Document:

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EXECUTIVE EMPLOYMENT AGREEMENT

     THIS AGREEMENT is made and entered into as of the 22nd day of December 2006 (the “Effective
Date”) by and between G&K SERVICES, INC., a Minnesota corporation with its principal business
office in the State of Minnesota (“Employer”, as further defined in Section 1.10 below); and
Richard L. Marcantonio, a resident of the State of Minnesota (“Executive”).

INTRODUCTION

     A. Employment. Employer has employed Executive in the capacity of Chairman of the
Board of Directors and Chief Executive Officer under that Executive Employment Agreement effective
as of August 31, 2004, as amended by that First Amendment to Executive Employment Agreement
executed October 3, 2006, which superseded that Executive Employment Agreement effective as of
June, 2002, and now wishes to make available to Executive certain new benefits and rights under
this Executive Employment Agreement (the “Agreement”). This Agreement is intended to fully
supersede all previous agreements between them, including without limitation that Executive
Employment Agreement effective as of August 31, 2004, as amended by that First Amendment to
Executive Employment Agreement executed October 3, 2006, as well as that Change of Control
Agreement dated as of November 12, 2002, except as otherwise specifically set forth herein. As
such, Executive is subject to the same polices, terms and conditions as those described in the
Employer’s employee handbook, its Code of Ethics, policies, and employee benefit plans (as modified
from time to time by Employer), except as otherwise specifically provided in this Agreement.

     B. Protection of Employer. 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 8. In Executive’s position with
Employer, Executive is a valued employee of Employer and Employer will benefit from Executive’s
continued employment as its Chairman of the Board of Directors 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 Executive’s 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 8.

     C. Employment and Benefits. For these purposes, Employer is willing to continue
retaining Executive as Chairman of the Board of Directors 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 pay, continued health and dental care coverage, perquisites, and
outplacement benefits [as described in Articles 6 and 7], if Executive’s employment with Employer
terminates under certain circumstances, including without limitation in connection with a Change in
Control [as defined at Section 7.1(c)].

 

 

     D. Other Intentions. Executive wishes to accept Employer’s offer to be retained as
Chairman of the Board of Directors and Chief Executive Officer, and of additional benefits set
forth in this Agreement, to which Executive is not otherwise entitled.

     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, assurance of Executive’s adherence to his other
agreements under Article 8 of this Agreement, and certain protections related to Notice of
Termination as set forth in this Agreement.

AGREEMENT

     In consideration of the facts recited above, which are a part of this Agreement, and the
parties’ mutual undertakings in this Agreement, Employer and Executive agree to the following:

ARTICLE 1

DEFINITIONS

     Capitalized terms used generally in this Agreement will be consistently defined 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 this Agreement, other than under Employer’s annual management incentive Plan,
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 5.3.

     1.5 “Change in Control” has the meaning set forth in Section 7.1(c).

     1.6 “Confidential Information” has the meaning set forth in Section 8.1.

     1.7 “Date of Termination” has the meaning set forth in Section 5.2(a).

     1.8 “Disability” means the unwillingness or inability of Executive to perform the essential
functions of Executive’s position (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, if Executive has not returned to the full-time performance of the Executive’s
duties within thirty (30) days after a Notice of Termination is issued by Employer, the Executive
will on such thirtieth day incur his Date of Termination; provided, however, that if Executive (or
Executive’s legal representative) 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), this
determination will be subject to the

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certification of a qualified medical doctor mutually agreed to by Employer and Executive. In
the absence of agreement, each party will nominate a qualified medical doctor and the two doctors
will select a third doctor, who will make the determination as to Disability. The decision of the
designated physician will be binding upon the parties.

     1.9 “Effective Date” has the meaning referred to in the first paragraph of this Agreement.

     1.10 “Employer” means all of the following, jointly and severally: (a) G&K Services, Inc., (b)
any Subsidiary of G&K Services, Inc. and (c) any Successor of G&K Services, Inc.

     1.11 “Executive” means the individual named in the first paragraph of this Agreement.

     1.12 “Good Reason,” with respect to Executive’s termination of employment, has the meaning set
forth in Section 5.4.

     1.13 “Notice of Termination” has the meaning set forth in Section 5.2(b).

     1.14 “Plan” means any bonus or incentive compensation agreement, plan, program, policy or
arrangement sponsored, maintained or contributed to by Employer in which executive employees of
Employer generally are covered, including, without limitation, (a) any stock option or any other
equity-based compensation plan, and specifically the G&K Services, Inc. 2006 Equity Incentive Plan,
and any predecessor or successor Plan thereto [hereinafter the “Equity Incentive Plan"] (b) any
annual or long-term incentive bonus plan; (c) any employee benefit plan, such as a thrift, profit
sharing, deferred compensation, medical, dental, disability income, accident, life insurance,
automobile allowance, perquisite, fringe benefit, vacation, sick or parental leave, separation or
relocation plan or policy and (d) any other agreement, plan, program, policy or arrangement
intended to benefit executive employees of Employer.

     1.15 “ Subsidiary” means any corporation or other business entity controlled by Employer.

     1.16 “Successor” means any corporation, individual, group, association, partnership, limited
liability company, firm, venture or other entity or person that, subsequent to the Effective Date,
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.

ARTICLE 2

EMPLOYMENT AND DUTIES

     2.1 Employment. Subject to the terms and conditions of this Agreement, Employer
employs and Executive accepts employment for an indefinite term. Executive will serve in the
capacity of Chairman of the Board of Directors and Chief Executive Officer reporting to Employer’s
Board of Directors. Subject to the respective rights of the parties under this Agreement, this
Agreement and Executive’s employment may be terminated by Employer at any time and for any reason,
with or without cause. Executive’s employment with Employer is and shall be at all times an
employment at will.

