act,
require from the Company or such Seller any notice to, declaration or filing
with, or consent or approval of, any governmental authority or other third
party.

 

4.04        Consents
and Approvals.  Except as
set forth in Sections 3.03 and 3.04, no consent, approval or authorization of,
or declaration, filing or registration with, any governmental authority or
third party is required to be made or obtained by such Seller in connection
with the execution, delivery and performance of this Agreement or the
Transaction Documents or the consummation of the transactions contemplated
hereby or thereby, other than compliance with any applicable requirements of
the HSR Act.

 

4.05        Brokers’,
Finders’ Fees, etc.  No
Seller has employed any broker, finder, investment banker or financial advisor (i) as
to whom any such Seller may have any obligation to pay any brokerage or finders’
fees, commissions or similar compensation in connection with the transactions
contemplated hereby, or (ii) who might be entitled to any fee or
commission from Buyer, the Company or any of their respective Affiliates upon
consummation of the transactions contemplated hereby.

 

4.06        Disclosure.  The representations and warranties made or
contained in this Article IV, the Schedules and Exhibits hereto and any
Transaction Document executed or delivered by such Seller, when taken together,
do not and shall not contain any untrue statement of a material fact and do not
and shall not omit to state a material fact required to be stated herein or
therein or necessary in order to make such representations or warranties not
misleading in the light of the circumstances in which they were made or
delivered.

 

4.07        Disclaimer of Other Representations and Warranties.  Except
as expressly set forth in this Agreement and the Transaction Documents, Sellers
make no representations or warranties, express or implied, at law or in equity,
in respect of Seller or the Company, and any such other representations or
warranties are hereby expressly disclaimed.

 

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF BUYER

 

Buyer and Newco, jointly and severally, hereby
represent and warrant to the Company and Sellers that:

 

33

 

5.01        Organization and Existence.  The Buyer is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware,
and has all corporate powers and all governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted.  Newco is a limited liability company validly
existing and in good standing as a limited liability company under Delaware
law, and has all limited liability company power and all governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted.

 

5.02        Corporate Authorization.  The execution, delivery and performance by
the Buyer of this Agreement and each Transaction Document to which the Buyer is
a party, and the consummation by the Buyer of the transactions contemplated
hereby and thereby, are within the Buyer’s corporate powers and have been duly
authorized by all necessary corporate action on the part of the Buyer.  Each of this Agreement and each Transaction
Document to which the Buyer is a party has been duly executed and delivered by
the Buyer and constitutes a valid and binding agreement of the Buyer, enforceable
in accordance with its terms, except as enforcement may be limited in
bankruptcy or by equitable principles. 
The execution, delivery and performance by Newco of this Agreement and
each Transaction Document to which Newco is a party, and the consummation by
Newco of the transactions contemplated hereby and thereby, are within Newco’s
limited liability company powers and have been duly authorized by all necessary
limited liability company action on the part of Newco.  Each of this Agreement and each Transaction
Document to which Newco is a party has been duly executed and delivered by
Newco and constitutes a valid and binding agreement of Newco, enforceable in
accordance with its terms, except as enforcement may be limited in bankruptcy
or by equitable principles.

 

5.03        Governmental Authorization; Consents.  The execution, delivery and performance by
the Buyer and Newco of this Agreement requires no action by or in respect of,
or filing with, any governmental body, agency, official or authority other than
compliance with any applicable requirements of the HSR Act.  No consent, approval, waiver or other action
by any Person (other than any governmental body, agency, official or authority)
under any contract, agreement, indenture, lease, instrument or other document
to which the Buyer or Newco is a party or by which it is bound is required or
necessary for the execution, delivery and performance by the Buyer and Newco of
this Agreement and each Transaction Document to which the Buyer and/or Newco is
a party, or for the consummation of the transactions contemplated hereby or
thereby.

 

5.04        Non-Contravention.  The execution, delivery and performance by
the Buyer and Newco of this Agreement and each Transaction Document to which
the Buyer and/or Newco is a party, and the consummation of the transactions contemplated
hereby and thereby, do not and will not (i) contravene or conflict with (A) in
the case of the Buyer, its certificate of incorporation or bylaws, and (B) in
the case of Newco, its certificate of formation or limited liability company
agreement, (ii) assuming compliance with the HSR Act, contravene or
conflict with any provision of any law, regulation, judgment, injunction,
order, Permit or decree binding upon or applicable to the Buyer or Newco; (iii) constitute
a default (with or without notice or lapse of time, or both) under or give rise
to any right of termination, cancellation or acceleration of any right or
obligation of the Buyer or Newco or to a loss of any benefit to which the Buyer
or Newco is entitled under any provision of any agreement, contract or other
instrument binding 

 

34

 

upon the Buyer or Newco or by
which their assets may be bound or (iv) result in the creation or
imposition of any Lien on any asset of the Buyer or Newco.

 

5.05        Finders’ Fees.  Neither Buyer nor Newco has employed any
broker, finder, investment banker or financial advisor (i) as to whom
Buyer or Newco may have any obligation to pay any brokerage or finders’ fees,
commissions or similar compensation in connection with the transactions
contemplated hereby, or (ii) who might be entitled to any fee or
commission from Sellers, the Company or any of their respective Affiliates upon
consummation of the transactions contemplated hereby.

 

5.06        Investment
Representations.  Buyer
and Newco are acquiring the Partnership Interests for their own account, for
investment and without any intention of distributing such Interests in
violation of the Securities Act of 1933 or any applicable state securities law.

 

ARTICLE VI

 

ADDITIONAL AGREEMENTS

 

6.01        Confidentiality.  Upon Closing, each Seller shall treat and
hold, and shall cause its Affiliates to treat and hold, as confidential any
proprietary information concerning the Company, including any notes, analyses,
compilations, studies, forecasts, interpretations or other documents that are
derived from, contain, reflect or are based upon any such proprietary
information (the “Confidential  Information”), refrain from using
any of the Confidential Information, and deliver promptly to Buyer, at the
request and option of Buyer, all tangible embodiments (and all copies) of the
Confidential Information which are in its possession or under its control.  Notwithstanding the foregoing, Confidential
Information shall not include information that is generally available to the
public other than as a result of a breach of this Section 6.01 or other
act or omission of any Seller or any of its Affiliates.  In the event that any Seller or any of its
Affiliates is requested or required to produce information or documents in any
legal proceeding, interrogatory, subpoena, civil investigative demand, or
similar process to disclose any Confidential Information, such Person shall
notify the Buyer promptly of the request or requirement so that the Buyer may
seek an appropriate protective order or waive compliance with the provisions of
this Section 6.01.  If, in the
absence of a protective order or the receipt of a waiver hereunder, any Seller
or any of its Affiliates is, on the advice of counsel, compelled to disclose
any Confidential Information to any tribunal, such Person may disclose the
Confidential Information to the tribunal; provided, that such disclosing Person
shall use its reasonable commercial efforts to seek, at the request and expense
of Buyer, an order or other assurance that confidential treatment shall be
accorded to such portion of the Confidential Information required to be
disclosed as Buyer shall designate.

