Document:

Exhibit 10.1

 

February 25, 2008

 

By Email

 

Louise A. Mawhinney

c/o Richard M. Stein

Nixon Peabody LLP

100 Summer Street

Boston, MA 02110

 

Re:         Severance Agreement and Release

 

Dear Louise:

 

This
letter summarizes the terms of your continuing employment and planned
separation from employment with Helicos BioSciences Corporation (the “Company”),
and the severance agreement and release between you and the Company (the “Agreement”).  The purpose of this Agreement is to establish
an amicable arrangement for ending your employment relationship, to release
legal claims between you and the Company and to permit you to receive severance
pay and related benefits.  With these
understandings and in exchange for the promises by you and the Company as set
forth below, you and the Company agree as follows.

 

1.                                      Employment Status,
Severance Pay and Benefits:

 

(a)           You shall be an employee of the
Company to and including the earlier of (i) March 19, 2008 or (ii) any
earlier date agreed upon in writing between you and the Company (the “Resignation
Date”).  During the remainder of your
employment, you shall continue to hold the position of and serve as Senior Vice
President, Chief Financial Officer and Treasurer of the Company (“CFO”);
provided that (i) the Company may reassign any of the CFO functions to any
other employee during the remainder of your employment and (ii) although
the Company does not have any present intention to remove you as CFO before the
Resignation Date, any such removal would not violate this Agreement; provided
that the Company continues your salary and employee benefit program
participation to the Resignation Date. 
To the extent that you retain responsibilities as CFO during the
remainder of your employment, you shall use your best efforts to perform such responsibilities,
including without limitation using your best efforts to complete the Company’s
2007 audit and to prepare and file the Company’s annual report on Form 10-K.  During the remainder of your employment, you
shall also perform any reasonably requested responsibilities to assist in the
transition of your duties.  If so
requested by the Company, you shall work from your home during any portion of
the remainder of your employment.

 

(b)           During the remainder of your
employment and continuing after the end of your employment effective to and
including August 1, 2008, the Company shall continue to pay you your regular
base salary on the Company’s regular payroll dates at the gross 

 

 

 

annual rate of
$278,125.00, subject to tax-related deductions and withholdings.  Your participation in all Company benefit
programs in which you currently participate shall continue to and including the
Resignation Date.  Effective on the
Resignation Date, your participation in all such Company benefit programs shall
end pursuant to program terms, except with respect to the Company’s group
medical and dental plans, which shall be subject to continuation pursuant to Section 1(c) below. 
On the Resignation Date, your employment and your affiliations with the
Company and any of its subsidiaries in any and all other capacities you may
hold with the Company or any subsidiary shall terminate.  If so requested by the
Company, you shall sign any reasonably requested written notices confirming
your resignation from the Company as CFO and/or from your affiliation with the
Company or any subsidiary in any other capacity. 
Notwithstanding the foregoing, nothing in this Agreement shall be
construed to affect your right to receive pay for all vacation pay that is
accrued, unused and otherwise available to you as of the Resignation Date.

 

(c)           The Resignation Date shall be the
date of the “qualifying event” under the Company’s group medical and dental
plans for the purpose of continuation of coverage pursuant to the Consolidated
Omnibus Budget Reconciliation Act of 1985 (“COBRA”).  The Company
will present you with information on COBRA under separate cover.  If you timely elect
continuation of coverage under COBRA, the Company shall pay the premiums for
coverage of you under the Company’s group medical and dental plans in which you
are currently participating (“Group Health Plans”) at the coverage levels that
currently apply to you, subject to premium contributions by you to the same
extent as premium contributions are required for active employees with the same
coverage levels, effective until the earlier of (i) August 1, 2008 or
(ii) the date when you become eligible for coverage under another group
medical plan as a result of other employment. 
You shall notify the Company in writing if you become eligible for
coverage under another group medical plan before August 1, 2008 and you
shall respond promptly to any reasonable requests for information relevant to
your rights under this Section 1(c). 
You acknowledge that the Company may deduct your premium contributions
for coverage under Group Health Plans from your salary continuation payments
pursuant to Section 1(b).  Nothing
in this Agreement shall affect your right to continue participating in Group
Health Plans pursuant to COBRA after August 1, 2008 at your own premium
cost subject to the terms of COBRA.

 

(d)           As
part of the consideration for the payments and benefits following the
Resignation Date pursuant to Sections 1(b) and 1(c), you agree that during
the period from the day following the Resignation Date to and including July 31,
2008, you shall provide up to five (5) hours per calendar month of
transitional assistance by telephone or email. 
You shall provide such assistance at any reasonable times requested by
the Company; provided that the Company shall not require you to provide
transitional assistance at any time that would unreasonably interfere with
personal or professional commitments. 
Transitional assistance pursuant to this Section 1(d) may
include but shall not be limited to services within the scope of Section 10.

 

 

2

 

2.                                      Stock/Change in Control
Agreements:

 

(a)           Stock and Stock Options:  Your rights to stock and stock options of the
Company shall be governed by the Helicos BioSciences Corporation 2003 Stock
Option and Incentive Plan and the 2007 Stock Option and Incentive  Plan (“Stock Option Plans”), your Restricted
Stock Agreement, dated September 25, 2006 (“Restricted Stock Agreement”),
and your Incentive Stock Option Agreement, dated June 7, 2007 (“ISO
Agreement”) based on your employment to the Resignation Date, except that you
shall further be entitled to vesting as of the Resignation Date of such
additional stock and options that would have vested if your employment had continued
to and including August 1, 2008. 
Subject only to that modification of vesting rights, all of your rights and obligations to
stock and/or stock options, including exercise, expiration and the Company’s
purchase of unvested stock, are governed by the terms and conditions of the
Stock Option Plan, the Restricted Stock Agreement and the ISO Agreement.  Pursuant to the provisions of the Helicos
BioSciences Corporation Insider Trading Policy (the “Insider Trading Policy”)
applicable to former employees, you further understand and agree that you shall
be subject to restrictions on trading of stock that are in effect as of the
Resignation Date until the first regularly scheduled open “trading window”
following the Resignation Date, which the Company represents shall in no event
be later than May 20, 2008.