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     2.2 Duties. While Executive is employed under this Agreement, and excluding any
periods of vacation, sick, disability, or other leave to which Executive is entitled or is
authorized to take, Executive agrees to devote substantially all of Executive’s attention and time
during normal business hours to the business and affairs of Employer and to use Executive’s
reasonable best efforts to perform faithfully and efficiently such responsibilities assigned to
Executive from time to time, in the capacity of Chairman of the Board of Directors and Chief
Executive Officer. Executive will comply with each of Employer’s policies and procedures,
including those described in Employer’s employee handbook, Code of Ethics, policies, and employee
benefit plans , as modified from time to time by Employer; provided, however, that to the extent
these policies and procedures are inconsistent with this Agreement, the provisions of this
Agreement will control.

     2.3 Relationship of Parties. The relationship between Employer and Executive will be
that of employer and employee. Except as otherwise specifically provided in this Agreement,
nothing in this Agreement will be construed to give Executive any interest in the assets of
Employer. All of the records and files pertaining to Employer’s suppliers, licensors, licensees
and customers, and any Confidential Information, are specifically acknowledged to be the property
of Employer and not that of Executive.

ARTICLE 3

COMPENSATION AND BENEFITS

     3.1 Base Salary. Commencing as of the Effective Date, Employer will pay Executive a
Base Salary at an annual rate as approved from time to time by the Board or the Compensation
Committee of the Board, but in any event no less than the annual rate being paid Executive on the
Effective Date of this Agreement. The Base Salary is to be paid in substantially equal regular
periodic payments in accordance with Employer’s regular payroll practices. Executive’s Base Salary
shall not be reduced in amount during the term of this Agreement but otherwise may be increased at
any time during Executive’s employment by Employer, and the increased 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 Employer terminates its health, dental or life Plan offered to Executive, without
replacing the Plan, Executive while employed will be entitled to receive as additional
compensation an amount equal to the Executive’s cost of replacing such terminated benefit
with a plan or policy that offers substantially the same benefit as determined by the
Employer.

     (c) Executive shall be entitled to a target incentive opportunity under the annual
management incentive Plan in effect at Employer from time to time, including Executive’s
target incentive for fiscal year 2007 established by the Board of Directors in August 2006.
Executive’s future incentive pay may be increased and determined on an annual basis by

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Employer’s Board of Directors, provided, however, Executive’s target incentive shall
not be reduced during the terms of the Agreement, provided that any incentive pay
established under this Agreement will remain in effect until the Board has completed its
next annual review of Executive’s performance.

     (d) 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 D, and that
related Stock Pledge Agreement, an unexecuted copy of which is attached hereto as Exhibit E,
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.

     (e) 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 the Plans and the preceding provisions of this Section 3.2.

     (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 its 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 its Compensation Committee may determine for Executive.

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

     (i) Executive will be entitled to any other fringe benefit that the Compensation
Committee approves for the Employer’s Chief Executive Officer, provided that to the extent a
fringe benefit is eliminated, Executive will be entitled to compensation equal to the value
of the eliminated benefit, as determined by the Employer.

     3.3 Limitation on Right to Deferred Compensation. The rights of Executive, or
Executive’s beneficiaries or estate, to any deferred compensation under this Agreement will be
solely those of an unsecured creditor of Employer. Nothing in this Agreement confers any right on
Executive, any of Executive’s beneficiaries, or Executive’s estate to receive, assign rights under,
or transfer any compensation including any deferred compensation other than as provided for under
the applicable Plan.

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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

     Executive’s employment with the Employer may be terminated at any time as of the applicable
Date of Termination as follows; provided, however, that provisions contained in this Agreement
which by their terms are to remain enforceable after a Date of Termination shall remain enforceable
to the full extent necessary to give them effect:

     5.1 Termination. Except as specifically provided otherwise in this Agreement, this
Agreement and Executive’s employment with the Employer may be terminated by Employer, upon thirty
(30) days advance written notice, or by Executive for any reason or no reason, or at any time by
mutual written agreement of the parties. During the period after notice is given, at Employer’s
request and sole discretion, Executive will continue to render Executive’s normal service to
Employer to the best of Executive’s ability, and Employer will continue to compensate the Executive
through the Date of Termination as set forth in Section 6.2. In addition, 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.

     5.2 Date of Termination and Notice of Termination.

     (a) 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 provided;] (iii) if Executive’s employment is terminated by Employer for
Cause, the date stated in the Notice of Termination; (iv) if Executive’s employment is
terminated by mutual agreement of the parties, the termination date provided for under the
agreement; (v) if Executive’s employment is terminated by Executive voluntarily or for Good
Reason, the termination date provided to Employer by Executive in Executive’s Notice of
Termination; (vi) if Executive’s employment is terminated for any other reason, and subject
to the terms of Section 5.1 above, the date stated in the Notice of Termination, unless an
earlier date has been expressly agreed to by Executive in writing either before or after
receiving the Notice of Termination.

     (b) For purposes of this Agreement, a “Notice of Termination” will mean a notice that
indicates the date on which termination of Executive’s employment is effective. Any
termination by Employer or by Executive under to this Agreement [other than Executive’s

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death, or a termination by mutual agreement] will be communicated to the other party by
submission of a written Notice of Termination. If termination is by Employer for Cause or
by Executive for Good Reason, the Notice of Termination will set forth in reasonable detail
the facts and circumstances claimed to provide the basis for the termination, consistent
with the terms of this Agreement.

