Document:

usdc_8k-ex1005.htm

    

       

      Exhibit 10.5

      
 

      STOCK PLEDGE
AGREEMENT

       

      In
consideration of NEWSTAR FINANCIAL, INC. (the “Lender”) selling certain assets
to USDC Portsmouth, Inc., a California corporation (“Borrower”), pursuant to
Secured Party Sale Agreement of even date between the Lender, the Borrower and
the undersigned, the Lender’s acceptance of the Borrower’s note in partial
payment of the purchase price, and to secure the undersigned’s Guaranty of even
date in favor of the Lender with respect to the obligations of the Borrower to
the Lender (the “Guaranty”), evidenced by that certain Time Note of even date
(the “Time Note”) in the principal amount of $975,000, U.S. Dry Cleaning
Corporation (the “Pledgor”), as collateral security for the performance of all
obligations hereunder and the payment of the indebtedness and the performance of
all other obligations relating to the Guaranty, the security documents, and
other documents relating thereto, and all amendments and replacements thereof
(collectively hereinafter called the “Obligations”), hereby deposits with the
Lender and pledges, collaterally assigns, delivers, and grants a security
interest in the following property:

       

      100
shares of common stock (par value $0.01 of USDC PORTSMOUTH, INC., a California
corporation, evidenced by certificate number No. 1,

      

      together
with any shares or fractional shares of stock issued or to be issued as a result
of a stock dividend or stock split-up on or with respect to the above-described
property, any additional shares which may be delivered and pledged to the Lender
as hereinafter provided, and all dividends, distributions, and other proceeds of
all of the foregoing, in each case whether now existing or hereafter arising
(all of the foregoing is hereinafter called the “Collateral”).

       

      The
Pledgor hereby represents and warrants that (a) the Pledgor is the sole owner of
the Collateral free from any adverse lien or security interest (other than the
pledge of the Collateral in favor of Setal 2, LLC (with it successors and
assigns, the “First Lien Lender”) to secure certain obligations of Pledgor under
that certain Convertible Note, dated March 12, 2008, in the original principal
amount of $1,725,000 (as amended from time to time, the “First Lien Note”), (b)
the Collateral is freely transferable by the Pledgor without notice to or
consent by any other person, corporation, or other entity (other than the First
Lien Lender until the payment in full of the First Lien Note), (c) the delivery
by the Pledgor of the Collateral will create a valid and perfected security
interest therein in the Lender, (d) there are no restrictions on the
transferability of the Collateral to the Lender by the Pledgor or with respect
to the foreclosure and transfer thereof by the Lender (other than in favor of
the First Lien Lender until the payment in full of the First Lien Note), (e) the
Collateral is registered in the Pledgor’s name on the books of the Borrower, (f)
the Pledgor will warrant and defend title to the Collateral against the claims
and demands of any person, firm, corporation, trust, partnership, or other
entity (other than the First Lien Lender until the payment in full of the First
Lien Note), (g) the Collateral constitutes all of the presently issued and
outstanding shares of Borrower owned by the Pledgor, and (h) the Pledgor owns
100% of the voting stock of Borrower and is the controlling stockholder of
Borrower.  The Pledgor agrees that the Collateral will not be sold,
assigned, transferred (other than in connection with the existing pledge in
favor of the First Lien Lender until the payment in full of the First Lien
Note), on further pledged without the prior written consent of the
Lender.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Until
such time as the Obligations have been paid in full, the Pledgor, except with
the written consent of the Lender which will not be unreasonably withheld, as
the controlling stockholder of Borrower, shall not suffer, cause, or permit any
other or further shares of Borrower to be issued to the Pledgor unless such
shares are pledged with the Lender as additional Collateral for the obligations,
nor shall the Pledgor suffer, cause, or permit the Collateral to be purchased or
retired by Borrower, nor shall the Pledgor permit Borrower to be merged,
consolidated, terminated, liquidated or dissolved.  The Pledgor agrees
that upon any sale or transfer of the Obligations, the Lender may deliver to the
purchaser or transferee the Collateral, which purchaser or transferee shall
thereupon become vested with all powers and rights given to the Lender hereunder
in respect thereto and the Lender shall be thereafter forever relieved and fully
discharged from any liability or responsibility in connection
therewith.  To the maximum extent permitted by law, the Lender shall
not be liable with respect to the Collateral except for the safekeeping
thereof.

       

      Prior to
any non-payment under the Obligations (beyond any notice and cure period) the
Pledgor shall have all rights and powers pertaining to the Collateral, subject
to the terms of this Agreement.  Upon the non-payment of any of the
Obligations thereunder as and when the same shall become due and payable (beyond
any notice and cure period), or at any time or from time to time thereafter
during the continuance of such default, the following may occur:

       

      1.           The
Lender may apply to the Obligations all or any part of the Collateral and the
proceeds thereof and may sell or otherwise transfer any or all of the Collateral
in such manner and for such price as the Lender may determine (subject to
applicable law) and out of the proceeds of such sale retain an amount sufficient
to pay the balance due and all other sums required under the terms of the
Obligations together with the expenses of the sale and shall pay any balance of
such proceeds to Pledgor.

       

      2.           The
Lender shall have all the rights and remedies of a secured party afforded by the
Uniform Commercial Code as from time to time in effect in the Commonwealth of
Massachusetts or afforded by other applicable law.  The requirement of
reasonable notice with respect to any public sale or disposition of the
Collateral shall be met if such notice is mailed, postage prepaid, to the
Pledgor at the address set forth above at least ten (10) days before the time of
the sale or other disposition.  The expenses of retaking, holding,
preparing for sale, selling, or the like shall include the Lender’s reasonable
attorneys fees and other costs and legal expenses and shall be part of the
Obligations.

       

      3.           The
Collateral, or any part thereof, may be sold, together or in parcels, at
brokers’ board, or at public or private sale, in Boston, Massachusetts or
elsewhere, in accordance with applicable law; and the Lender or its assigns may
at any such brokers’ board, or at public sale, become the purchaser of all or
any portion of the Collateral, discharged from all rights or redemption; and the
net proceeds of sale, after deducting all costs and expenses thereof and
attorneys’ fees in connection therewith, may be applied to the payment of the
Obligations, in such order as the Lender shall deem proper, accounting to the
Pledgor for the balance not so applied.  Nothing herein contained
shall obligate the Lender to resort to the Collateral before proceeding against
the Pledgor or the Pledgor’s estate for non-payment of sums due, or prevent it
from prosecuting both remedies at the same time, to the end that all Obligations
hereby secured may be paid in full.

       

      
        
           

        

        
          - 2
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      4.           The
Lender shall have authority to have stocks and registered bonds and other
securities included in the Collateral transferred into its own name as pledgee
or otherwise or into the name of its nominee and to collect the income
therefrom, and at its option to hold such income as security for the Obligations
or apply it on the principal and/or the accrued interest, if any, due on the
Obligations.

       

      5.           The
Pledgor agrees that whether or not registered in the Lender’s name as pledgee,
the Lender shall be under no duty to collect, exercise any rights pertaining to,
fix or preserve the liability of any party under, protect, preserve, vote upon
or otherwise deal with the Collateral pledged hereunder or any income thereon,
except that the Lender shall use due care with respect to the safekeeping
thereof while in the Lender’s possession, but nothing herein contained shall
deprive the Lender of exercising such rights at the Lender’s
election.  No delay or omission on the Lender’s part in exercising any
right hereunder or under any instrument evidencing an Obligation secured hereby
shall operate as a waiver of such right or of any other right hereunder or under
any such evidence of indebtedness.  A waiver on any one occasion shall
not be construed as a bar to or waiver or any such right and/or remedy on any
future occasion.

       

      The
Pledgor agrees to make, execute and deliver, upon request, any further
assignments, powers of attorney, assurances, acquittances or other documents
which the Lender may reasonably request to enable the Lender to transfer or
realize upon said property or to secure to the Lender more fully the full
benefit hereof and hereby appoints the Lender, its successors and assigns, its
attorney-in-fact, with full power of substitution, for the purpose of carrying
out any provisions herein and taking any action with respect to said property as
said attorney-in-fact may determine after the occurrence of a default (after any
applicable grace or notice period) to accomplish the purposes hereof (which
appointment as attorney-in-fact is irrevocable and coupled with an
interest).

       

      The
rights of the Pledgor hereunder are subject to an Intercreditor Agreement of
even date (the “Intercreditor Agreement”) among the Lender, the Borrower, the
Pledgor and the First Lien Lender.  Notwithstanding any other
provision hereof to the contrary, the Pledgor shall not be required to deliver
or grant control of any Collateral to Lender hereunder, prior to the payment in
full of the First Lien Note, if the Pledgor is also required to deliver or grant
control of such Collateral to the First Lien Lender or any successor thereto or
assignee thereof and the First Lien Lender and any such successor thereto or
assignee thereof has agreed, pursuant to the terms of the Intercreditor
Agreement, to hold the Collateral for the benefit of the Lender, subject to the
terms of the Intercreditor Agreement.

       

      
        
           

        

        
          - 3
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      IN
WITNESS WHEREOF, the Pledgor has caused this Stock Pledge Agreement to be duly
executed as of the 24th day of
March, 2008.

