Form 10-Q

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Rj7cSm66puU46RV4gOCY9fD6SIj0n9jSuK199eIDOHjDgHAZLKf6ma3ORhvGlh4K Cw2UztQjd/wHwvLhm/fiLw== 0001193125-06-169343.txt : 20060810 0001193125-06-169343.hdr.sgml : 20060810 20060810160653 ACCESSION NUMBER: 0001193125-06-169343 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 13 CONFORMED PERIOD OF REPORT: 20060630 FILED AS OF DATE: 20060810 DATE AS OF CHANGE: 20060810 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLIANCE LAUNDRY SYSTEMS LLC CENTRAL INDEX KEY: 0001063699 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MACHINERY, EQUIPMENT & SUPPLIES [5080] IRS NUMBER: 391927923 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-56857 FILM NUMBER: 061021498 BUSINESS ADDRESS: STREET 1: ALLIANCE LAUNDRY SYSTEMS STREET 2: P.O. BOX 990 CITY: RIPON STATE: WI ZIP: 54971-0990 BUSINESS PHONE: 9207481634 MAIL ADDRESS: STREET 1: ALLIANCE LAUNDRY SYSTEMS STREET 2: P.O. BOX 990 CITY: RIPON STATE: WI ZIP: 54971-0990 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLIANCE LAUNDRY HOLDINGS LLC CENTRAL INDEX KEY: 0001063698 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MACHINERY, EQUIPMENT & SUPPLIES [5080] IRS NUMBER: 522055893 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-56857-02 FILM NUMBER: 061021499 BUSINESS ADDRESS: STREET 1: RAYTHEON COMMERCIAL LAUNDRY STREET 2: P.O. BOX 990 CITY: RIPON STATE: WI ZIP: 54971-0990 BUSINESS PHONE: 9207481634 MAIL ADDRESS: STREET 1: RAYTHEON COMMERCIAL LAUNDRY STREET 2: P.O. BOX 990 CITY: RIPON STATE: WI ZIP: 54971-0990 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLIANCE LAUNDRY CORP CENTRAL INDEX KEY: 0001063697 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MACHINERY, EQUIPMENT & SUPPLIES [5080] IRS NUMBER: 391928505 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-56857-01 FILM NUMBER: 061021500 BUSINESS ADDRESS: STREET 1: RAYTHEON COMMERCIAL LAUNDRY STREET 2: P.O. BOX 990 CITY: RIPON STATE: WI ZIP: 54971-0990 BUSINESS PHONE: 9207481634 MAIL ADDRESS: STREET 1: RAYTHEON COMMERCIAL LAUNDRY STREET 2: P.O. BOX 990 CITY: RIPON STATE: WI ZIP: 54971-0990 10-Q 1 d10q.htm FORM 10-Q Form 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2006

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

COMMISSION FILE NUMBER 333-56857

333-56857-01

333-56857-02

ALLIANCE LAUNDRY SYSTEMS LLC

ALLIANCE LAUNDRY CORPORATION

ALLIANCE LAUNDRY HOLDINGS LLC

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE

39-1927923

39-1928505

52-2055893

(STATE OR OTHER JURISDICTION OF

INCORPORATION OR ORGANIZATION)

(I.R.S. EMPLOYER

IDENTIFICATION NO.)

P.O. BOX 990

RIPON, WISCONSIN 54971-0990

(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

(920) 748-3121

(REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes ¨ No x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ¨ No x

The number of shares of Alliance Laundry Corporation’s common stock outstanding as of August 9, 2006: 1,000 shares.

Alliance Laundry Systems LLC

Alliance Laundry Corporation

Alliance Laundry Holdings LLC

Form 10-Q

For The Quarterly Period Ended June 30, 2006

Table of Contents


		Page No.
PART I	Financial Information

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets as of June 30, 2006 and December 31, 2005	3

	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2006 (Successor); the three months ended June 30, 2005 (Successor); the period January 28, 2005 through June 30, 2005 (Successor); and the period January 1, 2005 through January 27, 2005 (Predecessor)	4

	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2006 (Successor); the period January 28, 2005 through June 30, 2005 (Successor); and the period January 1, 2005 through January 27, 2005 (Predecessor)	5

	Condensed Consolidated Statement of Member(s) Equity and Comprehensive Loss for the six months ended June 30, 2006	6

	Notes to Unaudited Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	36

Item 4.	Controls and Procedures	36

PART II	Other Information

Item 1.	Legal Proceedings	38

Item 1A.	Risk Factors	38

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38

Item 3.	Defaults Upon Senior Securities	38

Item 4.	Submission of Matters to a Vote of Security Holders	38

Item 5.	Other Information	38

Item 6.	Exhibits	38

Signatures		40

PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ALLIANCE LAUNDRY HOLDINGS LLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)

(in thousands)


	June 30,		December 31,
	2006		2005
Assets
Current assets:
Cash	$	2,145	$	5,075
Accounts receivable, net		11,364		9,056
Inventories, net		42,235		29,050
Beneficial interests in securitized accounts receivable		21,550		22,327
Deferred income tax assets		1,444		433
Prepaid expenses and other		5,131		2,139

Total current assets		83,869		68,080
Notes receivable, net		4,046		6,131
Property, plant and equipment, net		61,148		66,869
Goodwill		139,903		139,903
Beneficial interests in securitized financial assets		17,168		16,939
Deferred income tax assets		8,432		8,932
Debt issuance costs, net		10,250		11,172
Intangible assets, net		140,588		145,433

Total assets	$	465,404	$	463,459

Liabilities and Member(s) Equity
Current liabilities:
Current portion of long-term debt	$	53	$	—
Revolving credit facility		2,000		—
Accounts payable		10,263		7,866
Other current liabilities		25,848		26,500

Total current liabilities		38,164		34,366
Long-term debt:
Senior credit facility		175,000		177,000
Senior subordinated notes		149,383		149,336
Other long-term debt		947		—
Other long-term liabilities		9,690		8,924

Total liabilities		373,184		369,626
Commitments and contingencies (see Note 8)
Member(s) equity		92,220		93,833

Total liabilities and member(s) equity	$	465,404	$	463,459

The accompanying notes are an integral part of the financial statements.

ALLIANCE LAUNDRY HOLDINGS LLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands)


							Six Months Ended June 30, 2006			January 28, 2005 through June 30, 2005			January 1, 2005 through January 27, 2005
	Three Months Ended
	June 30,			June 30,
	2006			2005
	Successor			Successor			Successor			Successor			Predecessor
Net revenues	$	86,931		$	85,665		$	158,410		$	134,908		$	20,683
Cost of sales		66,829			65,081			119,745			108,418			15,585

Gross profit		20,102			20,584			38,665			26,490			5,098

Selling, general and administrative expense		11,989			10,116			24,486			16,858			3,829
Securitization, impairment and other costs		2,096			8,015			3,924			8,015			—
Transaction costs associated with sale of business		—			—			—			—			18,790

Total operating expenses		14,085			18,131			28,410			24,873			22,619

Operating income (loss)		6,017			2,453			10,255			1,617			(17,521	)
Interest expense		6,785			7,537			13,242			11,301			995
Loss from early extinguishment of debt		—			—			—			—			9,867
Other expense, net		360			—			360			—			—

Loss before taxes		(1,128	)		(5,084	)		(3,347	)		(9,684	)		(28,383	)
(Benefit) provision for income taxes		(307	)		(2,352	)		(1,012	)		(4,021	)		9

Net loss	$	(821	)	$	(2,732	)	$	(2,335	)	$	(5,663	)	$	(28,392	)

The accompanying notes are an integral part of the financial statements.

ALLIANCE LAUNDRY HOLDINGS LLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)


	Six Months Ended June 30, 2006			January 28, 2005 through June 30, 2005			January 1, 2005 through January 27, 2005
	Successor			Successor			Predecessor
Cash flows from operating activities:
Net loss	$	(2,335	)	$	(5,663	)	$	(28,392	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		11,245			10,365			526
Non-cash interest (income) expense		(808	)		36			351
Non-cash executive unit compensation		1,809			—			1,089
Non-cash trademark impairment		1,400			—			—
Non-cash debt financing write-off		—			—			5,751
Non-cash inventory expense		—			6,246			—
Deferred income tax assets		(1,011	)		(4,060	)		—
Loss on sale of property, plant and equipment		131			3			—
Changes in assets and liabilities:
Accounts receivable		(1,741	)		(10,284	)		(556	)
Inventories		(13,185	)		(824	)		(1,833	)
Other assets		1,365			6,220			101
Accounts payable		2,397			(21,267	)		19,076
Other liabilities		(163	)		3,407			(2,732	)

Net cash used in operating activities		(896	)		(15,821	)		(6,619	)

Cash flows from investing activities:
Additions to property, plant and equipment		(2,492	)		(2,072	)		(188	)
Cash paid for business development		(1,738	)		—			—
Proceeds on disposition of assets		1,226			1			—

Net cash used in investing activities		(3,004	)		(2,071	)		(188	)

Cash flows from financing activities:
Principal payments on long-term debt		(2,000	)		(5,000	)		1
Net increase in revolving line of credit borrowings		2,000			—			—
Proceeds from promissory notes		1,000			—			—
Proceeds from senior term loan		—			200,000			—
Proceeds from senior subordinated notes		—			149,250			—
Repayment of long-term debt		—			(275,920	)		—
(Repurchase) issuance of common stock		(30	)		117,000			—
Distribution to old unitholders		—			(154,658	)		—
Debt financing costs		—			(13,230	)		—
Cash paid for capitalized offering related costs		—			(1,364	)		—
Net proceeds - management note		—			—			(71	)

Net cash provided by (used in) financing activities		970			16,078			(70	)

Decrease in cash		(2,930	)		(1,814	)		(6,877	)
Cash at beginning of period		5,075			4,594			11,471

Cash at end of period	$	2,145		$	2,780		$	4,594

The accompanying notes are an integral part of the financial statements.