     5.3 Termination by Employer for Cause. Employer may terminate Executive’s at will
employment at any time for Cause, with or without advance notice [except as otherwise provided in
this Section 5.3]. 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;

     (b) any drunkenness or use of drugs that interferes with the performance of Executive’s
obligations under this Agreement;

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

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

     (e) Any gross negligence, or any 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;

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

     (g) except as otherwise specifically provided in this Section 5.3, Executive’s material
violation or breach of Employer’s standard business practices and policies;

     (h) Any court order or settlement agreement prohibits Executive’s continued employment
with Employer;

     (i) Any material breach by Executive [not covered by any of the above clauses (a)
through (h)] of any material term, provision or condition of this Agreement.

     Notwithstanding any of the foregoing, “Cause” shall not be deemed to exist unless and until
Employer provides Executive with (1) at least ten (10) days prior written notice of its intention
to terminate employment for Cause, together with a written statement describing the nature of the
Cause, including the clause or clauses of this definition that Employer deems applicable, and (2)
if the item constituting Employer’s “Cause” for termination of Executive is within the scope of
clauses (a), (b) (g) or (i) above, thirty (30) days to cure any acts or omissions on which the
finding of Cause is based. If the Executive cures, in accordance with the terms of the written
notice, the acts or omissions on which

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the finding of Cause is based, Employer shall not have Cause to terminate the Executive’s
employment under this Agreement.

     For purposes of this Section 5.3, 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.

     5.4 Termination by Executive for Good Reason. Executive may terminate employment with
Employer for Good Reason, upon notice as provided in Section 5.2(a). For purposes of this
Agreement, “Good Reason” will mean any of the following:

     (a) an adverse involuntary change in Executive’s status or position as Chairman and
Chief Executive Officer of Employer, including, without limitation, (i) any adverse change
in Executive’s status or position as a result of a material diminution in Executive’s
duties, responsibilities or authority; (ii) 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 (iii) 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);

     (b) either (i) a reduction by Employer in Executive’s Base Salary, or (ii) a
termination or adverse change in Executive’s incentive-based compensation package that
materially and adversely effects Executive’s compensation as a whole;

     (c) the taking of any action by Employer that would materially and adversely affect the
physical conditions existing as of the Effective Date of this Agreement that result in the
Executive being unable to perform the Executive’s employment duties for Employer, and under
which Executive regularly performs employment duties for Employer;

     (d) any requirement that Executive relocate (other than on a sporadic or intermittent
basis) to a location which is more than 35 miles from Employer’s corporate headquarters as
of the Effective Date of this Agreement as a necessary condition for Executive to perform
his employment duties for Employer;

     (e) Any failure by Employer to obtain from any Successor an assumption of this
Agreement; or

     (f) any purported termination by Employer or by any 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

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by Employer within a reasonable period after Employer’s receipt of notice thereof from
Executive.

ARTICLE 6

PAYMENTS UPON TERMINATION

     6.1 Compensation during Disability. During any period in which Executive fails to
perform Executive’s duties under this Agreement as a result of Executive’s incapacity due to
physical or mental illness or bodily injury or disease, Executive will continue to receive all Base
Salary and other compensation and benefits to which Executive is otherwise entitled under this
Agreement and any Plan through Executive’s Date of Termination, but only to the extent that
Executive is not receiving substantially equivalent benefits under any Plan maintained by Employer.

     6.2 Compensation Until Date of Termination of Employment. If Executive’s employment
under this Agreement is terminated, then Employer will pay Executive the Base Salary through the
Date of Termination, plus any other amounts to which the Executive is entitled to prior to the Date
of Termination under this Agreement and under any Plan as provided under the Plan; provided that
Executive continues to perform his duties in accordance with Article 2.

     6.3 Compensation Following Termination of Employment by Employer Without Cause, or by
Executive for Good Reason. In the event Executive’s employment under this Agreement is
terminated by Employer without Cause or by Executive for Good Reason, and provided Executive shall
first execute a written release substantially in the form attached to this Agreement as Exhibit B
consistent with this Section 6.3 (the “Release Agreement”), and provided further that Executive has
not exercised rights to revoke or rescind the release of claims under to the Release Agreement,
then Employer shall provide to Executive the following benefits:

     (a) Employer will pay to Executive, as Separation Pay, which Executive has not earned
and to which Executive is not otherwise entitled, an amount equal to Executive’s annual Base
Salary in effect as of the Date of Termination multiplied by the factor 2.99. Separation
Pay will be made to the Executive in weekly payments for eighteen months. The first payment
will commence one week following the sixth month anniversary of the Executive’s Date of
Termination and shall include a lump sum equal to the amount that Executive would have
received had payment commenced upon the Date of Termination.

     (b) If Executive (or any individual receiving group health Plan benefits through
Executive) is eligible under applicable law to continue participation in Employer’s group
health Plan following the Date of Termination and elects to continue these benefits,
Employer will, for a period of up to eighteen (18) months commencing as of the Date of
Termination, continue to pay Employer’s share of the cost of these benefits as if Executive
remained continuously employed with Employer throughout such period but only while Executive
or such other individual continues to pay the balance of such cost and the Executive or the
person who elected continuation coverage is not eligible for coverage under any other
employer’s group health plan. In the alternative, Employer may elect, in its discretion, to
pay to Executive on or about the Date of Termination a lump sum calculated to represent
Employer’s share of the cost of these benefits.

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     (c) Employer will, for a period of at least one (1) year commencing as of the Date of
Termination, pay directly or reimburse Executive for all reasonable expenses of a reputable
outplacement organization selected by Executive, but not to exceed twenty-five thousand
dollars [$25,000.00] in the aggregate.