 

 (b)          Change
in Control Agreement:  The Company
waives its right under Section 5(b) of the Change in Control
Agreement between you and the Company dated May 2, 2007 (the “Change in
Control Agreement”) to recover a tax gross-up of $142,356.00 in connection with
the revaluation of the fair market value of the Company’s stock.  You agree that you shall have no further
rights under the Change in Control Agreement, and that as of the Resignation
Date, the Change in Control Agreement shall be null and void.

 

3.                                      Mutual Releases:

 

(a)           Release of the Company:  In exchange for the Company’s promises set
forth herein, and other good and valuable consideration, the sufficiency of
which is hereby acknowledged, you and your representatives, agents, estate,
heirs, successors and assigns, absolutely and unconditionally hereby release,
remise, discharge, indemnify and hold harmless the Company Releasees (defined
to include the Company and/or any of its parents, subsidiaries or affiliates,
predecessors, successors or assigns, and its and their respective current
and/or former partners, directors, shareholders/stockholders, officers,
employees, attorneys and/or agents, all both individually and in their official
capacities), from any and all actions or causes of action, suits, claims,
complaints, contracts, liabilities, agreements, promises, torts, debts,
damages, controversies, judgments, rights and demands, whether existing or
contingent, known or unknown, suspected or unsuspected, which arise out of your
employment with, change in employment status with, and/or separation of
employment from, the Company.  This
release is intended by you to be all encompassing and to act as a full and
total release of any claims, whether specifically enumerated herein or not,
that you may have or have had against the Company Releasees arising from
conduct occurring up to and through the date of this 

 

 

3

 

Agreement, including, but
not limited to, any claims arising from any federal, state or local law,
regulation or constitution dealing with either employment, employment benefits
or employment discrimination such as those laws or regulations concerning
discrimination on the basis of race, color, creed, religion, age, sex, sex
harassment, sexual orientation, national origin, ancestry, genetic carrier
status, handicap or disability, veteran status, any military service or
application for military service, or any other category protected under federal
or state law; any contract, whether oral or written, express or implied,
including without limitation, any letter offering employment and any stock
option agreement(s); any tort; any claim for equity or other benefits; or any
other statutory and/or common law claim. You not only release and discharge the
Company Releasees from any and all claims as stated above that you could make
on your own behalf or on behalf of others, but also those claims that might be
made by any other person or organization on your behalf, and you specifically
waive any right to recover any damage awards as a member of any class in a case
in which any claim(s) against the Company Releasees are made involving any
matters.

 

Notwithstanding
the foregoing, nothing herein shall be deemed to release or waive any claims
arising from this Agreement.

 

(b)           Release of You:  In exchange for the release set forth in Section 3(a) above,
and other good and valuable consideration, the sufficiency of which is hereby
acknowledged, the Company absolutely and unconditionally hereby releases,
remises, discharges, indemnifies and holds you harmless from any and all
actions or causes of action, suits, claims, complaints, contracts, liabilities,
agreements, promises, torts, debts, damages, controversies, judgments, rights
and demands, whether existing or contingent, known or unknown, suspected or
unsuspected, which arise out of your employment with, change in employment
status with, and/or separation of employment from, the Company.  This release is intended by the Company to be
all encompassing and to act as a full and total release of any claims, whether
specifically enumerated herein or not, that the Company may have or have had
against you arising from conduct occurring up to and through the date of this
Agreement, including, but not limited to, any claims arising from any federal,
state or local law, regulation or constitution dealing with either employment
or employment benefits; any contract, whether oral or written, express or
implied, including without limitation, any letter offering employment and any
stock option agreement(s), any tort; any claim for equity or other benefits; or
any other statutory and/or common law claim.

 

Notwithstanding
the foregoing, nothing herein shall be deemed to release or waive (i) any
civil claims the Company may have arising from any acts or omissions by you
that would satisfy the elements of a criminal offense or (ii) any claims
arising from this Agreement.

 

 

4

 

4.                                      Waiver of Rights and
Claims Under the Age Discrimination

in Employment Act of 1967:

 

Since you are 40 years of
age or older, you are being informed that you have or may have specific rights
and/or claims under the Age Discrimination in Employment Act of 1967 (ADEA) and
you agree that:

 

(a)           in consideration for the Company’s
promises set forth herein, you specifically and voluntarily waive such rights
and/or claims under the ADEA you might have against the Company Releasees to
the extent such rights and/or claims arose prior to the date this Agreement was
executed;

 

(b)           you understand that rights or claims
under the ADEA which may arise after the date this Agreement is executed are
not waived by you;

 

(c)           you are advised that you may take at
least twenty-one (21) days within which to consider the terms of this
Agreement, subject to Section 5(a) below, and you are advised to
consult with an attorney of your choice prior to executing this Agreement, and
you acknowledge that you have not been subject to any undue or improper influence
interfering with the exercise of your free will in deciding whether to consult
with counsel;

 

(d)           you have carefully read and fully
understand all of the provisions of this Agreement, and you knowingly and
voluntarily agree to all of the terms set forth in this Agreement; and

 

(e)           in entering into this Agreement you
are not relying on any representation, promise or inducement made by the
Company or its attorneys with the exception of those promises described in this
document.

 

5.                                      Period for Review and
Consideration of Agreement:

 

(a)               You
acknowledge that you were informed and understood that you had twenty-one (21)
days from February 19, 2008 (i.e., to and
including March 11, 2008) to review and consider a preceding version of
this Agreement before signing it.  You
further acknowledge and agree that the revisions to such preceding version that
are reflected in this Agreement do not extend that twenty-one (21) day
period.  If you sign this Agreement
before March 11, 2008, you acknowledge that such decision was entirely
voluntary.

 

(b)               The
21-day review period will not be affected or extended by any revisions, whether
material or immaterial, that might be made to this Agreement.

