Document:

exv10w3

 

EXHIBIT 10.3

EXECUTION COPY

PURCHASE AND SALE AGREEMENT

BY AND BETWEEN

WELL-PROP (MULTI) LLC,

a Delaware limited liability company

as Seller

AND

LTF REAL ESTATE COMPANY, INC.,

a Minnesota corporation,

as Buyer

	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Property:
	 	 	1.	 	 	6701 West 78th Street, Edina, MN
	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	2.	 	 	Lake Breeze Avenue North, Brooklyn Center, MN
	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	3.	 	 	14600 Burnhaven Drive, Burnsville, MN
	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	4.	 	 	1201 South Ford Road, Minnetonka, MN
	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	Dated: July 26, 2006	 	 

 

 

PURCHASE AND SALE AGREEMENT

     THIS PURCHASE AND SALE AGREEMENT (this “Agreement”) is made and entered into as of the
26th day of July, 2006, by and between WELL-PROP (MULTI) LLC,
a Delaware limited liability company, having an office at c/o W.P. Carey & Co. LLC, 50 Rockefeller
Plaza, Second Floor, New York, New York 10020 (“Seller”), and LTF REAL ESTATE COMPANY,
INC., a Minnesota corporation, having an address of 6442 City West Parkway, Eden Prairie, Minnesota
55344 (“Buyer”).

 W
I T N E S S E
T H:

          WHEREAS, Seller is the owner of certain Property (as defined below) situate in Edina, MN,
Brooklyn Center, MN, Burnsville, MN, and 1201 South Ford Road, Minnetonka, MN; and

          WHEREAS, Seller is willing to sell the Property to Buyer and Buyer is willing to purchase the
Property from Seller, upon the terms and conditions hereinafter set forth.

          NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and
for other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows:

          1. Definitions. In addition to other words and terms defined elsewhere in this
Agreement, as used herein the following words and terms shall have the following meanings unless
the context hereof otherwise clearly requires:

               “Closing” shall mean the consummation of the purchase and sale of the Property in
accordance with the terms of this Agreement.

               “Improvements” shall mean the buildings and other improvements presently located on
the Land.

               “Land” shall mean each parcel of land described in “Exhibit A” hereto.

               “Property” shall collectively mean (a) the Land, together with all of the, tenements,
hereditaments and appurtenances belonging or in any way appertaining to such real property, and all
of Seller’s right, title and interest in and to (i) any and all property lying in the bed of any
street, road or avenue, open or proposed, in front of or adjoining such real property to the center
line thereof, (ii) any strips and gores of land adjacent to, abutting or used in connection with
such real property, and (iii) any easements and rights, if any, inuring to the benefit of such real
property or to Seller in connection therewith, and (b) the Improvements and Seller’s right title
and interest in all warranties, guaranties, plans, specifications, surveys and other reports
relating to such improvements.

          2. Purchase and Sale of Property. Subject to the terms, provisions and conditions set
forth herein, Seller hereby agrees to sell the Property to Buyer, and Buyer hereby agrees to
purchase the Property from Seller.

          3. Purchase Price for Property. The Purchase Price for the Property shall be Ten
Million and 00/100 Dollars ($10,000,000), provided, however, that in lieu of paying the Purchase
Price in cash, Buyer shall on the date hereof enter into a lease agreement (the “Lease”)

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with Seller for six other properties which lease requires Buyer to construct $10,000,000 of
improvements at such properties at Buyer’s expense. The entry into such lease by Buyer and Seller
shall be deemed payment in full of the Purchase Price.

     4. Closing.

	 	(a)	 	The Closing shall take place on July 26, 2006.
	 
	 	(b)	 	Settlement-Seller. At the Closing, Seller shall deliver to Buyer:

                    (i) A duly executed special warranty deed with respect to the Property;

                    (ii) A duly executed FIRPTA Certificate pursuant to Section 1445 of the Internal Revenue Code
of 1986, as amended;

                    (iii) Authorization documents of Seller;

                    (iv) A Bill of Sale with respect to any personal property situate at the Property or any of
the properties subject to the Lease;

                    (v) An amendment of the existing lease agreement by and between Seller and Starmark Camhood,
L.L.C. terminating such lease with respect to the Property;

                    (vi) An affidavit of Seller regarding judgments, tax liens, encroachments, unrecorded
documents, mechanics liens and other title matters; and

                    (vii) Such other documents as are required under applicable law, necessary to convey the
Property to Buyer subject only to the Permitted Exceptions or reasonably required to complete the
transaction contemplated herein.

	 	(c)	 	Settlement-Buyer. At the Closing, Buyer shall deliver to Seller:

                    (i) Authorization documents of Buyer; and

                    (ii) Such other documents as are required under applicable law or reasonably required to
complete the transaction contemplated herein.

     5. Title and Condition of Property; Due Diligence Review; Indemnification of Seller.

               (a) State of Title. Seller shall convey and Buyer shall take, title to the Property
subject only to the Permitted Exceptions. “Permitted Exceptions” shall mean the matters
set forth on each applicable deed.

               (b) Condition of Property. Buyer acknowledges and agrees that, as between Buyer and
Seller, Buyer shall accept the Property in “AS IS, WHERE IS CONDITION, WITH ALL FAULTS.”
Buyer hereby acknowledges that it shall not be entitled to, and does not and will not, rely on
Seller or its agents as to (i) the quality, nature, adequacy or physical condition of the Property
including, but not limited to, the structural elements, foundation, roof, appurtenances, access,
landscaping, parking facilities or the electrical, mechanical, HVAC, plumbing, sewage or utility
systems, facilities or appliances at the Property, if any; (ii) the quality, nature, adequacy or
physical condition of soils or the existence of ground water at the Property, (iii) the existence,
quality, nature, adequacy or physical condition of the utilities serving the

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Property; (iv) the
development potential of the Property for any particular purpose; (v) the zoning or other legal
status of the Property; (vi) the Property or their respective operations’ compliance with any
applicable codes, laws, regulations, statutes, ordinances, covenants, conditions or restrictions of
any governmental or quasi-governmental entity or of any other person or entity; (vii) the quality
of any labor or material relating in any way to the Property; or (viii) the existence or nature of
any environmental condition(s) at the Property involving any and all hazardous or toxic materials,
substances, pollutants, contaminants or waste currently defined as a “hazardous waste”, “hazardous
substance”, “toxic substance” or any word of similar import under any Environmental Laws,
including, without limitation, oil, petroleum, or any petroleum derived substance or waste,
asbestos or asbestos-containing materials, PCBs, explosives, radioactive materials, dioxins, or
urea formaldehyde insulation (collectively, “Hazardous Substances”). As used herein,
“Environmental Laws” shall include, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act, as amended, 42 U.S.C. § 9601, et seq., the
Resource Conservation and Recovery Act, 42 U.S.C. § 6901, et seq., the Clean Air Act, 42
U.S.C. § 7401, et seq., the Clean Water Act, 33 U.S.C. § 1251, et seq., the Toxic
Substance Control Act, 15 U.S.C. § 2601, et seq., and the Occupational Safety and Health
Act, 29 U.S.C. § 651, et seq., as any of the preceding have been amended prior to the date
hereof, and any other federal, state, or local law, ordinance, regulation, rule, order, decision or
permit relating to the protection of the environment or of human health from environmental effects
of Hazardous Substances and which are applicable to the Property.

BUYER ACKNOWLEDGES THAT AS BETWEEN BUYER AND SELLER, BUYER HAS RELIED AND WILL BE RELYING ON ITS
OWN DUE DILIGENCE REVIEW IN PURCHASING THE PROPERTY, INCLUDING PHYSICAL INSPECTIONS OF THE
PROPERTY, AND THAT THE SAME IS BEING PURCHASED SOLELY IN RELIANCE UPON SUCH DUE DILIGENCE REVIEW,
AND FURTHER ACKNOWLEDGES THAT NO REPRESENTATIONS OR WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY PURPOSE, HAVE BEEN MADE OR WILL BE MADE BY OR ON
BEHALF OF SELLER WITH RESPECT TO THE PROPERTY OR THE PHYSICAL CONDITION THEREOF. Without limiting
the generality of the foregoing, in the event of any defect or deficiency in the Property, whether
latent or patent, Seller shall not have any responsibility or liability with respect thereto, nor
any liability for incidental or consequential damages. Upon Closing, Buyer shall be deemed to have
waived, released and discharged any claims it has, might have or may have against Seller, Seller’s
officers, employees or agents, any affiliate of Seller or any of Seller’s lenders having a lien on
the Property, with respect to the condition of the Property, either patent or latent, the ability
or inability to obtain or maintain building permits, temporary or final certificates of occupancy
or other licenses for the use or operation of the Property, and/or certificates of compliance for
the Property, the actual or potential income or profits to be derived from the Property, the real
estate taxes or assessment now or hereafter payable thereon, the Property’s compliance with the
federal Americans with Disabilities Act (“ADA”) or any state or local accessibility
standards, or with any environmental protection, pollution, subdivision or land use laws, rules,
regulations or requirements, and any other state of facts which may exist with respect to the
Property. Furthermore, by executing this Agreement, Buyer, on behalf of itself and its officers,
directors, employees, agents, heirs,
successors and assigns, acknowledges does hereby fully and completely release and discharge Seller,
and all officers, directors, agents, attorneys, employees, servants, subsidiaries, affiliated
companies, parent companies, insurance companies, divisions, successors, and representatives of
Seller (collectively, the “Released Parties”), and its successors, and assigns, and each
of them, who may be liable to the undersigned or the assigns, executors, successors, and
administrators of them from any and all claims, rights, actions, causes of action, demands,
payments, attorneys’ fees, benefits, damages, costs, cleanup and removal costs, expenses, natural
resource damages, and compensation whatsoever (collectively, “Claims”) which Buyer now has
or which may hereafter accrue arising from the purchase and sale of the Property or operations on
the Property and/or from any and all claims, rights and actions relating to the Property,
irrespective of any action, inaction or

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negligence of any of the Released Parties, including but
not limited to the following: (A) claims for statutory consumer fraud and/or common law fraud; (B)
direct claims and/or contribution actions for cleanup and removal costs and natural resource
damages under Environmental Laws; and (C)third party claims (including government agencies) or
toxic tort claims arising out of any Hazardous Substances discharged, released, disposed of, or
stored at the Property, or third-party claims (including government agencies) or toxic tort claims
arising out of any Hazardous Substances present, discharged, released, disposed of or stored at the
Property prior to the Effective Date. Purchaser hereby agrees to not to institute, prosecute,
facilitate or, absent a court order or other binding court process, assist in the institution or
prosecution of any action, claim, proceeding or suit against any of the Released Parties, directly
or indirectly, arising from or out of, or in connection with, any Claim arising out of any
environmental conditions on, at, under or from the Property, whether such environmental conditions
existed or occurred prior to or after the Closing and regardless of whether such conditions were
caused by the acts or omissions of the Released Parties or by third parties.