     (d) Employer will pay Executive cash equal to the greater of lease costs and expenses
under the Executive Automobile Program for one year or a lump sum payment of Fifteen
Thousand Dollars ($15,000.00), such payment to be made in a lump sum on the date the Release
becomes irrevocable.

     (e) Employer will pay to Executive any unpaid management incentive bonus that Executive
had a right to receive on the last day of the fiscal year prior to his Date of Termination;
payment shall be made in accordance with the terms of the Plan.

     6.4 Vesting of Equity Grants. From and after the date on which Executive shall have reached
the age of 59 1/2, and provided that Executive gives Employer a written Notice of Termination at
least six (6) months in advance of the applicable Date of Termination and thereafter retires from
his employment with Employer on a Date of Termination that is consistent with such notice, then
effective as of that Date of Termination all unvested stock options and restricted stock granted to
Executive by Employer before that Date of Termination will automatically become fully vested and
all restrictions on the exercise of such options or transfers of such stock (as applicable) will
automatically lapse; provided, however, that the six (6) month notice requirement stated in this
Section 6.4 shall not apply, and Executive shall nevertheless be entitled to the benefits stated in
this Section 6.4, in the event of Executive’s termination with Employer due to his involuntary
termination by Employer Without Cause, his resignation for Good Reason, or due to his Disability,
which term (“Disability”) shall have the meaning set forth in Section 1.8 of this Agreement,
including, for purposes of this Section 6.4 only, an inability of Executive to perform the
essential functions of Executive’s position (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 the physical or mental illness,
disease, or bodily injury of Executive’s spouse or child; provided further, however, that the
determination of the existence of a disability will be made by certification of a qualified medical
doctor selected by Employer and approved by Executive (or, in the event of the Executive’s
incapacity to designate a doctor, then Executive’s legal representative), which approval shall not
be unreasonably withheld.

     6.5 Exercise Date for Stock Options.

     (a) The exercise period for any stock options granted to Executive before August 24,
2006 that have not expired by their terms before that Date of Termination will be
automatically extended, but not beyond their original fixed term until the later of: (i)
the last day of the calendar year in which the option period would otherwise have expired if
it had not been extended, or (ii) a date two and one-half months after the option period
would otherwise have expired due to Executive’s retirement, with all rights and privileges
set forth under Employer’s Equity Incentive Plan.

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     (b) The exercise period for stock options granted to Executive after August 24,
2006 will continue until the end of their original fixed term with all the rights and
privileges set forth under the Employer’s Equity Incentive Plan.

     6.6 No Additional Pay/Benefits. Except as specifically set forth above and except as
provided in Article 7, no post-termination payments or benefits will be provided to Executive
following the Date of Termination of Executive’s employment, except as otherwise provided under any
Plan in which Executive is a participant. No 401(k) contributions or contributions to any other
Plan will be paid by Employer based on post-termination Separation Pay. Further, Executive will
not be entitled to an incentive award under the Employer’s incentive Plans or any other bonus for
any fiscal year, or part thereof, during which post-termination Separation Pay is paid.

     6.7 No Mitigation. 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.

ARTICLE 7

CHANGE IN CONTROL

     7.1 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 applicable regulations.

     (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 pursuant to 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 the ownership.

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

     (i) Any person or group of persons attains Beneficial Ownership of thirty per
cent (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 a period of less
than two (2) years by directors not nominated and approved by the Board; or

     (iii) the stockholders of Employer approve a plan of liquidation of Employer, or
an agreement to merge or consolidate with or into, or to sell or otherwise dispose of
all or substantially all of Employer’s assets to, another corporation, entity or
person in which less than 50% of the total voting power is owned, directly or
indirectly, by Employer; provided, however, that this provision 7.1(c)(iii) shall not
be deemed to apply, and no Change in Control shall be deemed to occur, in the event
of a conversion

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of Employer from being a publicly-traded company to a private company through
efforts led by or coordinated with a management group of Employer in which Executive
actively and voluntarily participates other than at the request or behest of
Employer’s Board of Directors.

     (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 7.1 have
occurred; or (ii) directors in office for a period of more than two (2) years; or (iii)
directors nominated and approved by a majority of the Continuing Directors.

     (e) “Change in Control Termination” will mean a Change in Control of Employer has
occurred and the Executive’s employment is terminated by Executive or Employer for any
reason or no reason prior to the two year anniversary of the Change in Control.

     7.2 Benefits Upon a Change in Control Termination. If a Change in Control Termination
occurs with respect to Executive, Employer shall provide Executive advance written notice of the
Date of Termination as provided in Section 5.1, and Section 6.2 shall apply until the date of the
Change in Control Termination. Upon the Change in Control Termination, Executive will be entitled
to the benefits described below; provided, however, that to the extent Executive has already
received the same type of benefits under this Agreement or otherwise, Executive’s benefits under
this Section 7.2 will be offset by these other benefits to the extent necessary to prevent
duplication of benefits under this Agreement; and provided further, that Executive executes the
Release Agreement in substantially the form attached as Exhibit C to this Agreement and consistent
with this Section 7.2.