ALLIANCE LAUNDRY HOLDINGS LLC

CONDENSED CONSOLIDATED STATEMENT OF MEMBER(S) EQUITY

AND COMPREHENSIVE LOSS

(unaudited)

(in thousands)


							Unrealized
				Minimum			Holding Gain		Total
	Member(s)			Pension			on Residual		Member(s)
	Equity			Liability, Net			Interests, Net		Equity
Balances at December 31, 2005	$	94,583		$	(751	)	$	1	$	93,833
Net (loss)		(2,335	)		—			—		(2,335	)
Repurchased stock		(30	)		—			—		(30	)
Change in minimum pension liability, net		—			751			—		751
Unrealized holding gain, net		—			—			1		1

Total comprehensive (loss)									$	(1,613	)

Balances at June 30, 2006	$	92,218		$	—		$	2	$	92,220

The accompanying notes are an integral part of the financial statements.

Notes to Unaudited Condensed Consolidated Financial Statements

NOTE 1. BASIS OF PRESENTATION

On January 27, 2005, ALH Holding Inc. (“ALH”), an entity formed by Teachers’ Private Capital, the private equity arm of Ontario Teachers’ Pension Plan Board (“OTPP”), acquired 100% of the outstanding equity interests in Alliance Laundry Holdings LLC, a Delaware limited liability company (“Alliance Holdings”). We refer to the acquisition of Alliance Holdings and the related management investments in ALH as the “Acquisition.”

In connection with the closing of the Acquisition, we issued $150.0 million of 8¹/2% senior subordinated notes due January 15, 2013 (the “Senior Subordinated Notes”), established a $250.0 million senior secured credit facility (the “Senior Credit Facility”) and repaid the $110.0 million aggregate principal amount of our then outstanding 9⁵/8% Senior Subordinated Notes due 2008 (the “1998 Senior Subordinated Notes”). We refer to the above financing transactions (the “Financing Transactions”), taken together with the Acquisition, as the “Transactions.”

As a result of the Transactions, activity that occurred prior to January 27, 2005 has been reflected as the Predecessor and activity that occurred after January 27, 2005 has been reflected as the Successor. We have inserted a dark vertical or horizontal line to segregate the activities of the Predecessor and Successor. The distinction between Predecessor and Successor relates to the application of purchase accounting in accordance with Statement of Financial Accounting Standards (SFAS) No. 141, “Business Combinations.”

Throughout this quarterly report, we refer to Alliance Holdings, together with its consolidated operations, as “Alliance,” “we,” “our,” “Predecessor,” “Successor,” and “us,” unless otherwise indicated. Any reference to “Alliance Laundry” refers to our wholly-owned subsidiary, Alliance Laundry Systems LLC, a Delaware limited liability company, and its consolidated operations, unless otherwise indicated.

The unaudited financial statements as of and for the quarter ended June 30, 2006 present the consolidated financial position and results of operations of Alliance Laundry Holdings LLC, including our wholly-owned direct and indirect subsidiaries, Alliance Laundry Systems LLC and Alliance Laundry Corporation.

In the opinion of management, the accompanying unaudited interim financial statements contain all adjustments necessary (consisting only of normal recurring adjustments) for a fair statement of our financial position and operating results for the periods presented. The results of operations for such interim periods are not necessarily indicative of results of operations to be expected for the full year.

These interim financial statements have been prepared by us pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and disclosures normally included in our annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such regulations, although we believe the disclosures provided are adequate to prevent the information presented from being misleading.

Certain amounts in the prior year financial statements have been reclassified to conform to the current year presentation.

This report on Form 10-Q for the period ended June 30, 2006 should be read in conjunction with the audited financial statements presented in our December 31, 2005 Annual Report on Form 10-K (file no. 333-56857) filed with the Securities and Exchange Commission.

NOTE 2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In November of 2004, the FASB issued SFAS No. 151, “Inventory Costs,” an amendment of ARB No. 43, Chapter 4, “Inventory Pricing” which requires that abnormal amounts of idle capacity and spoilage costs be excluded from the cost of inventory and expensed when incurred. The provisions of SFAS No. 151 are applicable to inventory costs incurred during fiscal years beginning after June 15, 2005. The adoption of SFAS No. 151 did not have a material effect on the Company’s consolidated results of operations and financial position.

During December 2004, the FASB issued SFAS No. 123R “Share-Based Payment” (“SFAS 123R”), which replaces SFAS No. 123, “Accounting for Stock-Based Compensation,” (“SFAS 123”) and supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees.” SFAS 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized as expense in the financial statements based on their fair values beginning with the first annual period after June 15, 2005. The pro forma disclosures previously permitted under SFAS 123 will no longer be an alternative to expense recognition. We adopted SFAS 123R using the modified-prospective method in the first quarter of calendar year 2005.

The FASB is expected to issue a statement that would amend and clarify SFAS No. 140 (and related implementation guidance). The proposed statement will address permitted activities of qualifying special-purpose entities, including the degree of discretion allowable in determining the terms of beneficial interests issued after inception, and whether certain transfers can meet the criteria for sale accounting under SFAS No. 140 if the transferor or any consolidated affiliate provides liquidity support for the transferee’s beneficial interests. As the proposed statement has not been issued, we are unable to determine the effects of the related transition provisions, if any, on our existing securitization entity. However, in the event that transfers to our existing asset backed facility would no longer qualify as sales of financial assets in the future, we may recognize additional costs for a replacement facility or it may have other material financial statement effects. An exposure draft was issued in the third quarter of 2005 and a final document is anticipated in the first quarter of 2007.

In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections,” a replacement of APB Opinion No. 20 and FASB Statement No. 3. This statement applies to voluntary changes in accounting principles and requires retrospective application to prior period financial statements, unless impracticable to determine. The statement is a result of a broader effort by the FASB to improve comparability of financial reporting between U.S. and international accounting standards. This Statement is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The adoption of SFAS No. 154 did not have a material effect on the Company’s consolidated results of operations and financial position.

In June 2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109” (FIN 48). FIN 48 prescribes a comprehensive model for how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return. FIN 48 will be effective for fiscal years beginning after December 15, 2006. We are currently in the process of evaluating the effect, if any, FIN 48 will have on our consolidated financial statements.

In June 2006, the FASB ratified the consensus on Emerging Issues Task Force (EITF) Issue No. 06-3, How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement. (EITF 06-03). The scope of EITF 06-03 includes any tax assessed by a governmental authority that is directly imposed on a revenue-producing transaction between a seller and a customer and may include, but is not limited to, sales, use, value added, and some excise taxes. The Task Force affirmed its

conclusion that entities should present these taxes in the income statement on either a gross or a net basis, based on their accounting policy, which should be disclosed pursuant to APB Opinion No. 22, Disclosure of Accounting Policies. If such taxes are significant, and are presented on a gross basis, the amounts of those taxes should be disclosed. The consensus on EITF 06-03 will be effective for interim and annual reporting periods beginning after December 15, 2006. The Company currently records gross receipts taxes and miscellaneous other taxes on a net basis in its consolidated statements of operations. Should the Company conclude that such amounts are more appropriately presented on a gross basis, it would have a material impact on total operating revenues and expenses, although operating income and net income would not be affected.

NOTE 3. RESTRUCTURING AND OTHER ITEMS

Asset Impairment Charge

On March 20, 2006, the Board of Directors of ALH Holding Inc. resolved to discontinue the sale of AJAX® finished goods. We expect to discontinue the sale of AJAX® finished goods during the third quarter of 2006. In connection with this discontinuation, we recorded a non-cash charge for impairment of $1.4 million in the quarter ending March 31, 2006, for the reduction in the value of the AJAX® trademark. The Company had previously reduced the value of the AJAX® trademark by $1.7 million in the fourth quarter of 2005, based on an asset impairment test conducted pursuant to SFAS No. 142, “Goodwill and Other Intangible Assets.” These amounts are recorded within the Securitization, impairment and other costs line item of our consolidated statements of operations.

On June 15, 2006, Alliance Laundry Systems LLC (the “Company”) entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Sankosha Engineering Co. Ltd. (“Sankosha Engineering”) pursuant to which the Company agreed to sell to Sankosha Engineering certain intellectual property (including the “AJAX®” trademark and trade name) associated with the Company’s line of AJAX® pressing and finishing equipment for $1.2 million. As this was the net book value of the intellectual property at the time, there was no gain or loss recognized on the sale. The Company may continue to sell pressing and finishing equipment and accessories using the AJAX® trademark or trade name until October 31, 2006, and may sell service and repair parts using the AJAX® trademark or trade name for ten years from the date of the Purchase Agreement.