	 	6.	 	Prorations and Allocation of Expenses.

               (a) Prorations. The following items shall be prorated as of midnight preceding the
date of Closing: (i) all real estate taxes and installments of special assessments due and payable
in 2006, (ii) water and sewer and other utility charges, (iii) amounts payable under any property
contract or permits, if any, and (iv) rent received by Seller from Tenant pursuant to any lease for
the month in which the Closing occurs. Notwithstanding any of the foregoing, Seller shall not be
responsible for any portion of any special assessments which may be a lien on the Property but are
not due and payable in 2007 and thereafter.

               (b) Seller’s Costs and Expenses. Seller shall pay the following costs and expenses:
(i) one-half of the escrow fee, if any, which may be charged by Buyer’s title company (“Escrow
Agent”), (ii) any transfer tax, sales tax, documentary tax, stamp tax or similar tax which is
payable by reason of the transfer of the Property, (iii) the fee for title commitments, (iv) fees
of Seller’s counsel, (v) and all cots of Seller in preparing the Property for sale, including all
cost of releasing all existing loans and leases from the Property.

               (c) Buyer’s Costs and Expenses. Buyer shall pay the following costs and expenses:
(i) one-half of the escrow fee, if any, which may be charged by Escrow Agent, (ii) the premium for
the owner’s title policy, as well as any endorsements to such policy, (iii) Survey costs, (iv) the
fees for recording the Deed or other documents necessary to convey the Property to Buyer in
accordance with Paragraph 5(a), (v) fees for any environmental inspection of the Property
undertaken by Buyer, (viii) fees of Buyer’s counsel, and (vi) all other due diligence costs of
Buyer.

               (d) Other Costs and Expenses. All costs and expenses incident to this transaction and
the closing thereof not specifically described above shall be prorated and paid by Buyer in
accordance with Minnesota practice and custom.

	 	7.	 	Miscellaneous Provisions.

               (a) Brokers. No brokers were involved in connection with the transaction contemplated
herein. Each party hereby indemnifies, defends and holds harmless the other party from and against
any and all claims for any broker’s commission or similar compensation which may be payable to any
broker, finder or other person or entity based upon such indemnifying party’s own acts. The
provisions of this Section 7(a) shall survive the Closing or earlier termination of this Agreement.

               (b) Intentionally Omitted.

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               (c) Assignment; Binding Effect. This Agreement shall be binding upon and shall inure
to the benefit of Seller and Buyer and their respective successors and assigns and may not be
assigned or transferred by either party without having first obtained the consent of the other
party. Notwithstanding the foregoing, Buyer may assign this Agreement without Seller’s consent to
any entity in which Buyer has an interest. Notwithstanding any such assignment, the assigning party
shall remain jointly and severally liable hereunder.

               (d) Captions. The several headings and captions of the Sections and subsections used
herein are for convenience of reference only and shall in no way be deemed to limit, define or
restrict the substantive provisions of this Agreement.

               (e) Entire Agreement; Recording. This Agreement constitutes the entire agreement of
Buyer and Seller with respect to the purchase and sale of the Property, and supersedes any prior or
contemporaneous agreement with respect thereto. No amendment or modification of this Agreement
shall be binding upon the parties unless made in writing and signed by both Seller and Buyer. This
Agreement shall not be recorded by any party and, if recorded by any party, the other party hereto
may immediately terminate all of its obligations under this Agreement, and the party which recorded
this Agreement shall pay the other party’s reasonable costs and attorneys’ fees incurred in
removing this Agreement of record.

               (f) Time of Essence. Time is of the essence with respect to the performance of all of
the terms, conditions and covenants of this Agreement.

               (g) Cooperation. Buyer and Seller shall cooperate fully with each other to carry out
effectively the purchase and sale of the Property in accordance herewith and the satisfaction and
compliance with all of the conditions and requirements set forth herein, and shall execute such
instruments and perform such acts as may be reasonably requested by either party hereto.

               (h) Governing Law. This Agreement and the rights of the parties hereunder shall be
governed by and construed in accordance with the laws and customs of the State of Minnesota.

               (i) Counterparts. This Agreement may be executed in any number of counterparts and by
the different parties hereto on separate counterparts each of which, when so executed, shall be
deemed an original, but all such counterparts shall constitute but one and the same instrument.

               (j) Severability. Each covenant, agreement, term or condition of this Agreement shall be construed so as to be
valid and enforceable to the fullest extent permitted by law. If any portion of this Agreement or
the application thereof in any circumstance or to any person shall to any extent be invalid or
unenforceable, the remainder of this Agreement or the application of such portion to circumstances
or persons other than those as to which it is invalid or unenforceable shall be and remain in full
force and effect. If fulfillment of any provision of this Agreement, or performance of any
transaction related hereto, at the time such fulfillment or performance shall be due, shall involve
transcending the limit of validity prescribed by law, then the obligation to be fulfilled or
performed shall be reduced to the limit of such validity; and if any non-material clause or
provision contained in this Agreement operates or would prospectively operate to invalidate this
Agreement in whole or in part, then such clause or provision only shall be held ineffective, as
though not herein contained, and the remainder of this Agreement shall remain operative and in full
force and effect. In the event that any material provision (or any material part of any provision)
contained in this Agreement shall for any reason be held to be invalid, unlawful or unenforceable
in any respect, Seller and Buyer shall amend this Agreement so as to render every provision hereby
fully valid, lawful and enforceable in all respects, and so as to result in a revised

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contract with
equivalent economic and legal substance as if no provision or portion of this Agreement had been
declared invalid, unlawful or unenforceable.

Remainder of page left blank intentionally

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          IN WITNESS WHEREOF, the parties hereto have executed this Purchase and Sale Agreement on the
date first above written.

	 	 	 	 	 	 	 
	 	 	SELLER:	 	 
	 
	 	 	 	 	 	 
	 	 	WELL-PROP (MULTI) LLC, a Delaware	 	 
	 	 	limited liability company	 	 
	 
	 	 	 	 	 	 
	 	 	By: WELL-MEZ (MULTI) LLC,	 	 
	 	 	Delaware limited liability company,	 	 
	 	 	its sole member	 	 
	 
	 	 	 	 	 	 
	 	 	By: WELL (MULTI) QRS 15-17, INC.,	 	 
	 	 	a Delaware corporation,	 	 
	 	 	its managing member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	BUYER:	 	 
	 
	 	 	 	 	 	 
	 	 	LTF REAL ESTATE COMPANY, INC.,	 	 
	 	 	a Minnesota corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 

 

 

EXHIBIT A

Legal Description of the Propertyexv10w1

 

EXHIBIT 10.1

EXECUTIVE EMPLOYMENT AGREEMENT

     THIS AGREEMENT is effective as of the 31st day of August, 2004, by and between G&K
Services, Inc., a Minnesota corporation with (“Employer”); and Richard L. Marcantonio, a resident
of the State of Minnesota (“Executive”).

INTRODUCTION

A. Employment and Protection of Employer. Employer has employed Executive in the capacity
of President and Chief Executive Officer under that Executive Employment Agreement effective as of
June, 2002, and now wishes to make available to Executive certain new benefits and rights under
this new Executive Employment Agreement (the “Agreement”), which will fully supercede all previous
agreements between them except as specifically set forth herein. Employer further wishes to obtain
Executive’s promises related to Notice of Termination as set forth in this Agreement, as well as
Executive’s promises not to harm Employer following execution of this Agreement, particularly with
respect to Employer’s Confidential Information, as more fully described in Article 7. In
Executive’s position with Employer, Executive will be a valued employee of Employer and Employer
will benefit from Executive’s continued employment as its President and Chief Executive Officer,
and further Executive will have access to and control over Employer’s Confidential Information,
which Employer has developed at great expense, time and effort. As a result, voluntary termination
by Executive without adequate notice, or disclosure of any Confidential Information, could cause
irreparable harm to Employer, and Employer is not willing to extend to Executive the additional
benefits, rights and responsibilities under this Agreement unless Executive agrees, as set forth in
this Agreement, to provide Employer with reasonable notice of voluntary termination of his
employment, reasonable protection for its Confidential Information, and assurances to protect
Employer in other ways set forth in Article 7.

     B. Employment and Benefits. For these purposes, Employer is willing to retain
Executive as President and Chief Executive Officer and to grant to Executive benefits to which
Executive is not otherwise entitled, consisting of the right to receive certain separation
compensation, lump sum payments, and outplacement benefits (as described in Articles 5 and 6), if
Executive’s employment with Employer terminates under certain circumstances, including without
limitation in connection with a Change in Control (as defined in Article 6).

     C. Other Intentions. Executive desires to accept Employer’s offer to be retained as
President and Chief Executive Officer and additional benefits set forth in this Agreement, to which
Executive is not otherwise entitled.

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     Executive agrees, as a condition of Employer’s offer of additional benefits set forth in this
Agreement, to sign this Agreement in order that Employer may have reasonable protections against
the disclosure of its Confidential Information, other conduct of Executive prohibited under Article
7 of this Agreement, and certain protections related to Notice of Termination as set forth in this
Agreement.

AGREEMENT

     NOW, THEREFORE, in consideration of the facts recited above, which are a part of this
Agreement, and the parties’ mutual promises contained in this Agreement, Employer and Executive
agree as follows:

ARTICLE 1

DEFINITIONS

     Capitalized terms used generally in this Agreement will have their defined meaning throughout
the Agreement. The following terms will have the meanings set forth below; unless the context
clearly requires otherwise.

     1.1 “Agreement” means this Agreement, as it may be amended from time to time.

     1.2 “Base Salary” means the total annual cash compensation payable to Executive on a regular
periodic basis under Section 3.1, without regard to any voluntary salary deferrals or reductions to
fund employee benefits.

     1.3 “Board” means the Board of Directors of Employer.

     1.4 “Cause” has the meaning set forth in Section 5.2.

     1.5 “Date of Termination” has the meaning set forth in Section 5.4(b).