     (a) an amount equal to Executive’s annual Base Salary in effect as of the Date of
Termination multiplied by the factor 2.99 as Change in Control Separation Pay, which Change
in Control Separation Pay will be made to the Executive in weekly payments equal to the
amount of the Executive’s weekly base salary for a period of eighteen months. The first
payment will commence one week following the sixth month anniversary of the Executive’s Date
of Termination and shall include a lump sum equal to the amount that Executive would have
received had payment commenced upon his Date of Termination;

     (b) an amount equal to Executive’s full, un-prorated target incentive that Executive
may otherwise have been entitled under the annual management incentive plan in effect as of
the Date of Termination, calculated as provided under said plan, multiplied by the factor of
2.99, which amount shall be payable at the later of the time provided for under the Plan;

     (c) If Executive (or any individual receiving group health plan benefits through
Executive) is eligible under applicable law to continue participation in Employer’s group
health plan following the Date of Termination elects to continue these benefits, Employer
will, for a period of up to eighteen (18) months commencing as of the Date of Termination,
continue to pay Employer’s share of the cost of these benefits as if Executive remained
continuously employed with Employer throughout such period but only while Executive or such
other individual continues to pay the balance of such cost and the Executive or the person
who elected continuation coverage is not eligible for coverage under any other employer’s
group health plan. In the alternative, Employer may elect, in its discretion, to pay to
Executive on or

12

 

about the Date of Termination a lump sum calculated to represent Employer’s share of
the cost of these benefits;

     (d) for a period of at least one (1) year commencing as of the Date of Termination, by
direct payment to providers or by reimbursement to Executive, all reasonable expenses of a
reputable outplacement organization selected by Executive, but not to exceed twenty-five
thousand dollars [$25,000.00] in the aggregate;

     (e) a lump sum payment on the date the Release becomes irrevocable equal to the value
of the fringe benefits made available in accordance with 3.2(i) for an eighteen (18) month
period following the Date of Termination;

     (f) a lump sum payment on the date the Release becomes irrevocable, that is necessary
to acquire for, and obtain full title issued in the name of, Executive the personal
automobile leased by Employer for Executive under its Executive Automobile Program;

     (g) financial planning and tax preparation expenses, not to exceed five thousand
dollars ($5,000.00) per annum, or such greater amount as determined from time to time by the
Employer’s Board, from the Date of Termination payable for the eighteen (18) months
following the Date of Termination; and

     (h) in accordance with the terms of the applicable Plan, any management incentive bonus
that Executive has a right to receive on the last day of the fiscal year prior to his Date
of Termination.

     Executive will not be required to mitigate Employer’s payment obligations under this
Article 7 by making any efforts to secure other employment, and Executive’s commencement of
employment with another employer will not reduce the obligations of Employer pursuant to
this Article 7.

     7.3 Acceleration of Incentives. Upon the occurrence of a Change of Control, and
without regard to the Executive’s employment status, the following shall occur, without regard to
any contrary determination by Employer’s Board of Directors or a majority of the Continuing
Directors upon occurrence of a Change of Control, with respect to any and all economic incentives,
including without limitation stock options and awards of restricted stock, (the “Incentives”)
granted under the Equity Incentive Plan that are owned by Executive as of the date of the Change of
Control:

     (a) The restrictions set forth in the Equity Incentive Plan on all shares of restricted
stock awards will lapse immediately as of the date of the Change of Control;

     (b) All outstanding options and stock appreciation rights will become exercisable
immediately as of the date of the Change of Control; and

     (c) All performance shares will be deemed to be met and payment made immediately as of
the date of the Change of Control.

13

 

     7.4 Limitation on Change in Control Payments.

     (a) Notwithstanding any provision contained in this Agreement to the contrary, if any
amount or benefit to be paid or provided under this Article 7, 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 Employer
shall make a Tax Gross Up Payment to or on behalf of the Executive. For purposes of this
Agreement, “Tax Gross Up Payment” shall mean a payment to or on behalf of Executive which
shall be sufficient to pay, in full, (a) any excise tax imposed under Section 4999 of the
Code on any amount or benefit to be paid or provided under this Article 7; and (b) any
federal, state and local income tax, any social security and other employment tax, and any
additional excise tax under Section 4999 of the Code on the amount of the excise tax payment
described in clause (a) of this paragraph 7.4, and the aggregate amount of additional tax
payments described in this clause (b); but, (c) excluding any interest or penalties assessed
by the Internal Revenue Service on Executive which are attributable to Executive’s willful
misconduct or negligence.

     (b) If requested by Executive or Employer, the determination of whether any Tax Gross
Up Payment is required pursuant to the preceding paragraph 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 Change in Control Separation Pay to the
value of any personal services rendered following the Change in Control and the value of any
non-competition agreement or similar agreements to the extent that such items reduce the
amount of the parachute payment.

     7.5 No Additional Pay/Benefits. Except as specifically set forth in this Article 7,
no post-termination payments or benefits will be provided to Executive with respect to a Change in
Control Termination following the Date of Termination of Executive’s employment, except as
otherwise provided under any Plan in which Executive is a participant. No 401(k) contributions or
contributions to any other Plan will be paid by Employer based on post-termination Change in
Control Separation Pay. Further, except as otherwise specifically provided under Agreement,
Executive will not be entitled to an incentive award under the Employer’s incentive Plans or any
other bonus for any fiscal year, or part thereof, during which post-termination Change in Control
Separation Pay is paid.

ARTICLE 8

PROTECTION OF EMPLOYER

     8.1 Confidential Information.

     (a) “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

14

 

to 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 Employer has a
reasonable basis to consider as confidential will be Confidential Information, whether or
not marked as such, 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.

     (b) Executive will not, during or after any termination of Executive’s employment under
this Agreement, (i) directly or indirectly use Confidential Information for Executive’s own
benefit; or (ii) 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 properly authorized 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, 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.

     (c) 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.

     (d) The obligations contained in this Section 8.1 will survive for as long as Employer
in its sole judgment considers the information to be Confidential Information. The
obligations under this Section 8.1 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.