 

6.                                      Accord and Satisfaction:  The payments
set forth herein shall be complete and unconditional payment, settlement,
accord and/or satisfaction with respect to all obligations and liabilities of
the Company Releasees to you, including, without limitation, all claims for
back wages, salary, vacation pay, draws, incentive pay, bonuses, stock and
stock options, commissions, severance pay, reimbursement of expenses, motor
vehicle expenses, moving expenses, any and all other forms of compensation or
benefits, attorney’s fees, or other costs or sums.

 

 

5

 

7.                                      Company Files, Documents
and Other Property:  You agree that on or before the
Resignation Date you will return to the Company all Company property and
materials, including but not limited to, (if applicable) personal computers,
laptops, palm pilots and their equivalent, fax machines, scanners, copiers,
cellular phones, Company credit cards and telephone charge cards, manuals,
building keys and passes, courtesy parking passes, diskettes, intangible
information stored on diskettes, software programs and data compiled with the
use of those programs, software passwords or codes, tangible copies of trade
secrets and confidential information, sales forecasts, names and addresses of
Company customers and potential customers, customer lists, customer contacts,
sales information, sales forecasts, memoranda, sales brochures, business or
marketing plans, reports, projections, and any and all other information or
property previously or currently held or used by you that is or was related to
your employment with the Company (“Company Property”).  You represent that you have not and will not
take by download or otherwise any Company Property.  You agree that in the event that you discover
any Company Property in your possession, whether in electronic form or
otherwise, after the Resignation Date, you will immediately return such
materials to the Company.

 

8.                                      No Liability or Wrongdoing:  Nothing in
this Agreement, nor any of its terms and provisions, nor any of the
negotiations or proceedings connected with it, constitutes, will be construed
to constitute, will be offered in evidence as, received in evidence as, and/or
deemed to be evidence of, an admission of liability or wrongdoing by any and/or
all of the Company Releasees, and any such liability or wrongdoing is hereby
expressly denied by each of the Company Releasees.

 

9.                                      Future Conduct:

 

(a)       Nondisparagement:  You agree not to make disparaging statements
to any person or entity concerning the Company, its officers, directors or
employees; the products, services or programs provided or to be provided by the
Company; the business affairs, operation, management or the financial condition
of the Company; or the circumstances surrounding your employment and/or
separation of employment from the Company. 
The Company agrees that throughout their employment with the Company,
the current Chief Executive Officer and current President of the Company shall
not make any disparaging statements concerning you.  The Company shall also direct all current
Vice Presidents of the Company not to make any disparaging statements
concerning you.  The Company further
agrees that the Chief Executive Officer shall sign and provide to you a
reference letter on the Company’s letterhead with the text of Exhibit A.

 

(b)       Confidentiality
of this Agreement:  You agree that
you shall not disclose, divulge or publish, directly or indirectly, any
information regarding the substance, terms or existence of this Agreement
and/or any discussion or negotiations relating to this Agreement, including any
assertions made in the course of such negotiations, to any person or
organization other than your immediate family and accountants or attorneys when
such disclosure is necessary for the accountants or attorneys to render
professional services.  Prior to any such
disclosure that you may make, you shall secure from your attorney or accountant
their agreement to maintain the confidentiality of such matters.  Notwithstanding the foregoing, you may make
disclosure concerning this Agreement to 

 

 

6

 

the
same extent as the Company makes public disclosure for securities law reporting
purposes, after the Company has made any such disclosure.  Before the Company makes such disclosure, you
may also make disclosure to the Company’s outside accountants concerning the
fact that you will be resigning from the Company and the timing of your
departure.

 

(c)           Disclosures:  Nothing
herein shall prohibit or bar you from providing truthful testimony in any legal
proceeding or in communicating with any governmental agency or representative
or from making any truthful disclosure required, authorized or permitted under
law; provided, however, that in providing such testimony or making such
disclosures or communications, you will use your best efforts to ensure that
this section is complied with to the maximum extent possible.  Notwithstanding the foregoing, nothing in
this Agreement shall bar or prohibit you from contacting, seeking assistance from
or participating in any proceeding before any federal or state administrative
agency to the extent permitted by applicable federal, state and/or local
law.  However, you nevertheless will be
prohibited to the fullest extent authorized by law from obtaining monetary
damages in any agency proceeding in which you do so participate.

 

(d)           Noncompetition,
and Nondisclosure and Developments Agreement:  You agree that the Employee Noncompetition
Agreement between you and the Company, dated September 1, 2006 (“Noncompetition
Agreement”), and the Employee Nondisclosure and Developments Agreement between
you and the Company, dated September 1, 2006 (“Nondisclosure and
Developments Agreement”), provide restrictions regarding your conduct following
the termination of your employment.  You
agree that the agreements referenced in the preceding sentence are valid and
enforceable, and that you shall comply in all respects with the terms of such
agreements.

 

10.                               Future
Cooperation:

 

                You agree to cooperate
reasonably with the Company (including its outside counsel) in connection with
the contemplation, prosecution and defense of all phases of existing, past and
future litigation about which the Company believes you may have knowledge or
information.  You further agree to make
yourself available at mutually convenient times during and outside of regular
business hours as reasonably deemed necessary by the Company’s counsel.  The Company shall not utilize this Section 10
to require you to make yourself available to an extent that would unreasonably
interfere with full-time employment responsibilities that you may have.  You agree to appear without the necessity of
a subpoena to testify truthfully in any legal proceedings in which the Company
calls you as a witness.  The Company
shall compensate you at the rate of $200.00 per hour for services provided by
you pursuant to this Section 10; provided that (i) the Company shall
not be required to provide compensation for services that also come within the
scope of your obligations to provide transitional assistance pursuant to Section 1(d) (which
obligations are subject to the time period and hours limitation applicable to
services pursuant to Section 1(d)), and (ii) the Company shall not be
obligated to compensate you for any time that you could be compelled to expend
if you were subpoenaed by the Company. 
The Company shall also reimburse you for any pre-approved reasonable
business travel expenses that you incur on the Company’s behalf as 

 

 

7

 

a
result of your litigation cooperation services, after receipt of appropriate
documentation consistent with the Company’s business expense reimbursement
policy.