Costs Associated With Exit or Disposal Activities

On October 12, 2005, we committed to a plan to close our Marianna, Florida facility (the “Facility”) and consolidate the manufacture and design of the Facility’s product lines into our existing Ripon, Wisconsin operations. We have substantially completed the facility closure and consolidation as of July 30, 2006.

We estimate total cash costs and expenses associated with the closure of the Facility to be approximately $7.8 million, comprised of (1) approximately $3.1 million of one-time termination benefits and relocation costs; (2) approximately $2.2 million of other labor related costs including training and temporary living expenses; (3) approximately $1.5 million related to the relocation of the Facility’s tooling and equipment; and (4) approximately $1.0 million of other related expenses.

We estimate total non-cash costs and expenses associated with the closure of the Facility to be approximately $4.2 million, related to additional depreciation expense. This cost was partially offset by a post-retirement health care plan curtailment benefit of $0.6 million and a pension plan curtailment benefit of $0.5 million, which were recognized in the second quarter of 2006. The additional depreciation expense results from a re-evaluation of the remaining useful lives of our Marianna facility’s buildings and land improvements in accordance with applicable accounting rules.

For the three months ended June 30, 2006, we recorded $3.2 million of net charges for the Facility closure and transition of product lines to Wisconsin. Included in this total are $2.1 million of closure costs reflected in the Securitization, impairment and other costs line of our consolidated statements of operations, which include $3.2 million of costs for employee retention, moving equipment to Wisconsin and employee travel and also includes the post-retirement health care plan curtailment benefit of $0.6 million and the pension plan curtailment benefit of $0.5 million. Also included in the $3.2 million total are $1.1 million of cash charges related to the transfer of the Marianna, Florida product lines to Ripon, Wisconsin, which are reflected in the selling, general and administrative expense line of our consolidated statements of operations. Additionally, we recorded a non-cash charge of $1.6 million related to the additional depreciation expense for the Marianna Facility, which is reflected in the cost of sales line of our consolidated statements of operations.

For the six months ended June 30, 2006, we recorded $4.3 million of net charges for the Facility closure and transition of product lines to Wisconsin. Included in this total are $2.5 million of closure costs reflected in the Securitization, impairment and other costs line of our consolidated statements of operations, which include $3.6 million of costs for employee retention, moving equipment to Wisconsin and employee travel and also includes the post-retirement health care plan curtailment benefit of $0.6 million and the pension plan curtailment benefit of $0.5 million. Also included in the $4.3 million total are $1.8 million of cash charges related to the transfer of the Marianna, Florida product lines to Ripon, Wisconsin, which are reflected in the selling, general and administrative expense line of our consolidated statements of operations. Additionally, for the six months ended June 30, 2006, we recorded a non-cash charge of $3.2 million related to the additional depreciation expense for the Marianna Facility, which is reflected in the cost of sales line of our consolidated statements of operations.

As of June 30, 2006, the estimated remaining cash costs and expenses associated with the closure of the Facility are approximately $1.9 million, comprised of (1) approximately $0.7 million of one-time termination benefits and relocation costs; (2) approximately $0.5 million of other labor related costs including training and temporary living expenses; (3) approximately $0.5 million related to the relocation of the Facility’s tooling and equipment; and (4) approximately $0.2 million of other related expenses. We currently anticipate that substantially all the remaining closure costs for the Marianna Facility will be incurred prior to December 31, 2006.

As of October 12, 2005, we had 414 employees located at our Marianna, Florida facility. As of June 30, 2006 we had 155 employees at the Marianna, Florida facility.

Costs Associated with 2005 Asset Backed Facility

Acquisition Related Costs

In connection with the Acquisition, the Company incurred $18.8 million of seller related expenses. These amounts were expensed in the period ended January 27, 2005, and are reflected as a deduction in determining operating income (loss). In connection with the Acquisition, the Company also incurred $9.9 million of expenses related to the early redemption of debt. These amounts were expensed in the period ended January 27, 2005, and are reflected as a loss from early extinguishment of debt.

NOTE 4. ASSET BACKED FACILITY

According to SFAS No. 125 and 140, a transfer of financial assets in which the transferor surrenders control over those assets is accounted for as a sale to the extent that consideration other than beneficial interests in the transferred assets is received in exchange. We sell all of our trade receivable and eligible notes receivable to third parties through a special-purpose bankruptcy remote entity designed to meet the SFAS No. 125 and 140 requirements for sale treatment. Accordingly, we remove these receivables from our balance sheet at the time of transfer.

In a subordinated capacity, we retain rights to the residual portion of cash flows, including interest earned, from the notes receivable sold. This retained beneficial interest is recorded at its estimated fair value at the balance sheet date. In determining the gain on sales of notes receivable, the investment in the sold receivable pool is allocated between the portion sold and the portion retained, based on their relative fair values. We generally estimate the fair values of our retained interests based on the present value of expected future cash flows to be received, using our best estimate of key assumptions, including credit losses, prepayment rates, interest rates and discount rates commensurate with the risks involved. Unrealized gains and losses resulting from changes in the estimated fair value of our retained interests are recorded as other comprehensive income (loss). Impairment losses are recognized when the estimated fair value is less than the carrying amount of the retained interest in accordance with EITF 99-20.

On June 28, 2005, Alliance Laundry, through a special-purpose bankruptcy remote subsidiary, Alliance Laundry Equipment Receivables 2005 LLC (“ALER 2005”), and a trust, Alliance Laundry Equipment Receivables Trust 2005-A (“ALERT 2005A”), entered into a four year $330.0 million revolving credit facility (the “Asset Backed Facility”), backed by equipment loans and trade receivables originated by us. During the first four years of the new Asset Backed Facility, Alliance Laundry is permitted, from time to time, to sell its trade receivables and certain equipment loans to the special-purpose subsidiary, which in turn will sell them to the trust. The trust finances the acquisition of the trade receivables and equipment loans through borrowings under the Asset Backed Facility in the form of funding notes, which are limited to an advance rate of approximately 95% for equipment loans and 60-70% for trade receivables. Funding availability for trade receivables is limited to a maximum of $60.0 million, while funding for equipment loans is limited at $330.0 million less the amount of funding outstanding for trade receivables. Funding for the trade receivables and equipment loans is subject to certain eligibility criteria, including concentration and other limits, standard for transactions of this type. After four years from the closing date, which is June 27, 2009, (or earlier in the event of a rapid amortization event or an event of default), the trust will not be permitted to request new borrowings under the facility and the outstanding borrowings will amortize over a period of up to nine years. As of June 30, 2006, the balance of variable funding notes due to lenders under the Asset Backed Facility for equipment loans was $225.5 million.

Additional advances under the Asset Backed Facility are subject to certain continuing conditions, including but not limited to (i) covenant restrictions relating to the weighted average life, weighted average interest rate, and the amount of fixed rate equipment loans held by the trust, (ii) the absence of a rapid amortization event or event of default, as defined, (iii) our compliance, as servicer, with certain financial covenants, and (iv) no event having occurred which materially and adversely affects our operations.

The variable funding notes under the Asset Backed Facility will commence amortization and borrowings thereunder will cease prior to four years after the closing date upon the occurrence of certain “rapid amortization events” which include: (i) a borrowing base shortfall exists and remains uncured, (ii) delinquency,

dilution or default ratios on pledged receivables and equipment loans exceeding certain specified ratios in any given month, (iii) the days sales outstanding on receivables exceed a specified number of days, (iv) the occurrence and continuance of an event of default or servicer default under the Asset Backed Facility, including but not limited to, as servicer, a material adverse change in our business or financial condition and our compliance with certain required financial covenants, and (v) a number of other specified events.

The risk of loss to the note purchasers under the new Asset Backed Facility resulting from default or dilution on the trade receivables and equipment loans is protected by credit enhancement, provided by us in the form of cash reserves, letters of credit and overcollateralization. Further, the timely payment of interest and the ultimate payment of principal on the facility is guaranteed by Ambac Assurance Corporation. All of the residual beneficial interests in the trust and cash flows remaining from the pool of receivables and loans after payment of all obligations under the Asset Backed Facility would accrue to the benefit of Alliance Laundry. Except for the retained interests and amounts of the letters of credit outstanding from time to time as credit enhancement, we provide no support or recourse for the risk of loss relating to default on the assets transferred to the trust. In addition, we are paid a monthly servicing fee equal to one-twelfth of 1.0% of the aggregate balance of such trade receivables and equipment loans.

The estimated fair value of Alliance Laundry’s beneficial interests in the accounts receivable and notes sold to ALERT 2005A are based on the amount and timing of expected distributions to Alliance Laundry as the holder of the trust’s residual equity interests. Such distributions may be substantially deferred or eliminated, and result in an impairment of our residual interests, if repayment of the variable funding notes issued by ALERT 2005A is accelerated upon an event of default or rapid amortization event described above.

At June 30, 2006, our retained interest in trade accounts receivable sold to ALER 2005 was $21.6 million and our estimated fair value of beneficial interests in notes sold was $17.2 million.