 

6.02        Tax
Matters  The following
provisions shall govern the allocation of responsibility as between the Buyer
and the Sellers for certain tax matters following the Closing Date:

 

(a)           Tax Indemnification.  The Sellers jointly and severally shall
indemnify the Buyer Indemnified Parties and hold them harmless from and
against, any Loss, claim, liability, expense, or other damage attributable to (i) all
Taxes (or the non-payment 

 

35

 

thereof) imposed on the Company
for all taxable periods ending before the Closing Date and the portion through
the end of the day prior to the Closing Date for any taxable period that
includes (but does not end on) the Closing Date (“Pre-Closing Tax Period”),
(ii) all Taxes of any member of an affiliated, consolidated, combined or
unitary group of which the Company (or any predecessor of the foregoing) is or
was a member on or prior to the Closing Date, (iii) Taxes of any person
imposed on the Company as a transferee or successor, by contract or pursuant to
any law, rule or regulation, which Taxes relate to an event or transaction
occurring before the Closing Date, and (iv) breach of the representations
in Section 3.24 and (v) any Excluded Taxes.

 

The applicable
Buyer Indemnified Party shall provide a notice of claim for indemnification
hereunder to Sellers’ Representative, which notice shall include evidence that
such tax has been due and/or has been paid. 
Sellers shall indemnify the Buyer Indemnified Party within 5 days after
receipt of notice.  In the Sellers’
discretion, the Sellers may request such Buyer Indemnified Party to file a
claim for refund with respect to such indemnified Taxes.  Sellers shall bear the expenses of preparing
and prosecuting such refund action.  To
the extent a refund with respect to such indemnified Taxes paid by the Sellers
is actually recovered by a Buyer Indemnified Party, such Buyer Indemnified
Party shall pay such refund to the Sellers’ Representative within a reasonable
time of receipt.

 

The Sellers’
obligation to indemnify the Buyer Indemnified Parties pursuant to this Section 6.02(a) shall
survive the Closing until thirty (30) days following the expiration of the
applicable statute of limitations; provided, that, if the Buyer Indemnified
Parties provide the Sellers with notice of a claim to indemnify prior to the
end of such period, the Sellers will still be obligated to indemnify the Buyer
Indemnified Parties for such claim. 
Notwithstanding anything contained herein to the contrary, the Buyer
Indemnified Parties shall be entitled to dollar-for-dollar indemnification from
the first dollar and shall not be subject to the Sellers’ Basket or the
Indemnity Cap Amount in seeking indemnification under this Section 6.02(a).

 

(b)           Straddle Period.  In the case of any taxable period that
includes (but does not end on) the Closing Date (a “Straddle Period”),
the amount of Taxes that is allocable to the Pre-Closing Tax Period shall (i) in
the case of Taxes that are imposed on a periodic basis (such as real property
taxes), be deemed to be the amount of such Taxes for the entire period (or in
the case of such Taxes determined on an arrears basis, the amount of such Taxes
for the immediately preceding period) multiplied by a fraction the numerator of
which is the number of calendar days in the Straddle Period ending before (and
excluding) the Closing Date and the denominator of which is the number of
calendar days in the entire relevant Straddle Period and (ii) in the case
of Taxes that are not described in clause (i) above (such as income Taxes,
the Texas Revised Franchise Act, Taxes imposed in connection with any sale or
other transfer or assignment of property, and payroll and similar Taxes), be
deemed to be equal to the amount that would have been payable if the taxable
year or period of the Company ended on the day prior to the Closing Date.

 

Except for
federal, state and local income tax returns, the Buyer shall file, or shall
cause the Company to file, any tax return relating to the Company for any
Straddle 

 

36

 

Period, and the Buyer shall pay, or cause to
be paid, all Taxes shown as due on any such returns.  At least ten (10) days prior to filing
any such return, Buyer shall provide the Sellers’ Representative with a copy of
such return and a notice setting forth the calculation regarding the amount of
such Taxes allocable to the Sellers under this Section 6.02(b).  Sellers’ Representative shall have five (5) days
to either (i) make reasonable objection to the calculation or allocation
of any such Taxes to Sellers, or (ii) pay the amount shown as due from
Sellers to Buyer.  If reasonable
objection is made, the parties shall consult and resolve in good faith any such
objection, it being understood and agreed that in the absence of any
resolution, any and all such objections shall be resolved by treating items in
a manner consistent with the past practices with respect to such items.  Payment shall be made as soon as practical
thereafter.

 

With respect
to federal, state and local income tax returns, Sellers shall retain the right
to file the final Form 1065 and Forms K-1 with respect to the Company for
the short taxable year ending on the day prior to the Closing Date.  The income of the Company will be apportioned
to the period up to and excluding the Closing Date, and the period on or after
the Closing Date, by closing the books and records of the Company on the day
prior to the Closing Date.  For purposes
of allocating and apportioning income before and after the Closing Date, Buyer
and Sellers shall reasonably approximate items of income and deduction with
respect to the Route Cash and Accounts Receivable in accordance with the
allocations set forth in Sections 2.03(c) and 6.05 of this Agreement.

 

Sellers shall
retain the authority to control the final disposition or settlement of any tax
claim or assessment made with respect to any Pre-Closing Tax Period, subject to
compliance with applicable law.  Buyer
and Sellers shall cooperate and jointly control the disposition or settlement
of any tax claim or assessment made with respect to any Straddle Period.  With respect to all proceedings or litigation
with respect to Pre-Closing Tax Periods and Straddle Periods, Buyer and Sellers
shall consult and cooperate with each other in good faith to resolve the
controversy with the applicable taxing authority.

 

(c)           Cooperation on Tax
Matters.  Buyer, the Company, and the
Sellers shall cooperate fully, as and to the extent reasonably requested by the
other party, in connection with any audit, litigation or other proceeding with
respect to Taxes. Such cooperation shall include the retention and (upon the
other party’s request) the provision of records and information that are
reasonably relevant to any such audit, litigation or other proceeding and
making employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. The Company and
the Sellers agree (A) to retain all books and records with respect to Tax
matters pertinent to the Company relating to any taxable period beginning
before the Closing Date until the expiration of the statute of limitations
(and, to the extent notified by Buyer or the Sellers, any extensions thereof)
of the respective taxable periods, and to abide by all record retention
agreements entered into with any taxing authority, and (B) to give the
other party reasonable written notice prior to transferring, destroying or
discarding any such books and records and, if the other party so requests, the
Company or the Sellers, as the case may be, shall allow the other party to take
possession of such books and records. 
Buyer and Sellers shall work in good faith together to make any 

 

37

 

election under the Texas
Revised Franchise Tax to minimize taxes imposed on Buyer and/or Sellers, provided
that such election will not have an adverse affect on any of the parties.

 

(d)           Tax Sharing
Agreements.  All tax-sharing
agreements or similar agreements with respect to or involving the Company, if
any, shall be terminated as of the Closing Date and, after the Closing Date,
the Company shall not be bound thereby or have any liability thereunder.

 

(e)           Transfer Taxes.  Sellers will pay, and will indemnify and hold
the Buyer Indemnified Parties harmless against, any sales Tax, use Tax, real
property transfer or gains Tax, stamp Tax, stock transfer Tax, or other similar
Tax imposed on any of the Company or the Buyer Indemnified Parties as a result
of the transactions contemplated by this Agreement (but excluding any such
taxes that result from actions taken by the Company or Buyer after the Closing)
(collectively, “Transfer Taxes”), and any penalties or interest with
respect to the Transfer Taxes.  The
Sellers agree to cooperate with Buyer in the filing of any returns with respect
to the Transfer Taxes, including promptly supplying any information in their
possession reasonably requested by Buyer that is reasonably necessary to
complete such returns.