 

11.                               Representations, Governing
Law and Other Terms:

 

(a)       This
Agreement sets forth the complete and sole agreement between the parties and
supersedes any and all other agreements or understandings, whether oral or
written, except the Stock Option Plan, Restricted Stock Agreement, ISO
Agreement, Insider Trading Policy, Change in Control Agreement (subject to its
termination pursuant to this Agreement), Noncompetition Agreement and
Nondisclosure and Developments Agreement. 
This Agreement may not be changed, amended, modified, altered or
rescinded except upon the express written consent of the Company and you.

 

(b)       If any
provision of this Agreement, or part thereof, is held invalid, void or voidable
as against public policy or otherwise, the invalidity shall not affect other
provisions, or parts thereof, which may be given effect without the invalid
provision or part.  To this extent, the
provisions and parts thereof of this Agreement are declared to be
severable.  Any waiver of any provision
of this Agreement shall not constitute a waiver of any other provision of this
Agreement unless expressly so indicated otherwise.  The language of all parts of this Agreement
shall in all cases be construed according to its fair meaning and not strictly
for or against either of the parties.

 

(c)       This
Agreement and any claims arising out of this Agreement (or any other claims
arising out of the relationship between the parties) shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts and
shall in all respects be interpreted, enforced and governed under the internal
and domestic laws of Massachusetts, without giving effect to the principles of
conflicts of laws of such state.

 

(d)           You represent that you have not been
subject to any retaliation or any other form of adverse action by the Company
Releasees for any action taken by you as an employee of the Company or
resulting from your exercise of or attempt to exercise any statutory rights
recognized under federal, state or local law.

 

(e)       You may
not assign any of your rights or delegate any of your duties under this
Agreement.  The rights and benefits of
this Agreement shall inure to the benefit of the Company’s successors and
assigns.

 

(f)        This
Agreement may be executed in counterparts. 
When both parties have executed their respective counterparts, this
Agreement shall be considered to be fully executed and the counterparts shall
together be considered one and the same Agreement.

 

12.          Effective Date: 
After signing this letter, you may revoke this Agreement for a period of
seven (7) days following said execution. 
The Agreement shall not become effective or enforceable and no payments
will be made pursuant to this Agreement until this revocation period has
expired (“Effective Date”).

 

If
this letter correctly states the agreement and understanding we have reached,
please indicate your acceptance by countersigning the enclosed copy and
returning it to me.

 

 

8

 

Finally,
Louise, I want to thank you personally for your efforts and professionalism to
help Helicos achieve its goals.  I wish
you the very best in the future.

 

	
  Very truly
  yours,

  
	
   

  	
   

  
	
  HELICOS
  BIOSCIENCES CORPORATION

  
	
   

  	
   

  
	
  By: 

  	
  /s/ Stanley N.
  Lapidus

  
	
   

  	
  Stanley N.
  Lapidus

  
	
   

  	
  Chairman and
  Chief Executive Officer

  
	
   

  	
   

  
	
  Date:

  	
  March 3, 2008

  
	
   

  	
   

  
			

 

I REPRESENT THAT I HAVE READ THE FOREGOING AGREEMENT,
THAT I FULLY UNDERSTAND THE TERMS AND CONDITIONS OF SUCH AGREEMENT AND THAT I
AM KNOWINGLY AND VOLUNTARILY EXECUTING THE SAME.  IN ENTERING INTO THIS AGREEMENT, I DO NOT
RELY ON ANY REPRESENTATION, PROMISE OR INDUCEMENT MADE BY THE COMPANY OR ITS
REPRESENTATIVES WITH THE EXCEPTION OF THE CONSIDERATION DESCRIBED IN THIS
DOCUMENT.

 

Accepted and Agreed to:

 

	
  /s/ Louise A.
  Mawhinney

  	
   

  
	
  Louise A.
  Mawhinney

  
	
   

  
	
  Date: 

  	
  2/25/08

  	
   

  
			

 

 

9Exhibit
10.1

 

EXECUTIVE
SEVERANCE AGREEMENT

 

AGREEMENT made as of this
3rd day of March, 2008 by and between Mac-Gray Corporation, a Delaware
corporation with its principal place of business in Waltham, Massachusetts (the
“Company”), and                                       
(the “Executive”).

 

1.             Purpose.  The Company considers it essential to the
best interests of its stockholders to promote and preserve the continuous
employment of key management personnel. 
The Board of Directors of the Company (the “Board”) recognizes, however,
that, as is the case with many publicly held corporations, the possibility of a
Change in Control (as defined in Section 2 hereof) exists and that such
possibility, and the uncertainty and questions which it may raise among management,
may result in the departure or distraction of management personnel to the
detriment of the Company and its stockholders. 
Therefore, the Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of
members of the Company’s management, including the Executive, to their assigned
duties without distraction in the face of potentially disturbing circumstances
arising from the possibility of a Change in Control.  Nothing in this Agreement shall be construed
as creating an express or implied contract of employment and, except as
otherwise agreed in writing between the Executive and the Company, the
Executive shall not have any right to be retained in the employ of the Company.

 

2.             Change in Control.  A “Change in Control” shall be deemed to have
occurred in any one of the following events:

 

(a)           any “person,” as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), (other than the Company, any of its subsidiaries,
or any trustee, fiduciary or other person or entity holding securities under
any employee benefit plan or trust of the Company or any of its subsidiaries),
together with all Affiliates and Associates (as such terms are hereinafter
defined) of such person, shall become the “beneficial owner” (as such term is
defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of
securities of the Company representing 25% (or in the case of a Grandfathered
Person, the Grandfathered Percentage applicable to such Grandfathered Person
(as such terms are hereinafter defined)) or more of the then outstanding shares
of common stock of the Company (the “Stock”) (in either such case other than as
a result of an acquisition of securities directly from the Company); or

 

(b)           persons who, as of the date hereof,
constitute the Company’s Board of Directors (the “Incumbent Directors”) cease
for any reason, including, without limitation, as a result of a tender offer,
proxy contest, merger or similar transaction, to constitute at least a majority
of the Board, provided that any person becoming a director of the Company
subsequent to the date hereof whose election or nomination for election was
approved by a vote of at least a majority of the Incumbent Directors shall, for
purposes of this Agreement, be considered as an Incumbent Director provided,
however, that there shall be excluded for consideration as an Incumbent
Director any individual whose initial assumption of office occurred as a result
of an actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of proxies or
consents, by or on behalf of a person other than the Board of Directors; or