     1.6 “Disability” means the unwillingness or inability of Executive to perform the essential
functions of Executive’s position as President and Chief Executive Officer (with or without
reasonable accommodation) under this Agreement for a period of ninety (90) days (consecutive or
otherwise) within any period of six (6) consecutive months because of Executive’s incapacity due to
physical or mental illness, bodily injury or disease. For purposes of this Agreement, Executive
will be deemed to have a Disability if he is incapacitated and, within ten (10) days after a Notice
of Termination is thereafter given by Employer, Executive will not have returned to the full-time
performance of the Executive’s duties; provided, however, that if Executive does not agree with a
determination of the existence of a Disability (or the existence of a physical or mental illness or
bodily injury or disease), the determination will be may by the certification of a qualified
medical doctor mutually agreed to by Employer and Executive (or, in the event of the Executive’s
incapacity to designate a doctor, the Executive’s legal representative). In the absence of such
agreement, each party will nominate a
qualified medical doctor and the two doctors will select a third doctor, who

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will make the
determination as to Disability. The decision of the designated physician will be binding upon the
parties. In all matters related to the incapacity or disability of Executive, the Executive may
act through a legal representative properly appointed for that purpose.

     1.7 “Employer” means G&K Services, Inc., as well as any of its Subsidiaries and any Successor
organization.

     1.8 “Executive” means Richard L. Marcantonio, a Minnesota resident.

     1.9 “Notice of Termination” has the meaning set forth in Section 5.6(a).

     1.10 “Plan” means any bonus or incentive compensation agreement, plan, program, policy or
arrangement sponsored, maintained or contributed to by Employer, to which Employer is a party or
under which employees of Employer are covered, including, without limitation, (a) any stock option,
restricted stock or any other equity-based compensation plan; (b) any annual or long-term incentive
(bonus) plan; (c) any employee benefit plan, such as a thrift, pension, profit sharing, deferred
compensation, medical, dental, disability income, accident, life insurance, automobile allowance,
perquisite, fringe benefit, vacation, sick or parental leave, severance or relocation plan or
policy and (d) any other agreement, plan, program, policy or arrangement intended to benefit
employees or executive officers of Employer.

     1.11 “Subsidiary” means any corporation or other business entity that is controlled by
Employer.

     1.12 “Successor” has the meaning set forth in Section 9.1(a).

ARTICLE 2

EMPLOYMENT AND DUTIES

     2.1 Employment. Upon the terms and conditions set forth in this Agreement,
Employer hereby employs Executive for an indefinite term, and Executive accepts such employment as
President and Chief Executive Officer of Employer. For the term of this Agreement, Executive at
all times shall be, and shall have the responsibilities and privileges of, President and Chief
Executive Officer of Employer. This Agreement and Executive’s employment by Employer may be
terminated at any time as set forth in Article 5.

     2.2 Duties. While Executive is employed hereunder, and excluding any periods of
vacation, sick, disability or other leave to which Executive is entitled, Executive agrees to
devote substantially all of Executive’s attention and time during normal business hours to the
legal and ethical business and affairs of Employer, and to act in the best interests of Employer,
its shareholders and employees and, to the extent necessary to discharge the responsibilities
assigned to Executive under
this Agreement and under Employer’s bylaws, to use Executive’s reasonable best efforts to perform
faithfully and efficiently all responsibilities of the position.

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     Executive will comply with Employer’s policies and procedures; provided, however, that to the
extent these policies and procedures are inconsistent with this Agreement, the provisions of this
Agreement will control.

ARTICLE 3

COMPENSATION AND BENEFITS

     3.1 Base Salary. Commencing as of the effective date of this Agreement,
Employer will pay Executive a Base Salary at a minimum annual rate of Six Hundred Thousand Dollars
($600,000.00). Executive’s Base Salary may be adjusted and determined periodically by Employer’s
Board of Directors; provided, however, that a Base Salary established under this Agreement will
remain in effect until the Board has completed its next annual review of Executive’s performance..
The Base Salary will be paid in substantially equal regular periodic payments in consistent with
Employer’s regular payroll practices. If Executive’s Base Salary is changed at any time during
Executive’s employment by Employer, the changed amount will become the Base Salary under this
Agreement, subject to any subsequent changes.

     3.2 Other Compensation and Benefits. While Executive is employed by Employer
under this Agreement:

     (a) Executive will be permitted to participate in all Plans for which Executive is or
becomes eligible under their respective terms.

     (b) Employer may, in its sole discretion, amend or terminate any Plan that provides
benefits generally to its employees or its executive officers; provided, however, that in
the event that Employer terminates its health, dental or life Plan offered to Executive,
without replacing the Plan, Executive will be entitled to receive as additional compensation
an amount equal to the cash equivalent of any terminated benefits.

     (c) Executive will also be entitled to participate in or receive benefits under any
Plan made available by Employer in the future to its executives and key management
employees, subject to and on a basis consistent with the terms, conditions and overall
administration of these Plans and the preceding provisions of this Section 3.2.

     (d) Executive shall be entitled to a minimum incentive pay under the Annual Management
Incentive Plan in effect at Employer from time to time. Executive’s minimum target
incentive, as a percentage of Base Salary, is 70%, with an unlimited maximum incentive
opportunity, based on achievement by Employer of Company Financial Measures for Earnings Per
Share (55% of incentive opportunity) and Total Revenue Growth (25% of incentive
opportunity), as well as Key Initiatives/Department or Individual Objectives (20% of
incentive
opportunity). Executive’s incentive pay may be adjusted and determined periodically by
Employer’s Board of Directors; provided, however, that incentive pay established under this
Agreement will remain in effect until the Board has completed its next annual review of
Executive’s performance.

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     (e) Executive will continue to have the rights, benefits and responsibilities set forth
in that Promissory Note in the original principal amount of Four Hundred Thousand Dollars
($400,000.00. ), an unexecuted copy of which is attached hereto as Exhibit C, and that
related Stock Pledge Agreement, an unexecuted copy of which is attached hereto as Exhibit D,
the originals of which were made and entered into by Executive with Employer as of July
2002, and each of which are current as of the date of this Agreement.

     (f) Executive will have the use of a personal automobile leased by Employer under its
Executive Automobile Program with a value up to the greater of (i) Seventy-Five Thousand
Dollars ($75,000.00), (ii) the value set forth in the Employer’s Executive Automobile
Program, or (iii) such other value as the Board of Directors or it Compensation Committee
may determine for Executive.

     (g) Executive will have available annual financial planning and tax preparation
benefits with a value up to the greater of (i) Five Thousand Dollars ($5,000.00), (ii) the
value set forth in the Employer’s plans for such services, or (iii) such other value as the
Board of Directors or it Compensation Committee may determine for Executive.

     (h) Executive will be entitled to up to six (6) weeks of vacation annually, or such
greater period of time as the Board of Directors or its Compensation Committee may determine
from time to time.

ARTICLE 4

RESTRICTED STOCK GRANT

     4.1 Restricted Stock Agreement. Employer and Executive previously entered into
a Restricted Stock Agreement dated as of June, 2002, an unexecuted copy of which is attached to
this Agreement as Exhibit A. This Agreement continues in full force and effect, and is
incorporated into this Agreement, granting Executive the right to purchase Employer Stock (as
defined below) in the amount, at the price and on the terms set forth in the Restricted Stock
Agreement.

     4.2 Employer Stock. “Employer Stock” means the voting common stock of
Employer described in the Restricted Stock Agreement attached as Exhibit A.

ARTICLE 5

TERMINATION

     5.1 Termination. This Article 5 sets forth the terms for termination of Executive’s
employment under this Agreement, subject to the respective continuing rights and obligations of the
parties under this Agreement. In general, this Agreement and Executive’s employment with

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 the Employer may be terminated by Employer upon thirty (30) days advance written notice to Executive
and by Executive upon ninety (90) days advance written notice to Employer, for any reason or no
reason, or at any time by mutual written agreement of the parties. For purposes of this section,
the ninety (90) advance written notice required for termination by Executive is necessary so that
Employer may have the opportunity to find a suitable replacement for Executive. This Agreement and
Executive’s employment under this Agreement will terminate in the event of Executive’s death or
Disability, as of the applicable Date of Termination.

     In any such case, this Agreement will terminate as of the applicable Date of Termination,
except for the rights and obligations of the parties under this Agreement that survive beyond
Executive’s termination of employment.

     5.2 Termination by Employer for Cause. Employer may terminate this Agreement
at any time for Cause, with or without advance notice (except as otherwise provided in this Section
5.2). For purposes of this Agreement, “Cause” means any of the following, with respect to
Executive’s position of employment with Employer:

     (a) Executive’s failure or refusal to perform the duties and responsibilities
set forth in Section 2.2, if the failure or refusal (i) is not due to a Disability or a
physical or mental illness or bodily injury or disease; or (ii) is not due to Executive’s
reasonable best efforts to perform faithfully and efficiently the responsibilities of his
position with Employer, acting in good faith in the interests of Employer, its shareholders
and employees; and (iii) is not cured within thirty (30) days after written notice of the
failure or refusal is received by Executive from Employer;

     (b) any drunkenness or use of drugs that interferes with the performance of
Executive’s obligations under this Agreement; and continues for more than five (5) days
after a written notice to Executive; provided, however, that Employer will have the right to
prevent Executive from performing any duties under this Agreement and from entering the
premises of Employer during any such period;

     (c) Executive’s indictment for or conviction of (including entering a guilty plea or
plea of no contest to) a felony or any crime involving moral turpitude, fraud, dishonesty or
theft;

     (d) any material dishonesty of Executive involving or affecting Employer;

     (e) any gross negligence or other willful or intentional act or omission of Executive
having the effect or reasonably likely to have the effect of injuring the reputation,
business or business relationships of Employer in a material way; provided, however, that if
an
action or omission giving rise to Cause is curable, Employer first will have given prior
written notice to the Executive specifying the action or omission with reasonable
particularity and, within thirty (30) days after such notice, the Executive will not have
cured the action or omission;

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     (f) any willful or intentional breach by Executive of a fiduciary duty to Employer;

     (g) Except as otherwise specifically provided in this Section 5.2, Executive’s material
violation or breach of Employer’s standard business practices and policies, including,
without limitation, policies against racial or sexual discrimination or harassment;
provided, however, that if in the Employer’s discretion, such breach or violation is
curable, Employer first will have given prior written notice to the Executive specifying the
violation or breach with reasonable particularity and, within thirty (30) days after such
notice, the Executive will not have cured the violation or breach giving rise to such Cause;

     (h) any material breach (not covered by any of the above clauses (a) through
(g)) of any material term, provision or condition of this Agreement, if such breach is not
cured (to the extent curable) within thirty (30) days after written notice thereof is
received by Executive from Employer.

     For purposes of this Section 5.2, no act, or failure to act, on Executive’s part will be
considered “dishonest,” “willful” or “intentional” unless done, or omitted to be done, by Executive
in bad faith and without reasonable belief that Executive’s action or omission was in or
not opposed to the best interest of Employer. Any act, or failure to act, based upon authority
given pursuant to a resolution duly adopted by the Board or based upon the advice of counsel for
Employer will be conclusively presumed to be done, or omitted to be done, by Executive in good
faith and in the best interests of Employer. Furthermore, the term “Cause” will not include
ordinary negligence or failure to act, whether due to an error in judgment or otherwise, if
Executive has exercised substantial efforts in good faith to perform the duties reasonably assigned
or appropriate to the position.