       

       

       

      
        	 
      	
                US
      DRY CLEANING CORPORATION

                 

                 

              
	 
      	
                By 
      ____________________________________

              
	 
      	
                Name:

              
	 
      	
                Title:

              

      

      

       

       

       

       

       
- 4 -usdc_8k-ex1006.htm

     

    Exhibit 10.6

    
 

    ASSIGNMENT AND ASSUMPTION
AGREEMENT

     

    This
Assignment and Assumption Agreement (this “Agreement”), dated as
of the 21st day of
March, 2008, by and among Zoots Corporation, a Delaware corporation (“Zoots”), Zoots
Holding Corporation, a Delaware corporation (“Holding”), Delivery
LLC, a Delaware limited liability company (“Delivery” and
together with Zoots and Holding, the “Companies,” each of
which may be referred to from time to time herein individually as a “Company”), USDC
Portsmouth, Inc., a California corporation (“Purchaser”) and U.S.
Dry Cleaning Corporation, a Delaware corporation (“Parent”).

     

    W I T N E S S E T
H:

     

    WHEREAS, NewStar Financial,
Inc. (“Seller”), as
administrative agent and successor lender under the Credit Agreement (as
hereinafter defined) has a valid and duly perfected security interest in and
lien on substantially all of the assets of the Companies, to secure all
liabilities, obligations and indebtedness owing to Seller under that certain
Credit and Security Agreement, dated as of April 1, 2005, among Zoots as
borrower, Holding, Delivery and Widmer’s, LLC as guarantors, and Seller (as
successor lender thereunder) (as amended from time to time, the “Credit Agreement”),
and the other agreements, documents and instruments entered into in connection
therewith (collectively, the “Credit
Documents”);

     

    WHEREAS, simultaneously with
the execution and delivery of this Agreement, Seller and Purchaser are entering
into a Secured Party Sale Agreement, dated of even date herewith (the “Sale Agreement”),
providing for the purchase by Purchaser of certain assets of the Companies
pursuant to a private sale in accordance with Section 9-610 of the UCC (the
“Secured Party
Sale”);

     

    WHEREAS, the Companies have
consented to the Secured Party Sale;

     

    WHEREAS, Seller and Purchaser
desire that the transactions contemplated by the Sale Agreement be consummated
as promptly as possible, and, in such regard, have requested the cooperation and
assistance of the Companies in order to consummate those such transactions;
and

     

    WHEREAS, in partial
consideration for Purchaser agreeing to execute and deliver the Sale Agreement,
and to consummate the transactions contemplated therein, and for other good and
valuable consideration, as set forth herein, the Companies desire to execute and
deliver this Agreement;

     

    NOW, THEREFORE, in consideration
of the foregoing and the mutual covenants set forth in this Agreement, and to
induce Purchaser and Seller to execute and deliver the Sale Agreement, and to
consummate the transactions contemplated therein, the parties hereto hereby
agree as follows:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    1.     DEFINITIONS.

     

    Capitalized
terms used but not otherwise defined in this Agreement are used with the
meanings given those terms in the Sale Agreement.  In addition, as
used in this Agreement (including in the preamble and recitals above), the
following terms have the following definitions:

     

    “Action” means any
suit, order, litigation, arbitration, mediation, action or other proceeding
before any Governmental Authority, arbitrator or mediator.

     

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

     

    “Business” means the
retail dry cleaning and laundry business engaged in by the Companies using the
“Portsmouth Network” (and related assets) and the locations covered by the
leases listed on Schedule 4(a) hereto
during the one (1) year period immediately prior to the date
hereof.

    

    “Business Day” means any day (other than a
Saturday or Sunday) on which banks are not required or authorized to close in
The City of New York, New York.

     

    “Code” means the
Internal Revenue Code of 1986, as amended, and any rules or regulations
promulgated thereunder

     

    “Company Material Adverse
Effect” shall mean a material adverse effect on the assets, properties,
financial condition and/or prospects of the Business, taken as a whole, other
than as disclosed on Schedule 1 hereto;
provided, however, that in no
event shall any of the following be or be taken into account in the
determination of whether a Company Material Adverse Effect has occurred: (i) any
change resulting from conditions affecting the retail dry cleaning and laundry
industries or from changes in general business, financial, political, capital
market or economic conditions (including any resulting from any hostilities, war
or military or terrorist attack anywhere in the world); (ii) any change
resulting from the announcement or pendency of the transactions contemplated by
this Agreement or attributable to the fact that Purchaser and its Affiliates are
the prospective owners of the Companies’ assets; (iii) any change resulting from
the compliance by any Company with the terms of, or the taking of any action by
any Company contemplated or permitted by, this Agreement; or (iv) any condition
described in any Schedule to this Agreement; (v) any change in applicable
law.

     

    “Company Transaction
Documents” means, collectively, this Agreement and the agreements,
instruments and documents contemplated herein contemplated therein, or otherwise
incidental hereto, to be executed by any Company.

     

    “Consent” means any
consent, approval, authorization, qualification, waiver or notification of or to
a Governmental Authority or any other person or entity.

     

    “Contract” means any
written or oral contract, agreement, license, commitment, undertaking or
arrangement, whether express or implied, and includes purchase and sale
orders.

     

    
      
         

      

      
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    “Conveyed Assets”
means, collectively, the Assigned Contracts the Purchased Assets (as defined in
and to be acquired pursuant to the Sale Agreement) and the Company Purchased
Assets (as defined below in Section 4(c).

     

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

     

    “ERISA Affiliate”
shall mean any entity which is a member of (1) a controlled group of
corporations (as defined in Section 414(b) of the Code), (2) a group of trades
or businesses under common control (as defined in Section 414(c) of the Code),
or (3) an affiliated service group (as defined under Section 414(m) of the Code
or the regulations under Section 414(o) of the Code), any of which includes or
within the six years preceding the date of this Agreement.

     

    “Governmental
Authority” means any government or any agency, bureau, commission, court,
department, official, political subdivision, tribunal or other instrumentality
of any government, whether federal, state or local, domestic or
foreign.

     

    “Law” means any law
(including, without limitation, principles of common law), statute, code,
regulation, treaty, permit, license, certificate, judgment, order, writ, decree,
award or other decision or requirement of any arbitrator or Governmental
Authority.

     

    “License Agreement”
means a license agreement by and between one or more of the Companies and the
Purchaser, in form and substance satisfactory to the Companies and the
Purchaser, pursuant to which the Companies will grant to the Purchaser those
rights described in Section 9(f) hereof.

     

    “Lien” means any
security interest, mortgage, lien, pledge, adverse claim, interest, charge,
option, pledge, right of first option, right of first refusal, obligation or
other restriction or encumbrance of any kind on title or transfer of any nature
whatsoever.

     

    “Permit” means any
Consent, license, registration, permit, franchise or authorization issued,
granted, given or otherwise made available by or under the authority of any
Governmental Authority or pursuant to any Law.

     

    “Person” means an
individual, a corporation, a partnership, a limited liability company, a trust,
an unincorporated association, a governmental entity or any agency,
instrumentality or political subdivision of a governmental entity, or any other
entity or body.

     

    “Required Consents”
means, collectively, written consents from the counterparties to the contracts
listed on Schedule
4(b), in form and substance reasonably satisfactory to
Purchaser.

     

    “Tax Returns” means
returns, declarations, reports, claims for refund, information returns or other
documents (including any related or supporting schedules, statements or
information) filed or required to be filed in connection with the determination,
assessment or collection of any Taxes of any party or the administration of any
laws, regulations or administrative requirements relating to any
Taxes.

     

    
      
         

      

      
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    “Taxes” shall mean any
and all taxes, fees, levies, duties, tariffs, imposts and other similar charges
of any kind imposed by any governmental authority, including, without
limitation: taxes or other charges on or with respect to income, property,
sales, use, payroll, employment, social security, workers’ compensation,
unemployment compensation or net worth; taxes or other charges in the nature of
excise, withholding, ad valorem, stamp, transfer, value-added or gains taxes;
license, registration and documentation fees; and customs’ duties, tariffs and
similar charges.

     

    “Transaction
Documents” means, collectively, the Sale Agreement, the agreements,
instruments and documents contemplated therein or otherwise incidental thereto,
and the Company Transaction Documents.

     

    “Transactions” means,
collectively, the transactions contemplated in the Transaction
Documents.

     

    “Virginia Property
Taxes” has the meaning set forth in Section 2(m).

     

    “Virginia Property Tax
Liability” has the meaning set forth in Section 2(m).

     

    2.     REPRESENTATIONS
AND WARRANTIES OF THE COMPANIES.

     

    The
Companies hereby represent and warrant, jointly and severally, as of the date
hereof and as of the Closing Date, to Purchaser as follows:

     

    (a)     The
Obligations.  Pursuant to the Credit Agreement, and certain
other documents, instruments and agreements executed pursuant thereto or in
connection therewith, Seller has made loans to, and made other financial
accommodations to or for the benefit of, the Companies.  The repayment
of the liabilities, obligations and indebtedness owing to Seller are secured by
valid, enforceable and fully perfected Liens in favor of Seller against
substantially all of the Companies’ assets, including, without limitation, all
of the Purchased Assets (the “Seller
Liens”).