 

(f)            Allocation of
Purchase Price.  For Tax purposes,
Buyer and Sellers agree to allocate the Purchase Price consistently with
Schedule 6.02(f) attached hereto. 
Buyer shall prepare Form 8594 consistently with such Schedule, and
shall provide Sellers a copy of such Form 8594 so that Sellers may confirm
consistency with such Schedule.  Buyer
and Sellers shall file all Tax Returns and reports consistently with such
allocations.  Buyer and Sellers shall
promptly inform one another of any challenge by any taxing authority to any
allocation made pursuant to this paragraph and agree to consult with and keep
one another informed with respect to the state of, and any discussion, proposal
or submission with respect to, such challenge.

 

(g)           The Buyer and the
Sellers agree that for federal income tax purposes, the Sellers’ sale of
Partnership Interests to the Buyer shall be treated under Revenue Ruling 99-6
as (A) a sale by each Seller of its partnership interest in the Company to
the Buyer, and (B) a purchase by the Buyer of the assets of the Company
from the Sellers.

 

6.03        Further Assurances.  After the Closing, each party hereto shall
cooperate with the others, and execute and deliver, or cause to be executed and
delivered, all such other instruments, including instruments of conveyance,
assignment and transfer, and use commercially reasonable efforts to take all
such other actions as may be reasonably requested by the other parties hereto
from time to time, consistent with the terms of this Agreement, to effectuate
the purposes and provisions of this Agreement.

 

6.04        Seller Releases.

 

(a)           For and in
consideration of the amount to be paid to each Seller under this Agreement, and
the additional covenants and promises set forth in this Agreement, effective as
of the Closing each Seller, on behalf of itself and its assigns, heirs, 

 

38

 

beneficiaries, creditors,
representatives, agents and Affiliates (the “Releasing Parties”), hereby
fully, finally and irrevocably releases, acquits and forever discharges the
Company its partners and any parent or subsidiary entities, and the Buyer, Newco
and their Subsidiaries, and the respective officers, directors, partners,
general partners, limited partners, managing directors, members, stockholders,
trustees, shareholders, representatives, employees, principals, agents,
Affiliates, parents, subsidiaries, joint ventures, predecessors, successors,
assigns, beneficiaries, heirs, executors, personal or legal representatives,
insurers and attorneys of any of them (collectively, the “Released Parties”)
from any and all commitments, actions, debts, claims, counterclaims, suits,
causes of action, damages, demands, liabilities, obligations, costs, expenses,
Losses and compensation of every kind and nature whatsoever, past, present, or
future, at law or in equity, whether known or unknown, contingent or otherwise,
which such Releasing Parties, or any of them, had, has, or may have had at any
time in the past until and including the Closing Date against the Released
Parties, or any of them, including but not limited to any claims which relate
to or arise out of such Releasing Party’s relationship with the Company or its
rights or status as a partner, officer or director of the Company and further
including without limitation any claims of fraud or fraudulent inducement in
connection with the negotiation, execution and performance of this Agreement
and the other documents and agreements to which such Seller is a party in
connection with the transactions contemplated by this Agreement (collectively, “Released
Causes of Action”); provided, however, that the Released Causes
of Action shall not include any rights and claims of any Releasing Party
arising from or in connection with this Agreement or any Transaction Document,
in each case to the extent arising after the Closing.

 

(b)           Each Seller hereby
represents to the Released Parties that as of the Closing Date such Seller (i) has
not assigned any Released Causes of Action or possible Released Causes of
Action against any Released Party, (ii) fully intends to release all
Released Causes of Action against the Released Parties including, without
limitation, unknown and contingent Released Causes of Action (other than those
specifically reserved above), and (iii) has consulted with counsel with
respect to the execution and delivery of this general release and has been
fully apprised of the consequences hereof. 
Furthermore, each Seller further agrees not to institute any litigation,
lawsuit, claim or action against any Released Party with respect to the
Released Causes of Action.

 

(c)           Each Seller hereby
represents and warrants that it has access to adequate information regarding
the terms of this Agreement, the scope and effect of the releases set forth
herein, and all other matters encompassed by this Agreement to make an informed
and knowledgeable decision with regard to entering into this Agreement.  Each Seller further represents and warrants
that it has not relied upon the Company, the Buyer or the Released Parties in
deciding to enter into this Agreement and has instead made its own independent
analysis and decision to enter into this Agreement.

 

6.05        Accounts
Receivable.

 

(a)           Immediately prior to
Closing, the Company shall distribute to the Sellers an undivided interest in
the accounts receivable of the Company with respect to the 

 

39

 

Company’s laundry equipment
sales and equipment rental business as of the Closing Date (collectively, “Accounts
Receivable”).  On or as soon as
practicable after the Closing Date, Sellers’ Representative will prepare and
deliver to Buyer a statement setting forth the outstanding Accounts Receivable,
including the dates on which payments thereunder are due.  Effective upon the Closing, the Sellers
hereby appoint Buyer their agent for collection of all of the Accounts
Receivable as provided herein.  For a
period of ninety (90) days following the Closing Date (the “Collection
Period”), Buyer will collect the Accounts Receivable substantially in the
same manner and with the same diligence that Buyer uses to collect its own
accounts receivable.  During the
Collection Period, the Sellers will not undertake, directly or indirectly, the
collection of the Accounts Receivable other than pursuant to Buyer’s
obligations on Sellers’ behalf under the terms and conditions of this Section 6.05.

 

(b)           All amounts received by
Buyer during the Collection Period from an account debtor of Accounts
Receivable shall be applied first to the Accounts Receivable of such account
debtor in the order of their origination, unless the account debtor designates
a specific invoice for payment or disputes such Accounts Receivable in writing,
in which case the payment of such account debtor shall be applied to the
Accounts Receivable as designated by the account debtor. Within fifteen (15)
days after the end of each calendar month during the Collection Period, Buyer
will deliver to the Sellers’ Representative a report with respect to the
collections made with respect to the Accounts Receivable for such month and
will remit to the Sellers’ Representative, on behalf of Sellers the total
amount so collected during such month. 
Except for such actions as it would customarily take in the ordinary
course, Buyer will not be obligated to take any other actions, including the
institution of litigation, the employment of any collection agency, legal
counsel, or other third party, or other means of collections or pay any
expenses to third parties to collect the Accounts Receivable.  If during the Collection Period a dispute
arises with regard to an account included among the Accounts Receivable, Buyer
shall promptly advise the Sellers’ Representative thereof and may (or, if
requested by the Sellers’ Representative, will) turn over collection efforts
for that account to the Sellers’ Representative, on behalf of Sellers.  At the end of the Collection Period,
collection efforts for all uncollected Accounts Receivable shall be turned over
by Buyer to the Sellers’ Representative, on behalf of Sellers.  Any amounts received by Buyer in respect of
any Accounts Receivable following the Collection Period shall be promptly
remitted to the Sellers’ Representative.

 

6.06        Insurance.  At or promptly following the Closing, the
Company shall terminate all insurance policies and coverages in effect prior to
the Closing Date.  All premium refunds
for premiums paid prior to the Closing Date paid to Buyer pursuant to such
terminations shall be delivered to the Sellers’ Representative for distribution
to the Sellers in accordance with such Seller’s Fraction. Premiums for any
insurance policies or coverages maintained in force after the Closing shall be
prorated based on the numbers of days each such policy or coverage was in
effect prior to the Closing and the number of days such policy or coverage was
or will be in effect after the Closing until it is terminated or is scheduled
to expire, and Buyer shall reimburse Sellers for prorated premiums allocated to
Buyer.