NOTE 5. GOODWILL AND OTHER INTANGIBLES

Identifiable intangible assets, which are subject to amortization, consist primarily of customer agreements and distributor networks which are amortized over the assets’ estimated useful lives ranging from five to twelve years; engineering drawings, product designs and manufacturing processes, which are amortized over their estimated useful lives ranging from four to fifteen years; and computer software and patents which are amortized over their estimated useful lives ranging from three to twenty years. Intangible assets also include trademarks and tradenames, which have an indefinite life. Such assets are not amortized, but are subject to an annual impairment test pursuant to SFAS No. 142, “Goodwill and Other Intangible Assets.” Amortization expense associated with identifiable intangible assets was as follows (in thousands):


	Three Months Ended June 30, 2006		Three Months Ended June 30, 2005		Six Months Ended June 30, 2006		January 28, 2005 through June 30, 2005		January 1, 2005 through January 27, 2005
	Successor		Successor		Successor		Successor		Predecessor
Amortization expense	$	1,134	$	1,114	$	2,267	$	1,885	$	14

The following is a summary of identifiable intangible assets as of June 30, 2006 and December 31, 2005 (in thousands):


	June 30, 2006						December 31, 2005
	Gross		Accumulated		Net		Gross		Accumulated		Net
	Amount		Amortization		Amount		Amount		Amortization		Amount
Identifiable intangible assets:
Trademarks, tradenames	$	109,736	$	—	$	109,736	$	112,336	$	—	$	112,336
Customer agreements and distributor network		28,247		5,147		23,100		28,247		3,330		24,917
Engineering and manufacturing designs and processes		7,861		915		6,946		7,861		592		7,269
Patents		256		9		247		233		3		230
Computer software and other		906		347		559		906		225		681

	$	147,006	$	6,418	$	140,588	$	149,583	$	4,150	$	145,433

NOTE 6. INVENTORIES

Inventories are stated at cost using the first-in, first-out method but not in excess of net realizable value, and consist of the following (in thousands):


	June 30,			December 31,
	2006			2005
Materials and purchased parts	$	16,228		$	10,259
Work in process		5,425			4,448
Finished goods		23,692			15,859
Inventory reserves		(3,110	)		(1,516	)

	$	42,235		$	29,050

At January 27, 2005, as a result of the Acquisition, the Company recorded inventories at fair market value. This resulted in a net write-up of $6.2 million. Of this amount $5.6 million was expensed to cost of sales in the period January 28, 2005 through March 31, 2005 and the remaining $0.6 million was expensed in the second quarter of 2005 as this inventory was sold.

NOTE 7. OTHER LONG-TERM DEBT

On January 25, 2006 we received $1.0 million in borrowings, evidenced by two promissory notes, pursuant to a Wisconsin Community Development Block Grant Agreement (the “Agreement”) dated January 6, 2006 between the Wisconsin Department of Commerce, Alliance Laundry and Fond du Lac County, Wisconsin. The first promissory note, in the amount of $0.5 million bears interest at an annual rate of 2%, with monthly payments of interest and principal commencing January 1, 2007 and a final installment paid on December 1, 2010, subject to the covenants of the Agreement. The second promissory note, in the amount of $0.5 million bears interest at an annual rate of 2%, with monthly payments of interest and principal commencing January 1, 2009 and a final installment paid on December 1, 2010, subject to the covenants of the Agreement. A portion or the entire amount of this second promissory note may be forgiven if we meet certain job creation and retention requirements outlined in the promissory note.

NOTE 8. COMMITMENTS AND CONTINGENCIES

Various claims and legal proceedings generally incidental to the normal course of business are pending or threatened against us. While we cannot predict the outcome of these matters, in the opinion of management, any liability arising thereunder will not have a material adverse effect on our business, financial condition and results of operations after giving effect to provisions already recorded.

Environmental, Health and Safety Matters

We are subject to comprehensive and frequently changing federal, state and local environmental and occupational health and safety laws and regulations, including laws and regulations governing emissions of air pollutants, discharges of waste and storm water and the disposal of hazardous wastes. We are also subject to liability for the investigation and remediation of environmental contamination (including contamination caused by other parties) at the properties we own or operate and at other properties where our Company or predecessors have arranged for the disposal of hazardous substances. As a result, we are involved, from time to time, in administrative and judicial proceedings and inquiries relating to environmental matters. There can be no assurance that we will not be involved in such proceedings in the future and that the aggregate amount of future clean-up costs and other environmental liabilities will not have a material adverse effect on our business, financial condition and results of operations. We believe that our facilities and operations are in material compliance with all environmental, health and safety laws.

NOTE 9. GUARANTEES

We, through our special purpose bankruptcy remote subsidiary, entered into a $330.0 million Asset Backed Facility on June 28, 2005 for the purpose of selling trade receivables and certain equipment loans. Pursuant to the terms of the Asset Backed Facility, we provide credit enhancement to the note purchasers including an irrevocable letter of credit, which is an unconditional lending commitment of the lenders under the Senior Credit Facility, subject to certain limits. We are obligated under the reimbursement provisions of the Senior Credit Facility to reimburse the lenders for any drawings on the credit enhancement by the facility indenture trustee. If the credit enhancement is not replenished by us after a drawing, the trust will not be permitted to request new borrowings under the Asset Backed Facility and the Asset Backed Facility will begin to amortize. The amount of the irrevocable letter of credit related to the Asset Backed Facility at June 30, 2006 was $29.2 million.

We offer warranties to our customers depending upon the specific product and the product use. Standard product warranties vary from one to three years for most components with certain components extending to five years. Certain customers have elected to buy products without warranty coverage. The standard warranty program requires that we replace defective components within a specified time period from the date of installation. We record an estimate for future warranty related costs based on actual historical incident rates and cost per incident trends. Based on analysis of these and other factors, the carrying amount of our warranty liability is adjusted as necessary. While our warranty costs have historically been within our calculated estimates, it is possible that future warranty costs could exceed those estimates.

The changes in the carrying amount of our total product warranty liability for the periods presented were as follows (in thousands):


	Six Months			January 28,			January 1,
	Ended			2005 through			2005 through
	June 30,			June 30,			January 27,
	2006			2005			2005
	Successor			Successor			Predecessor
Balance at beginning of period	$	4,109		$	4,309		$	4,309
Accruals for current and pre-existing warranties issued during the period		1,542			994			140
Settlements made during the period		(1,417	)		(1,094	)		(140	)

Balance at end of period	$	4,234		$	4,209		$	4,309

NOTE 10. INCOME TAXES

Alliance Holdings is a single member limited liability company owned by ALH, which is a corporation for U.S. tax purposes. Accordingly, the consolidated financial statements are being presented as if Alliance Holdings was taxed as a corporation. We use the liability method of accounting for income taxes whereby deferred income taxes are recorded for the future tax consequences attributable to differences between the financial statement and tax bases of assets and liabilities. Deferred income tax assets and liabilities are measured using tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred income tax assets and liabilities are revalued to reflect new tax rates during the periods in which rate changes are enacted. Management believes, based on the operating earnings in prior years, expected reversals of taxable temporary differences, and reliance on future earnings, that it is more likely than not that the recorded deferred tax assets are fully realizable.

The income tax provision (benefit) for the six months ended June 30, 2006 was determined by applying an estimated annual effective income tax rate of 30.3% to income before taxes. The estimated effective income tax rate was determined by applying statutory income tax rates to our annualized forecast of pretax income adjusted for certain permanent book/tax differences and tax credits. The effective tax rate for the period January 28, 2005 through June 30, 2005 was 41.5%. The decrease is primarily a result of a State of Wisconsin development zone tax credit awarded to the Company which has reduced the effective state income tax rates between the periods.

There are various factors that may cause our tax assumptions to change in the near term, and we may have to record a valuation allowance against our deferred income tax assets. We cannot predict whether future U.S. federal and state income tax laws and regulations might be passed that could have a material effect on our results of operations. We will assess the impact of significant changes to the U.S. federal and state income tax laws and regulations on a regular basis and update the assumptions and estimates used to prepare our consolidated financial statements when new regulations and legislation are enacted.

We did not provide for U.S. federal income taxes or tax benefits prior to the January 27, 2005 Transactions as the Company was a partnership for tax reporting purposes and the payment of federal and most state taxes were the responsibility of the partners.

NOTE 11. EMPLOYEE BENEFIT PLANS

Substantially all of our employees are covered by a defined benefit pension plan. In addition, we provide certain health care benefits for retired employees for a limited time. The components of periodic benefit costs for the three months ended June 30, 2006 and 2005 are as follows (in thousands):


	Pension Benefits						Other Benefits
	Three Months Ended June 30, 2006			Three Months Ended June 30, 2005			Three Months Ended June 30, 2006			Three Months Ended June 30, 2005
	Successor			Successor			Successor			Successor
Service cost	$	475		$	428		$	29		$	32
Interest cost		733			690			32			33
Expected return on assets		(869	)		(911	)		—			—
Amortization of prior service cost		—			—			(6	)		—
Amortization of loss		—			—			—			—
Curtailment gain		(513	)		—			(619	)		—

Net periodic benefit cost	$	(174	)	$	207		$	(564	)	$	65

The components of periodic benefit costs for these plans for the periods presented are as follows (in thousands):


	Pension Benefits									Other Benefits
	Six Months			January 28,			January 1,			Six Months			January 28,		January 1,
	Ended			2005 through			2005 through			Ended			2005 through		2005 through
	June 30,			June 30,			January 27,			June 30,			June 30,		January 27,
	2006			2005			2005			2006			2005		2005
	Successor			Successor			Predecessor			Successor			Successor		Predecessor
Service cost	$	942		$	731		$	151		$	54		$	54	$	11
Interest cost		1,448			1,145			229			59			54		10
Expected return on assets		(1,784	)		(1,515	)		(311	)		—			—		—
Amortization of prior service cost		—			—			6			(11	)		—		4
Amortization of loss		—			—			4			—			—		7
Curtailment gain		(513	)		—			—			(619	)		—		—

Net periodic benefit cost	$	93		$	361		$	79		$	(517	)	$	108	$	32

The curtailment gain was recorded as a result of the termination of employees in Marianna, Florida in connection with the Marianna facility closure which is further discussed in Note 3.