     

    (b)     Defaults; Right to
Assign.  As a result of continuing defaults by the Companies in
the performance of their obligations and in repayment and performance of the
other liabilities under the Credit Agreement, Seller has the right under Section
9-610 of the UCC, and under the Credit Documents, to sell and transfer to any
person or entity for value in a private sale all of the Companies’ rights in and
to any or all of the personal property and other assets subject to the Seller
Liens.

     

    (c)     Organization;
Authorization.  Each of the Companies is a corporation or
limited liability company, as the case may be, duly organized or formed, as the
case may be, validly existing and in good standing under the laws of the State
of Delaware, and has the requisite corporate or limited liability company power
and authority, as the case may be, to execute and deliver this Agreement and
each other Company Transaction Document to which it is a party and to perform
its obligations hereunder and thereunder.  The execution, delivery and
performance of this Agreement and each other Company Transaction Document have
been duly authorized by all necessary corporate or limited liability company
action, as the case may be, on the part of each relevant
Company.  This Agreement is, and each of the other Company Transaction
Document shall be when executed and delivered by each relevant Company, the
valid and binding obligations of such Company enforceable in accordance with its
terms.

     

    
      
         

      

      
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    (d)     No
Conflict.  Neither the execution and delivery of this Agreement
and the other Company Transaction Documents, nor the consummation of any or all
of the Transactions, will violate the certificate or articles of incorporation,
by-laws, certificate of formation, operating agreement or other governing
documents of any of the Companies; (i) violate, be in conflict with, or
constitute a default under, or other than the Key Landlord Consents or as set
forth on Schedule
4(b), require the consent of any third party to, any material contract or
other agreement to which any of the Companies is a party; (ii) violate any Law
applicable to any of the Companies; or (iii) result in the creation or
imposition of any further Lien on any assets of any Company.

     

    (e)     Brokers;
Agents.  The Companies have retained the services of
Drycleaning Plus, National Commercial Brokers, and/or Matrix Capital Markets
Group, Inc. (collectively, the “Brokers”).  Fees
or commissions owed to the Brokers, if any, will be paid by the
Companies.  The Companies have not dealt with any agent, finder,
broker or other representative in any manner which could result in Purchaser
being liable for any fee or commission in the nature of a finder’s fee or
originator’s fee in connection with the subject matter of this
Agreement.

     

    (f)     Sufficiency of Assets;
Title; Condition. Except as set forth on Schedule 2(f), the
Purchased Assets constitute all of the assets, tangible and intangible, of any
nature whatsoever, necessary to operate the Business in the manner currently and
historically operated by the Companies. The Companies’ liabilities to Seller
under the Credit Agreement are secured by valid and perfected Liens in favor of
Seller against all of the Purchased Assets.  Except as set forth on
Schedule 2(f),
to the knowledge of the Companies, each item of tangible personal property
included in the Purchased Assets and reasonably required for the continued
operation of the Business on a basis consistent with the past practices of the
Business immediately prior to the Closing is in good operating condition or
repair adequate for its present use, reasonable wear and tear and routine or
scheduled maintenance excepted.  Upon transfer of the Company
Purchased Assets, if any, to Purchaser as contemplated herein, Purchaser will
acquire good and marketable title thereto, free and clear of the
Liens.

     

    (g)     Assumed
Contracts.  To the knowledge of the Companies, each Assumed
Contract is in full force and effect and is valid, binding and enforceable
against the parties thereto in accordance with its terms. Each Company has
performed in all material respects all obligations required to be performed by
it under each Assumed Contract to which it is a party, and to the knowledge of
each Company, no condition exists or event has occurred that, with or without
notice or lapse of time, would constitute a default or a basis for delay or
non-performance by any Company or by any other party thereto.

     

    (h)     Financial Data Files; Other
Records.  To the knowledge of the Companies, the Companies have
provided to Purchaser full and complete copies of all (x) historical data files
and other document relating to the financial information of the Business and/or
the point-of sale system and data files and (y) records and other documents
relating to all motor vehicles forming part of the Purchased Assets (including,
without limitation, maintenance records).

     

    
      
         

      

      
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    (i)     Accounts
Receivable.  Schedule 2(i) sets
forth a true and complete list of all accounts receivable of each Company
arising from the Business and the aging thereof as of two (2) Business Days
prior to the date hereof.  Two (2) Business Days prior to the Closing
Date the Companies shall provide an updated Schedule 2(i) to
Purchaser, which shall set forth a true and complete list of all accounts
receivable of each Company arising from the Business and the aging thereof as of
such delivery date.  All such accounts receivable of the Companies (i)
represent sales actually made in the ordinary course of the Business, (ii) do
not represent obligations for goods sold on consignment and (iii) are not the
subject of any claims brought by or on behalf of any Company or any other party,
or to knowledge of any Company, are not disputed in any material
respect.

     

    (j)     Litigation.  Except
as set forth on Schedule 2(j), there
is no Action pending or threatened seeking to enjoin, restrain or prohibit any
of the Transactions or that relates to (x) any Conveyed Asset or (y) to the
knowledge of the Companies, the retaining or employment of any consultant or
employee in connection with the Business.  Except as set forth on
Schedule
2(j), there is
no Action pending or threatened that might call into question the validity of
any Transaction Document, or any action taken or to be taken pursuant hereto or
thereto.

     

    (k)     Environmental
Matters.  Except for any matter that would not reasonably be
expected to have a Company Material Adverse Effect, to the knowledge of the
Companies, the ownership and use by the Companies of the Conveyed Assets and the
conduct of the Business are in compliance with all applicable Legal Requirements
relating to pollution, environmental protection, hazardous substances and
related matters.  As used herein, “Legal Requirements”
means all foreign, federal, state and local statutes, laws, ordinances,
judgments, decrees, orders, rules, regulations, policies and guidelines
applicable to the Companies’ businesses.  To the knowledge of the
Companies, the Companies have not received any notice from any Governmental
Authority or any other Person of any alleged violation or
noncompliance.  For purposes of this Section, “hazardous substance”
shall mean oil or any other substance which is included within the definition of
a “hazardous substance,” “pollutant,” “toxic substance,” “toxic waste,”
“hazardous waste,” “contaminant” or other words of similar import in any
federal, state or local environmental law, statute, ordinance, rule or
regulation applicable to the Companies’ businesses.

     

    (l)     Permits.  To
the knowledge of the Companies, Schedule 2(l) lists
all Permits possessed by each Company relating to the Conveyed Assets and/or the
Business. To the knowledge of the Companies, each Company currently has, and at
all times since January 1, 2006 had, all Permits necessary or required under
applicable Law for the conduct of the Business except where the failure to have
such Permits did not and would not have a Company Material Adverse
Effect.  Except as set forth in Schedule 2(l), to the
knowledge of the Companies, all such Permits are in full force and effect, are
transferable to Purchaser by virtue of the transactions contemplated by this
Agreement and the Sale Agreement, and, to the knowledge of each Company, no
suspension or cancellation of any of them is being threatened.

     

    
      
         

      

      
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    (m)     Tax
Matters.  Other than as set forth on Schedule 2(m), the
Companies have properly prepared and timely filed, or will file on a timely
basis, all Tax Returns required to be filed by or on behalf of or with respect
to the Companies for any period and such Tax Returns are true, correct and
complete in all material respects.  Other than the property taxes owed
by the Companies with respect to the Processing Plant (the “Virginia Property
Taxes”) or as otherwise set forth on Schedule 2(m), all Taxes due and
owing by any Company (whether or not shown or required to be shown on any
Tax Return) have been paid.  The aggregate amount of the Companies’
liabilities with respect to the Virginia Property Taxes (including, without
limitation, all fees and penalties relating thereto, if any), do not exceed
$62,575.90 (such amount, the “Virginia Property Tax
Liability”).  To the knowledge of the Companies, none of the
Purchased Assets is subject to any Lien in favor of the United States pursuant
to Section 6321 of the Code for nonpayment of taxes, or any lien in favor of any
state or locality pursuant to any comparable provision of state or local Law,
under which transferee liability might be imposed upon Purchaser as a buyer of
such Purchased Assets pursuant to Section 6323 of the Code or any comparable
provision of state or local Law.

     

    (n)     Intellectual
Property.  The Companies own or hold valid licenses to use such
Intellectual Property, without any infringement or misappropriation of the
rights of other Persons.  As used herein “Intellectual
Property” means (a) the trademarks “Zoots” and “The Cleaner Cleaner,” (b)
the domain name zoots.com, and (c) the 1-800
telephone number used in connection with the Business.