 

 

1

 

 

(c)           Upon (A) any consolidation or
merger of the Company where the shareholders of the Company, immediately prior
to the consolidation or merger, did not, immediately after the consolidation or
merger, beneficially own (as such term is defined in Rule 13d-3 of the
Exchange Act), directly or indirectly, shares representing in the aggregate
more than 50% of the voting shares of the corporation issuing cash or
securities in the consolidation or merger (or of its ultimate parent
corporation, if any), (B) any sale, lease, exchange or other transfer (in
one transaction or a series of transactions contemplated or arranged by any
party as a single plan) of all or substantially all of the assets of the
Company or (C) the approval by the stockholders of the Company of any plan
or proposal for the liquidation or dissolution of the Company.

 

(d)           Notwithstanding the foregoing, a “Change
in Control” shall not be deemed to have occurred for purposes of the foregoing
clause (a) solely as the result of an acquisition of securities by the
Company which, by reducing the number of shares of Stock outstanding, increases
the proportionate number of shares of Stock beneficially owned by any person to
25% (or in the case of a Grandfathered Person, the Grandfathered Percentage
applicable to such Grandfathered Person) or more of the shares of Stock then
outstanding; provided, however, that if any such person shall at any time
following such acquisition of securities by the Company become the beneficial
owner of any additional shares of Stock (other than pursuant to a stock split,
stock dividend, or similar transaction) and such person immediately thereafter
is the beneficial owner of 25% (or in the case of a Grandfathered Person, the
Grandfathered Percentage applicable to such Grandfathered Person) or more of
the shares of Stock then outstanding, then a “Change in Control” shall be
deemed to have occurred for purposes of the foregoing clause (a).

 

(e)           For purposes of this Agreement, the
following terms shall have the definitions set forth below:

 

(1)           “Family Stockholders”
shall mean any of The Evelyn C. MacDonald Family Trust for the benefit of
Stewart G. MacDonald, Jr. (the “ECM/SGM Trust”); The Evelyn C. MacDonald
Family Trust for the benefit of Sandra E. MacDonald (the “ECM/SEM Trust”); The
Evelyn C. MacDonald Family Trust for the benefit of Daniel W. MacDonald (the “ECM/DWM
Trust”); Stewart G. MacDonald, Jr.; Sandra E. MacDonald; The Stewart G.
MacDonald, Jr. 1984 Trust; The Daniel W. MacDonald Revocable Living Trust
(the “DWM Revocable Trust”); the New Century Trust; The Whitney E. MacDonald
GST Trust-1997 (the “WEM/GST Trust”); The Jonathan S. MacDonald GST Trust-1997
(the “JSM/GST Trust”); The Robert C. MacDonald GST Trust-1997 (the “RCM/GST
Trust”); The Whitney E. MacDonald Gift Trust (the “WEM Gift Trust”); The
Jonathan S. MacDonald Gift Trust (the “JSM Gift Trust”); The Robert C.
MacDonald Gift Trust (the “RCM Gift Trust”); Cynthia V. Doggett; the Richard G.
MacDonald 2004 Irrevocable Trust; the Sandra E. MacDonald 2005 Grantor Retained
Annuity Trust; Peter C. Bennett, in his capacity as a trustee of the ECM/SGM
Trust, the ECM/SEM Trust and the ECM/DWM Trust; R. Robert Woodburn, Jr.,
in his capacity as a trustee of the ECM/SGM Trust, the ECM/SEM Trust and the
ECM/DWM Trust; Richard G. MacDonald, in his capacity as a trustee of the
WEM/GST Trust, the JSM/GST Trust, the RCM/GST Trust, the WEM Gift Trust, the
JSM Gift Trust and the RCM Gift Trust; Gilbert M. Roddy, Jr., in his
capacity as a trustee of the New Century Trust; the Charles E. Clapp, III
custodial accounts for the benefit of Sawyer Doggett MacDonald, Stewart Gray
MacDonald, III, 

 

 

2

 

 

Tucker
William MacDonald and Dylan Crowdis MacDonald; and any other shareholder of the
Company who becomes a party to the Stockholders’ Agreement.

 

(2)           “Grandfathered Percentage” shall mean
the percentage of the outstanding shares of Stock that a Grandfathered Person,
together with all Affiliates and Associates of such Grandfathered Person,
beneficially owns as of the Grandfathered Time plus an additional 3.0%.  Notwithstanding the foregoing, in the event
any Grandfathered Person shall sell, transfer, or otherwise dispose of any
outstanding shares of Stock after the Grandfathered Time, the Grandfathered
Percentage shall, subsequent to such sale, transfer or disposition, mean, with
respect to such Grandfathered Person, the lesser of (i) the Grandfathered
Percentage as in effect immediately prior to such sale, transfer or disposition
or (ii) the percentage of outstanding shares of Stock that such
Grandfathered Person beneficially owns immediately following such sale,
transfer or disposition plus an additional 3.0%.

 

(3)           “Grandfathered Person” shall mean any
one or more of the following persons: (A) Stewart G. MacDonald, Jr.
and his Affiliates and Associates, (B) Sandra E. MacDonald and her
Affiliates and Associates, (C) Daniel W. MacDonald and his Affiliates and
Associates, and (D) any other person who or which, together with all
Affiliates and Associates of such person, is, as of the Grandfathered Time, the
beneficial owner of 25% or more of the shares of Stock then outstanding.  Notwithstanding anything to the contrary
provided in this Agreement, any Grandfathered Person who after the
Grandfathered Time becomes, for any reason, the beneficial owner of less than
25% of the shares of Stock then outstanding shall cease to be a Grandfathered
Person.

 

(4)           “Grandfathered Time” shall mean 9:00 a.m.,
Boston, Massachusetts time, on March 3, 2008.