     5.3 Termination by Executive. Executive may voluntarily resign from employment
under this Agreement with or without Good Reason (as such term is defined in Section 6.1(f))
provided he gives Employer ninety (90) calendar days advance written Notice of Termination.

     5.4 Notice of Termination and Date of Termination.

     (a) For purposes of this Agreement, a “Notice of Termination” will mean a
written notice that will indicate the specific termination provisions in this Agreement
relied upon and will set forth in reasonable detail the facts and circumstances claimed to
provide the basis for the termination. Any termination by Employer or by Executive under
this Agreement (other than Executive’s death, or a termination by mutual agreement) will be
communicated by written Notice of Termination to the other party.

     (b) For purposes of this Agreement, “Date of Termination” will mean: (i) if
Executive’s employment is terminated due to death, the date of Executive’s death; (ii) if
Executive’s employment is terminated for Disability, thirty (30) calendar days after the
Notice of Termination is given; (iii) if Executive’s
employment is terminated by Employer for Cause or by Executive for Good Reason, the date specified in the

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Notice of Termination;
(iv) if Executive’s employment is terminated by mutual agreement of the parties, the
termination date specified by the agreement; or (v) if Executive’s employment is terminated
for any other reason, the date specified in the Notice of Termination, provided that if
Executive voluntarily terminates his employment the date specified may be no earlier than
ninety (90) calendar days after the date on which the Notice of Termination is given unless
an earlier date has been expressly agreed to by Employer and Executive in writing.

     5.5 Compensation during Disability and upon Termination.

     (a) During any period in which Executive fails to perform Executive’s duties under
this Agreement as a result of a Disability, Executive will continue to receive all Base
Salary and other compensation and benefits to which Executive is otherwise entitled under
this Agreement and under any Plan through Executive’s Date of Termination. To the extent
the Executive has not received the Base Salary and other compensation and benefits
referenced in the preceding sentence prior to the 90th day of a Disability,
Executive will receive such Base Salary and other compensation and benefits.

     (b) Except as otherwise provided in Article 6 or under a mutual agreement of the
parties, if Executive’s employment under this Agreement is terminated (i) by Executive’s
death, (ii) voluntarily by Executive without Good Reason, (iii) by Employer for Cause, or
(iv) by mutual agreement of the parties, then Employer will pay Executive the Base Salary
through the Date of Termination, plus any amounts to which the Executive is entitled under
any Plan (in accordance with the terms of such Plan). Employer will also pay any retirement
benefits to which Executive is or becomes entitled under any Plan, except to the extent any
such benefits are forfeited under the terms of the Plan.

     (c) Except in the case of a termination for Disability, if either (i) Employer
terminates Executive’s employment under this Agreement without Cause; or (ii) Executive
voluntarily terminates his employment under this Agreement for Good Reason, as that term is
defined at Section 6.1(f) without regard to whether or not it is associated with a Change of
Control; and if Executive executes a written release substantially in the form attached
hereto as Exhibit B and consistent with this Section 5.5(d) (a “Release Agreement”), then
Employer will pay to Executive, as separation pay, which Executive has not earned and to
which he is not otherwise entitled, an amount equal to twelve (12) months of Executive’s
monthly Base Salary, plus the full, unprorated target incentive compensation payable to
Executive under the Annual Management Incentive Plan in effect as of the Date of
Termination without regard to actual achievement of incentive objectives Such payment will
be made to the Executive in weekly payments beginning sixteen days after Executive’s
execution of the Release
Agreement, provided that the Executive has not exercised his rights to revoke or rescind his
release of claims under to the Release Agreement. Further, Employer will pay to Executive
cash equal to the greater of lease costs and expenses under the Executive Automobile Program
or Fifteen Thousand Dollars ($15,000.00), such payment to be made in a lump sum on or about
the sixteenth day following Executive’s execution of the Release Agreement.

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     (d) In the event that Executive provides the ninety (90) day Notice of Termination for
a voluntary separation and retires from his employment with Employer, (i) at any time
following his sixtieth birthday, Executive will be entitled to the continued vesting of all
unvested restricted stock and stock options granted by Employer prior to the Date of
Termination, and (ii) at any time up to and including Executive’s sixtieth birthday,
Executive may be entitled to the continued vesting of all unvested restricted stock and
stock options granted by Employer prior to the Date of Termination at the discretion of
Employer’s Board of Directors, with all the rights and privileges set forth under the
Restricted Stock Agreement or Employer’s 1998 Stock Option and Compensation Plan.

     Executive will not be required to mitigate Employer’s payment obligations under this Article 5
by making any efforts to secure other employment; and Executive’s commencement of employment with
another employer will not reduce the obligations of Employer under to this Article 5.

ARTICLE 6

CHANGE IN CONTROL

     6.1 Definitions Relating to a Change in Control. The following terms will have
the meanings set forth below; unless the context clearly requires otherwise:

     (a) “1934 Act” will mean the Securities Exchange Act of 1934, as amended (or any
successor provision), and the regulations promulgated under that Act.

     (b) “Beneficial Ownership” by a person or group of persons will be determined in
accordance with Regulation 13D (or any similar successor regulation) promulgated by the
Securities and Exchange Commission under the 1934 Act. Beneficial Ownership of an equity
security may be established by any reasonable method, but will be presumed conclusively as
to any person who files a Schedule 13D report with the Securities and Exchange Commission
reporting such ownership.

     (c) “Change of Control” means the occurrence of any of the following events:

     (i) any person or group of persons attains Beneficial Ownership (as
defined below) of 30% or more of any equity security of Employer entitled to vote
for the election of directors;

     (ii) a majority of the members of the Board is replaced within the
period of less than two years by directors not nominated and approved by the Board;
or

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     (iii) the stockholders of Employer approve an agreement to merge or
consolidate with or into another corporation, or an agreement to sell or otherwise
dispose of all or substantially all of Employer’s assets (including a plan of
liquidation).

     (d) “Continuing Directors” are (i) directors who were in office prior to the time any
events described in paragraphs (c)(i), (c)(ii) or (c)(iii) of this Section 6.1 occurred, or
any person publicly announced an intention to acquire 20% or more of any equity security of
Employer; (ii) directors in office for a period of more than two years; and (iii) directors
nominated and approved by the Continuing Directors.

     (e) “Change in Control Termination” will mean that a Change in Control of Employer
has occurred, and either of the following events also occurs within one (1) year after the
Change in Control: (i) Employer terminates the Executive’s employment or this Agreement for
any reason other than for Cause, Executive’s death or Executive’s Disability; or (ii)
Executive terminates his employment for Good Reason.

     (f) “Good Reason” will mean, with respect to a voluntary termination of
employment by Executive, any of the following:

     (i) an adverse involuntary change in Executive’s status or position as
President and Chief Executive Officer of Employer, including, without limitation,
(A) any adverse change in Executive’s status or position as a result of a material
diminution in Executive’s duties, responsibilities or authority; (B) the assignment
to Executive of any duties or responsibilities that, in Executive’s reasonable
judgment, are significantly inconsistent with Executive’s status or position; or (C)
any removal of Executive from, or any failure to reappoint or reelect Executive to,
such position (except in connection with a termination of Executive’s employment for
Cause in accordance with Article 5, or as a result of Executive’s Disability or
death);

     (ii) in the event that following a Change in Control, Executive, in performing
the duties of his employment, does not report directly to the Board, or if Employer
is not an ultimate parent entity following such Change in Control, the board of
directors of such ultimate parent entity;

     (iii) in the event of a Change in Control, either (A) a reduction by Employer
in Executive’s Base Salary, or (B) a termination or adverse change in Executive’s
incentive-based compensation package that materially and adversely effects
Executive’s compensation as a whole;

     (iv) the taking of any action by Employer that would materially and
adversely affect the physical conditions existing as of the date of the Change of
Control, and under which Executive performs employment duties for Employer;

10

 

     (v) Employer’s requiring Executive to be based anywhere other than where
Executive’s office is located as of the effective date of this Agreement, except for
required travel on Employer’s business to an extent substantially consistent with
business travel obligations;

     (vi) in the event of a Change in Control, any failure by Employer to
obtain from any Successor an assumption of this Agreement as contemplated by Section
9.1; or

     (vii) any purported termination by Employer or by a successor to the
Employer either of this Agreement or of the employment of the Executive that is not
expressly authorized by this Agreement; or any breach of this Agreement by Employer
at any time, other than an isolated, insubstantial and inadvertent failure that does
not occur in bad faith and is remedied by Employer within a reasonable period after
Employer’s receipt of notice thereof from Executive.

     6.2 Benefits Upon a Change in Control Termination. If a Change in Control
Termination occurs with respect to Executive, Executive will be entitled to the following benefits;
provided, however, that to the extent Executive has already received the same type of benefits
under Article 5 as a result of Executive’s Change in Control Termination, Executive’s benefits
under this Section 6.2 will be offset by such other benefits, to the extent necessary to prevent
duplication of benefits under this Agreement:

     (a) all of the payments and benefits that Executive would have been entitled to
receive if the Change in Control Termination were described in Section 5.5(c), except that
in lieu of any further Base Salary payments to Executive for periods subsequent to the Date
of Termination, Employer will pay to Executive an amount equal to twenty-four (24) months of
(i) Executive’s monthly Base Salary, plus (ii) the Employer-paid portion of health and
welfare benefits coverage, plus (iii) the full, unprorated target incentive compensation
payable to Executive under the Annual Management Incentive Plan in effect as of the Date of
Termination without regard to actual achievement of incentive objectives, plus (iv) the
greater of lease costs and expenses under the Executive Automobile Program or a lump sum of
Thirty Thousand Dollars ($30,000.00); all such payments to be made in a single lump sum on
or about the sixteenth day following Executive’s execution of the Release Agreement;

     (b) all terms and conditions of that Change of Control Agreement dated as of November
12, 2002 between Employer and Executive, a copy of which is attached to this
Agreement as Exhibit E, shall continue in full force and effect, and is incorporated into
this Agreement, granting to Executive the acceleration of incentives provided under
Employer’s 1998 Stock Option and Compensation Plan; and

     (c) for a period of not less than six (6) months following Executive’s Date of
Termination, Employer will reimburse Executive for all reasonable expenses incurred by
Executive (excluding any arrangement by which Executive prepays expenses for a period of

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greater than thirty (30) days) in seeking employment with another employer, including the
fees of a reputable outplacement organization selected by Employer, but not to exceed
$12,000.00 in the aggregate.