     

    (o)     Employees.  Schedule 2(o) lists:
(i) the names and titles of all current employees of each Company employed in
connection with the Business (the “Relevant Employees”),
whether such employees are full or part time employees or temporary employees
with each of their hourly rates or target salaries (including amounts subject to
performance criteria) and the current annual salary payable to each such
Relevant Employee as of the date hereof, and (ii) the aggregate amount of such
remuneration for each such Relevant Employee for the calendar year
2007.  Except as set forth on Schedule 2(o), (A) no
Company has agreed (whether orally or in writing) to any increase in the
compensation or benefits payable to, or otherwise materially modified the terms
of employment of, any Relevant Employee from those in effect as of September 30,
2007, (y) all Relevant Employees are “at will” under oral agreement and (B)
there are no employment agreements, arrangements or understandings with respect
to such Relevant Employees, other than customary 3% annual raises granted to
employees on the anniversary of their start date. No Company is bound by any
union or collective bargaining agreement or other agreement, written or oral,
with any trade or labor union, employees’ association or similar organization
relating to any Relevant Employee, nor is any Company subject to any pending or,
to the knowledge of any Company, threatened labor dispute or organization
activity relating to any Relevant Employee. Except as set forth on Schedule 2(o), there
are no pending claims or actions that have been asserted or instituted with
respect to workers compensation or asserting employment discrimination,
disability, wage and hour, wrongful discharge, harassment, breach of contract,
defamation, invasion of privacy, unemployment compensation, employee safety or
other similar claims relating to any Relevant Employee under which any Company
may have liability, contingent or otherwise. There are no present or, to any
Company’s knowledge,  threatened actions, work stoppages or other
labor difficulties relating to any Relevant Employee. Except as set forth on
Schedule 2(o),
no unfair labor practice, wrongful termination, or race, sex, age, disability or
other discrimination, complaint or other Action is pending with respect to any
Relevant Employee, nor, to any Company’s knowledge, is any such complaint or
other Action threatened, against any Company before the National Labor Relations
Board, Equal Employment Opportunity Commission or any other Governmental
Authority, and no grievance is pending, nor, to any Company’s knowledge, is any
grievance threatened against any Company.  The Companies have provided
to Purchaser full and complete copies of all contracts, reports and other
documentation in possession of any Company relating to each Relevant
Employee.

     

    
      
         

      

      
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    (p)     Employee Benefit
Plans.  Schedule 2(p) lists
each of the Companies’ employee pension, profit sharing, deferred compensation,
severance, cafeteria, stock option, stock purchase, incentive, golden parachute,
bonus, group or individual medical and health benefits, welfare, insurance or
other employee benefit plan, program or arrangement (collectively, the “Company Plans”),
which is maintained or contributed to by any Company on behalf of any Relevant
Employee. Complete and correct copies of all such Company Plans have been made
available to Purchaser.  There is no Company Plan, nor has any Company
at any time maintained, administered, contributed or been required to contribute
to any “employee pension benefit plan” as defined in Section 3(2) of ERISA,
which is subject to the minimum funding requirements of Section 412 of the Code
or Section 302 of ERISA, or the provisions of Title IV of ERISA.  None
of the Company Plans is a “multiemployer pension plan” within the meaning of
Section 3(37) of ERISA. Each Company Plan and any related trust agreement that
is intended to be qualified under the provisions of Section 401(a) of the Code
has received a favorable determination from the IRS to that effect, and, to the
knowledge of each Company, no circumstance exists that will or could reasonably
be expected to result in revocation of any such favorable determination letter.
Each Company Plan and any related trust agreement complies in all material
respects and has been maintained in material compliance with its terms and, both
as to form and in operation, with the requirements prescribed by any and all
Laws that are applicable to such plans, including but not limited to ERISA and
the Code.  No Company has any obligation to make any payment to or
with respect to any current or former employee pursuant to any severance
agreement or retiree medical benefit or other Company Plan, or would have any
obligation to make any severance or other payments to any employee if such
employee was terminated prior to, at or after the Closing.  No
benefit, payment or other entitlement under any Company Plan, or under any
agreement relating to the employment of the Relevant Employees, will be
established or become accelerated, vested, payable or funded by reason of the
execution and delivery of this Agreement or the consummation of the
Transactions, and there are no claims pending, or to the knowledge of any
Company, threatened with respect to any Company Plan, other than
claims for the payment of benefits in the ordinary course of operation of such
Company Plan.

     

    (q)     Purchased
Assets.  The Companies have good, valid and marketable title to
the following assets (collectively, the “Purchased
Assets”):

     

    (i)      
all of the tangible assets and all of the Companies’ rights in and to the
vehicle and personal property leases listed on Schedule 2(q)(i)
hereto;

     

    (ii)     
all customer and prospective customer lists used in connection with the
operation of the Business;

     

    (iii)     all
customer goodwill generated in the operation of the Business;

     

    
      
         

      

      
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    (iv)    all
inventories of the Companies in connection with the Business, including, without
limitation, all purchased parts, materials and supplies, as set forth on Schedule 2(q)(iv)
hereto;

     

    (v)    
all accounts receivable of the Companies in connection with the Business,
including, without limitation, all accounts receivable set forth on Schedule 2(i)
hereto;

     

    (vi)    all
personal property, machinery, furniture, fixtures, leasehold improvements, and
equipment situated at the Companies’ retail dry cleaning and laundry stores and
processing facilities, and used in connection with the operation of the
Business;

     

    (vii)   all
real property leases and other contracts listed on Schedule
4(a);

     

    (viii)  all
prepaid items or accounts of the Companies relating solely to the Business and
described on Schedule
2(q)(vii) hereto;

     

    (ix)     all
of the deposits may by any Company under any lease or other contract relating to
the Business listed on Schedule 2(q)(x)
hereto;

     

    (x)     all
computer equipment located at any of the premises located at the locations
covered by the leases listed on Schedule 4(a);

     

    (xi)     all
rights in the Intellectual Property described in Section 9(f)
below;

     

    (xii)    cash
of not less than $15,000;

     

    (xiii)   all
physical plans and designs of the Business’ labs and stores (including, without
limitation, blueprints and layouts); and

     

    (xiv)   all
books and records relating solely to the Business (if any).

     

    (r)     Other
Trademarks.  The
Companies have good, valid and marketable title to the trademarks “Zoots” and “The Cleaner
Cleaner”.

     
b

     

    3.     SURVIVAL
OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.

     

    (a)     The
representations and warranties of the Companies contained in this Agreement, or
in any certificate or other instrument delivered in connection herewith, shall
survive the Closing and shall expire six (6) months after the Closing Date,
provided that if any party hereto, before expiration of a representation or
warranty given by another party hereto, delivers to such other party a written
notice alleging a breach of such representation or warranty, the applicable
representation or warranty shall survive until, but only for purposes of, the
resolution of the matter covered by such notice.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    (b)     From
and after the date hereof, each Company shall, jointly and severally, defend,
indemnify and hold harmless Purchaser, Parent and their respective Affiliates
(each a “Purchaser
Indemnified Party”) from, against and in respect of any and all claims,
losses, costs, expenses, obligations, liabilities, damages, recoveries and
deficiencies (including, without limitation, interest, penalties and reasonable
attorneys’ fees) (“Losses”), that such
Purchaser Indemnified Party may incur, sustain or suffer resulting from or
arising out of (directly or indirectly) or in connection with (i) any breach of
or any inaccuracy in any representation or warranty of any Company contained in
this Agreement, or any other certificate or other document delivered by Seller
pursuant to this Agreement, or in any Schedule or Exhibit hereto or thereto,
and/or (ii) any breach or failure to perform any covenant or agreement of any
Company contained in this Agreement.

     

    (c)     In
the event that any Purchaser Indemnified Party shall have incurred, sustained or
suffered any Loss with respect to which it is entitled to be indemnified under
Section 4(b) above resulting from or arising out of (directly or indirectly) or
in connection with any breach of or any inaccuracy in any representation or
warranty of any Company contained in [Section 2(m) (other than any
income or franchise Taxes),] Section 2(q) or Section 2(r)
above, Parent shall, in addition to any other rights Purchaser or
Parent  may have against the Companies, have the right to set-off the
full amount of such Loss against the payments due under the Note, in which event
the Note shall be deemed to be automatically amended accordingly.  In
addition, Parent shall have the right to set-off against the payments due under
the Note the full amount of the Losses contemplated in Section 9(f)(iv) below,
in which event the Note shall be deemed to be automatically amended
accordingly.

     

    4.     ASSIGNMENT
AND ASSUMPTION.

     

    (a)     Assigned Contracts and
Intellectual Property.  At the Closing, the Companies shall
assign to Purchaser all of their right, title and interest in and to the
following Contracts (collectively, the “Assigned
Contracts”):

     

    (i)     the
real property leases and other contracts listed on Schedule 4(a);
and

     

    (ii)     the
vehicle, equipment and other personal property leases and loan agreements listed
on Schedule
2(q)(i) (representing outstanding payment liabilities (including, without
limitation, residual payments) of approximately $156,000 in the
aggregate).