 

(5)           “Stockholders’ Agreement” shall mean
the Stockholders’ Agreement, dated as of June 26, 1997, by and among the
Company (f/k/a Mac-Gray II, Inc.) and ECM/SGM Trust; ECM/SEM
Trust; ECM/DWM Trust; Stewart G. MacDonald, Jr.; Sandra E. MacDonald; The
Stewart G. MacDonald, Jr. 1984 Trust; the DWM Revocable Trust; the New
Century Trust; the WEM/GST Trust; the JSM/GST Trust; the RCM/GST Trust; the WEM
Gift Trust; the JSM Gift Trust; the RCM Gift Trust; Cynthia V. Doggett; the
Richard G. MacDonald 2004 Irrevocable Trust; the Sandra E. MacDonald 2005
Grantor Retained Annuity Trust and certain other shareholders who may become
parties thereto, as amended from time to time.

 

(6)           “Affiliate” and “Associate” shall
have the respective meanings ascribed to such terms in Rule 12b-2 of the
Exchange Act, as in effect on the date of this Agreement; provided, however,
that no person who is a director or officer of the Company shall be deemed an
Affiliate or an Associate of any other director or officer of the Company
solely as a result of his position as director or officer of the Company.

 

(f)            For purposes of this Agreement, no
Family Stockholder or any of its Affiliates or Associates shall be deemed to
beneficially own any shares of Stock beneficially owned by any of the other
Family Stockholders as a result of such Family Stockholder’s execution of the
Stockholders’ Agreement or any of such Family Stockholder’s rights thereunder,
unless and until 

 

 

3

 

 

such time as such Family
Stockholder actually purchases such shares of Stock through the exercise of its
right of first offer, or otherwise, pursuant to the provisions of the
Stockholders’ Agreement.

 

3.             Terminating Event.  A “Terminating Event” shall mean any of the
events provided in this Section 3 occurring subsequent to a Change in
Control as defined in Section 2:

 

(a)           termination by the Company of the
employment of the Executive with the Company for any reason other than (A) a
willful act of dishonesty by the Executive with respect to any matter involving
the Company or any subsidiary or affiliate, or (B) conviction of the
Executive of a crime involving moral turpitude, or (C) the gross or
willful failure by the Executive to substantially perform the Executive’s
duties with the Company (other than any such failure after the Executive gives
notice of termination for “Good Reason”), which failure is not cured within 30
days after a written demand for substantial performance is received by the
Executive from the Board of Directors of the Company which specifically
identifies the manner in which the Board of Directors believes the Executive
has not substantially performed the Executive’s duties, or (D) the failure
by the Executive to perform his full-time duties with the Company by reason of
his death or disability or (E) the willful failure of Executive to
cooperate with a bona fide internal investigation or an investigation by
regulatory or law enforcement authorities, after being instructed by the
Company to cooperate, or the willful destruction or failure to preserve
documents or other materials known to be relevant to such investigation or the
willful inducement of others to fail to cooperate or to produce documents or
other materials; provided, however, that a Terminating Event shall not be
deemed to have occurred pursuant to this Section 3(a) solely as a
result of the Executive being an employee of any direct or indirect successor
to the business or assets of the Company, rather than continuing as an employee
of the Company following a Change in Control. 
For purposes of clauses (A), (C) and (E) of this Section 3(a),
no act, or failure to act, on the Executive’s part shall be deemed “willful”
unless done, or omitted to be done, by the Executive without reasonable belief
that the Executive’s act, or failure to act, was in the best interests of the
Company and its subsidiaries and affiliates. 
For purposes of clause (D) of this Section 3(a), Section 6
and Section 8(b) hereof, “disability” shall mean the Executive’s
incapacity due to physical or mental illness which has caused the Executive to
be absent from the full-time performance of his duties with the Company for a
period of six (6) consecutive months if the Company shall have given
the Executive a Notice of Termination and, within thirty (30) days after such
Notice of Termination is given, the Executive shall not have returned to the
full-time performance of his duties.

 

(b)           termination by the Executive of the
Executive’s employment with the Company for “Good Reason.”  “Good Reason” shall mean the occurrence of
any of the following events:

 

(i)            an adverse change, not consented to
by the Executive, in the nature or scope of the Executive’s responsibilities,
authorities, powers, functions or duties from the responsibilities,
authorities, powers, functions or duties exercised by the Executive immediately
prior to the Change in Control; or

 

(ii)           a reduction in the Executive’s annual
base salary as in effect on the date hereof or as the same may be increased
from time to time hereafter; or

 

 

4

 

 

(iii)          the relocation of the Company’s
offices at which the Executive is principally employed immediately prior to the
date of a Change in Control (the “Current Offices”) to any other location more
than fifty (50) miles from the Current Offices, or the requirement by the
Company for the Executive to be based anywhere other than the Current Offices,
except for required travel on the Company’s business to an extent substantially
consistent with the Executive’s business travel obligations immediately prior
to the Change in Control; or

 

(iv)          the failure by the Company to pay to
the Executive any portion of his compensation or to pay to the Executive any
portion of an installment of deferred compensation under any deferred
compensation program of the Company within fifteen (15) days of the date such
compensation is due without prior written consent of the Executive; or

 

(v)           the failure by the Company to obtain
an effective agreement from any successor to assume and agree to perform this
Agreement, as required by Section 18.

 

4.             Severance Payment.  In the event a Terminating Event occurs
within twenty-four (24) months after a Change in Control,

 

(a)           the Company shall pay to the
Executive an amount equal to two (2) times of the sum of (i) the
Executive’s average annual base salary over the three (3) fiscal years
immediately prior to the Terminating Event (or the Executive’s annual base
salary in effect immediately prior to the Change in Control, if higher) and (ii) the
Executive’s average annual bonus over the three (3) fiscal years
immediately prior to the Change in Control (or the Executive’s annual bonus for
the last fiscal year immediately prior to the Change in Control, if higher),
payable in one lump-sum payment no later than five (5) days following the
Date of Termination (subject to Section 5(c)).