 

40

 

 

6.07        Terminated Contracts.  At any time within 90 days following the
Closing, Buyer may give one or more written notices to Sellers’ Representative
that the Company and Buyer intend to terminate and/or buyout one or more of the
contracts listed on Schedule 6.07 hereto and designated with an asterisk,
specifying the proposed date of termination (the “Termination Date”,
which Termination Date may not be later then the 90th day following
closing) for each contract listed in such notice (the “Terminated Contracts”).  Any liabilities resulting from such
terminations and/or buyouts as well as all liabilities arising under such
Terminated Contracts from and after the Termination Date will be paid by the
Sellers; provided, that the terms of any such termination and/or buyout will be
subject to the reasonable consent of the Sellers’ Representative.  For the avoidance of doubt the parties hereto
agree that Buyer will make the ordinary payments required under the Terminated
Contracts listed on Schedule 6.07 that are designated with an asterisk (but not
any costs arising under such Terminated Contracts from and after the
Termination Date or associated with the termination and/or buyout of such
Terminated Contracts) from and after the Closing and until the respective Termination
Dates of such Terminated Contracts.  All
contracts listed on Schedule 6.07 that are not designated with an asterisk are
Terminated Contracts and Excluded Liabilities and will be terminated and/or
bought out as promptly as practicable after the Closing, with the terms of any
such termination and/or buyout subject to the reasonable consent of the Sellers’
Representative.

 

6.08        Sellers’ Net Worth.  Without
limiting their obligations under applicable law or the indemnifications set
forth in Section 8.01 hereof, for a period of at least two (2) years
after Closing, the Sellers will maintain, in the aggregate, a minimum net worth
equal to Eleven Million dollars ($11,000,000) and a minimum amount of cash,
short-term investments and marketable securities equal to Eleven Million
dollars ($11,000,000).  Upon the request
of Buyer from time to time after the Closing, the Sellers will provide
financial statements or other reasonable evidence of their compliance with this
covenant.

 

6.09        Software Licenses.  The parties hereto agree to cooperate and use
their reasonable efforts to transfer and assign any software licenses which are
required to be transferred as a result of the consummation of the transactions
contemplated by this Agreement.  Any
license, transfer or other fees associated with such transfer and assignment
shall be borne 50% by Buyer and 50% by Sellers.

 

6.10        Re-Hiring of Terminated Employees.  The Buyer hereby covenants and agrees that if
any employee of the Company is terminated by the Company upon or after the
Closing and such termination results in additional Seller Expenses, the Buyer
will, in the event that it re-hires any such terminated employee within one
year of the Closing Date, reimburse the Sellers, in accordance with each Seller’s
Fraction, an amount equal to the additional Seller Expenses.

 

6.11        Company’s 2007 Audit.  The Sellers and Buyer agree that the costs
and expenses of Clifton Gunderson LLP incurred in connection with the audit of
the Company’s financial statements (including the balance sheet and related
statements of operations and cash flows) for the fiscal year ended December 31,
2007 shall be borne 50% by Buyer and 50% by Sellers.

 

6.12        Colorado Springs Location. 
For a period of up to ninety (90) days after Closing, the Company and Buyer
will be permitted to occupy the Company’s current facility in Colorado 

 

41

 

Springs, Colorado (recently transferred from
the Company to Paceco Investors, L.P.) for monthly rent in the amount of
$2,500.

 

6.13        Sale of Machines.  For a
period of up to ten (10) yeas after Closing, so long as Buyer is a
distributor of laundry machines, and provided that (i) it will not violate
any contractual obligations of Buyer and (ii) Seller, Joe K. Pace, Gary Pace,
Margaret P. Sykes and Tom L. Burgett are in compliance with all of their
obligations under their respective Noncompetition Agreements, Buyer will sell
new laundry machines at Buyer’s cost, including any related delivery,
preparation or other costs, for such machines to (A) a business
wholly-owned by Tom Burgett and his family members solely for use in public
laundromats owned and/or operated by such business (and not for resale), up to
a maximum amount of 100 machines per year, and (B) Q/W Coins Services,
Ltd. solely for use in public laundromats owned and/or operated by Q/W Coins
Services, Ltd. (and not for resale) for so long as such entity is wholly-owned
by J.C. Pace & Co. and its Affiliates.

 

6.14        Certain Employee Benefits.  For a period of thirty (30) days after
Closing, the Sellers hereby covenant and agree to cause J.C. Pace &
Co. and its Affiliates to maintain the coverage and benefits available to
Employees of the Company (other than Employees participating in the plan
indentified as item 4 of Schedule 3.28), and, as applicable, their
eligible dependents, under the employee healthcare plan identified as item 5
of Schedule 3.28.

 

ARTICLE VII

CONDITIONS TO CLOSING

 

7.01        Conditions to the Obligations of Each Party.  The obligations of Buyer, Newco, the Company
and Sellers to consummate the Closing are subject to the satisfaction of the
following conditions:

 

(a)           No provision of any
applicable law or regulation and no judgment, injunction, order or decree shall
prohibit the consummation of the Closing.

 

(b)           Each other party to
this Agreement shall have executed and delivered each of the Transaction
Documents to be entered into by it at Closing and any other documents or items
required to be delivered by it pursuant to this Agreement.

 

7.02        Conditions to Obligation of Buyer.  The obligation of Buyer and Newco to
consummate the Closing is subject to the satisfaction of the following further
conditions:

 

(a)           Buyer and Newco shall
have received an opinion of Kelly Hart & Hallman LLP, dated the
Closing Date, in form and substance mutually satisfactory to such parties.

 

(b)           The Company shall have
received all of the Required Consents referred to in Schedule 3.03, in
each case in form and substance reasonably satisfactory to Buyer, and no such
consent, authorization or approval shall have been revoked.

 

42

 

(c)           Each Seller shall have
executed and delivered to Buyer and Newco a certificate of non-foreign status
satisfying the requirements of Treasury Regulations Section 1.1445-2(b).  Each Seller shall have delivered to Buyer a
clearance certificate or similar document(s) which may be required by any
Tax authority to relieve Buyer and Newco of (x) any obligation to withhold
Taxes in connection with the transactions contemplated by this Agreement and (y) any
liability for Taxes (determining without regard to provisions of this Agreement
assigning responsibility therefor) for which relief is available by reason of
the filing of an appropriate certificate or other document.

 

(d)           Sellers shall have paid
all sales, use, transfer, stamp, documentary and other similar Taxes and
recording and filing fees (but excluding any such taxes that result from
actions taken by the Company, Buyer or Newco after the Closing) incurred in connection
with the transactions contemplated by this Agreement.

 

(e)           Each Seller, Joe K.
Pace, Gary Pace, Margaret P. Sykes and Tom L. Burgett shall have entered into a
non-competition agreement, in form and substance mutually satisfactory to such
parties (collectively, the “Noncompetition Agreements”).

 

7.03        Conditions to Obligation of Sellers.  The obligation of Sellers to consummate the
Closing is subject to the satisfaction of the following further conditions:

 

(a)           Sellers shall have
received an opinion of Goodwin Procter LLP,
dated the Closing Date, in form and substance mutually satisfactory to such
parties.

 

(b)           The Company shall have
received the Required Consents, in each case in form and substance reasonably
satisfactory to Sellers, and no such consent, authorization or approval shall
have been revoked.