     

    (b)     Consents.  This
Section 4 does not constitute an agreement to assign any of the Assigned
Contracts that are not capable of being validly assigned without the Consent of
any third party that has not been obtained on or prior to the Closing Date (a
“Nonassignable
Contract”).  Schedule 4(b) sets
forth a list of each such Nonassignable Contract and all of the consent or other
fee or consideration payable to the counterparty to each such Nonassignable
Contract in connection with the obtaining of such Consent.  The
Companies will use their best efforts to obtain any Consent required to assign
the Assigned Contracts to Purchaser, and Purchaser will cooperate in any
commercially reasonable manner that the Companies request; provided that
Purchaser will not be obligated to pay any consent fee of other consideration
required in order to obtain any such Consent.  The relevant Company
shall pay all consent fees and other considerations required in order to obtain
such Consents.  In the event that the parties are unsuccessful in
obtaining necessary Consents for the transfer of any of the Assigned Contracts
prior to the Closing, the Companies shall hold such Assigned Contracts and take
such action as may be reasonably requested by Purchaser in order to place
Purchaser, to the extent possible and consistent with the appropriate documents
relating to such Assigned Contracts, in the same position as would have existed
had such Consent been obtained prior to the Closing and such portion of the
Assigned Contracts transferred to Purchaser as contemplated
hereby.  As and when such Assigned Contracts become transferable, the
Companies will transfer such Assigned Contracts forthwith to Purchaser and the
assignment to Purchaser by the Companies of any such Assigned Contracts shall be
deemed effective at the time such Consent is obtained.  Nothing in
this Section 4(b) shall affect the rights of Purchaser under Section 1.6 of the
Sale Agreement.

     

    
      
         

      

      
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    (c)     Company Purchased
Assets.  It is the intention of the parties hereto that the
transactions contemplated by the Sale Agreement be consummated.  For
the avoidance of doubt, to the extent that any Purchased Assets described in the
Sale Agreement are not subject to perfected first priority liens in favor of
Seller, the Companies hereby transfer and assign to Purchaser all their right
and title in and to such Purchased Assets (the “Company Purchased
Assets”).  The Company Purchased Assets shall include, without
limitation, all of those assets described in clauses (i), (vi) (to the
extent that any fixtures are deemed to be real estate requiring a filing with
local land records), (xii) and (xiii) on Schedule 2(q),
those assigned contracts relating to the assets described on Schedule 2(n) and
those assets described on Schedule
4(a).  Notwithstanding anything to the contrary set forth
herein, the Company Purchased Assets shall not include any of the Companies’
rights under any agreement by and between one or more of the Companies and the
purchaser of any of the assets of one or more of the Companies.

     

    5.     ASSUMPTION
OF LIABILITIES; COMPANY PURCHASE PRICE.

     

    (a)     Assumed
Liabilities.  At the Closing, Purchaser shall assume from the
Companies and thereafter pay, perform or otherwise discharge or satisfy when due
(except while contested in good faith by appropriate proceedings) all
liabilities (i) arising under any Assigned Contracts, but only to the extent
such liabilities accrue from and after the Closing Date and do not arise from,
and not attributable to, any breach, default or failure of performance
thereunder by any Company occurring on or prior to the Closing Date, and (ii)
with respect to Hired Employees expressly assumed pursuant to Section 5(d) below
(collectively, the “Assumed
Liabilities”).  Except for the Assumed Liabilities, the
Companies shall remain responsible for, and Purchaser shall not directly or
indirectly, assume, or in any way become liable or responsible for, any
liability, obligation, debt or contingency of any Company, any Affiliate of any
Company, or the Business of any type or nature, whether liquidated or
unliquidated, known or unknown, actual or inchoate, accrued, contingent or
otherwise, and whether arising from facts existing or events occurring prior to,
on or after the date of this Agreement or the Closing.

     

    (b)     Company Purchase
Price.  At the Closing, the Companies shall sell to the
Purchaser, and Purchaser shall purchase from the Companies, pursuant to a Bill
of Sale in substantially the form attached hereto as Exhibit A,
all  of the Companies right, title and interest in the Company
Purchased Assets.  The purchase price for the Company Purchased Assets
shall be $187,471.00 (the “Company Purchase
Price”).  In the event that the cash located in the stores
purchased by Purchaser pursuant to this Agreement and the Sale Agreement (the
“Cash On Hand”)
is less than $15,000 at Closing, then the Company Purchase Price shall be
reduced by an amount equal to the difference between $15,000 and the Cash On
Hand.  The Company Purchase Price shall be paid as
follows:  (a) $99,895.10 shall be paid to the Companies, or their
designee, at the Closing via wire transfer in immediately available funds in
accordance with wire instructions to be provided by the Companies prior to
Closing, (b) $25,000 shall be paid to Commercial Bldg Assoc. LLC, the owner of
the Portsmouth Plant (as defined below), via wire transfer in immediately
available funds in accordance with wire instructions to be provided by the
Companies prior to Closing; and (c) an amount equal to the Virginia Property Tax
Liability shall be paid by the Purchaser to the Commonwealth of Virginia, in
satisfaction of the Companies’ Virginia Property Taxes, at the Closing via wire
transfer in immediately available funds in accordance with wire instructions to
be provided by the Companies prior to Closing.

     

    
      
         

      

      
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    (c)     Bill of
Sale.  In consideration for the consummation by Purchaser of
the applicable Transactions (including, without limitation, the payment of the
Purchase Price), at the Closing, the Companies shall deliver to Purchaser, and
Purchaser shall accept from the Companies, pursuant to a Bill of Sale in
substantially the form attached hereto as Exhibit A,
transferring Purchaser all of the Companies’ rights, title and interest in and
to the Purchased Assets.

     

    (d)     Employees.

     

    (i)    
  Not later than five (5) Business Days prior to the Closing, Schedule 2(o) shall
be updated by the Companies to reflect any additional individuals who become
Relevant Employees in the ordinary course of the conduct of the Business after
the date of this Agreement and prior to the Closing and to otherwise update the
information set forth thereon (including, without limitation, a description of
all accrued but unpaid salaries, unpaid benefits and unused vacation pay for all
such Relevant Employees, up to and including the Closing Date). The Companies
shall provide Purchaser with all other information reasonably requested by
Purchaser pertaining to the Relevant Employees.

     

    (ii)      Not
earlier than twenty (20) nor later than two (2) days prior to the Closing,
Purchaser shall offer all Relevant Employees then actively employed by the
Companies employment with Purchaser, conditioned upon the Closing, on terms of
employment that are substantially similar to the terms of their employment in
effect as of Closing, provided that such Relevant
Employees shall, if they accept such offer of employment, be eligible to
participate in employee benefit plans, programs, arrangements and policies of
the Purchaser (“Purchaser Employee Benefit
Plans”).  All Relevant Employees who elect to become employees
of Purchaser are hereinafter referred to collectively as “Hired Employees” and
individually as a “Hired
Employee”.  The Hired Employees who accept Purchaser’s offer of
employment shall become employees of Purchaser immediately following the
Closing.  Purchaser shall, from and after the Closing Date, assume the
Companies’ obligations to the Hired Employees with respect to all unused
paid-time-accrued as listed on Schedule 2(o)
hereto.

     

    (iii)     From
and after the Closing Date, the Company shall remain solely responsible for any
and all liabilities in respect of continued coverage under COBRA, Section 4980B
of the Code and Part 6 of Subtitle of Title I of ERISA and the regulations
thereunder, and any similar state law, for all Relevant Employees who do not
become Hired Employees who are covered under any Purchaser Employee Benefit Plan
that is a group health plan.

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    (iv)     From
and after the Closing Date, the Company shall remain solely responsible for any
and all liabilities in respect of the Relevant Employees, including the Hired
Employees, related to the Company Plans.  Purchaser and its Affiliates
are not assuming any obligation or liability of any Company or any of its ERISA
Affiliates, including any Company Plan, or any liability thereunder, to any
Hired Employee or other Person except to the extent such liability or obligation
is specifically assumed pursuant to this Section 5(c)  or any other
provision of the Agreement.

     

    (v)     
Except as expressly set forth in this Section 5(c), after the Closing Date the
Companies shall remain solely responsible for any and all liabilities in respect
of all Relevant Employees (including, without limitation, all Hired Employee)
under or related to the Company Plans or otherwise in connection with their
employment with any such Company.

     

    6.     CONDITIONS
TO PURCHASER’S OBLIGATION TO EFFECT CLOSING.

     

    Purchaser
shall not be obligated to effectuate the Closing unless each of the following
conditions, any one or more of which may be waived by Purchaser, is satisfied as
of the Closing Date:

     

    (a)  
   Representations and
Warranties and Covenants.  (i)   
The representations and warranties of the Companies set forth in this Agreement
shall be true and correct in all material respects as of the Closing Date, (ii)
the Companies shall have performed and complied in all material respects with
the agreements contained in the Company Transaction Documents required to be
performed and complied with by the Companies on or before the Closing, and (iii)
the Companies shall have delivered to Purchaser at the Closing certificates,
dated the Closing Date, signed by a senior officer of the Companies certifying
as to compliance with clauses (i) and (ii) above.

     

    (b)    
 No
Litigation.  There
shall not be any Action pending seeking to enjoin, restrain or prohibit any of
the Transactions or that may (or be reasonably expected to) adversely affect the
ability of Purchaser to own, operate or otherwise enjoy the Conveyed Assets.
Additionally, Purchaser shall not have received any notice of any Action
relating in any manner to the sale or transfer of the Conveyed Assets hereunder,
including any such Action which questions the validity of any of the
Transactions or the commercial reasonableness of the sales contemplated by the
Transaction Documents.