     Executive will not be required to mitigate Employer’s payment obligations under this Article 6
by making any efforts to secure other employment; and Executive’s commencement of employment with
another employer will not reduce the obligations of Employer under this Article 6.

     6.3 Limitation on Severance Payment. Notwithstanding any provision contained herein
to the contrary, if any amount or benefit to be paid or provided under this Article 6, or any other
plan or agreement between Executive and Employer would be an “Excess Parachute Payment,” within the
meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), or any
successor provision thereto, but for the application of this sentence, then the payments and
benefits to be paid or provided under this Article 6 will be reduced to the minimum extent
necessary (but in no event to less than zero) so that no portion of any such payment or benefit, as
so reduced, constitutes an Excess Parachute Payment; provided, however, that the foregoing
reduction will be made only if and to the extent that such reduction would result in an increase in
the aggregate payment and benefits to be provided to Executive, determined on an after-tax basis
(taking into account the excise tax imposed pursuant to Section 4999 of the Code, or any successor
provision thereto, any tax imposed by any comparable provision of state law, and any applicable
federal, state and local income taxes). If requested by Executive or Employer, the determination
of whether any reduction in such payments or benefits to be provided under this Article 6 or
otherwise is required pursuant to the preceding sentence will be made by an independent accounting
firm that is a “Big-4 Accounting Firm” (or other accounting firm mutually acceptable to Executive
and Employer) not then-engaged as Employer’s independent public auditor, at the expense of
Employer, and the determination such independent accounting firm will be final and binding on all
parties. In making its determination, the independent accountant will allocate a reasonable portion
of the severance payment to the value of any personal services rendered following the Change in
Control and the value of any noncompetition agreement or similar agreements to the extent that such
items reduce the amount of the parachute payment. In the event that any payment or benefit
intended to be provided under this Article 6 or otherwise is required to be reduced pursuant to
this Section 6.3, Executive (in his sole discretion) will be entitled to designate the payments
and/or benefits to be so reduced in order to give effect to this Section. Employer will provide
Executive with all information reasonably requested by Executive to permit Executive to make such
designation. In the event that Executive fails to make such
designation within ten (10) business days of receiving such information, Employer may effect such
reduction in any manner it deems appropriate.

ARTICLE 7

PROTECTION OF EMPLOYER

     7.1 Confidential Information. For purposes of this Article 7, “Confidential
Information” means information that is proprietary to Employer or proprietary to others and
entrusted to Employer; whether or not such information includes trade secrets. Confidential
Information includes, but is not limited to, information relating to Employer’s business plans and
to its business as conducted or anticipated to be conducted, and to

12

 

its past or current or
anticipated products and services. Confidential Information also includes, without limitation,
information concerning Employer’s customer lists or routes, pricing, purchasing, inventory,
business methods, training manuals or other materials developed for Employer’s employee training,
employee compensation, research, development, accounting, marketing and selling. All information
that Executive has a reasonable basis to consider as confidential will be Confidential Information,
whether or not originated by Executive and without regard to the manner in which Executive obtains
access to this and any other proprietary information of Employer.

     Executive will not, during or after the termination of Executive’s employment under this
Agreement, (a) directly or indirectly use for Executive’s own benefit; or (b) disclose any
Confidential Information to, or otherwise permit access to Confidential Information by, any person
or entity not employed by Employer or not authorized by Employer to receive such Confidential
Information, without the prior written consent of Employer. Executive will use reasonable and
prudent care to safeguard and protect and prevent the unauthorized use and disclosure of
Confidential Information. Furthermore, except in the usual course of Executive’s duties for
Employer, Executive will not at any time remove any Confidential Information from the offices of
Employer, record or copy any Confidential Information or use for Executive’s own benefit or
disclose to any person or entity directly or indirectly competing with Employer any information,
data or materials obtained from the files or customers of Employer, whether or not such information, data or materials are Confidential
Information.

     Upon any termination of Executive’s employment, Executive will collect and return to Employer
(or its authorized representative) all original copies and all other copies of any Confidential
Information acquired by Executive while employed by Employer.

     The obligations contained in this Section 7.1 will survive for as long as Employer, in its
sole judgment, considers the information to be Confidential Information. The obligations under
this Section 7.1 will not apply to any Confidential Information that is now or becomes generally
available to the public through no fault of Executive or to Executive’s disclosure of any
Confidential Information required by law or judicial or administrative process.

     7.2 Non-Competition. Executive agrees that, while employed by Employer and for a
period of eighteen (18) months following the date of Executive’s termination of employment for any
reason, Executive will not, directly or indirectly, alone or as an officer, director, shareholder,
partner, member, employee or consultant of any other corporation or any partnership, limited
liability company, firm or other business entity:

     (a) engage in, have any ownership interest in, financial participation in, or become
employed by, any business or commercial activity in competition (i) with any part of
Employer’s business, as conducted anywhere within the geographic area in which Employer has
conducted its business within the three (3) years before such date, or (ii) with any part of
Employer’s contemplated business with respect to which

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Executive
has Confidential Information governed by Section 7.1. For purposes of this paragraph, “ownership interest”
will not include beneficial ownership of less than one percent (1%) of the combined voting
power of all issued and outstanding voting securities of a publicly held corporation whose
stock is traded on a major stock exchange or quoted on NASDAQ;

(b) call upon, solicit or attempt to take away any customers or accounts of Employer;

(c) solicit, induce or encourage any supplier of goods or services to Employer to
cease its business relationship with Employer, or violate any term of any contract with
Employer; or

(d) solicit, induce or encourage any other employee of Employer to cease employment with
Employer, or otherwise violate any term of such employee’s contract of employment with
Employer.

The restrictions set forth in this Section 7.2 will survive any termination of this Agreement
or other termination of Executive’s employment with Employer, and will remain effective and
enforceable for the full 18-month period; provided, however, that this period will be automatically
extended and will remain in full force for an additional period equal to any period in which
Executive is proven to have violated any such restriction.

     7.3 Protection of Reputation. Executive will, both during and after the
termination of Executive’s employment under this Agreement, refrain from communicating to any
person, including without limitation any employee of Employer, any statements or opinions that are
negative in any way about Employer or any of its past, present or future officials. In return,
whenever Employer sends or receives any Notice of Termination of Executive’s employment under this
Agreement, Employer will advise the members of its operating committee and executive committee (or
any successors to such committees), to refrain from negative communications about Executive to
third parties.

     7.4 Remedies. The parties declare and agree that it is impossible to accurately
measure in money the damages that will accrue to Employer by reason of Executive’s failure to
perform any of Executive’s obligations under this Article 7; and that any such breach will result
in irreparable harm to Employer, for which any remedy at law would be inadequate. Therefore, if
Employer institutes any
action or proceeding to enforce the provisions of this Article 7, Executive hereby waives the claim
or defense that such party has an adequate remedy at law, Executive will not assert in any such
action or proceeding the claim or defense that such party has an adequate remedy at law, and
Employer will be entitled, in addition to all other remedies or damages at law or in equity, to
temporary and permanent injunctions and orders to restrain any violations of this Article 7 by
Executive and all persons or entities acting for or with Executive.

     7.5 Survival.  The provisions and obligations of Article 7 of this Agreement will
survive the termination of this Agreement or the termination of the Executive’s employment with
Employer, and will remain in full force and effect thereafter.

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     7.6 Continuation. Executive and Employer acknowledge that the terms and conditions of
this Article 7 restate and continue terms and conditions previously agreed to between then as a
condition for Executive’s first employment with Employer. To the extent that any portion of this
Article 7 may be deemed invalid for a failure of Employer to provide new consideration to
Executive, then that portion of this Article 7 will be deemed to have been supported by the
previous agreements between Executive and Employer as a condition for his first employment with
Employer.

ARTICLE 8

GENERAL PROVISIONS

     8.1 Successors and Assigns; Beneficiary.

(a) For purposes of this Agreement, “Successor” will mean any corporation,
individual, group, association, partnership, limited liability company, firm, venture or
other entity or person that, subsequent to the effective date of this Agreement, succeeds to
the actual or practical ability to control (either immediately or with the passage of time)
substantially all of Employer and/or Employer’s business and/or assets, directly or
indirectly, by merger, consolidation, recapitalization, purchase, liquidation, redemption,
assignment, similar corporate transaction, operation of law or otherwise.

     (b) This Agreement will be binding upon and inure to the benefit of any Successor
of Employer and each Subsidiary, and any such Successor will absolutely and unconditionally
assume all of Employer’s and any Subsidiary’s obligations hereunder. Upon Executive’s
written request, Employer will seek to have any Successor, by agreement in form and
substance satisfactory to Executive, assent to the fulfillment by Employer of their
obligations under this Agreement. Failure to obtain such assent prior to the time a person
or entity becomes a Successor (or where Employer does not have advance notice that a person
or, entity may become a Successor, within one (1) business day after having notice that such
person or entity may become or has become a Successor) will constitute Good Reason for
termination of employment by Executive pursuant to Article 6.

     (c) This Agreement and all rights of Executive hereunder will inure to the
benefit of and be enforceable by Executive’s personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees and any assignees
permitted hereunder. If Executive dies while any amounts would still be payable to
Executive hereunder if Executive had continued to live, all such amounts, unless otherwise
provided herein, will be paid in accordance with the terms of this Agreement to Executive’s
Beneficiary. Executive may not assign this Agreement, in whole or in any part, without the
prior written consent of Employer.

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     (d) For purposes of this Section 9.1, “Beneficiary” means the person or persons
designated by Executive (in writing to Employer) to receive benefits payable after
Executive’s death pursuant to Section 9.1(c). In the absence of any such designation or in
the event that all of the persons so designated predecease Executive, Beneficiary means the
executor, administrator or personal representative of Executive’s estate.

     8.2 Litigation Expense. If any party is made or will become a party to any
litigation (including arbitration) commenced by or against the other party involving the
enforcement of any of the rights or remedies of such party, or arising on account of a default of
the other party in its performance of any of the other party’s obligations hereunder, then the
parties will bear their own expenses and attorneys’ fees.

     8.3 No Offsets. In no event will any amount payable to Executive pursuant to
this Agreement be reduced for purposes of offsetting, either directly or indirectly, any
indebtedness or liability of Executive to Employer.

     8.4 Notices. All notices, requests and demands given to or made pursuant
hereto will, except as otherwise specified herein, be in writing and be personally delivered or
mailed postage prepaid, registered or certified U. S. mail, to any party as its address set forth
on the last page of this Agreement. Either party may, by notice hereunder, designate a changed
address. Any notice hereunder will be deemed effectively given and received: (a) if personally
delivered, upon delivery; or (b) if mailed, on the registered date or the date stamped on the
certified mail receipt.