 

(c)           Sellers shall have
received payment of the Estimated Purchase Price in accordance with Section 2.05(a).

 

ARTICLE VIII

INDEMNIFICATION

 

8.01        Indemnification by Sellers.  Each Seller and their respective successors
and permitted assigns will subsequent to the Closing, jointly and severally
indemnify and hold harmless the Company, Buyer, Newco their respective
subsidiaries and affiliates and their respective officers, directors, employees
and agents (individually, a “Buyer Indemnified Party” and collectively,
the “Buyer Indemnified Parties”) from and against and in respect of all
losses, liabilities, obligations, damages, deficiencies, actions, suits,
proceedings, demands, assessments, orders, judgments, fines, penalties, costs
and expenses (including the reasonable fees, disbursements and expenses of
attorneys, accountants and consultants) of any kind or nature whatsoever
(whether or not arising out of third-party claims and including all amounts paid
in investigation, defense or settlement of the foregoing) sustained, suffered
or incurred by or made against (collectively “Losses” and individually a
“Loss”) any Buyer Indemnified Party arising out of, based upon or in
connection with:

 

43

 

(a)           actual fraud or an
intentional misrepresentation by Sellers or the Company of any of their
representations or warranties in this Agreement or in any Schedule, exhibit,
certificate, financial statement, agreement or other instrument delivered under
or in connection with this Agreement;

 

(b)           any other breach of any
representation or warranty (other than a breach of Section 3.24 hereof,
which is addressed in Section 6.02(a) hereof) made by Sellers or the
Company in this Agreement or in any Schedule, exhibit, certificate, financial
statement, agreement or other instrument delivered under or in connection with
this Agreement;

 

(c)           any breach of any
covenant or agreement made by Sellers or the Company in this Agreement or in
any Schedule, exhibit, certificate, financial statement, agreement or other
instrument delivered under or in connection with this Agreement;

 

(d)           any Excluded Liability; and

 

(e)           any liability under the
Terminated Contracts to the extent provided in Section 6.07.

 

Claims under clauses (a) through (e) of
this Section 8.01 shall be hereinafter collectively referred to as “Buyer
Indemnifiable Claims,” and Losses in respect of such claims shall be
hereinafter collectively referred to as “Buyer Indemnifiable Losses.”

 

8.02        Limitations on Indemnification by Sellers.

 

(a)           Maximum
Indemnification.  Subject to the
exceptions set forth in subsection (d)(ii) and (e)(ii) of this Section 8.02,
the obligation of Sellers to indemnify Buyer Indemnified Parties in respect of
any Buyer Indemnifiable Losses described in or arising under Section 8.01(b) (“Representation
and Warranty Losses”) shall be limited, in the aggregate, to an amount
equal to Eleven Million Six Hundred Fifty Thousand Dollars ($11,650,000) (the “Indemnity
Cap Amount”).

 

(b)           Sellers’ Basket.  Subject to the exceptions set forth in
subsection (d)(ii) and (e)(ii) of this Section 8.02, no
indemnification shall be payable with respect to Representation and Warranty
Losses except to the extent the cumulative amount of all Representation and
Warranty Losses exceeds Seven Hundred Fifty Thousand Dollars ($750,000) in the
aggregate (the “Sellers’ Basket”), whereupon the total amount of such
Representation and Warranty Losses in excess of the Sellers’ Basket shall be recoverable
in accordance with the terms hereof.

 

(c)           Time Limitation.  Subject to the exceptions set forth in
subsection (d)(ii) and (e)(ii) of this Section 8.02, no
indemnification shall be payable to a Buyer Indemnified Party with respect to
any claim relating to Representation and Warranty Losses asserted more than
eighteen (18) months after the Closing Date (the “Expiration Date”);
provided that any claim for indemnification as to which notice has been given
prior to the Expiration  Date  shall survive such expiration until final
resolution of such claim.

 

44

 

(d)           Purchase Price
Limitation on Certain Claims. 
Notwithstanding anything herein to the contrary, Buyer Indemnified
Parties shall be entitled to dollar-for-dollar indemnification from the first
dollar up to the amount of the Purchase Price and shall not be subject to the
Sellers’ Basket, or the Indemnity Cap Amount, or any limitation as to time
(other than applicable legal statutes of limitation) in seeking indemnification
with respect to any of the following:

 

(i)            Losses described in or
arising under Sections 8.01(c), (d), or (e);

 

(ii)           Losses described in or
arising under Section 8.01(b) involving a breach by Sellers or the
Company of any of the representations and warranties contained in Sections
3.20, 3.23, 3.28 or 4.05.

 

(e)           No Limitation on
Certain Claims.  Notwithstanding
anything herein to the contrary, Buyer Indemnified Parties shall be entitled to
dollar-for-dollar indemnification from the first dollar and shall not be
subject to the Sellers’ Basket, or the Indemnity Cap Amount, or any limitation
as to time (other than applicable legal statutes of limitation) in seeking
indemnification with respect to any of the following:

 

(i)            Losses described in or
arising under Sections 8.01(a);

 

(ii)           Losses described in or
arising under Section 8.01(b) involving a breach by Sellers or the
Company of any of the representations and warranties contained in Sections
3.02, 3.05, 4.01 or 4.02.

 

8.03        Indemnification
by Buyer and Newco. 
Buyer, Newco and their respective successors and permitted assigns agree
subsequent to the Closing to indemnify and hold harmless Sellers, their
subsidiaries and their affiliates and their respective partners, officers,
directors, employees and agents (individually, a “Seller Indemnified Party”
and collectively, the “Seller Indemnified Parties”) from and against and
in respect of all Losses arising out of, based upon or in connection with:

 

(a)           actual fraud or an
intentional misrepresentation by Buyer or Newco of any of its representations,
or warranties in this Agreement or in any schedule, exhibit, certificate,
financial statement, agreement or other instrument delivered under or in
connection with this Agreement;

 

(b)           any breach of any
representation or warranty made by Buyer or Newco in this Agreement or in any
Schedule, exhibit, certificate, financial statement, agreement or other
instrument delivered under or in connection with this Agreement;

 

(c)           any breach of any
covenant or agreement made by Buyer or Newco in this Agreement or in any
Schedule, exhibit, certificate, agreement or other instrument delivered under
or in connection with this Agreement; and

 

(d)           any Assumed Liability.

 

45

 

Claims under clauses (a) through (d) of
this Section 8.03 shall be hereinafter collectively referred to as “Seller
Indemnifiable Claims,” and Losses in respect of such claims shall be
hereinafter collectively referred to as “Seller Indemnifiable Losses.”

 

8.04        Limitations
on Indemnification by Buyer and Newco.

 

(a)           Maximum
Indemnification.  Buyer’s and Newco’s
obligation to indemnify Seller Indemnified Parties in respect of Seller
Indemnifiable Losses described in or arising under Section 8.03(b) shall
be limited, in the aggregate, to an amount equal to the Indemnity Cap Amount.

 

(b)           No Limitation on
Certain Claims.  Notwithstanding
anything herein to the contrary, Seller Indemnified Parties shall be entitled
to dollar-for-dollar indemnification from the first dollar and shall not be
subject to the Indemnity Cap Amount or any limitation as to time (other than
applicable legal statutes of limitation) in seeking indemnification from the
Buyer or Newco with respect to any of the following:

 

(i)            Losses described in or
arising under Sections 8.03(a), (c) or (d); and

 

(ii)           Losses described in or
arising under Section 8.03(b) involving a breach by Buyer or Newco of
any of the representations and warranties contained in Section 5.02, 5.05
or 5.06.