Employer Contributions

We anticipate making a voluntary contribution in 2006 of approximately $1.0 million to the pension plan which is consistent with our previous disclosures in our financial statements for the year ended December 31, 2005. As of June 30, 2006, no contributions have been made.

NOTE 12. STOCK-BASED COMPENSATION

On January 27, 2005, in connection with the Acquisition, ALH established a stock option plan, primarily for the benefit of Alliance Laundry’s executive officers. No further options were issued since that time and no options were exercised in the period ended June 30, 2006. Based upon a valuation of these stock options, for the six months ended June 30, 2006, we recognized $1.8 million of compensation expense. No compensation expense was recorded for the period from January 28, 2005 through June 30, 2005. For the period ended January 27, 2005, we recognized $1.1 million of compensation expense, primarily associated with the acceleration of vesting of units as of the Acquisition date under a prior incentive program.

NOTE 13. SEGMENT INFORMATION

Based upon the information used by management for making operating decisions and assessing performance, we have organized our business into two reportable segments. Commercial laundry equipment sales to domestic and international markets are combined to form the commercial laundry segment. Commercial laundry net sales include amounts related to our finance program which supports the commercial laundry operations. Our other reportable segment is consumer laundry, which includes sales to domestic and Canadian distributors. Service parts is not considered a separate segment, in that the service operations are required to support both commercial laundry and consumer laundry segments, but the operations could not stand alone and the results are not reviewed as a separate operating entity. As the service operations are also not allocated to the commercial laundry equipment segment or the consumer laundry segment, we have chosen to show the service operations separately.

Our assets and liabilities, including inventory, trade receivables, property, plant and equipment, and accounts payable are not reviewed by segment by management for making operating decisions and assessing performance. Such information would not be useful due to common manufacturing lines and significant shared components across all product lines.

Our primary measure of operating performance is gross profit which does not include an allocation of any selling expenses. Such amounts are reviewed on a consolidated basis by management. In determining gross profit for our operating units, we do not allocate certain manufacturing costs, including manufacturing variances and warranty costs. Gross profit is determined by subtracting cost of sales from net sales. Cost of sales is comprised of the costs of raw materials and component parts, plus costs incurred at the manufacturing plant level, including, but not limited to, labor and related fringe benefits, depreciation, supplies, utilities, property taxes and insurance. We do not allocate assets internally in assessing operating performance. Net sales and gross profit as determined by the Company for its operating segments for the three months ended June 30, 2006 and 2005 are as follows (in millions):


	Three Months Ended					Three Months Ended
	June 30, 2006					June 30, 2005
	Net Sales		Gross Profit			Net Sales		Gross Profit
	Successor					Successor
Commercial laundry	$	72.5	$	23.0		$	73.4	$	24.1
Consumer laundry		3.7		(0.1	)		2.2		(0.1	)
Service parts		10.7		4.2			10.1		4.2

	$	86.9		27.1		$	85.7		28.2

Other manufacturing costs				(7.0	)				(7.6	)

Gross profit as reported			$	20.1				$	20.6

Net sales and gross profit as determined by the Company for its operating segments for the periods presented are as follows (in millions):


	Six Months Ended					January 28, 2005 through					January 1, 2005 through
	June 30, 2006					June 30, 2005					January 27, 2005
	Net Sales		Gross Profit			Net Sales		Gross Profit			Net Sales		Gross Profit
	Successor					Successor					Predecessor
Commercial laundry	$	129.7	$	42.7		$	114.1	$	36.9		$	17.3	$	4.6
Consumer laundry		6.8		(0.2	)		3.2		(0.1	)		0.2		—
Service parts		21.9		9.1			17.6		7.5			3.2		1.5

	$	158.4		51.6		$	134.9		44.3		$	20.7		6.1

Other manufacturing costs				(12.9	)				(17.8	)				(1.0	)

Gross profit as reported			$	38.7				$	26.5				$	5.1

NOTE 14. SUBSEQUENT EVENTS

On July 14, 2006, Alliance Laundry completed the acquisition of substantially all of Laundry System Group NV’s (“LSG”) commercial laundry division (“CLD”) operations pursuant to a share purchase agreement, dated May 23, 2006 (the “Share Purchase Agreement”), between Alliance Laundry and LSG, and a purchase agreement, dated May 23, 2006 (the “Purchase Agreement”), among Alliance Laundry, LSG, Cissell Manufacturing Company, Jensen USA Inc. and LSG North America, Inc. Alliance Laundry acquired LSG’s Belgian CLD operations pursuant to the Share Purchase Agreement by purchasing all of the outstanding stock of a wholly-owned direct subsidiary of LSG for approximately 45.3 million Euros, which price is subject to adjustment in accordance with the Share Purchase Agreement, and the assumption of approximately 5.1 million Euros of debt. Alliance Laundry acquired LSG’s United States CLD operations pursuant to the Purchase Agreement for 8.6 million Euros. The Share Purchase Agreement prohibits LSG from competing with the Company in certain segments of the commercial laundry business for a period of three years and restricts LSG’s ability to solicit commercial laundry division customers, suppliers, employees, directors and certain other persons for a period of two years following the completion of the transaction. CLD markets commercial washer-extractors, tumbler dryers, and ironers worldwide under the Ipso and Cissell brand names, and has its headquarters in Wevelgem, Belgium, and manufacturing facilities and sales offices in the United States, Belgium, Norway and Spain.

In support of this acquisition we incurred $2.4 million of legal and professional fees through June 30, 2006, which have been recorded in prepaid expenses in our Condensed Consolidated Balance Sheet as of that date.

On July 14, 2006, Alliance Laundry, Alliance Holdings, Lehman Commercial Paper Inc., as administrative agent and lender, and the other parties named therein as lenders, entered into an amendment (the “Amendment”) to the credit agreement, dated as of January 27, 2005 (the “Credit Agreement”), among Alliance Laundry, Alliance Holdings, ALH Finance LLC, Lehman Commercial Paper Inc., as administrative agent, and the several banks and other financial institutions party thereto. The Amendment amends the Credit Agreement to (i) provide for an additional $60 million of term loans under the Credit Agreement term loan facility, (ii) increase the revolving credit commitments to $55.0 million from $50.0 million under the Credit Agreement revolving credit facility, (iii) permit the acquisition of CLD, (iv) modify certain negative covenants in the Credit Agreement, including by (a) adjusting the calculation of the consolidated leverage ratio, (b) adjusting the calculation of the consolidated interest coverage ratio, (c) increasing the annual ordinary course capital expenditures permitted by Alliance Laundry and its subsidiaries to $13.0 million from $10.0 million, effective 2007, and (d) increasing the maximum permitted debt Alliance Laundry’s non-U.S. subsidiaries may incur without restriction to $5.0 million from $2.5 million, (v) revising the procedure for term

loan borrowing, (vi) revising the term loan repayment schedule to require repayment in 22 quarterly installments of $587,500 commencing on September 30, 2006, and one installment of $222,075,000, or such lesser amount then outstanding, on January 27, 2012, and (vii) making conforming changes to the definitions contained therein. This Amendment did not affect interest rates charged under the Credit Agreement. The additional term loans were used to partially finance the acquisition of CLD.

The acquisition of CLD was funded through the $60.0 million of increased term loans, $3.2 million of incremental equity contribution from management investors and a $20.0 million equity bridge facility. The equity bridge facility is expected to be replaced by an additional equity contribution from OTPP in 2006. The equity bridge loan is not secured by any of our assets.

On August 8, 2006, the Board of Directors of ALH Holding Inc. resolved to discontinue our Louisville, Kentucky operations (the “Discontinuance”) and close our Portland, Tennessee facility (the “Closure”). We expect to complete the Discontinuance and Closure within the next six months. The decision was based on an analysis of each location’s manufacturing capabilities as well as the continuing investment requirements for each of the locations.

We estimate total cash costs and expenses associated with the Discontinuance and Closure to be approximately $3.3 million, comprised of (1) approximately $1.5 million of one-time termination benefits; (2) approximately $0.2 million of other labor related costs including training and temporary living expenses; (3) approximately $0.3 million related to the relocation of tooling and equipment; (4) approximately $1.0 million related to contractual obligations; and (5) approximately $0.3 million of other related expenses. We expect these costs to be partially offset by the proceeds of the anticipated sale of the Portland facility. We are currently evaluating the accounting for these restructuring activities under Emerging Issues Task Force Issue No. 95-3, “Recognition of Liabilities in Connection with a Purchase Business Combination.”