     8.2 Non-Competition. While employed by Employer and for a period of eighteen (18)
months following any Date of Termination under this Agreement, Executive will not, directly or
indirectly, alone or as an officer, director, shareholder, partner, member, employee, independent
contractor, 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 is
then conducting its business; Executive acknowledges that Employer presently conducts its
business generally throughout the United States, or (ii) with any part of Employer’s
contemplated business with respect to which Executive has had access to Confidential
Information governed by Section 8.1 [for purposes of this paragraph, “ownership interest”
will

15

 

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) for the purpose of taking business away from Employer, call upon, solicit or
attempt to take away any customers, accounts or prospective customers 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 employee of Employer to violate any term of his or
her employment contract with Employer, or to directly or indirectly hire or solicit, induce,
recruit or encourage any of Employer’s employees for the purpose of hiring them or inducing
them to leave their employment with Employer.

     The restrictions set forth in this Section 8.2 will survive any termination of this
Agreement or other termination of Executive’s employment with Employer, for whatever reason,
and will remain effective and enforceable for the full eighteen (18) month period; provided,
however, that such 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.

     8.3 Stipulated Reasonableness. Executive acknowledges and agrees that the nature of
Executive’s position, the period of time necessary to fill Executive’s position in the event
Executive’s employment is terminated, the period of time necessary to allow customers of Employer’s
business to become familiar with Executive’s replacement, and the period of time necessary to cause
an end to the identification between Executive and Employer in the minds of Employer’s customers
and vendors, requires that the eighteen (18) month noncompetition and nonsolicitation period be
imposed for the protection of Employer’s investment in its business, and that the period is
reasonable and justified.

     8.4 Protection of Reputation. Executive will, both during and after any 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.

     8.5 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 8, 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 8, Executive
waives the claim or defense that Employer has an adequate remedy at law and Executive will not
assert in any such action or proceeding the claim or defense that Employer has an adequate remedy
at law. Employer will be entitled, in addition to all other remedies or damages at law or in
equity, to temporary and permanent

16

 

injunctions and orders to restrain any violations of this Article 8 by Executive and all
persons or entities acting for or with Executive.

     8.6 Survival. The provisions of Article 8 of this Agreement will survive the
termination of this Agreement or the termination of Executive’s employment with Employer, and will
remain in full force and affect following termination.

     8.7 Continuation. Executive and Employer acknowledge that certain terms and
conditions of this Article 8 restate and reassert terms and conditions previously agreed to between
them as a condition for Executive’s initial and continuing employment with Employer. To the extent
that any portion of this Article 8 may be deemed invalid for a failure of Employer to provide new
consideration to Executive, then that portion of this Article 8 will be deemed to have been
supported by those agreements between Executive and Employer heretofore entered into as a condition
for his initial and continuing employment with Employer.

     8.8 Forfeiture of Benefits for Violations of Article 8. Executive acknowledges and
agrees that his violation of any provisions of Sections 8.1(b), 8.1(c), 8.2, 8.4, or 8.7 above
shall result in the immediate forfeiture of any unpaid benefit under this Agreement. In addition,
Executive acknowledges that if he violates Sections 8.1(b), 8.1(c), 8.2, 8.4 or 8.7, he shall repay
to the Company any amounts paid to him following his Date of Termination under this Agreement.

     8.9 Severability and Blue Penciling. To the extent any provision of this Article 8
shall be determined to be invalid or unenforceable as written in any jurisdiction, the validity and
enforceability of the remainder of such provision and of this Agreement shall be unaffected. In
furtherance of and not in limitation of the foregoing, Executive expressly agrees that should the
duration of, geographical extent of, or business activities covered by, any provision of this
Article 8 be in excess of that which is valid or enforceable under applicable law in a given
jurisdiction, then such provision, as to such jurisdiction only, shall be construed to cover only
that duration, extent or activities that may validly or enforceably be covered. Executive
acknowledges the uncertainty of the law in this respect and expressly stipulates that this Article
8 shall be construed in a manner that renders its provisions valid and enforceable to the maximum
extent (not exceeding its express terms) possible under applicable law in each applicable
jurisdiction.

ARTICLE 9

GENERAL PROVISIONS

     9.1 Successors and Assigns; Beneficiary.

     (a) This Agreement will be binding upon and inure to the benefit of any Successor of
Employer, and any Successor will absolutely and unconditionally assume all of Employer’s
obligations hereunder this Agreement. Employer will use its best efforts to seek to have
any Successor, by agreement in form and substance satisfactory to Executive, assent to the
fulfillment by Employer of its 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 with respect to
Executive.

17

 

Notwithstanding the foregoing, nothing in this Section 9.1 shall require that a Good
Reason exist as a condition for termination by Executive during the two-year period
immediately following a Change of Control.

     (b) This Agreement and all rights of Executive hereunder this Agreement will inure to
the benefit of and be enforceable by Executive’s personal or legal representatives,
executors, administrators, successors, heirs, distributes, devisees and legatees and any
assignees permitted hereunder this Agreement. If Executive dies while any amounts would
still be payable to Executive hereunder this Agreement 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.

     (c) 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 7.1(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.

     9.2 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 under this Agreement, or arising on account of a default of
the other party in its performance of any of the other party’s obligations under this Agreement,
then the parties will bear their own expenses and attorneys fees.

     9.3 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 this Agreement, designate a changed
address. Any notice hereunder this Agreement 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.

     9.4 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.

     9.5 Governing Law. The validity, interpretation, construction, performance,
enforcement and remedies of or relating to this Agreement, and the rights and obligations of the
parties under this Agreement, 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.

     9.6 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

18

 

Agreement will be prohibited by or invalid under applicable law, such provision is ineffective
only to the extent of such prohibition or invalidity without invalidating the remainder of such
provision or the remaining provisions of this Agreement. To the extent that any provision of this
Agreement shall be determined to be invalid or unenforceable, the validity and enforceability of
the remainder of such provision and of this Agreement shall be unaffected.