 

(c)           Time Limitation.  Subject to the exception set forth in Section 8.04(b),
no indemnification shall be payable to a Seller Indemnified Party with respect
to any claim asserted after the Expiration Date which relates to Seller
Indemnifiable Losses described in or arising under Section 8.03(b);
provided that any claim for indemnification as to which notice has been given
prior to the Expiration  Date  shall survive such expiration until final
resolution of such claim.

 

8.05        Notice; Defense of
Claims.

 

(a)           Notice of Claims.  Promptly after receipt by an indemnified
party of notice of any claim, liability or expense to which the indemnification
obligations hereunder would apply, the indemnified party shall give notice
thereof in writing (a “Claim Notice”) to the indemnifying party, but the
omission to so notify the indemnifying party promptly will not relieve the
indemnifying party from any liability except (i) to the extent that the
indemnifying party shall have been materially prejudiced as a result of the
failure or delay in giving such Claim Notice and (ii) that no
indemnification will be payable to an indemnified party with respect to any
claim for which the Claim Notice is given after expiration of the period for
which such claim may be made pursuant to Section 8.02 or 8.04 (as the case
may be) of this Agreement.  Such Claim
Notice shall state the information then available regarding the amount and
nature of such claim, liability or expense and shall specify the provision or
provisions of this Agreement under which the liability or obligation is
asserted.

 

46

 

(b)           Third Party Claims.  With respect to third party claims, if within
thirty (30) days after receiving the Claim Notice the indemnifying party gives
written notice (the “Defense Notice”) to the indemnified party stating
that (i) it may be liable under the provisions hereof for indemnity in the
amount of such claim if such claim were successful and (ii) that it
disputes and intends to defend against such claim, liability or expense at its
own cost and expense, then counsel for the defense shall be selected by the
indemnifying party (subject to the consent of the indemnified party which
consent shall not be unreasonably withheld) and the indemnified party shall not
be required to make any payment with respect to such claim, liability or
expense as long as the indemnifying party is conducting a good faith and
diligent defense at its own expense; provided, however, that the assumption of
defense of any such matters by the indemnifying party shall relate solely to
the claim, liability or expense that is subject or potentially subject to
indemnification.

 

The indemnifying
party shall have the right, with the consent of the indemnified party, which
consent shall not be unreasonably withheld, to settle all identifiable matters
related to claims by third parties which are susceptible to being settled
provided the indemnifying parties’ obligation to indemnify the indemnified
party therefor will be fully satisfied. 
The indemnifying party shall keep the indemnified party apprised of the
status of the claim, liability or expense and any resulting suit, proceeding or
enforcement action, shall furnish the indemnified party with all documents and
information that the indemnified party shall reasonably request and shall
consult with the indemnified party prior to acting on major matters, including
settlement discussions.  Notwithstanding
anything herein stated, the indemnified party shall at all times have the right
to fully participate in such defense at its own expense directly or through
counsel; provided, however, if the named parties to the action or proceeding
include both the indemnifying party and the indemnified party and
representation of both parties by the same counsel would be inappropriate under
applicable standards of professional conduct, the expense of one separate
counsel for the indemnified party shall be paid by the indemnifying party.

 

If no Defense Notice is given by the indemnifying
party, or if diligent good faith defense is not being or ceases to be conducted
by the indemnifying party, the indemnified party shall, at the expense of the
indemnifying party, undertake the defense of (with counsel selected by the
indemnified party), and shall have the right to compromise or settle such
claim, liability or expense.  If such
claim, liability or expense is one that by its nature cannot be defended solely
by the indemnifying party, then the indemnified party shall make available all
information and assistance that the indemnifying party may reasonably request
and shall cooperate with the indemnifying party in such defense.

 

(c)           Non-Third Party
Claims.  With respect to non-third
party claims, if within thirty (30) days after receiving the Claim Notice the
indemnifying party does not give written notice to the indemnified party that
it contests such indemnity, the amount of indemnity payable for such claim
shall be as set forth in the Claim Notice. 
If the indemnifying party provides written notice to the indemnified
party within such 30-day period that it contests such indemnity, the parties
shall attempt in good faith to reach an agreement with regard thereto within
thirty (30) days of delivery of the indemnifying party’s notice.  If the parties cannot reach agreement within
such 30-day period, the parties may pursue such remedies as are available to
them at law or in equity.

 

47

 

8.06        No Subrogation.  Following the Closing, Sellers shall have no
right of indemnification, contribution or subrogation against the Company with
respect to any indemnification payments by any Seller or Sellers under Section 8.01
or any set-off under Section 8.07. 
Sellers shall have a right of contribution against each other with
respect to amounts actually paid pursuant to Section 8.01, but such right
of contribution shall in no way limit or affect Buyer’s, Newco’s and the
Company’s rights contained in this Article VIII.

 

8.07        Limited Right of Set-Off.  Each Buyer Indemnifiable Party (or the Buyer
on its behalf) shall have the right to set-off against any unsatisfied
principal amount of the Note (whether or not such principal amount is then due
and payable) the amount of any Buyer Indemnifiable Losses suffered or incurred
by such Buyer Indemnified Party, in accordance with the procedures, and subject
to the limitations, set forth in this Section 8.07.

 

(a)           Set-Off Procedures.  In the event that any Buyer Indemnified Party
gives Sellers a Claims Notice pursuant to Section 8.05(a) hereof and
advises that it intends to exercise its right of set-off with respect to such
claim (a “Set-Off Claim”), and if Sellers do not give timely written
notice pursuant to Section 8.05(c) that they contest such Set-Off
Claim, or if Sellers notify the Buyer Indemnified Party within the period of
timely notice thereunder that they agree to indemnify all or a portion of such
Set-Off Claim, then the principal amount of the Note shall be reduced by the
full amount of such Set-Off Claim, or the portion thereof that is uncontested,
if any portion of such Set-Off Claim is contested.  From and after the date of such principal
reduction, interest on the Note shall accrue only on the remaining principal of
the Note, but no set-off of interest shall be made or permitted, and interest
shall continue to accrue and be paid on the remaining principal of the Note in
accordance with its terms.  The parties
shall attempt during the 30-day period following notice of a contested Set-Off
Claim to reach agreement regarding any disputed portion of such Set-Off Claim.  If the parties cannot reach agreement within
such 30-day period, the parties may pursue such remedies as are available to
them at law or in equity.  Absent any
agreement by the parties or an order of a court of competent jurisdiction
resolving in favor of the Buyer Indemnified Party a disputed Set-Off Claim, no
set-off of the disputed Set-Off Claim shall be permitted.  If a court of competent jurisdiction
determines that interest has accrued and been paid on principal of the Note
that was subject to a valid Set-Off Claim but was not set-off, the Sellers
shall return such amount of interest to the maker of the Note together with
interest on such amount at the rate provided by the Note from, and including,
the date of payment to, but not including, the date such interest is returned.

 

(b)           Claims Unresolved at
Maturity.  If any unsatisfied Set-Off
Claim has not been resolved by agreement of the parties or by an order of a
court of competent jurisdiction when the principal of the Note becomes due and
payable, Buyer shall deposit an amount equal to the least of (i) the
aggregate amount of unsatisfied Set-Off Claims, (ii) the remaining
principal amount of the Note and (iii) the excess of $5,825,000 over the
aggregate amount set off against the principal of the Note prior to maturity,
with an escrow agent satisfactory to Sellers’ Representative to be held and
paid over in accordance with an escrow agreement to be executed by the parties
substantially in the form of Exhibit B hereto.  The remaining principal amount of the Note,
if any, shall be paid in accordance with its terms.