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

We believe we are the leading designer, manufacturer and marketer of stand-alone commercial laundry equipment in North America and that we are similarly a leader worldwide. Under the well-known brand names of Speed Queen®, UniMac® and Huebsch®, we produce a full line of commercial washing machines and dryers with load capacities from 16 to 250 pounds as well as presses and finishing equipment. Our commercial products are sold to four distinct customer groups: (i) laundromats; (ii) multi-housing laundries, consisting primarily of common laundry facilities in apartment buildings, universities and military installations; (iii) on-premise laundries, consisting primarily of in-house laundry facilities of hotels, hospitals, nursing homes and prisons; and (iv) drycleaners.

The North American stand-alone commercial laundry equipment industry’s revenues are primarily driven by population growth and the replacement cycle of laundry equipment. With economic conditions having limited effect on the frequency of use, and therefore the useful life of laundry equipment, industry revenues have been relatively stable over time. Similarly, with a majority of our revenues generated by recurring sales of replacement equipment and service parts, we have experienced stable revenues even during economic slowdowns.

Sales of stand-alone commercial laundry equipment are the single most important driver of our revenues. In 2005, our full year net revenues from the sale of commercial laundry equipment were approximately $268.3 million, which comprised over 84% of our total net revenues. The other main component of our revenues is the sale of service parts. We offer immediate response service whereby many of our parts are available on a 24-hour turnaround for emergency repair parts orders. In 2005, our full year net revenues from the sale of service parts were approximately $40.5 million, which comprised almost 13% of our total net revenues. In addition to commercial laundry equipment and service parts, we re-entered the U.S. consumer laundry market in October 2004, after the expiration of a non-compete agreement. In 2005, our net revenues from the sale of consumer laundry equipment were approximately $8.5 million, which comprised approximately 3% of our total net revenues.

We have achieved steady revenues by building an extensive and loyal distribution network for our products, establishing a significant installed base of units and developing and offering a full innovative product line. As a result of our large installed base, a significant majority of our revenue is attributable to replacement sales of equipment and service parts.

We believe that continued population expansion in North America will continue to drive steady demand for garment and textile laundering by all customer groups that purchase commercial laundry equipment. We anticipate growth in demand for commercial laundry equipment in international markets as well, especially in developing countries where laundry processing has historically been far less sophisticated than in North America. In addition, customers are increasingly trading up to equipment with enhanced functionality, thereby raising average selling prices. Customers are also moving towards equipment with increased water and energy efficiency as the result of government and consumer pressure and a focus on operating costs.

The following discussion should be read in conjunction with the Financial Statements and Notes thereto included in this report.

RECENT DEVELOPMENTS

All information related to debt and liquidity in the liquidity and capital resources sections of this 10-Q incorporate the impact of the above changes to debt and the changes in covenants.

RESULTS OF OPERATIONS

As a result of the acquisition on January 27, 2005, by ALH Holding Inc., an entity formed by Teachers’ Private Capital, the private equity arm of Ontario Teachers’ Pension Plan Board, of 100% of the outstanding equity interests in Alliance Holdings (the “Acquisition”), the Condensed Consolidated Financial Statements present our results of operations, financial position and cash flows prior to the date of the Acquisition transaction under “Predecessor.” The financial effects of the Acquisition transaction and our results of operations, financial position and cash flows following the closing of the Acquisition are presented under “Successor.” In accordance with generally accepted accounting principles in the United States, or GAAP, our Predecessor results have not been aggregated with our Successor results and, accordingly, our Condensed Consolidated Financial Statements do not show results of operations or cash flows for the six months ended June 30, 2005. However, in order to facilitate an understanding of our results of operations for the six months ended June 30, 2006 in comparison with the six months ended June 30, 2005, we have presented and discussed below our Predecessor results and our Successor results on a combined basis. The combined results of operations are non-GAAP financial measures and should not be considered in isolation or as a substitute for the Predecessor and Successor results.

The following table sets forth our historical net revenues for the periods indicated:


	Quarter Ended
	June 30, 2006		June 30, 2005
	(Dollars in millions)
Net revenues:
Commercial laundry	$	72.5	$	73.4
Consumer laundry		3.7		2.2
Service parts		10.7		10.1

	$	86.9	$	85.7

Net revenues. Net revenues for the quarter ended June 30, 2006 increased $1.2 million, or 1.5%, to $86.9 million from $85.7 million for the quarter ended June 30, 2005. This increase was attributable to higher consumer laundry revenue of $1.5 million and higher service parts revenue of $0.6 million, which were offset by lower commercial laundry revenues of $0.9 million. The increase in consumer laundry revenue was due to continued growth in the number of retailers and sales per retailer. The decrease in commercial laundry revenues was due to lower earnings from our off-balance sheet equipment financing program of $1.9 million which was partially offset by higher North American commercial equipment revenue of $0.4 million and higher

international revenue of $0.5 million. Revenue for North America was lower for coin-operated laundry customers, with revenue increases for multi-housing customers. Revenue for international customers was higher in Asia and South Africa. The net revenue increases stated above include price increases of approximately $2.2 million.

Gross profit. Gross profit for the quarter ended June 30, 2006 decreased $0.5 million, or 2.3%, to $20.1 million from $20.6 million for the quarter ended June 30, 2005. This decrease was primarily attributable to the $1.9 million of lower earnings from our off-balance sheet equipment financing program, $1.2 million related to unfavorable sales volume and sales mix and $0.8 million of excess and discontinued inventory provisions largely related to electronic control components. This gross profit decrease was partly offset by the $2.2 million of price increase impacts and $0.5 million of lower depreciation expense. The remaining $0.7 million of favorability was due to favorable material costs partially offset by inefficiencies related to the Marianna transition. As a result of these factors, gross profit as a percentage of net revenues decreased to 23.1% for the quarter ended June 30, 2006 from 24.0% for the quarter ended June 30, 2005.

Selling, general and administrative expense. Selling, general and administrative expense for the quarter ended June 30, 2006 increased $1.9 million, or 18.5%, to $12.0 million from $10.1 million for the quarter ended June 30, 2005. The increase in selling, general and administrative expense was primarily due to recognition of $1.1 million of costs related to the transfer of production lines from Marianna, Florida to Ripon, Wisconsin, a $0.5 million increase in non-cash incentive compensation resulting from the recognition of stock/unit related incentive compensation costs and $0.5 million of employee fringe benefit related costs. As a result of these factors, selling, general and administrative expense as a percentage of net revenues increased to 13.8% for the quarter ended June 30, 2006 as compared to 11.8% for the quarter ended June 30, 2005.

Securitization, impairment and other costs. Securitization, impairment and other costs for the quarter ended June 30, 2006 decreased $5.9 million to $2.1 million from $8.0 million for the quarter ended June 30, 2005. These costs in 2006 are comprised of $2.1 million of Marianna plant closure costs. Securitization, impairment and other costs for the quarter ended June 30, 2005 are comprised of $8.0 million of transaction costs incurred in establishing a new asset backed facility for the sale of equipment notes and trade receivables. Securitization, impairment and other costs as a percentage of net revenues decreased to 2.4% for the quarter ended June 30, 2006 as compared to 9.4% for the quarter ended June 30, 2005.

Operating income (loss). As a result of the foregoing, operating income (loss) for the quarter ended June 30, 2006 increased $3.5 million, to an operating income of $6.0 million as compared to $2.5 million for the quarter ended June 30, 2005. Operating income as a percentage of net revenues increased to 6.9% for the quarter ended June 30, 2006 as compared to 2.9% for the quarter ended June 30, 2005.

Interest expense. Interest expense for the quarter ended June 30, 2006 decreased $0.7 million, or 10.0%, to $6.8 million from $7.5 million for the quarter ended June 30, 2005. Interest expense in 2006 includes a favorable non-cash adjustment of $0.2 million to reflect adjustments in the fair values of an interest rate swap agreement. Under a previous interest rate swap agreement, 2005 interest expense included an unfavorable non-cash adjustment of $0.7 million. This net favorability was partially offset by higher interest costs primarily related to higher interest rates for the quarter ended June 30, 2006 as compared to the quarter ended June 30, 2005. Interest expense as a percentage of net revenues decreased to 7.8% for the quarter ended June 30, 2006 as compared to 8.8% for the quarter ended June 30, 2005.

Other expense, net. Other expense, net for the quarter ended June 30, 2006 of $0.4 million consists of a mark to market loss related to two foreign exchange hedge agreements. The agreements were entered to control the foreign exchange risk associated with the initial acquisition price of CLD. We paid $0.5 million for the hedges, which decreased in value to $0.1 million as of June 30, 2006. There were no similar costs for the quarter ended June 30, 2005.

Income tax provision. The provision for income taxes for the quarter ended June 30, 2006 was a benefit of $0.3 million, as compared to a benefit of $2.4 million for the quarter ended June 30, 2005. The effective tax rate decreased from 46.3% for the quarter ended June 30, 2005 to 27.2% for the quarter ended June 30, 2006. The decrease is a result of a State of Wisconsin development zone tax credit awarded to the Company which has reduced the effective state income tax rates between the periods.