 

(b)           the Company shall, regardless of
whether the Company is unable to utilize Company-related benefit plans,
continue to provide to the Executive certain benefits, including, without
limitation, health, dental and life insurance on the same terms and conditions
as though the Executive had remained an active employee, for twenty-four (24)
months;

 

(c)           the Company shall provide COBRA
benefits to the Executive following the end of the period referred to in Section 4(b) above,
such benefits to be determined as though the Executive’s employment had
terminated at the end of such period; and

 

(d)           the Company shall pay to the
Executive all reasonable legal and arbitration fees and expenses incurred by
the Executive in obtaining or enforcing any right or benefit provided by this
Agreement, except in cases involving frivolous or bad faith litigation.

 

5.                                       Additional Limitation.

 

(a)           Anything in this Agreement to the
contrary notwithstanding, in the event that any compensation, payment or
distribution by the Company to or for the benefit of the Executive, 

 

 

5

 

 

whether paid or payable
or distributed or distributable pursuant to the terms of this Agreement or
otherwise (the “Severance Payments”), would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended
(the “Code”), then the benefits payable under this Agreement shall be reduced
(but not below zero) to the extent necessary so that the maximum Severance
Payments shall not exceed the Threshold Amount. 
To the extent that there is more than one method of reducing the
payments to bring them within the Threshold Amount, the Executive shall
determine which method shall be followed; provided that if the Executive fails
to make such determination within 45 days after the Company has sent the
Executive written notice of the need for such reduction, the Company may
determine the amount of such reduction in its sole discretion.

 

For the purposes
of this Section 5, “Threshold Amount” shall mean three (3) times the
Executive’s “base amount” within the meaning of Section 280G(b)(3) of
the Code and the regulations promulgated thereunder less one dollar ($1.00);
and “Excise Tax” shall mean the excise tax imposed by Section 4999 of the
Code, and any interest or penalties incurred by the Executive with respect to
such excise tax.

 

(b)           The determination as to which of the
alternative provisions of Section 5(a) shall apply to the Executive
shall be made by a nationally recognized accounting firm selected by the
Executive (the “Accounting Firm”), which shall provide detailed supporting
calculations both to the Company and the Executive within fifteen (15) business
days of the Date of Termination, if applicable, or at such earlier time as is
reasonably requested by the Company or the Executive.  For purposes of determining which of the
alternative provisions of Section 5(a)  shall apply, the Executive
shall be deemed to pay federal income taxes at the highest marginal rate of
federal income taxation applicable to individuals for the calendar year in
which the determination is to be made, and state and local income taxes at the
highest marginal rates of individual taxation in the state and locality of the
Executive’s residence on the Date of Termination, net of the maximum reduction
in federal income taxes which could be obtained from deduction of such state
and local taxes.  Any determination by
the Accounting Firm shall be binding upon the Company and the Executive.  The Company shall bear the costs of the
Accounting Firm in connection with such firm’s services provided hereunder.

 

(c)           Notwithstanding anything herein to
the contrary, if at the time of the Executive’s termination of employment with
the Company, the Executive is a ‘specified employee’ within the meaning of Section 409A(a)(2)(B)(i) of
the Code and the regulations promulgated thereunder, and if any payment or
benefit that the Executive becomes entitled to under this Agreement would be
considered deferred compensation subject to interest and additional tax imposed
pursuant to Section 409A(a) of the Code as a result of the
application of Section 409A(a)(2)(B)(i) of the Code, then no such
payment or benefit shall be payable or provided prior to the date that is the
earlier of (A) six months after the Executive’s ‘separation from service’
within the meaning of Section 409A of the Code, or (B) the Executive’s
death. The parties intend that this Agreement will be administered in
accordance with Section 409A of the Code. 
The parties agree that this Agreement may be amended, as reasonably
requested by either party, and as may be necessary to fully comply with Section 409A
of the Code and all related rules and regulations in order to preserve the
payments and benefits provided hereunder without additional cost to either
party.

 

 

6

 

 

6.             Term.  This Agreement shall take effect on the date
first set forth above and shall terminate upon the earlier of (a) the
termination by the Company of the employment of the Executive because of (A) a
willful act of dishonesty by the Executive with respect to any matter involving
the Company or any subsidiary or affiliate, or (B) conviction of the
Executive of a crime involving moral turpitude, or (C) the gross or
willful failure by the Executive to substantially perform the Executive’s
duties with the Company, or (D) the failure by the Executive to perform
his full-time duties with the Company by reason of his death or disability (as
defined in Section 3(a)), or (E) the willful failure of Executive to
cooperate with a bona fide internal investigation or an investigation by
regulatory or law enforcement authorities, after being instructed by the
Company to cooperate, or the willful destruction or failure to preserve
documents or other materials known to be relevant to such investigation or the
willful inducement of others to fail to cooperate or to produce documents or
other material, (b) the resignation or termination of the Executive for
any reason prior to a Change in Control, (c) the termination of the
Executive’s employment with the Company after a Change in Control for any
reason other than the occurrence of any of the events enumerated in Section 3(b)(i)-(v) of
this Agreement, or (d) the date which is twenty-four (24) months after a
Change in Control if the Executive is still employed by the Company.

 

7.             Withholding.  All payments made by the Company under this
Agreement shall be net of any tax or other amounts required to be withheld by
the Company under applicable law.

 

8.             Notice and Date of Termination;
Disputes; Etc.

 

(a)           Notice of Termination.  After a Change in Control and during the term
of this Agreement, any purported termination of the Executive’s employment
(other than by reason of death) shall be communicated by written Notice of
Termination from one party hereto to the other party hereto in accordance with
this Section 8.  For purposes of
this Agreement, a “Notice of Termination” shall mean a notice which shall
indicate the specific termination provision in this Agreement relied upon and
the Date of Termination.  Further, a
Notice of Termination pursuant to one or more of clauses (A) through (C) or
(E) of Section 3(a) hereof is required to include a copy of a
resolution duly adopted by the affirmative vote of not less than two-thirds
(2/3) of the entire membership of the Board at a meeting of the Board (after
reasonable notice to the Executive and an opportunity for the Executive,
accompanied by the Executive’s counsel, to be heard before the Board) finding
that, in the good faith opinion of the Board, the termination met the criteria
set forth in one or more of clauses (A) through (C) or (E) of
Section 3(a) hereof.