 

48

 

(c)           Priority of Set-Off.  For so long as there remains outstanding any
principal amount of the Note, the Buyer Indemnified Parties shall first proceed
with set-off as provided under this Section 8.07 with respect to claims
for Buyer Indemnifiable Losses described in or arising under Sections 8.01(b),
(c), (d) or (e), before proceeding against one or both Sellers with
respect to such claims, and then only to the extent that the aggregate amount
of unsatisfied Set-Off Claims exceeds $5,825,000; provided, however, that if at
any time the aggregate amount of both resolved and unsatisfied Set-Off Claims
exceeds $5,825,000, then the Buyer Indemnified Parties shall have the right to
proceed directly against the Sellers with respect to such excess.  This Section 8.07 shall not limit or
restrict the right of Buyer Indemnified Parties to proceed against one or both
Sellers (without the need to first make a Set-Off Claim) with respect to claims
for Buyer Indemnifiable Losses described in or arising under Sections 8.01(a).

 

8.08        Exclusive
Remedy.  After the
Closing, Section 6.02 and this Article VIII shall provide the
exclusive remedy for any misrepresentation or breach of warranty, covenant or
other agreement or other claim arising out of this Agreement or the
transactions contemplated hereby, other than with respect to claims for actual
fraud or equitable remedies, including but not limited to specific performance
and injunctive relief.

 

8.09        No
Punitive Damages. 
Notwithstanding anything to the contrary contained in this Agreement, no
indemnifying party shall be liable for punitive damages, except to the extent
any indemnified party suffered Losses for punitive damages paid to a
third-party.

 

8.10        Tax
Treatment.  The parties
agree to treat all payments made pursuant to this Article VIII or Section 6.02
as adjustments to the Purchase Price for Tax purposes.

 

ARTICLE IX

 

SELLERS’ REPRESENTATIVE

 

9.01        Appointment of Sellers’ Representative.

 

(a)           Each Seller hereby
irrevocably constitutes and appoints, J.C.P. Holding, L.P. (the “Sellers’
Representative”), as such Seller’s attorney-in-fact and agent in connection
with the transactions contemplated by this Agreement.  This power is irrevocable and coupled with an
interest, and shall not be affected by the death, incapacity, illness or other
inability to act of any Seller.

 

(b)           Each Seller hereby
irrevocably grants Sellers’ Representative full power and authority on behalf
of such Seller:

 

(i)            to execute and
deliver, and to accept delivery of, such documents as may be deemed by Sellers’
Representative, in its sole discretion, to be appropriate to consummate the
transactions contemplated by this Agreement;

 

(ii)           to execute documents of
assignment transferring the Partnership Interests to be sold by such Seller at
the Closing;

 

49

 

(iii)          to accept, at the
Closing, the purchase price for each Partnership Interest sold by such Seller
at the Closing, as payment in full for such Partnership Interest, and to
certify as to the accuracy of the representations and warranties of the Company
and of such Seller under, or pursuant to the terms of, this Agreement;

 

(iv)          to (A) dispute or
refrain from disputing any claim made by Buyer under this Agreement; (B) negotiate
and compromise any dispute that may arise under, and to exercise or refrain
from exercising any remedies available under, this Agreement and (C) execute
any settlement agreement, release or other document with respect to such
dispute or remedy;

 

(v)           to waive any closing
condition contained in Article VII of this Agreement and to give or agree
to any and all consents, waivers, amendments or modifications deemed by Sellers’
Representative, in its sole discretion, to be necessary or appropriate under
this Agreement, and, in each case, to execute and deliver any documents that
may be necessary or appropriate in connection therewith;

 

(vi)          to enforce any claim
against Buyer arising under this Agreement;

 

(vii)         to engage attorneys,
accountants and agents at the expense of Sellers; and

 

(viii)        to give such instructions
and to take such action or refrain from taking such action as Sellers’
Representative deems, in its sole discretion, necessary or appropriate to carry
out the provisions of, and to consummate the transactions contemplated by, this
Agreement.

 

(c)           Each Seller hereby
agrees that:

 

(i)            the Company and Buyer
shall be entitled to rely on any and all action taken by Sellers’
Representative under this Agreement notwithstanding any dispute or disagreement
among Sellers without any liability to, or obligation to inquire of, any Seller
or the Sellers’ Representative, notwithstanding any knowledge on the part of
the Company or Buyer of any such dispute or disagreement;

 

(ii)           notice to Sellers’
Representative, delivered in the manner provided herein, shall be deemed to be
notice to such Seller for the purposes of this Agreement and the Transaction
Documents;

 

(iii)          the authority of Sellers’
Representative, as described in this Agreement, shall be effective until the
rights and obligations of Sellers’ Representative under this Agreement shall
terminate by virtue of the termination of any and all rights and obligations of
such Seller to Buyer under this Agreement;

 

50

 

 

(iv)                              if
the Sellers’ Representative resigns or is removed or otherwise ceases to
function in its capacity as such for any reason whatsoever, a successor
reasonably acceptable to Buyer shall be appointed by a majority-in-interest of
Sellers; and

 

(v)                                 the
Sellers’ Representative shall not be liable to any Seller for Damages with
respect to any action taken or any omission by Sellers’ Representative pursuant
to this Article IX, except to the extent such Damages are caused by Seller
Representative’s gross negligence or willful misconduct.

 

(d)                                 Each
Seller agrees that, notwithstanding the foregoing, at the request of Buyer, it
shall take all actions necessary or appropriate to consummate the transactions
contemplated by this Agreement (including, without limitation, delivery of such
Seller’s Partnership Interests and acceptance of the purchase price therefor)
individually on its own behalf.

 

9.02                        Limitation on Actions.  Any claim, action, suit or other proceeding,
whether at law or in equity, to enforce any right, benefit or remedy granted to
Sellers under this Agreement shall be asserted, brought, prosecuted, or
maintained only by Sellers’ Representative on behalf of Sellers.  Any claim, action, suit or other proceeding,
whether at law or in equity, to enforce any right, benefit or remedy granted
under this Agreement, including without limitation any right of indemnification
provided in this Agreement, may be asserted, brought, prosecuted or maintained
by Buyer against Sellers by service of process on the Sellers’ Representative
and without the necessity of serving process on, any other Seller in such
claim, action, suit or other proceeding. 
With respect to any matter contemplated by this Section, a Seller shall
be bound by any settlement or release to which Sellers’ Representative shall
become a party.

 

9.03                        Indemnification.  Each Seller shall indemnify the Sellers’
Representative against any Damages that such Seller Representative may suffer
or incur in connection with any action taken or any omission by the Sellers’
Representative except to the extent such Damages were caused by the Sellers’
Representative’s gross negligence or willful misconduct.

 

ARTICLE X

 

MISCELLANEOUS

 

10.01                 Notices. All notices, requests,
demands or other communications that are required or may be given pursuant to
the terms of this Agreement shall be in writing and shall be deemed to have
been duly given:  (i) on the date of
delivery, if personally delivered by hand, (ii) upon the third day after
such notice is deposited in the United States mail, if mailed by registered or
certified mail, postage prepaid, return receipt requested, (iii) upon the
date scheduled for delivery after such notice is sent by a nationally
recognized overnight express courier or (iv) by fax upon written
confirmation (including the automatic confirmation that is received from the
recipient’s fax machine) of receipt by the recipient of such notice:

 

51

 

	
  if to Buyer or Newco, to:

  	
  with a copy (which shall not constitute notice)

  
	
   

  	
  to:

  
	
  Mac-Gray Services, Inc.