     

    (c)  
   New
Employment Agreement.  William
Wall shall have entered into a written employment agreement with Purchaser in
form and substance reasonably satisfactory to Purchaser; provided that Purchaser
shall have offered William Wall employment on terms that are substantially
similar to or better than the terms of his employment with the
Companies.

     

    (d)   
  Driver
Non-Compete Agreements.  Any
written non-competition agreement between one or more of the Companies and a
vehicle driver that was formerly employed by any Company and who will, in
connection with the Closing, be employed as a vehicle driver by Purchaser shall
have shall have been assigned to Purchaser.

     

    

     

    
      
         

      

      
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    (e)   
  Required
Lease Assignment.  Purchaser
shall have received an executed lease assignment, in form and substance
reasonably satisfactory to Purchaser, from Commercial Bldg Assoc. LLC, with
respect to the Companies lease of 3303 Airline Boulevard, Building 2A-H,
Portsmouth, Virginia (the “Processing
Plant”).

     

    (f)   
  Vehicle
and Personal Property Leases. All of
the Companies’ rights in and to the vehicle and personal property leases listed
on Schedule
2(q)(i) hereto shall have been transferred to Purchaser on the Closing
Date.

     

    (g)   
  Tax
Returns and Financial Information.
Purchaser shall have received are true and complete copies of (x) the Companies’
Tax Returns filed by  the Companies for the tax years ended December
31, 2004, December 31, 2005, December 31, 2006, and, if available, December 31,
2007, and (y) audited, unaudited, and reviewed financial information of the
Companies for the years ended December 31, 2004, December 31, 2005, December 31,
2006 and December 31, 2007 and for the each quarterly period
thereof.

     

    (h)   
  Release of
Liens.  Purchaser shall have received evidence reasonably
satisfactory to it that all Liens on the Purchased Assets have been released on
the Closing Date (including, without limitation, by filing the applicable UCC
termination statements and a discharge of leasehold mortgages), other than Liens
securing any of the obligations assumed by Purchaser pursuant to Section 4(a)(ii)
above.

     

    (i)  
   License
Agreement.  Purchaser shall have received the executed License
Agreement.

     

    (j)   
  Hazardous
Substances.  Purchaser shall have received evidence reasonably
satisfactory to it that all hazardous substances consisting of by-products from
processing have been removed from the Processing Plant.

     

    (k)  
   Other Transaction
Documents.  All
conditions to the closing of the Transactions contemplated by the other
Transaction Documents shall have been waived or satisfied, and the Transactions
contemplated by the other Transaction Documents shall be consummated
simultaneously with the transactions contemplated hereby.

     

    7.     CONDITIONS
TO THE COMPANIES’ OBLIGATION TO EFFECT CLOSING.

     

    The
Companies shall not be obligated to effectuate the Closing unless each of the
following conditions, any one or more of which may be waived by the Company, is
satisfied as of the Closing Date:

     

    (a)  
   Representations and
Warranties and Covenants.  (i) The representations and
warranties of Purchaser set forth in this Agreement shall be true and correct in
all material respects as of the Closing Date, (ii) Purchaser shall have
performed and complied in all material respects with the agreements contained in
this Agreement required to be performed and complied with by Purchaser on or
before the Closing, and (iii) Purchaser shall have delivered to the Companies at
the Closing certificates, dated the Closing Date, signed by a senior officer of
Purchaser certifying as to compliance with clauses (i) and (ii)
above.

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    (b)   
  No
Litigation.  There shall not be any Action pending seeking to
enjoin, restrain or prohibit the transactions contemplated hereby.

     

    8.     TERMINATION;
EFFECT OF TERMINATION.

     

    (a)     Termination.  This
Agreement may be terminated before the Closing occurs only as
follows:

     

    (i)   
   by mutual written consent of Purchaser and the Companies;
or

     

    (ii)     
by Purchaser, if the Companies shall have breached or failed to perform in any
material respect any of its obligations, covenants or agreements under this
Agreement, or if any of the representations and warranties of the Companies set
forth in this Agreement shall not be true and correct to the extent set forth in
Article 2, and such breach, failure or misrepresentation is not cured to
Purchaser’s reasonable satisfaction within 10 days after Purchaser gives the
Companies written notice identifying such breach, failure or
misrepresentation;

     

    (iii)   
  by the Companies, if Purchaser shall have breached or failed to
perform in any material respect any of its obligations, covenants or agreements
under this Agreement, or if any of the representations and warranties of
Purchaser set forth in this Agreement shall not be true and correct, and such
breach, failure or misrepresentation is not cured to the Companies’ reasonable
satisfaction within 10 days after the Companies give Purchaser written notice
identifying such breach, failure or misrepresentation;

     

    (iv)   
  by Purchaser, if the conditions set forth in Section 6 hereof become
incapable of satisfaction; or

     

    (v)   
  by the Companies, if the conditions set forth in Section 7 hereof
become incapable of satisfaction;

     

    except
that this Agreement may not be terminated under this Section by or on behalf of
any party that is in breach of any representation or warranty or in violation of
any covenant or agreement contained herein.

     

    (b)     Automatic
Termination. This Agreement shall automatically terminate upon the
termination of the Sale Agreement.

     

    (c)     No Further
Liability.  If this Agreement is terminated pursuant to this
Section 8, neither party shall have any further obligation or liability under
this Agreement, except that (i) the termination of this Agreement for any reason
will not relieve any party from any liability that at the time of termination
had already accrued to the other party or that thereafter accrues in respect of
any act or omission of such party prior to such termination; (ii) the provisions
of Section 9(e) shall survive any termination of this Agreement for a period of
one (1) year; (iii) the provisions of Section 3 shall survive any termination of
this Agreement and (iv) in the event that this agreement is terminated pursuant
to Sections 8(a) hereof (other than pursuant to clause 8(a)(iii), or the Sale
Agreement is terminated pursuant to Sections 6.1 thereof (other than pursuant to
clause 6.1(c)), the Companies shall promptly reimburse Purchaser for $15,000 of
Purchaser’s costs and expenses incurred in acquiring certain computer hardware
in connection with the contemplated closing.

     

    
      
         

      

      
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    9.     COVENANTS.

     

    (a)     Commercially Reasonable
Efforts. From and after the date hereof, the parties shall use
commercially reasonable efforts to take or cause to be taken all action and do
or cause to be done all things necessary, proper or advisable to consummate the
transactions contemplated by this Agreement and the Sale
Agreement.  Without limiting the generality of the foregoing, the
Companies will use all commercially reasonable efforts to timely obtain any
Consent required for the consummation of the transactions contemplated by this
Agreement as soon as practicable.

     

    (b)     Interim
Operations.  From the date of this Agreement through the
Closing Date, the Companies shall use their best efforts to (A) operate in the
ordinary course, including with respect to their cash flow management, and (B)
operate in a manner that prevents any impairment of their ability to fully and
timely perform in all material respects under the Assigned
Contracts.  The Companies shall use all commercially reasonable
efforts to keep the Business substantially intact, including the present
operations, physical facilities, working conditions and relationships with
suppliers, customers, employees and parties to Contracts relating to the
Business.

     

    (c)     Notification of Certain
Matters.  From and after the date of this Agreement, the
Companies shall give notice to Purchaser of (i) the occurrence or nonoccurrence
of any event that would be reasonably likely to cause either (A) any
representation or warranty of the Companies contained in this Agreement to be
untrue or inaccurate in any material respect at the Closing or (B) a Company
Material Adverse Effect, and (ii) any material failure of any Company to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement.

     

    (d)     Power of
Attorney.  Without limiting any provisions hereof, effective as
of the Closing Date, and each of the Companies by appropriate instrument shall
constitute and appoint Purchaser and its successors and assigns the true and
lawful attorney-in-fact of such Company with full power of substitution in the
name of Purchaser or in the name of any Company but for the benefit and at the
expense of Purchaser (i) to collect for the account of Purchaser all receivables
and any other items to be sold and transferred or intended to be sold and
transferred to Purchaser as provided in this Agreement or under the Purchase
Agreement, (ii) to institute and prosecute all proceedings that Purchaser may
deem proper in order to collect, assert or enforce any right or title of any
kind in or to the Conveyed Assets, to defend or compromise any and all actions,
suits or proceedings in respect of any of the Conveyed Assets and to do all such
acts and things in relation thereto as Purchaser shall deem advisable, and (iii)
to take all reasonable actions that Purchaser may deem proper in order to
provide for Purchaser the benefits under any Assigned Contract under which any
required Consent of another party to the assignment thereof to Purchaser
pursuant to this Agreement shall not have been obtained.  Such
instrument shall provide that, unless a Company has dissolved or otherwise
ceased to exist, Purchaser will first ask the Company to take such action before
exercising Purchaser’s authority under the instrument.  Each Company
shall acknowledge that the foregoing powers are coupled with an interest and
shall be irrevocable by such Company or by its subsequent dissolution or in any
manner or for any reason.  Purchaser shall be entitled to retain for
its own account any amounts collected pursuant to the foregoing powers,
including any amounts payable as interest in respect thereof.  Any
amounts collected that are due the Companies pursuant to the terms hereof or
otherwise shall be promptly paid over to the Companies.