Net loss. As a result of the foregoing, our net loss for the quarter ended June 30, 2006 was $0.8 million as compared to a net loss of $2.7 million for the quarter ended June 30, 2005. Net loss as a percentage of net revenues for the quarter ended June 30, 2006 was a negative 0.9% as compared to a negative 3.2% for the quarter ended June 30, 2005.

The following table sets forth our historical net revenues for the periods indicated:


	Six Months Ended June 30, 2006		January 28, 2005 through June 30, 2005		January 1, 2005 through January 27, 2005		Six Months Ended June 30, 2005
	Successor		Successor		Predecessor		Combined
	(Dollars in millions)				(Dollars in millions)
Net revenues:
Commercial laundry	$	129.7	$	114.1	$	17.3	$	131.4
Consumer laundry		6.8		3.2		0.2		3.4
Service parts		21.9		17.6		3.2		20.8

	$	158.4	$	134.9	$	20.7	$	155.6

Below is a reconciliation of the combined results of operations for the periods presented (in thousands):


	Six Months Ended June 30, 2006			January 28, 2005 through June 30, 2005			January 1, 2005 through January 27, 2005			Six Months Ended June 30, 2005
	Successor			Successor			Predecessor			Combined
Net revenues	$	158,410		$	134,908		$	20,683		$	155,591
Cost of sales		119,745			108,418			15,585			124,003

Gross profit		38,665			26,490			5,098			31,588

Selling, general and administrative expense		24,486			16,858			3,829			20,687
Securitization, impairment and other costs		3,924			8,015			—			8,015
Transaction costs associated with sale of business		—			—			18,790			18,790

Total operating expenses		28,410			24,873			22,619			47,492

Operating income (loss)		10,255			1,617			(17,521	)		(15,904	)
Interest expense		13,242			11,301			995			12,296
Loss from early extinguishment of debt		—			—			9,867			9,867
Other expense, net		360			—			—			—

Loss before taxes		(3,347	)		(9,684	)		(28,383	)		(38,067	)
(Benefit) provision for income taxes		(1,012	)		(4,021	)		9			(4,012	)

Net loss	$	(2,335	)	$	(5,663	)	$	(28,392	)	$	(34,055	)

Net revenues. Net revenues for the six months ended June 30, 2006 increased $2.8 million, or 1.8%, to $158.4 million from $155.6 million for the six months ended June 30, 2005. This increase was attributable to

higher consumer laundry revenue of $3.4 million and higher service parts revenue of $1.1 million, which were offset by lower commercial laundry revenues of $1.7 million. The increase in consumer laundry revenue was due to continued growth in the number of retailers and sales per retailer. The decrease in commercial laundry revenues was due to lower North American commercial equipment revenue of $2.5 million and lower earnings from our off-balance sheet equipment financing program of $1.4 million, partly offset by higher international revenue of $2.3 million. Revenue for North America was lower for coin-operated laundry customers. Revenue for international customers was higher in Asia and South Africa. The net revenue increases stated above include price increases of approximately $4.5 million.

Gross profit. Gross profit for the six months ended June 30, 2006 increased $7.1 million, or 22.4%, to $38.7 million from $31.6 million for the six months ended June 30, 2005. This increase was primarily attributable to $6.2 million of expense in 2005 related to an inventory step-up to fair market value recorded on the Acquisition date with no similar expense incurred in 2006 and $4.5 million of price increase impacts. These gross profit increases were partly offset by $1.4 million of lower earnings from our off-balance sheet equipment financing program, $1.4 million related to unfavorable sales volume and sales mix and $0.9 million of excess and discontinued inventory provisions largely related to electronic control components. As a result of these factors, gross profit as a percentage of net revenues increased to 24.4% for the six months ended June 30, 2006 from 20.3% for the six months ended June 30, 2005.

Selling, general and administrative expense. Selling, general and administrative expense for the six months ended June 30, 2006 increased $3.8 million, or 18.4%, to $24.5 million from $20.7 million for the six months ended June 30, 2005. The increase in selling, general and administrative expense was due primarily to recognition of $1.8 million of costs related to the transfer of production lines from Marianna, Florida to Ripon, Wisconsin, $0.3 million of costs associated with the implementation of Sarbanes-Oxley initiatives, a $0.7 million increase in non-cash incentive compensation resulting from the recognition of stock/unit related incentive compensation costs, $0.2 million of higher losses on the sale of trade receivables, $0.5 million of employee fringe benefit related costs and $0.4 million of increased amortization expenses driven primarily by Acquisition date write-ups to fair market value for customer agreements, engineering drawings, and our distribution network. As a result of these factors, selling, general and administrative expense as a percentage of net revenues increased to 15.5% for the six months ended June 30, 2006 as compared to 13.3% for the six months ended June 30, 2005.

Securitization, impairment and other costs. Securitization, impairment and other costs for the six months ended June 30, 2006 decreased $4.1 million to $3.9 million from $8.0 million for the six months ended June 30, 2005. These costs in 2006 are comprised of a $1.4 million impairment charge related to a reduction in value of the Ajax trademark and $2.5 million related to Marianna plant closure costs. Securitization, impairment and other costs for the six months ended June 30, 2005 are comprised of $8.0 million of transaction costs incurred in establishing a new asset backed facility for the sale of equipment notes and trade receivables. Securitization, impairment and other costs as a percentage of net revenues decreased to 2.5% for the six months ended June 30, 2006 as compared to 5.2% for the six months ended June 30, 2005.

Transaction costs associated with sale of business. Transaction costs associated with sale of business for the six months ended June 30, 2005 were $18.8 million, with no similar costs in 2006. These costs were comprised of seller transaction fees including transaction underwriting fees of $4.5 million, legal and professional fees of $1.3 million, a management sale bonus of $6.2 million and advisory fees to Bain Capital Partners LLC and Bruckman, Rosser, Sherrill & Co. of $6.8 million. Transaction costs associated with sale of business as a percentage of net revenues was 12.1% for the six months ended June 30, 2005.

Operating income (loss). As a result of the foregoing, operating income (loss) for the six months ended June 30, 2006 increased $26.2 million, to an operating income of $10.3 million as compared to an operating loss of $15.9 million for the six months ended June 30, 2005. Operating income as a percentage of net revenues increased to 6.5% for the six months ended June 30, 2006 as compared to a negative 10.2% for the six months ended June 30, 2005.

Interest expense. Interest expense for the six months ended June 30, 2006 increased $0.9 million, or 7.7% to $13.2 million from $12.3 million for the six months ended June 30, 2005. Interest expense in 2006 includes approximately $0.5 million of higher interest costs primarily related to higher interest rates for the six months ended June 30, 2006 as compared to the six months ended June 30, 2005. The interest increase is also attributable to the recognition of $0.7 million of interest income in 2005 related to pre-Acquisition investor promissory notes. Interest expense in 2006 includes a favorable non-cash adjustment of $0.6 million to reflect adjustments in the fair values of an interest rate swap agreement. Under a previous interest rate swap agreement, 2005 interest expense included a favorable non-cash adjustment of $0.4 million. Interest expense as a percentage of net revenues increased to 8.4% for the six months ended June 30, 2006 as compared to a 7.9% for the six months ended June 30, 2005.

Other expense, net. Other expense, net for the six months ended June 30, 2006 of $0.4 million consists of a mark to market loss related to two foreign exchange hedge agreements. The agreements were entered to control the foreign exchange risk associated with the initial acquisition price of CLD. We paid $0.5 million for the hedges, which decreased in value to $0.1 million as of June 30, 2006. There were no similar costs for the six months ended June 30, 2005.

Loss on early extinguishment of debt. Loss on early extinguishment of debt for the six months ended June 30, 2005 was $9.9 million, with no similar costs in 2006. The 2005 costs were incurred in conjunction with the Acquisition. Loss on early extinguishment of debt as a percentage of net revenues was 6.3% for the six months ended June 30, 2005.

Income tax provision. The provision for income taxes for the six months ended June 30, 2006 was a benefit of $1.0 million, as compared to a benefit of $4.0 million for the six months ended June 30, 2005. Prior to January 28, 2005, we did not provide for U.S. federal income taxes or tax benefits, as the Predecessor Company was a partnership for tax reporting purposes and the payment of federal and most state taxes were the responsibility of the partners. The effective tax rate decreased from 41.5% for the January 28, 2005 through June 30, 2005 period to 30.2% for the six months ended June 30, 2006. The decrease is primarily a result of a State of Wisconsin development zone tax credit awarded to the Company which has reduced the effective state income tax rates between the periods.

Net loss. As a result of the foregoing, our net loss for the six months ended June 30, 2006 was $2.3 million as compared to a net loss of $34.1 million for the six months ended June 30, 2005. Net loss as a percentage of net revenues for the six months ended June 30, 2006 was a negative 1.5% as compared to a negative 21.9% for the six months ended June 30, 2005.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

Our principal sources of liquidity are cash flows generated from operations and potential borrowings under our $55.0 million Revolving Credit Facility. Our principal uses of liquidity are to meet debt service requirements, finance our capital expenditures and provide working capital. We expect that capital expenditures in 2006 will not exceed $7.5 million. The aggregate scheduled maturities of long-term debt in subsequent years, after giving effect to the scheduled payments and $22.5 million of voluntary prepayments made through June 30, 2006 and after giving effect to the $60.0 million of additional term loans received in July of 2006, are as follows:


Year	Amount Due
	(Dollars in millions)
2006	$	1.2
2007		2.5
2008		2.4
2009		2.8
2010		2.7
Thereafter		374.4

The Senior Credit Facility and the indenture governing the Senior Subordinated Notes contain a number of covenants that, among other things, restrict our ability to dispose of assets, repay other indebtedness, incur liens, make capital expenditures and make certain investments or acquisitions, engage in mergers or consolidation and otherwise restrict our operating activities. In addition, under the Senior Credit Facility, the Company is required to satisfy specified financial ratios and tests, including a maximum of total debt to Adjusted EBITDA (as defined in the credit agreement governing the Senior Credit Facility) and a minimum interest coverage ratio.