     8.5 Captions. The various headings or captions in this Agreement are for
convenience only and will not affect the meaning or interpretation of this Agreement. When used
herein, the terms “Article” and “Section” mean an Article or Section of this Agreement, except as
otherwise stated.

     8.6 Governing Law. The validity, interpretation, construction, performance,
enforcement and remedies of or relating to this Agreement, and the rights and obligations of the
parties hereunder, will be governed by the substantive laws of the State of Minnesota (without
regard to the conflict of laws rules or statutes of any jurisdiction), and any and every legal
proceeding arising out of or in connection with this Agreement will be brought in the appropriate
courts of the State of Minnesota, each of the parties hereby consenting to the exclusive
jurisdiction of said courts for this purpose.

     8.7 Construction. Wherever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Agreement will be prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity without invalidating the
remainder of such provision or the remaining provisions of this Agreement.

     8.8 Waiver. No failure on the part of either party to exercise, and no delay
in exercising, any right or remedy hereunder will operate as a waiver thereof; nor will any single
or partial exercise of any right or remedy hereunder preclude any other or further exercise thereof
or the exercise of any other right or remedy granted hereby or by any related document or by law.

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     8.9 Modification. This Agreement may not be modified or amended except by
written instrument signed by the parties hereto.

     8.10 Entire Agreement. This Agreement constitutes the entire agreement and
understanding between the parties hereto in reference to all the matters herein agreed upon. This
Agreement replaces in full all prior employment agreements or understandings of the parties hereto,
including that Executive Employment Agreement between them effective as of June, 2002, except as
otherwise provided in this Agreement, and any and all such prior agreements or understandings are
hereby rescinded by mutual agreement.

     8.11 Survival. The parties expressly acknowledge and agree that the
provisions of this Agreement which by their express or implied terms extend (a) beyond the
termination of Executive’s employment hereunder (including without limitation provisions relating
to severance compensation and effects of a Change in Control); or (b) beyond the termination of
this Agreement, including, without limitation Article 7 (relating to confidential information,
non-competition and non-solicitation), will continue in full force and effect notwithstanding
Executive’s termination of employment hereunder or the termination of this Agreement, respectively.

     8.12 Voluntary Agreement. Executive has entered into this Agreement
voluntarily, after having the opportunity to consult with an advisor chosen freely by Executive.

     IN WITNESS WHEREOF, the parties hereto have caused this Executive Employment Agreement
to be duly executed and delivered on the day and year first above written, but effective
retroactively as of the effective date of this Agreement.

	 	 	 	 	 	 	 
	EMPLOYER:	 	G&K SERVICES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By	 	 	 	 
	 

	 	 	 	 

	 	 
	 	 	Richard Fink	 	 
	 

	 	 	 	Its Chairman of the Board of Directors	 	 
	 
	 	 	 	 	 	 
	EXECUTIVE:
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	Richard L. Marcantonio	 	 
	 
	 	 	 	 	 	 
	Executive’s Address:	 	5995 Opus Parkway	 	 
	 	 	Minnetonka, MN 55343	 	 

Signature Page — Executive Employment Agreement

 

 

EXHIBIT A

RESTRICTED STOCK AGREEMENT

RESTRICTED STOCK AGREEMENT (the “Agreement”) made effective January 2, 2002 by and between G&K
Services, Inc., a Minnesota corporation, having a place of business at G&K Services, Inc., 5995
Opus Parkway, Suite 500, Minnetonka, MN 55343 (the “Company”), and                      (“Employee”).

WITNESSETH:

WHEREAS, the Company has adopted the G&K Services, Inc. 1998 Stock Option and Compensation Plan
(the “Plan”) to increase stockholder value and to advance the interests of the Company by
furnishing a variety of economic incentives designed to attract, retain and motivate employees; and

WHEREAS, the Compensation Committee of the Board of Directors of the Company (the “Committee”)
believes that entering into this Agreement with Employee is consistent with the stated purposes for
which the Plan was adopted.

NOW, THEREFORE, it is agreed as follows:

1. Grant of Stock.

Subject to the terms and provisions of this Agreement and the Plan, the Company hereby sells to
Employee the number of shares of Class A Common Stock, $0.50 par value, of the Company (the
“Stock”) for the purchase price set forth at the end of this Agreement after “Number of Shares” and
“Purchase Price”, respectively. The Stock will be transferred of record to Employee and a
certificate or certificates representing the Stock will be issued in the name of Employee upon the
execution of this Agreement, the payment of the Purchase Price set forth at the end of this
Agreement, if any, and the execution and delivery by Employee to the Company of a stock power
endorsed in blank. Each such certificate will bear a legend in the form provided for in the Plan.
The Stock, together with a stock power endorsed in blank by employee, will be deposited with the
Company. Employee will not be entitled to delivery of certificates representing the Stock until
the expiration of the restrictions set forth in paragraph 3 of this Agreement.

2. Rights of Employee

Upon the execution of this Agreement and issuance of the certificates for the Stock, Employee will
become a stockholder with respect to the Stock and will have all of the rights of a stockholder
with respect to all such shares, including the right to vote such shares and to receive all
dividends and other distributions paid with respect to such shares, provided, however, that such
shares will be subject to the restrictions set forth in paragraph 3 of this Agreement.

Notwithstanding the preceding paragraph, the Committee may, in its discretion, instruct the Company
to withhold any stock dividends or stock splits issued on or with respect to shares that are
subject to the restrictions provided for in Paragraph 3 of this Agreement.

3. Restrictions

Employee agrees that at all times prior to the vesting of the Stock as contemplated by Paragraph 4
hereof:

	 	a)	 	Employee will not sell, transfer, pledge, hypothecate or otherwise encumber the Stock;
and
	 
	 	b)	 	If Employee’s employment with the Company is voluntarily or involuntarily terminated
for any reason whatsoever, or Employee violates the terms of any confidentiality agreement,
non-solicitation covenant or covenant not to compete, however delineated, subject to
paragraph 4 hereof, Employee will forfeit and transfer to the Company all shares of Stock,
and the Company will pay Employee an amount equal to the Purchase Price of $.50 par value paid by Employee, if any, with respect to the shares of Stock so
forfeited. 

A-1

 

	 	c)	 	If the Employee is transferred out of an eligible-level position, the employee will
receive any shares vesting within nine months of transfer. Any remaining shares will be
forfeited and the Company will pay the Employee an amount equal to the Purchase Price of
$.50 par value paid by the Employee with respect to the shares of Stock forfeited.

4. Lapse of Restrictions

Subject to Section 11.12 of the Plan, the restrictions set forth in Paragraph 3 of this Agreement
will lapse on one-fifth of the Stock on January 2, 2003, and one-fifth of the Stock on each of the
next four successive anniversaries of such date. The Company will deliver certificates
representing the shares of Stock upon which the restrictions have lapsed and have become vested,
free and clear of all restrictions, except as provided in Section 11.5 of the Plan, within 30 days
after the date such shares of Stock have become vested.

5. Securities Act

The Company will have the right, but not the obligation, to cause the shares of Stock issuable
hereunder to be registered under the appropriate rules and regulations of the Securities and
Exchange Commission.

Employee hereby represents and warrants to the Company that Employee is acquiring the shares for
investment and not with a view to the sale or distribution thereof.

If shares of Stock or other securities issuable hereunder have not been registered under the
Securities Act of 1933, as amended, or other applicable federal or state securities law or
regulations, such shares will bear a legend restricting the transferability thereof, such legend to
be substantially in the following form:

     “The shares represented by this certificate have not been registered or
qualified under federal or state securities laws. The shares may not be offered
for sale, sold, pledged or otherwise disposed of unless so registered or
qualified, unless an exemption exists or unless such disposition is not subject
to the federal or state securities laws, and the availability of any exemption
or the inapplicability of such securities laws must be established by an opinion
of counsel, which opinion and counsel will both be reasonably satisfactory to
the Company.”

6. Copy of Plan

By the execution of this Agreement, Employee acknowledges receipt of a copy of the Plan, the terms
and conditions of which are hereby incorporated herein by reference and made a part hereof by
reference as if set forth in full.

7. Administration

This Agreement will at all times be subject to the terms and conditions of the Plan. The Committee
will have the sole and complete discretion with respect to all matters reserved to it by the Plan
and decisions of the Committee with respect thereto and to this Agreement will be final and binding
upon Employee. In the event of any conflict between the terms and conditions of this Agreement and
the Plan, the provisions of the Plan will govern and control.

8. Continuation of Employment

This Agreement will not confer upon Employee, and will not be construed to confer upon Employee,
any right to continue in the employ of the Company for any period of time, and will not limit the
rights of the Company in their sole discretion, to terminate the employment of Employee at any
time, with or without cause, for any reason or no reason, or to change Employee’s assignment or
rate of compensation.

A-2

 

9. Section 83(b) Election

Employee understands that he (and not the Company) will be responsible for his own federal, state,
local or foreign tax liability and any of his other tax consequences that may arise as a result of
the transactions contemplated by this Agreement. Employee will rely solely on the determinations
of his tax advisors or his own determinations, and not on any statements or representations by the
Company or any of its agents, with regard to all such tax matters. Employee understands that
Section 83 of the Internal Revenue Code of 1986, as amended (the “Code”), taxes as ordinary income
the difference between the amount paid for the Stock and the fair market value of the Stock as of
the date any restrictions on the Stock lapse. In this context, “restriction” includes without
limitation the vesting restrictions set forth in paragraph 3 hereof. In the event the Company has
registered any of its shares under the Securities Exchange Act of 1934, “restriction” with respect
to officers, directors and ten percent (10%) shareholders also means the period after the purchase
of the Stock during which such officer, director and ten percent (10%) shareholders could be
subject to suit under Section 16(b) of the Securities Exchange Act of 1934. Employee understands
that Employee may elect to be taxed at the time the shares of Stock are purchased rather than when
and as the restrictions on the Stock lapse or expire by filing an election under Section 83(b) of
the Code with the Internal Revenue Service within thirty (30) days from the date of purchase. In
the event Employee files an election under Section 83(b) of the Code, such election will contain
all information required under the applicable treasury regulation(s) and Employee will deliver a
copy of such election to the Company contemporaneously with filing such election with the Internal
Revenue Service. EMPLOYEE ACKNOWLEDGES THAT IT IS EMPLOYEE’S SOLE RESPONSIBILITY AND NOT THE
COMPANY’S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b) OF THE CODE, EVEN IF EMPLOYEE REQUESTS
THAT THE COMPANY OR ITS REPRESENTATIVES MAKE THIS FILING ON EMPLOYEE’S BEHALF.