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    (e)     Confidentiality.  Pending
the Closing of all of the transactions contemplated hereby, all trade secrets or
other information of a business, financial, marketing, technical or other nature
pertaining to the Companies or any Company obtained by Purchaser from or on
behalf the Companies will be kept confidential and will not be disclosed by
Purchaser other than to its officers, employees, advisors and financing sources;
provided that the foregoing restriction shall not apply to information which (a)
is lawfully and independently obtained by Purchaser from a third party without
restriction as to disclosure by Purchaser, (b) was known by Purchaser prior to
its disclosure by or on behalf of or the Companies, (c) is in the public domain
or enters into the public domain through no fault of Purchaser, or (d) Purchaser
is required by Law or legal process to disclose.  If this Agreement is
terminated, Purchaser will cause to be delivered to the Companies, as
applicable, all materials obtained by Purchaser from or on behalf of the
Companies, whether obtained before or after the date of this
Agreement.  Following the Closing, Purchaser shall not, directly or
indirectly, disclose, divulge or make use of any trade secrets or other
information of a business, financial, marketing, technical or other nature
pertaining to the Companies that does not solely relate to the Conveyed Assets,
including information of others that the Companies have agreed to keep
confidential.  Nothing in this Agreement, including, without
limitation, this Section 9(e), shall prevent Purchaser from making any public
announcement and/or filings that it may be required to make under applicable
Law.

     

    (f)     License Agreement and
Assignment.

     

    (i)     On
or prior to the Closing Date, Purchaser and the Companies shall enter into the
License Agreement, pursuant to which:

     

    (x)     Purchaser
shall, at no cost to Purchaser, be granted an exclusive license, in perpetuity,
to:

     

    (1)     use
the trademarks “Zoots”
and “The Cleaner
Cleaner” in the Commonwealth of Virginia and in the States of Georgia,
Maryland North Carolina and South Carolina, provided that the Companies shall
retain the right to use the Zoots trademark in such
jurisdictions for a period of thirty (30) days following the Closing in
connection with the transaction of their businesses; and

    

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    (2)     use
the domain name zootsva.com, and to replicate
the information relating to the Business, the look, feel and the layout of the
Website (as defined below) on the zootsva.com website;
and

    

    (y)     the
Companies shall agree, for a period of six (6) months after the Closing Date,
with respect to the website zoots.com and the related
domain name (the “Website”),
to:

     

    (1)
maintain the Website, or cause the Website to be maintain, in accordance with
historical practice; and

    

    (2)
maintain, or cause to be maintained, a prominent link on the Website to the
zootsva.com website (in
connection with which Purchaser shall pay such transferee’s direct, reasonable
and documents costs relating to the maintenance of such link).

    

    

     

    (ii)     The
Companies hereby agree, for a period of ninety (90) days after the Closing Date,
to provide (or to cause their successor to provide) call forwarding services
with respect to the 1-800 telephone number used in the Business (to such number
as may be designated by Purchaser).

     

    (iii)     On
the effective date of any transfer of each of the “Zoots” and/or “The Cleaner Cleaner”
trademarks, the Website and the 1-800 telephone number used in the Business, the
Companies shall cause the relevant transferee (the “Transferee”) to enter
in an assignment and assumption agreement, in form and substance satisfactory to
Purchaser (the “License Assignment
Agreement”) with the Companies and Purchaser with respect to the License
Agreement (or, if applicable, the rights under the License Agreement relating to
the relevant transferred assets).

     

    (iv)     In
the event that Purchaser is unable to transition the Business onto the Westgate
hosting system (with respect to point-of-sale functions) by the Closing
Date,  the Companies shall permit Purchaser to use the existing
point-of-sale system for a two (2) week period after the Closing
Date.  In the event that Purchaser is unable to transition the
merchant services system (with respect to credit card transactions) to
Purchaser’s bank by the Closing Date, any credit card payments received by the
Companies in connection with the Business after the Closing Date shall promptly
(and in any event within two (2) Business Days of such receipt)
be  transferred by the Companies to the bank account specified by
Purchaser (less customary expenses).  In the event that Purchaser is
unable to transition the internet portals used at each location used in the
Business to its own service provider by the Closing Date,  for a
period of thirty (30) days after the Closing Date, the Companies shall maintain,
and allow Purchaser to use, or cause the Transferee to maintain and allow the
Purchaser to use, the internet portals at each location used in the Business,
provided that the Purchaser shall reimburse the Companies (or the Transferee, if
applicable) for all direct costs associated with the Purchaser’s use of such
internet portals within five (5) days after receipt of an invoice for the
same.

     

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

    (v)     In
the event that (x) any Company fails to comply with its obligations under this
Section 9(f) (including, without limitation, failing to cause the Transferee to
enter into the License Assignment Agreement), (y) any Company fails to comply
with its obligations under the License Agreement (prior to the assignment
thereof as contemplated in Section 9(f)(ii) above), or (z) the Transferee fails
to comply with its obligations under the License Agreement (after the assignment
thereof as contemplated in Section 9(f)(ii) above), Parent shall, in addition to
any other rights Purchaser or Parent  may have against the Companies,
have the right to set-off the full amount of the Losses that Purchaser may
incur, sustain or suffer resulting from or arising out of (directly or
indirectly) or in connection with any such breach (in an aggregate amount not to
exceed $100,000) against the payments due under the Note, in which event the
Note shall be deemed to be automatically amended accordingly; provided, however, that (1)
the Companies shall have the right, but not the obligation, to transfer to the
Purchaser all of the Companies’ rights in the Website and the 1-800 number used
in connection with the Business, in which case the Purchaser shall no longer
have any right to setoff in connection with the Website and the 1-800 number
used in connection with the Business; and (2) in the event that the Companies
have not the caused the Transferee to enter into the License Assignment
Agreement on or before April 30, 2008, then the Companies shall transfer to the
Purchaser all of the Companies’ rights in the Website and the 1-800 number used
in connection with the Business, in which case the Purchaser shall no longer
have any right to setoff in connection with the Website and the 1-800 number
used in connection with the Business.

     

    (g)     Accounts Receivable Data
Transfer.  Following the close of business on Saturday, March
22, 2008 and prior to 11:59 P.M. (Eastern time) on Sunday, March 23, 2008, the
Companies shall deliver to the Purchaser, via electronic mail, a schedule
setting forth the Companies’ accounts receivable arising from the Business as of
the close of business on March 22, 2008.  Further, within two (2)
business days after Closing, the Companies will deliver to the Purchaser a hard
copy of a schedule setting forth the Companies’ accounts receivable arising from
the Business as of the close of business on March 22, 2008.

     

    (h)     POS Data
Transfer.  Following the close of business on Saturday, March
22, 2008 and prior to 11:59 P.M. (Eastern time) on Sunday, March 23, 2008, the
Companies shall deliver to the Purchaser or to Purchaser’s designee the
Companies’ point of sale data for the seven (7) calendar days preceding March
22, 2008.

     

    (i)     Financial
Data.  Within thirty (30) days after the Closing Date, the
Companies shall deliver to the Purchaser (1) financial schedules relating to the
Business for the 2006 and 2007 fiscal years and the year to date ending on the
Closing Date; (2) a list of Companies’ fixed assets relating to the Business;
(3) a trial balance relating to the Business; and (4) the general ledger as it
relates to the Business.

     

    (j)     Receivables Received
Post-Closing.  In the event that, after the Closing Date, any
one of the Companies or a successor to one or more of the Companies receives (1)
a payment with respect to the accounts receivable of the Companies arising from
the Business or (2) an invoice relating to the Business arising for a period
beginning on or after the Closing Date, then the Companies shall deliver such
payment or invoice, or shall cause their successor to deliver such payment or
invoice, within five (5) days after receipt of same by the Companies (or the
Companies’ successor, as applicable), to the Purchaser at the following
address:  3303 Airline Drive, Suite 2A, Portsmouth,
Virginia  23701.

     

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    10.     MISCELLANEOUS.

     

    (a)     Notices.  All
notices, requests, demands, consents and other communications required or
permitted under this Agreement shall be in writing and shall be considered to
have been duly given when (i) delivered by hand, (ii) sent by telecopier or
facsimile (with receipt confirmed), provided that a copy is mailed (on the same
date) by certified or registered mail, return receipt requested, postage
prepaid, or (iii) received by the addressee, if sent by Express Mail, Federal
Express or other express delivery service (receipt requested), in each case to
the appropriate addresses and telecopier numbers set forth below (or to such
other addresses and telecopier numbers as a party may from time to time
designate as to itself by notice similarly given to the other party in
accordance herewith).  A notice of change of address shall not be
deemed given until received by the addressee.