 

(b)           Date of Termination.  “Date of Termination”, with respect to any
purported termination of the Executive’s employment after a Change in Control
and during the term of this Agreement, shall mean (i) if the Executive’s
employment is terminated for disability, thirty (30) days after Notice of
Termination is given (provided that the Executive shall not have returned to
the full-time performance of the Executive’s duties during such 30-day period)
and (ii) if the Executive’s employment is terminated for any other reason,
the date specified in the Notice of Termination.  In the case of a termination by the Company
other than a termination pursuant to one or more of clauses (A) through (C) or
(E) of Section 3(a) (which may be effective immediately), the
Date of Termination shall not be less than 30 days after the Notice of 

 

 

7

 

 

Termination is
given.  In the case of a termination by
the Executive, the Date of Termination shall not be less than fifteen (15) days
from the date such Notice of Termination is given.  Notwithstanding Section 3(a) of
this Agreement, in the event that the Executive gives a Notice of Termination
to the Company, the Company may unilaterally accelerate the Date of Termination
and such acceleration shall not result in a Terminating Event for purposes of Section 3(a) of
this Agreement.

 

(c)           No Mitigation.  The Company agrees that, if the Executive’s
employment by the Company is terminated during the term of this Agreement, the
Executive is not required to seek other employment or to attempt in any way to
reduce any amounts payable to the Executive by the Company pursuant to
Sections 4(a) and (b) hereof. 
Further, the amount of any payment provided for in this Agreement shall
not be reduced by any compensation earned by the Executive as the result of
employment by another employer, by retirement benefits, by offset against any
amount claimed to be owed by the Executive to the Company or otherwise.

 

(d)           Settlement and Arbitration of
Disputes.  Any controversy or claim
arising out of or relating to this Agreement or the breach thereof shall be
settled exclusively by arbitration in accordance with the laws of the
Commonwealth of Massachusetts by three arbitrators, one of whom shall be appointed
by the Company, one by the Executive and the third by the first two
arbitrators.  If the first two
arbitrators cannot agree on the appointment of a third arbitrator, then the
third arbitrator shall be appointed by the American Arbitration Association in
the City of Boston.  Such arbitration
shall be conducted in the City of Boston in accordance with the rules of
the American Arbitration Association for commercial arbitrations, except with
respect to the selection of arbitrators which shall be as provided in this Section 8(d).  Judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof.

 

9.             Successor to Executive.  This Agreement shall inure to the benefit of
and be enforceable by the Executive’s personal representatives, executors,
administrators, heirs, distributees, devisees and legatees.  In the event of the Executive’s death after a
Terminating Event but prior to the completion by the Company of all payments
due him under Section 4(a) and (b) of this Agreement, the
Company shall continue such payments to the Executive’s beneficiary designated
in writing to the Company prior to his death (or to his estate, if the
Executive fails to make such designation).

 

10.           Enforceability.  If any portion or provision of this Agreement
shall to any extent be declared illegal or unenforceable by a court of
competent jurisdiction, then the remainder of this Agreement, or the
application of such portion or provision in circumstances other than those as
to which it is so declared illegal or unenforceable, shall not be affected
thereby, and each portion and provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.

 

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

 

 

8

 

 

12.           Notices.  Any notices, requests, demands and other
communications provided for by this Agreement shall be sufficient if in writing
and delivered in person or sent by registered or certified mail, postage
prepaid, to the Executive at the last address the Executive has filed in
writing with the Company, or to the Company at its main office, attention of
the Board of Directors.

 

13.           Effect on Other Plans.  An election by the Executive to resign after
a Change in Control under the provisions of this Agreement shall not be deemed
a voluntary termination of employment by the Executive for the purpose of
interpreting the provisions of any of the Company’s benefit plans, programs or
policies.  Nothing in this Agreement
shall be construed to limit the rights of the Executive under the Company’s
benefit plans, programs or policies except as otherwise provided in Section 5
hereof, and except that the Executive shall have no rights to any severance
benefits under any severance pay plan.

 

14.           No Offset.   The Company’s obligation to make the
payments provided for in this Agreement and otherwise perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company or any of its Affiliates may have against the Executive or others
whether by reason of the Executive’s breach of this Agreement, subsequent
employment of the Executive, or otherwise.

 

15.           Entire Agreement.  This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes in all respects all prior agreements between the parties concerning
such subject matter.

 

16.           Amendment.  This Agreement may be amended or modified
only by a written instrument signed by the Executive and by a duly authorized
representative of the Company.

 

17.           Governing Law.  This is a Massachusetts contract and shall be
construed under and be governed in all respects by the laws of the Commonwealth
of Massachusetts.

 

18.           Obligations of Successors.  The Company shall require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business or assets of the Company to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform if no such
succession had taken place.

 

19.           Confidential Information.  The Executive shall never use, publish or
disclose in a manner adverse to the Company’s interests, any proprietary or
confidential information relating to (a) the business, operations or
properties of the Company or any subsidiary or other affiliate of the Company,
or (b) any materials, processes, business practices, technology, know-how,
research, programs, customer lists, customer requirements or other information
used in the manufacture, sale or marketing of any of the respective products or
services of the Company or any subsidiary or other affiliate of the Company;
provided, however, that no breach or alleged breach of this Section 19
shall entitle the Company to fail to comply fully and in a timely manner 

 

 

9

 

 

with any other provision
hereof.  Nothing in this Agreement shall
preclude the Company from seeking money damages, or equitable relief by
injunction or otherwise without the necessity of proving actual damage to the
Company, for any breach by the Executive hereunder.

 

 

IN WITNESS WHEREOF, this
Agreement has been executed as a sealed instrument by the Company by its duly
authorized officer, and by the Executive, as of the date first above written.

 

 

 

	
   

  	
  MAC-GRAY CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name: Stewart G.
  MacDonald, Jr.

  
	
   

  	
  Title: Chairman and
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

 

10

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