     9.7 Waiver. No failure on the part of either party to exercise, and no delay in
exercising, any right or remedy hereunder this Agreement will operate as a waiver thereof, nor will
any single or partial exercise of any right or remedy under this Agreement 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.

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

     9.9 Entire Agreement. Except as otherwise specifically provided herein, this
Agreement constitutes the entire agreement and understanding between the parties in reference to
all the matters agreed upon herein, and replaces in full all prior employment agreements,
understandings or undertakings of the parties related to the employment relationship, and any and
all such prior agreements or under this understandings are hereby rescinded and voided by mutual
agreement including, without limitation, that Executive Employment Agreement effective as of August
31, 2004, as amended by that First Amendment to Executive Employment Agreement executed October 3,
2006, and that Change of Control Agreement dated as of November 12, 2002; provided, however, that
the Restricted Stock Agreement referred to in Article 4 [and all other Plans] is and shall remain
in full force and effect.

     9.10 Survival. 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, the provisions relating to separation compensation and effects of a Change in Control);
or (b) beyond the termination of this Agreement (including, without limitation the provisions in
Article 8 relating to confidential information, non-competition and non-solicitation), will
continue in full force and effect notwithstanding Executive’s termination of employment under this
Agreement or the termination of this Agreement, respectively.

     9.11 Section 409A. The Company shall, with the consent of Executive, timely amend
this Agreement as many times as may be required so that adverse tax consequences to the Executive
under Section 409A, including the imposition of any excise tax and interest penalties are avoided.
If the Employer fails to timely amend the Agreement to comply with Section 409A, or if Executive
has timely provided his consent to any such amendment but still incurs an adverse tax consequence
under Section 409A, the Employer shall make a 409A Tax Gross Up Payment to Executive. For purposes
of this Section 9.1l, it is the intent of the Parties that the Agreement and any related Plan or
arrangement be amended only to the extent required to comply with 409A and that the intended
benefits to Executive, including the amount, form and timing of such benefits as specified in this
Agreement, will be preserved to the greatest extent possible. For purposes of this Agreement,
“409A Tax Gross Up Payment” shall mean a payment to or on behalf of Executive which shall be
sufficient to pay, in full, (a) any excise tax imposed under Section 409A of the Code on any amount
or benefit to be paid or provided under this Agreement, (b) any reasonable legal, accounting or tax
preparation fees incurred

19

 

by Executive as a result of any adverse tax consequences incurred by Executive under Section
409A, and (c) any federal, state and local income tax, any social security and other employment
tax, as a result of the payments described under (a) and (b) and the aggregate amount of additional
tax payments described in this clause (c) but, (d) excluding any interest or penalties assessed by
the Internal Revenue Service on Executive which are attributable to Executive’s willful misconduct
or negligence. Notwithstanding the above, no 409A Gross Up Payment will be made if the Executive
fails to timely consent to the amendment of this Agreement.

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

     9.13 Remedies. No civil action may be commenced for any claim or dispute relating to
this Agreement or arising out of Executive’s employment with Employer unless the parties, within
thirty (30) days after the date of either party’s written request, attempt in good faith to
promptly resolve the claim or dispute by negotiation at agreed time(s) and location(s). All
negotiations are confidential and will be treated as settlement negotiations. Notwithstanding the
foregoing, either party may seek equitable relief prior to such good faith efforts to preserve the
status quo pending the completion of such efforts.

     9.14 Counterparts. This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute one and the same
instrument.

20

 

     IN WITNESS WHEREOF, the parties have caused this Executive Employment Agreement to be executed
and delivered as of the Effective Date.

	 	 	 	 	 
	EMPLOYER:	 	G&K SERVICES, INC.
	 
	 	 	 	 
	 

	 	By
	 	/s/ Wayne Fortun
	 

	 	 	 	Wayne Fortun
	 

	 	 	 	Chairman, Compensation Committee
	 

	 	 	 	Board of Directors
	 
	 	 	 	 
	 	 	G&K SERVICES, INC.
	 
	 	 	 	 
	 

	 	By
	 	/s/ Jacqueline T. Punch
	 

	 	 	 	Jacqueline T. Punch
	 

	 	 	 	Senior Vice President,
	 

	 	 	 	Human Resources
	Employer’s Address:

	 	 	 	5995 Opus Parkway
	 

	 	 	 	Suite 500
	 

	 	 	 	Minnetonka, MN 55343
	 
	 	 	 	 
	EXECUTIVE:	 	/s/ Richard L. Marcantonio
	 	 	Richard L. Marcantonio
	Executive’s Address:
	 	 	 	 

21

 

Exhibit List

	 	 	 
	Exhibit A

	 	Restricted Stock Agreement
	 
	 	 
	Exhibit B

	 	Release Agreement
	 
	 	 
	Exhibit C

	 	Release Agreement
	 
	 	 
	Exhibit D

	 	Promissory Note
	 
	 	 
	Exhibit E

	 	Stock Pledge Agreementexv10w1

 

EXECUTIVE LIFE INSURANCE AGREEMENT

     This AGREEMENT is made as of the 28th day of December, 2006, by and between
TERRENCE G. LINNERT (the “Executive”) and GOODRICH CORPORATION (the “Company”), a New York
corporation (collectively, the “Parties”).