10. Governing Law

This Agreement, in its interpretation and effect, will be governed by the laws of the State of
Minnesota applicable to contracts executed and to be performed therein.

11. Amendments

This Agreement may be amended only by a written agreement executed by the Company and Employee.

12. Entire Agreement

This Agreement embodies the entire agreement made between the parties hereto with respect to
matters covered herein and will not be modified except in accordance with paragraph 11 of this
Agreement.

13. Counterparts

This Agreement may be executed in any number of counterparts, each of which will be deemed an
original, but all of which will constitute but one and the same agreement.

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed as of the date first
written above.

	 	 	 	 	 
	 	 	G&K Services, Inc.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Its:
	 	Chief Executive Officer
	 
	 	 	 	 
	 	 	 	 	 
	Name
	 	 	 	 
	 
	 	 	 	 
	Number of Shares: 15,000
	 	 	 	 
	Purchase Price: $.50 per share
	 	 	 	 

A-3

 

EXHIBIT B

SEPARATION AGREEMENT AND GENERAL RELEASE

Definitions. All the words used in this Separation Agreement and General Release have
their plain meaning in ordinary English. Specific terms used in this Separation Agreement and
General Release have the following meanings:

	 	1.	 	Words such as I and me include both me and anyone who has or
obtains any legal rights or claims through me. My name is ___.
	 
	 	2.	 	“G&K” means G&K Services, Inc., and its past or present managers, agents,
officers, directors, employees, shareholders, committees, insurers, indemnitors,
successors or assigns of any of the foregoing entities.

G&K’s Promises. In exchange for My Promises, as set forth below, G&K has promised to
extend the following consideration to me, but only if I have not exercised my rights to rescind as
provided in this agreement:

	 	1.	 	Pay me, as separation pay which I have not earned, and to which I am not
otherwise entitled,                      (___) months of my monthly Base Salary in effect as of the
Date of Termination, less any separation pay amounts to which I am entitled under any
written Plan generally applicable to management employees of G&K. Payment of the
separation pay will be made sixteen days after I sign this agreement, and only if I
have not exercised my rights to revoke or rescind as provided in this agreement. These
payments will be subject to applicable federal and state income tax and FICA
withholding.

My Claims. The claims I am releasing include all of my rights to any relief of any kind
from G&K including but not limited to:

	 	1.	 	All claims I have now, whether or not I now know about the claims;
	 
	 	2.	 	All claims for attorney’s fees;
	 
	 	3.	 	All claims, through the date this document is executed, for alleged
discrimination against me and any other rights and claims, the Minnesota Human Rights
Act (“MHRA”), the federal Age Discrimination in Employment Act (“ADEA”) or any other
federal, state, or local law;
	 
	 	4.	 	All claims arising out of my offer of employment, employment or my separation
from employment with G&K including, but not limited to, any alleged breach of contract,
wrongful termination, defamation or intentional infliction of emotional distress;
	 
	 	5.	 	All claims for any other alleged unlawful employment practices arising out of
or relating to my employment or my separation from employment; and
	 
	 	6.	 	All claims for any other form of pay, for example unaccrued holiday pay,
vacation pay and sick pay.

My Promises. In exchange for receiving the payments and other consideration set forth in
this Separation Agreement and General Release, I promise to give up all my claims against G&K. I
fully and finally release, give up, and otherwise relinquish all of my rights and claims against
G&K, including for example rights and claims under the MHRA and ADEA. I will not bring any lawsuits or make any other demands against

C-1

 

G&K, except if necessary to enforce the provisions of
this Separation Agreement and General Release. The money and benefits I will receive as set forth
in this Separation Agreement and General Release are full and fair payment for the release of all
my rights and claims. G&K does not owe me anything in addition to what I will receive under this
Separation Agreement and General Release. The consideration extended by G&K in this agreement in
return for my release of rights and claims is more than anything of value to which I am already
entitled.

Additional Agreements and Understandings.

	 	1.	 	G&K does not admit that it is responsible or legally obligated to me, and in
fact G&K denies that it is responsible or legally obligated to me even though it has
paid me to release my claims.
	 
	 	2.	 	My last day of employment is                                         .
	 
	 	3.	 	This Agreement replaces, supersedes and nullifies any prior oral or written
agreements between G&K and me, with the exception of the provisions set forth in
Article 7 of the Executive Employment Agreement between me and G&K, and the terms of
any written Plan generally applicable to management employees of G&K.

Rights to Consider, Revoke and Rescind.

	 	1.	 	I understand that I am advised by G&K to consult an attorney prior to signing this
Separation Agreement and General Release.
	 
	 	2.	 	I further understand that I have twenty-one (21) days to consider this
Separation Agreement and General Release of age discrimination claims under the ADEA,
beginning                                         , the date on which I received this Separation
Agreement and General Release. If I sign this Separation Agreement and General
Release, I understand that I will then be entitled to revoke my release of any rights
and claims of age discrimination under the ADEA within seven (7) days of executing it,
and the release of my ADEA rights and claims will not become effective or enforceable
until the seven-day period has expired.
	 
	 	3.	 	I further understand that I have the right to rescind this general release of
discrimination rights and claims under the MHRA within fifteen (15) calendar days of the date upon
which I sign it. I understand that, if I desire to rescind my general release of discrimination
rights and claims under the MHRA, I must put my rescission request in writing and deliver it to G&K
by hand or by mail within 15 calendar days of the date of execution of this Separation Agreement
and General Release by me. If I deliver my rescission request by mail, it must be:

	 	a.	 	postmarked within 15 calendar days of the day on which I sign
this Separation Agreement and General Release;
	 
	 	b.	 	addressed to Mary Anderson, Director of Compensation & Benefits, G&K Services, Inc., 5995 Opus Parkway, Suite 500, Minnetonka, Minnesota 55343 and,

C-2

 

	 
	 	c.	 	sent by certified mail, return receipt requested.

     I understand that if I revoke or rescind this Separation Agreement and General Release, all of
G&K’s obligations under this agreement will immediately cease, and G&K will not pay me any of the
money or benefits in this agreement.

     I have read this Separation Agreement and General Release carefully and understand all of its
terms. I have had the opportunity to discuss this Separation Agreement and General Release with my
own attorney prior to signing it. In agreeing to sign this Separation Agreement and General
Release, I have not relied on any statements or explanations made by G&K, its agents or its
attorneys.

	 	 	 	 	 
	 	 	 
	 	 	(Name)
	Subscribed and sworn to
	 	 	 	 
	before me this            day
	 	 	 	 
	of                     , 20     .
	 	 	 	 
	 
	 	 	 	 
	 	 	 	 	 
	Notary Public
	 	 	 	 
	 	 	G&K SERVICES, INC.
	 
	 	 	 	 
	 

	 	By	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Its	 	 
	 

	 	 	 	 

C-3

 

EXHIBIT C

PROMISSORY NOTE

			
	 	 	 
	$400,000
	 	Minneapolis, Minnesota
	 
	 	June ___, 2002

FOR VALUE RECEIVED, Richard L. Marcantonio (“Maker”), promises to pay to G&K Services, Inc., a
Minnesota corporation (the “Company” or “Holder”) at its office at 5995 Opus Parkway, Suite 500,
Minnetonka, Minnesota 55343, or at such other place as the holder hereof may from time to time
designate in writing, in lawful money of the United States of America, the principal sum equal to
Four Hundred Thousand Dollars ($400,000) (the “Principal Sum”), upon the terms and subject to the
conditions set forth herein.

No interest shall accrue on the unpaid Principal Sum during the term of this Note.

     Subject to the forgiveness of certain amounts of the Principal Sum, as provided below, the
Principal Sum shall be payable in five (5) annual installments, each in the amount set forth under
the caption “Amount Payable” in the table below, commencing on the one-year anniversary of the date
hereof and continuing on each of the next four (4) successive anniversaries thereof (each a
“Payment Date”). For so long as Maker continues to be employed by Holder, the amount of the
Principal Sum set forth under the caption “Amount Subject To Forgiveness” in the table below shall
be forgiven by Holder on the applicable anniversary of the date hereof.

	 	 	 	 	 
	 	 	 	 	Amount Subject
	Anniversary	 	Amount Payable ($)	 	to Forgiveness ($)
	1st Year
	 	80,000	 	40,000
	2nd Year
	 	80,000	 	40,000
	3rd Year
	 	80,000	 	40,000
	4th Year
	 	80,000	 	40,000
	5th Year
	 	80,000	 	40,000

     In addition to any amounts forgiven pursuant to the terms hereof, the amount payable by Maker
to Holder on each Payment Date shall be further reduced by an amount (the “Gross-Up Amount”) equal
to any federal, state and local income imposed on Maker as a result of the forgiveness of portions
of the Principal Sum hereunder or the interest-free nature of this Note. For purposes of
determining the Gross-Up Amount, Maker shall be deemed to pay federal income tax at the highest
marginal rate of federal income taxation in the calendar year of the applicable Payment Date and
state and local income taxes at the highest marginal rate of taxation in the state and locality of
the Maker’s residence in the calendar year of the applicable Payment Date, net of the maximum
reduction in federal income taxes that may be obtained from the deduction of such state and local
taxes.

C-4

 

     This Note may be prepaid in whole or in part at any time without payment of any prepayment
penalty or fee. Any prepayment shall not accelerate forgiveness of the Amounts Subject to
Forgiveness as detailed above.

     The Maker shall remain liable for the payment of this Note, and any other charges payable
hereunder, notwithstanding any extension or extensions of time for payment or any indulgence of any
kind that Holder may grant to Maker.

     The occurrence of either of the following events shall constitute an event of default under
this Note (each such event is hereinafter referred to as an “Event of Default”):

	 	(a)	 	Voluntary termination not for “Good Reason” (as defined in Maker’s employment
agreement with Holder) by Maker of his employment with Holder at any time prior to the
five-year anniversary of the commencement of Maker’s employment with Holder; or

	 	 	 	 
	 	(b)	 	Termination for “Cause” (as defined in Maker’s employment agreement with
Holder) by Holder of Maker’s employment with Holder at any time prior to the five-year
anniversary of the commencement of Maker’s employment with Holder.

     Upon the occurrence of an Event of Default, Holder may, at its sole and absolute discretion
declare the outstanding amount of the Principal Sum to be immediately due and payable in full
without demand. Upon the occurrence of an Event of Default hereunder Holder may, at its sole and
absolute discretion, deduct any amounts then due hereunder from any money due or to become to Maker
from Holder.

     The Maker agrees to pay on demand the costs of collection, including, without limitation,
reasonable attorneys’ fees incurred by Holder in collecting or attempting to collect any amount
under this Note that is not paid when due or to enforce its rights under this Note. All such costs
of collection shall bear interest, payable on demand, from the date of payment thereof by Holder
until paid in full by Maker at the lesser of (i) the highest rate permitted by law or (ii) eight
(8%) percent.