  	
   

  
	
  c/o Mac-Gray Corporation

  	
   

  
	
  404 Wyman Street

  	
  Goodwin Procter LLP

  
	
  Waltham, MA 02451

  	
  53 State Street

  
	
  Attn: Chief Executive Officer

  	
  Exchange Place

  
	
  Telecopy: (781) 290-5358

  	
  Boston, MA 02109

  
	
   

  	
  Attn: Robert P. Whalen, Jr., Esq.

  
	
   

  	
  Telecopy: (617) 523-1231

  
	
   

  	
   

  
	
  if to the Company, to:

  	
  with a copy (which shall not constitute notice)

  
	
   

  	
  to:

  
	
  Automatic Laundry Company, Ltd.

  	
   

  
	
  420 Throckmorton Street, Suite 710

  	
  Kelly Hart & Hallman LLP

  
	
  Fort Worth, Texas 76102

  	
  201 Main Street

  
	
  Attn: Joe K. Pace

  	
  Suite 2500

  
	
  Telecopy: (817) 332-3296

  	
  Fort Worth, TX 76102

  
	
   

  	
  Attn: F. Richard Bernasek

  
	
   

  	
  Telecopy: (817) 878-9709

  
	
   

  	
   

  
	
  if to a Seller:

  	
   

  
	
   

  	
   

  
	
  at its address shown in

  	
   

  
	
  Schedule 2.01, or to the

  	
   

  
	
  Sellers’ Representative

  	
   

  

 

Such information may be changed, from time to time, by
means of a notice given in the manner provided in this Section 10.01.

 

10.02                 Amendments; No Waivers.

 

(a)                                  Any
provision of this Agreement may be amended prior to the Closing Date if, and
only if, such amendment is in writing and signed by Buyer, the Company and the
Sellers.  Any provision of this Agreement
may be waived if the waiver is in writing and signed by the party to be bound,
which in the case of the Sellers may be done by Sellers’ Representative.

 

(b)                                 No
failure or delay by either party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. 
The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.

 

10.03                 Expenses.  All costs and expenses incurred in connection
with this Agreement shall be paid by the party incurring such costs or
expenses; provided that if the Closing shall occur all such costs and expenses
incurred by the Company (a) shall be paid or reimbursed by Sellers, or (b) shall
reduce the Purchase Price as provided in Section 2.02.

 

52

 

10.04                 Successors and Assigns.

 

(a)                                  The
rights of either Party under this Agreement shall not be assignable by such
Party hereto prior to the Closing without the written consent of the other
Party.

 

(b)                                 Following
the Closing, neither Party may assign any of its rights hereunder to any third
Person without the written consent of the other Party, except that either Party
may assign its rights hereunder to an Affiliate.  Any assignment hereunder (whether before or
after the Closing) shall not relieve the assigning Party of its obligations
hereunder.  This Agreement shall be
binding upon and inure to the benefit of the Parties hereto and their
successors and permitted assigns. 
Nothing in this Agreement, expressed or implied, is intended or shall be
construed to confer upon any Person other than the Parties and successors and
assigns permitted by this Section 10.04 any right, remedy or claim under
or by reason of this Agreement.

 

10.05                 Further Assurances.  From time to time after the Closing, at the
request of Buyer and without further consideration, Sellers will execute and
deliver to Buyer such other documents, and take such other action, as Buyer may
reasonably request in order to consummate more effectively the transactions
contemplated hereby and to vest in Buyer good, valid and transferable title to
the Partnership Interests.

 

10.06                 Governing Law.  This Agreement shall be construed in
accordance with and governed by the law of the State of Delaware, without
regard to the conflicts of law rules of such state.

 

10.07                 Counterparts; Effectiveness.  This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.  This Agreement shall become effective when
each party hereto shall have received a counterpart hereof signed by the other
parties hereto.

 

10.08                 Entire Agreement.  This Agreement, the Note, the Noncompetition
Agreements and the Escrow Agreement constitute the entire agreement between the
parties with respect to the subject matter hereof and supersede all prior
agreements (including, without limitation, that certain letter agreement among
the Buyer, Company and Sellers, dated as of December 10, 2007),
understandings and negotiations, both written and oral, between the parties
with respect to the subject matter hereof. 
No representation, inducement, promise, understanding, condition or
warranty not set forth herein has been made or relied upon by either party
hereto.

 

10.09                 Captions.  The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.

 

10.10                 Jurisdiction.  Any action or proceeding seeking to enforce
any provision of, or based on any right arising out of, this Agreement or the
transactions contemplated hereby may be brought against any of the parties in
the state and federal courts of the State of Delaware, and each of the parties
hereby consents to the jurisdiction of such courts (and of the appropriate
appellate courts from such courts) in any such action or proceeding.  Each party further irrevocably waives any
objection to proceeding before any such court based upon lack of personal
jurisdiction or to the laying of the venue and further irrevocably and
unconditionally 

 

53

 

waives and agrees not to make
any claim that a proceeding brought in any such court has been brought in an
inconvenient forum.  Process in any such
action or proceeding may be served on any party anywhere in the world, whether
within or without the State of Delaware. 
Notwithstanding the foregoing, the parties agree that the jurisdiction
of the above courts shall be non-exclusive and that any action or proceeding
seeking to enforce any provision of, or based on any right arising out of, this
Agreement may be brought against any of the parties in any court where the such
action or proceeding may be properly brought.

 

[Signature Pages Follow
Next]

 

54

 

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

 

	
   

  	
  MAC-GRAY
  SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael
  J. Shea

  
	
   

  	
   

  	
  Michael J.
  Shea, EVP, CFO and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MAC-GRAY
  NEWCO, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Mac-Gray
  Services, Inc., its sole member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael
  J. Shea

  
	
   

  	
   

  	
  Michael J.
  Shea, EVP, CFO and Treasurer

  

 

[Signature Page to Partnership Interest Purchase Agreement]

 

 

	
   

  	
  AUTOMATIC
  LAUNDRY COMPANY, LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  JCP Holding,
  L.P., its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  JCP Holding
  Genpar, LLC, its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joe K.
  Pace

  
	
   

  	
   

  	
  Joe K. Pace,
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SELLERS:

  
	
   

  	
   

  	
   

  
	
   

  	
  JCP Holding,
  L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  JCP Holding
  Genpar, LLC, its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joe K.
  Pace

  
	
   

  	
   

  	
  Joe K. Pace,
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Paceco
  Investors, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Paceco
  Investors Genpar, LLC, its general

  
	
   

  	
   

  	
  partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joe K.
  Pace

  
	
   

  	
   

  	
  Joe K. Pace,
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  JCP Holding,
  L.P., as Sellers’ Representative

  
	
   

  	
  (in its
  capacity as such)

  
	
   

  	
   

  	
   

  
	
  .

  	
  JCP Holding,
  L.P

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  JCP Holding
  Genpar, LLC, its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joe K.
  Pace

  
	
   

  	
   

  	
  Joe K. Pace,
  President

  

 

[Signature Page to Partnership Interest Purchase Agreement]

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