RECITALS

     WHEREAS, the Parties have entered into a Split Dollar Insurance Agreement dated March 1, 1998
pursuant to which the Company purchased a certain life insurance policy insuring the life of the
Executive attached hereto as Exhibit A (the “Policy”) and endorsed to the Executive’s
designated beneficiary or beneficiaries a right to receive a portion of the death benefits payable
thereunder (the “Split Dollar Program”);

     WHEREAS, the Parties have determined that the Split Dollar Program no longer meets the
business purposes of the Company; and

     WHEREAS, the Parties desire to terminate the Split Dollar Program, cancel the endorsement and
enter into this Agreement providing for the transfer of all rights of ownership of the Policy to
the Executive and the one-time lump sum cash payment by the Company to the insurer in the amount
needed to sustain the Policy for the anticipated lifetime of the Executive at a cost of $300 per
year for the Executive’s lifetime with a death benefit equal to the Executive’s projected base
salary at age 65 multiplied by two.

     NOW, THEREFORE, in consideration of the promises and other valuable consideration between the
Parties it is agreed as follows:

ARTICLE I

TERMINATION OF SPLIT DOLLAR PROGRAM

     The Split Dollar Program shall be terminated and all rights, benefits and obligations derived
from such instruments or any other documents (including any related correspondence) by or of the
Executive shall be cancelled. The Company shall become the sole owner and beneficiary of the
Policy and exercise, in its sole discretion, all rights of ownership granted to the policyholder by
the terms of the Policy. Each Party agrees to take such further action, do such other things and
execute such other written instruments as shall be necessary and proper to carry out the
termination of the Split Dollar Program and transfer of all rights of ownership of the Policy to
the Executive. The Executive agrees that the Company’s obligations pursuant to this Agreement
shall not become effective unless and until all such actions to terminate the Split Dollar Program
are complete. The Company and the Executive agree that the termination of the Split Dollar Program
and the transfer of the ownership of the Policy in accordance with Article II shall occur
simultaneously.

 

 

ARTICLE II

COMPANY OBLIGATIONS

     2.1 Subject to the terms and conditions of this Agreement, the Company shall transfer all
rights of ownership of the Policy to the Executive.

     2.2 Subject to the terms and conditions of this Agreement, the Company shall pay directly to
the insurer a one-time lump sum cash payment in the amount needed to sustain the Policy for the
anticipated life of the Executive with a death benefit equal to the level of benefit provided in
Section 2.3. The Executive shall be eligible to enroll in the Company’s group term life insurance
program, subject to the terms and conditions of such program.

     2.3 The Policy and the one-time lump sum payment are based on projections by the Company so
that, after assuming the Executive’s base salary compounds by 3.5% growth per annum until age 65,
the Executive will hold a life insurance policy with a death benefit equal to the Executive’s
projected base salary at age 65 multiplied by two, which death benefit amount equals $1,129,000.00.
The projections prepared by the Company are final, and may not be challenged by the Executive as
of the time this Agreement is executed or at any time in the future.

     2.4 The Company shall increase the Executive’s compensation for services rendered by an amount
determined by the Company which, net of its federal, state and local income tax effects, is
approximately sufficient to enable the Executive to pay any federal, state and local income taxes
payable by the Executive because of taxable income resulting from this Agreement (the “Tax Gross
Up”).

ARTICLE III

EXECUTIVE’S RIGHTS AND OBLIGATIONS

     The Executive shall become the sole owner of the Policy and may exercise all rights of
ownership granted to the policyholder by the terms of the Policy, including but not limited to the
right to borrow against the Policy, the right to assign his interest in the Policy, the right to
change the beneficiary(ies) of the Policy, the right to exercise settlement options and the right
to surrender or cancel the Policy. The Executive acknowledges that any exercise of any such
ownership rights with respect to the Policy shall not increase in any way the obligations of the
Company pursuant to this Agreement.

ARTICLE IV

AMENDMENT OR TERMINATION

     This Agreement shall not be modified, amended or terminated except by a written agreement of
the Company and the Executive. This Agreement and any amendment hereto shall inure to the benefit
of and shall be binding upon the heirs, personal representatives, successors and assigns of each
party to this Agreement.

 - 2 - 

 

ARTICLE V

FURTHER PERFORMANCE

     5.1 Each of the Parties, for itself and its heirs, beneficiaries, personal representatives,
trustees, successors and assigns, agrees to take such further action, do such other things, and
execute such other writings as shall be necessary and proper to carry out the terms and provisions
of this Agreement.

     5.2 The Executive shall provide, or shall take action to cause the issuing insurance company
or other appropriate party to provide, information as may be reasonably requested by the Company or
its designated agent with respect to the Policy which is necessary or desirable in order to permit
the Company or its designated agent to comply with any financial reporting or disclosure
obligations or reporting, disclosure or other obligations under applicable law.

ARTICLE VI

MISCELLANEOUS

     6.1 This Agreement shall be personal to the Executive and shall not be construed to grant or
imply any right of any employee or other executive of the Company to enter into any similar
arrangement.

     6.2 All notices required to be given shall be in writing and sent by regular, overnight,
certified or registered mail to the last known address of the Party. Notice shall be deemed given
within five business days after the notice is provided to the delivery service for service.

     6.3 This Agreement shall be subject to and construed in accordance with the laws of North
Carolina; provided, that the conflicts of laws principles shall not apply to the extent that they
would operate to apply the laws of another State or Commonwealth.

     IN WITNESS WHEREOF, the Parties have executed this Executive Life Insurance Agreement as of
the day and year first written above.

	 	 	 	 	 	 	 
	EXECUTIVE	 	GOODRICH CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	TERRENCE G. LINNERT
	 	 	 	 	 	 
	 

	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 

 - 3 - 

 

Exhibit A

LIFE INSURANCE POLICY

	 	 	 	 	 
	Insured	 	Carrier	 	Policy Number
	Terrence G. Linnert
	 	Principal Life Insurance Company	 	4499823

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