     Holder shall not by any act of omission or commission be deemed to waive any of its rights or
remedies hereunder unless such waiver is in writing and signed by an authorized officer of Holder
and then only to the extent specifically set forth therein. A waiver on one occasion shall not be
construed to be a continuing waiver of such right or remedy on any other occasion.

     Every person who is at any time liable for the payment of the debt evidenced by this Note
hereby waives presentment for payment, demand, notice of nonpayment of this Note, protest and
notice of protest, and the right to trial by jury in any litigation arising out of, relating to, or
connected with this Note or with any instrument given as security herefor, and hereby agrees that
Holder may extend, without affecting their liability hereon, the time for payment of any part of or
the whole of the debt evidenced by this Note, at any time, at the request of any other person
or entity liable for said debt.

C-5

 

     This Note is given and accepted as evidence of indebtedness only and not in payment of or in
satisfaction of any indebtedness or obligation.

     The form and essential validity of this Note shall be governed by the laws of the State of
Minnesota applicable to contracts made and to be performed wholly within Minnesota, without giving
effect to conflicts of laws principles. All lawsuits and judicial proceedings regarding the
interpretation of this Note, any dispute arising hereunder or the collection of any amount due
under this Note shall be brought and heard in the District Court, State of Minnesota, Fourth
Judicial District, and Maker hereby consents to such jurisdiction. If any portion of this Note is
unenforceable, the remainder of this Note shall continue in full force and effect.

     Time is of the essence with respect to all of Maker’s obligations and agreements under this
Note.

     This Note and all the provisions, conditions, promises and covenants hereof shall inure to the
benefit of Holder, its successors and assigns, and shall be binding upon the Maker, his personal
representatives, heirs, successors and assigns.

     This Note is not an employment contract for a definite term. This Note is not intended to
modify the at-will employment relationship between Maker and Holder.

     IN WITNESS WHEREOF, the Maker has caused this Note to be signed on his behalf on the day and
year first above written.

	 	 	 	 	 
	 	 	 
	 	 	Richard L. Marcantonio
	Subscribed and sworn to
	 	 	 	 
	before me this            day
	 	 	 	 
	of                     , 20     .
	 	 	 	 
	 
	 	 	 	 
	 	 	 	 	 
	Notary Public
	 	 	 	 
	 	 	G&K SERVICES, INC.
	 
	 	 	 	 
	 

	 	By	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Its	 	 
	 

	 	 	 	 

C-6

 

EXHIBIT D

STOCK PLEDGE AGREEMENT

     This STOCK PLEDGE AGREEMENT is made and entered into as of the ___day of                     , 2002,
by and between Richard L. Marcantonio, a resident of the State of Minnesota (the “Pledgor”) and G&K
Services, Inc., a Minnesota corporation (“Pledgee”).

INTRODUCTION

     A. Promissory Note. Pledgor has issued a Promissory Note in the original principal amount of
Four Hundred Thousand Dollars ($400,000) (the “Principal Sum”).

     B. Security. To induce Pledgee to enter into the transactions described above, and as security
for payments due under the Note, Pledgor has agreed to pledge shares of                                         , a
                     corporation (the “Shares”), which Shares have a value of at least 130% of the
Principal Sum.

AGREEMENT

     NOW, THEREFORE, in order to secure payment of all amounts due and owing Pledgee under the Note
(collectively, the “Obligations”), and in consideration of the facts recited above (which are a
part of this Agreement) and the promises set forth below, it is agreed:

     1. Pledge. As collateral for the payment of the Obligations, Pledgor hereby grants a security
interest to Pledgee and deposits with Pledgee (accompanied by a stock power in blank) the Shares
(which Shares, as adjusted from time to time as provided herein, shall hereinafter to be referred
to as the “Pledged Stock”), and Pledgor agrees to perform the obligations set forth herein.
Pledgor hereby appoints Pledgee as attorney-in-fact to arrange for the transfer of the Pledged
Stock on the books of the Company into the name of Pledgee if an Event of Default (as defined
below) occurs as set forth herein. The Pledged Stock shall be held and disposed of pursuant to the
terms of this Agreement.

     2. Further Assurances. Pledgor agrees at any time, and from time to time, to execute such
other instruments as Pledgee may reasonably request to establish, maintain and perfect the security
interest in the Pledged Stock conveyed by this Agreement.

     3. Rights of Pledgor. Prior to the occurrence of an Event of Default:

     (a) Pledgor shall have the right to exercise all voting and other powers pertaining to
the Pledged Stock for all purposes; and

     (b) All dividends or other distributions with respect to the Pledged Stock shall be
payable to Pledgor; provided, however, that following an Event of Default, all dividends or
other distributions with respect to the Pledged Stock shall be payable to Pledgee.

D-1

 

     4. Representations and Warranties. Pledgor represents and warrants as follows:

     (a) Pledgor will not sell or otherwise dispose of any Pledged Stock or any interest
therein without the prior written consent of the Pledgee; and

     (b) Throughout the term of this Agreement, Pledgor will keep the Pledged Stock free and
clear of all security interests, liens, and encumbrances, except the security interest
granted hereunder.

     5. Adjustment. If during the term of this Agreement any share dividend, reclassification,
readjustment or other change is declared or made in the capital structure of the Company, then all
new, substituted, and additional shares, or other securities issued by reason of original issuance
of the Pledged Stock shall be subject to the terms of this Agreement in the same manner as, and as
a part of, the Pledged Stock.

     6. Release of Shares; Termination. On each Payment Date (as such term is defined in the
Note), Pledgee agrees to release Shares of Pledged Stock to the extent that the remaining Shares
have an aggregate value of 130% of the Obligations, and Pledgee shall transfer to Pledgor such
released Shares and deliver any assignments separate from certificate for cancellation relating
thereto. Upon full performance of all of the Obligations, Pledgee shall transfer to Pledgor all of
the Pledged Stock and deliver any assignments separate from certificate for cancellation, and all
rights received by Pledgee under this Agreement shall terminate.

     7. Events of Default. An event of default under this Agreement (“Event of Default”) shall
occur when an Event of Default occurs under the Note, and remains uncured for thirty (30) days
after written notice of such default is given by Pledgee to Pledgor.

     8. Remedies. Upon the occurrence of an Event of Default and at any time thereafter, Pledgee
may exercise any one or more of the following rights or remedies:

     (a) exercise all voting rights, rights to receive dividends and other distributions,
and other rights as a holder of the Pledged Stock;

     (b) exercise and enforce any or all rights and remedies available upon default to a
secured party under the Uniform Commercial Code, including (i) the right to offer and sell
the Pledged Stock privately to purchasers who will agree to take the Pledged Stock for
investment and not with a view to distribution, and who will agree to the imposition of
restrictive legends on any certificates representing the Pledged Stock, and (ii) the right
to arrange for a sale that would otherwise qualify as exempt from registration under the
Securities Act of 1933, as amended; and, if notice to Pledgor of any intended disposition of
the Pledged Stock or any other intended action is required by law in a particular instance,
such notice shall be deemed commercially reasonable if given at least twenty (20) calendar
days prior to the date of intended disposition or other action; and

     (c) exercise or enforce any or all other rights or remedies available to Pledgee by law
or agreement against the Pledged Stock, against Pledgor or against any other person or
property.

     9. Application of Proceeds. The proceeds of any sale of all or a part of the Pledged Stock
shall be applied as follows:

D-2

 

     (a) First, to the payment of all costs and expenses incurred by Pledgee in enforcing
its rights under this Agreement, including without limitation, the reasonable fees of
attorneys or other agents employed by Pledgee in connection therewith;

     (b) Second, to the payment of all of the Obligations then due and owing; and

     (c) Third, any surplus remaining after application of the proceeds pursuant to
subparagraphs (a) and (b) above shall be paid to Pledgor or the successors or assigns
thereof.

Pledgor shall remain liable to Pledgee for any deficiency.

     10. Miscellaneous. The parties agree as follows:

     (a) No waiver of any of the provisions or conditions of this Agreement shall be
effective unless such waiver is in writing and signed by the party claimed to have given, or
consented to, such waiver.

     (b) No failure on the part of Pledgee to exercise, and no delay on the part of Pledgee
in exercising, any right, power, or remedy pursuant to this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise by Pledgee of any right, power, or
remedy hereunder preclude any other or further exercise thereof or the exercise of any other
right, power, or remedy. The remedies herein provided are cumulative and shall not be
exclusive of any other remedies provided by law or agreement.

     (c) The terms and conditions of this Agreement shall inure to the benefit of, and be
binding upon, the respective legal representatives, successors and permitted assigns of the
parties; provided, however, that neither party may assign this Agreement or its obligations,
duties, or liabilities hereunder without the express prior written consent of the other
party.

     (d) This Agreement is delivered and is intended to be performed in the State of
Minnesota and should be construed and enforced in accordance with the laws of such State,
without regard to conflict of law principles.

     (e) All notices, requests, demands, and other communications hereunder shall be in
writing, and shall be deemed to have been duly given three days after mailed if sent by
registered mail, return receipt requested, postage prepaid, to the parties at the following
addresses (or to any other address given to the other party pursuant to the provisions of
this subsection):

	 	 	 	 	 
	 

	 	If to Pledgor:
	 	If to Pledgee:
	 
	 	 	 	 
	 

	 	 	 	G&K Services, Inc.
	 

	 	 	 	 
	 

	 	 	 	5995 Opus Parkway, Suite 5500
	 

	 	 	 	 
	 

	 	 	 	Minnetonka, MN 55343
	 

	 	 	 	 
	 

	 	 	 	Attention: Chief Financial Officer
	 

	 	 	 	 

D-3

 

     (f) This Agreement may be executed in any number of counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the same
instrument.

     (g) This Agreement may not be amended except by written agreement executed by all
parties hereto.

     (h) If any provision or application of this Agreement is held unlawful or unenforceable
in any respect, such illegality or unenforceability shall not affect other provisions or
applications which can be given effect, and this Agreement shall be construed as if the
unlawful or unenforceable provision or application had never been contained herein or
prescribed hereby.

     (i) All representations and warranties contained in this Agreement shall survive the
execution, delivery, and performance of this Agreement and any other documents or
instruments executed or delivered in connection with or pursuant to any of the foregoing.

D-4

 

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

	 	 	 	 	 
	 	 	PLEDGOR:
	 
	 	 	 	 
	 	 	 
	 	 	Richard L. Marcantonio
	 
	 	 	 	 
	 	 	PLEDGEE:
	 
	 	 	 	 
	 	 	G&K SERVICES, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 

B-1

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