     

    
      	
              If
      to any Company, to it at:

            
	 	 
	 
      	
              Todd
      Krasnow

              ZOOTS
      Corporation

              153
      Needham Street, Building 1

              Newton,
      Massachusetts 02464

              Telecopier:  617)558-9667

            
	 	 
	 
      	
              With
      copies to:

            
	 	 
	 
      	
              Michael
      Nowlan

              FTI
      Consulting

              125
      High Street, Suite 1402

              Boston,
      Massachusetts 02110

              Telecopier:  617-897-1510

            
	 	 
	 
      	
              and

            
	 	 
	 
      	
              Robert
      V. Jahrling, III

              Choate
      Hall & Stewart, LLP

              Two
      International Place

              Boston,
      Massachusetts 02110

              Telecopier:  617-248-4000

            
	 	 
	 
      	
              If
      to Purchaser, to it at:

            
	 	 
	 
      	
              U.S.
      Dry Cleaning Corp.

              4040
      MacArthur Blvd., Suite 305

              Newport
      Beach, California 92660

              Telecopier:  (949)
      863-9657

              Attn:  Mr.
      Robert Y. (Robbie) Lee, Chief Executive
Officer

            

    

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

    

    
      	 
      	
              With
      copies (which shall not constitute notice) to:

            
	 	 
	 
      	
              Levene,
      Neale, Bender, Rankin & Brill L.L.P.

              10250
      Constellation, Suite 1700

              Los
      Angeles, CA 90067

              Telecopier:  (310)
      229-1244

              Attn.:  Mr.
      Martin Brill

            
	 	 
	 
      	
              and

            
	 	 
	 
      	
              Greenberg
      Traurig, LLP

              The
      Met Life Building

              200
      Park Avenue, 15th Floor

              New
      York, New York 10166

              Telecopier:  (212)
      801-6400

              Attn:  Spencer
      G. Feldman, Esq.

            

    

     

    (b)     Entire
Agreement.  This Agreement and the instruments, agreements,
exhibits and other documents contemplated hereby (including, without limitation,
the Sale Agreement) supersede all prior discussions and agreements between the
parties with respect to the matters contained herein and this Agreement and the
instruments, agreements and other documents contemplated hereby (including,
without limitation, the Sale Agreement) contain the entire agreement between the
parties hereto with respect to the transactions contemplated
hereby.

     

    (c)     Further Assurances and
Transitional Services.

     

    (i)     After
the Closing, each of the parties hereto shall hereafter, at the reasonable
request of the other party hereto, execute and deliver such other instruments of
transfer and assumption and further documents and agreements, and do such
further acts and things as may be necessary to carry out the provisions of this
Agreement.

     

    (ii)     After
the Closing, Purchaser will permit the Companies or their respective
successors-in-interests and/or assigns access to the books and records acquired
by Purchaser on reasonable notice.

     

    (iii)     If
any Company receives any cash, checks or other property constituting Conveyed
Assets after the Closing, such Company will promptly forward the same to
Purchaser.  If Purchaser receives any cash, checks or other property
of the Companies that does not constitute Conveyed Assets hereunder after the
Closing, Purchaser will promptly forward the same to the Companies.

     

    (d)     Post-Closing Obligations of
Companies.  Nothing in this Agreement shall require the
Companies to retain personnel after Closing or continue business operations
after Closing, and, whether or not expressly set forth elsewhere in this
Agreement, the Companies’ obligations to perform hereunder after Closing shall
only require the Company to use commercially reasonable efforts to perform such
obligations, taking into account the Companies’ staffing and financial
capabilities at the time post-Closing performance is requested or
required.  Purchaser acknowledges that, after Closing, the Companies
may not have any employees or material resources and may only be able to provide
minimal assistance to Purchaser.

     

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

    (e)     Non-Solicitation By
Purchaser.  Purchaser shall not knowingly solicit any current
customers of the Companies or any purchaser of the Companies’ assets in the
areas that comprise the Companies’ former Philadelphia and New Jersey networks
(as defined by the geographical areas corresponding to the postal codes
identified on Schedule 10(e) hereto) for a period of two (2) years after
Closing.

     

    (f)     Waiver.  Any
term or condition of this Agreement may be waived at any time by the party
thereto which is entitled to the benefit thereof, but such waiver shall only be
effective if evidenced by a writing signed by such party.  A waiver on
one occasion shall not be deemed to be a waiver of the same of any other breach
on a future occasion.

     

    (g)     Amendment. Except as
otherwise expressly provided herein, this Agreement may be amended only by a
writing signed by all the parties hereto.

     

    (h)     Counterparts.  This
Agreement may be executed in any number of counterparts, each of which shall be
deemed an original and all of which together shall constitute one and the same
instrument.  Each party hereto may deliver its signature page by
facsimile transmission, and any such facsimile of a signature page to this
Agreement shall be treated as an original signature page for all purposes under
this Agreement.

     

    (i)     Binding Agreement;
Assignment; No Third Party Beneficiaries.  This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.  This Agreement may not
be assigned by any party hereto, without the prior written consent of the other
party.  Any purported assignment without such consent shall be
void.

     

    (j)     Headings.  The
headings in this Agreement are for convenience of reference only and should not
be deemed a part of this Agreement.

     

    (k)     Fees and
Expenses.  Each party shall bear the costs and expenses
incurred by it in connection with the preparation, execution and performance of
this Agreement.

     

    11.     CHOICE
OF LAW, VENUE AND JURY TRIAL WAIVER.

     

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

    THE VALIDITY OF THIS AGREEMENT, THE
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS
OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED
HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW
PRINCIPLES.  THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING
IN CONNECTION WITH THIS AGREEMENT SHALL BE TRIED AND LITIGATED ONLY IN THE STATE
AND FEDERAL COURTS LOCATED IN THE CITY OF NEW YORK, NEW YORK, AND EACH PARTY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF SUCH COURTS.  EACH PARTY
HEREBY WAIVES, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY
HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE
EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS
SECTION.  EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF
THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY
CLAIMS.  EACH PARTY REPRESENTS THAT IT HAS REVIEWED THIS WAIVER AND
EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL.  IN THE EVENT OF LITIGATION, A COPY
OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.

     

    12.     WAIVER
AND CONSENT

     

    Each
Company hereby irrevocable waives, to the fullest extent permitted by Law, any
right it may have (including, without limitation, under the UCC) to (a) object
or challenge any of the Transactions, including, without limitation, the Secured
Party Sale, and (b) to notice or consultation with respect to the consummation
of the Transactions, including, without limitation, the Secured Party
Sale.  Each Company hereby irrevocable consents to the consummation of
each of the Transactions, including, without limitation, the Secured Party
Sale.

     

    [Signatures on Next Page]

     

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

    
 

     

    
       

      IN
WITNESS WHEREOF, each of the undersigned has executed and delivered this
Assignment and Assumption Agreement as of the date first above
written.

       

      
        	 
      	
                Zoots
      Corporation

              
	 	 
	 	 
	 
      	
                By:                                                                 

                Name:                                                            

                Title:                                                              

              
	 	 
	 	 
	 
      	
                Zoots
      Holding Corporation

              
	 	 
	 	 
	 
      	
                

                  By:                                                                 

                  Name:                                                            

                  Title:                                                              

                

              
	 	 
	 
      	
                Delivery
      LLC

              
	 	 
	 
      	
                

                  

                    

                      By:                                                                 

                      Name:                                                            

                      Title:                                                              

                    

                  

                

              
	 	 
	 
      	
                USDC
      Portsmouth, Inc.

              
	 	 
	 
      	
                

                  

                    

                      By:                                                                 

                      Name:                                                            

                      Title:                                                              

                    

                  

                

              
	 	 
	 
      	
                U.S.
      Dry Cleaning Corporation

              
	 	 
	 
      	
                

                  

                    By:                                                                 

                    Name:                                                            

                    Title:                                                              

                  

                

              

      

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

        List of
Schedules:

        

        

        
          	
                  Schedule
      1

                	
                  Company
      Material Adverse Effect

                
	 
      	 
      
	
                  Schedule
      2(f)

                	
                  Exceptions
      to Sufficiency of Assets

                
	 
      	 
      
	
                  Schedule
      2(i)

                	
                  Accounts
      Receivable

                
	 
      	 
      
	
                  Schedule
      2(j)

                	
                  Litigation

                
	 
      	 
      
	
                  Schedule
      2(l)

                	
                  Permits

                
	 
      	 
      
	
                  Schedule
      2(m)

                	
                  Taxes

                
	 
      	 
      
	
                  Schedule
      2(o)

                	
                  Employees

                
	 
      	 
      
	
                  Schedule
      2(p)

                	
                  Employee
      Benefit Plans

                
	 
      	 
      
	
                  Schedule
      2(q)(i)

                	
                  Tangible
      Assets/Vehicle and Personal Property Leases

                
	 
      	 
      
	
                  Schedule
      2(q)(iv)

                	
                  Inventories

                
	 
      	 
      
	
                  Schedule
      2(q)(vii)

                	
                  Prepaid
      Items/Accounts

                
	 
      	 
      
	
                  Schedule
      2(q)(x)

                	
                  Deposits

                
	 
      	 
      
	
                  Schedule
      4(a)

                	
                  Assigned
      Contracts

                
	 
      	 
      
	
                  Schedule
      4(b)

                	
                  Nonassignable
      Contracts

                
	 
      	 
      
	
                  Schedule
      10(e)

                	
                  Philadelphia
      and New Jersey Networks

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