The Senior Credit Facility requires us to comply with certain financial ratios and tests in order to comply with the terms of the agreement. The occurrence of any default of these covenants could result in acceleration of our obligations under the Senior Credit Facility (approximately $235.0 million after giving effect to the $60.0 million of additional term loans received in July of 2006) and foreclosure on the collateral securing such obligations. Further, such an acceleration would constitute an event of default under the indenture governing the Senior Subordinated Notes.

At June 30, 2006, there was $2.0 million of borrowings under our Revolving Credit Facility. At June 30, 2006, letters of credit issued on our behalf under the Revolving Credit Facility totaled $30.9 million. At June 30, 2006, we had $17.1 million of our existing $50.0 million Revolving Credit Facility available, subject to certain limitations under the Senior Credit Facility. After considering such limitations, which relate primarily to the maximum ratio of consolidated debt to Adjusted EBITDA, we could have borrowed $17.1 million at June 30, 2006 in additional indebtedness under the Revolving Credit Facility.

The maximum ratio of consolidated debt to Adjusted EBITDA under the Senior Credit Facility is 6.25 at June 30, 2006. We are in compliance with this and all other debt related covenants as of June 30, 2006. We believe, based on currently available information, that for the foreseeable future, cash flows from operations, together with available borrowings under the Senior Credit Facility, will be adequate to meet our anticipated requirements for capital expenditures, working capital, interest payments, scheduled principal payments and other debt repayments while achieving all required covenant requirements under the Senior Credit Facility and Senior Subordinated Notes.

The Senior Credit Facility, after giving effect to the $60.0 million of additional term loans received in July of 2006, is repayable in the following aggregate annual amounts:


Year	Amount Due
	(Dollars in millions)
2006	$	1.2
2007		2.4
2008		2.3
2009		2.4
2010		2.3
Thereafter		224.4

The Senior Credit Facility is also subject to mandatory prepayment with the proceeds of certain debt incurrences, asset sales and a portion of Excess Cash Flow (as defined in the Senior Credit Facility). The Revolving Credit Facility will terminate on January 27, 2011.

On January 25, 2006 we received $1.0 million in borrowings, evidenced by two promissory notes, pursuant to a Wisconsin Community Development Block Grant Agreement (the “Agreement”) dated January 6, 2006 between the Wisconsin Department of Commerce, Alliance Laundry and Fond du Lac County, Wisconsin. The first promissory note, in the amount of $0.5 million bears interest at an annual rate of 2%, with monthly payments of interest and principal commencing January 1, 2007 with the final installment paid on December 1, 2010, subject to the covenants of the Agreement. The second promissory note, in the amount of $0.5 million bears interest at an annual rate of 2%, with monthly payments of interest and principal commencing January 1, 2009 with the final installment paid on December 1, 2010, subject to the covenants of the Agreement. A portion or the entire amount of this second promissory note may be forgiven if we meet certain job creation and retention requirements outlined in the promissory note.

Our ability to make scheduled payments of principal or to refinance our indebtedness, or to pay the interest or liquidated damages, if any thereon, or to fund planned capital expenditures, will depend upon our future performance, which, in turn, is subject to general economic, financial, competitive and other factors that are beyond our control. There can be no assurance that our business will continue to generate sufficient cash flow from operations in the future to service our debt and make necessary capital expenditures after satisfying certain liabilities arising in the ordinary course of business. If unable to do so, we may be required to refinance all or a portion of our debt, to sell assets or to obtain additional financing. There can be no assurance that any such refinancing would be available or that any such sales of assets or additional financing could be obtained.

Our Asset Backed Facility provides for a total of $330.0 million in off-balance sheet financing for trade receivables and equipment loans. We have structured, and intend to continue to structure, the finance programs in a manner that qualifies for off-balance sheet treatment in accordance with generally accepted accounting principles. It is expected that under the Asset Backed Facility, we will continue to act as originator and servicer of the equipment financing promissory notes and the trade receivables.

EBITDA and Adjusted EBITDA

We have presented EBITDA and Adjusted EBITDA below because certain covenants in the indenture governing our Senior Subordinated Notes (the “Notes Indenture”), are tied to ratios based on these measures. “EBITDA” represents net income (loss) before interest expense, income tax (provision) benefit and depreciation and amortization, and “Adjusted EBITDA” is EBITDA as further adjusted to exclude, among other things, certain non-recurring expenses and other non-recurring non-cash charges, which are further defined in the Notes Indenture. EBITDA and Adjusted EBITDA do not represent, and should not be considered, an alternative to net income or cash flow from operations, as determined by GAAP, and our calculations thereof may not be comparable to similarly entitled measures reported by other companies. Based on our industry and debt financing experience, we believe that EBITDA and Adjusted EBITDA are customarily used to provide useful information regarding a company’s ability to service and/or incur indebtedness. In addition, EBITDA and Adjusted EBITDA are defined in the Notes Indenture in a manner which is identical to the definition of EBITDA and Adjusted EBITDA in our Senior Credit Facility under which we are required to satisfy specified financial ratios and tests, including a maximum of total debt to Adjusted EBITDA and a minimum interest coverage ratio. The Notes Indenture also requires us to meet a fixed charge coverage ratio in order to incur additional indebtedness, subject to certain exceptions.

The following is a reconciliation of net loss to EBITDA and Adjusted EBITDA, and reconciliation of Adjusted EBITDA to net cash provided by operating activities, in order to reconcile with the most directly comparable GAAP measures (dollars in thousands):


	Three Months			Three Months
	Ended			Ended
	June 30,			June 30,
	2006			2005
	Successor			Successor
Net loss	$	(821	)	$	(2,732	)
Benefit for income taxes		(307	)		(2,352	)
Interest expense		6,785			7,537
Depreciation and amortization (a)		5,378			6,240
Non-cash interest income included in amortization above		(444	)		(579	)

EBITDA		10,591			8,114
Finance program adjustments (b)		750			(496	)
Other non-recurring charges (c)		3,505			8,305
Other non-cash charges (d)		524			640
Other expense (e)		360			—

Adjusted EBITDA		15,730			16,563

Interest expense		(6,785	)		(7,537	)
Non-cash interest income included in amortization above		444			579
Other non-cash interest		(333	)		880
Finance program adjustments (b)		(750	)		496
Other non-recurring charges (c)		(3,505	)		(8,305	)
Loss on sale of property, plant and equipment		111			2
Other expense		(351	)		(42	)
Changes in assets and liabilities		1,953			330

Net cash provided by operating activities	$	6,514		$	2,966

(a)	Depreciation and amortization amounts include amortization of deferred financing costs included in interest expense.

(b)

We currently operate an off-balance sheet commercial equipment finance program in which newly originated equipment loans are sold to qualified special-purpose bankruptcy remote entities. In accordance with GAAP, we are required to record gains/losses on the sale of these equipment based promissory notes. In calculating Adjusted EBITDA, management determines the cash impact of net interest income on these notes. The finance program adjustments are the difference between GAAP basis revenues (as prescribed by SFAS No. 125/140) and cash basis revenues.

(c)	Other non-recurring charges are described as follows:

•

Other non-recurring charges for the quarter ended June 30, 2006 relate to $2.1 million of costs associated with the closure of the Marianna, Florida production facility which are included in the Securitization, impairment and other costs line of our consolidated statements of operations, $1.1 million of costs related to the transfer of the Marianna, Florida product lines to Ripon, Wisconsin which are included in the selling, general and administrative expense line of our consolidated statements of operations and a periodic accrual of $0.3 million under a one time retention bonus

agreement entered into with certain management employees concurrent with the Acquisition, which is included in the selling, general and administrative expense line of our consolidated statements of operations. Under the retention bonus agreements, the executives are entitled to receive special retention bonus awards upon the second anniversary of the closing date of the Acquisition, subject generally to their continued employment with Alliance Laundry through such date.

•

Other non-recurring charges for the quarter ended June 30, 2005 relate to $8.0 million of transaction costs incurred in establishing a new asset backed facility for the sale of equipment notes and trade receivables, which is included in the Securitization, impairment and other costs line of our consolidated statements of operations, and a periodic accrual of $0.3 million under the one time retention bonus agreement entered into with certain management employees.

(d)	Other non-cash charges are described as follows:

•

Other non-cash charges for the quarter ended June 30, 2006 are comprised of $0.5 million of non-cash incentive compensation expense related to management incentive stock options, which is included in the selling, general and administrative expense line of our consolidated statements of operations.

•

Non-cash charges for the quarter ended June 30, 2005 relate to $0.6 million of cost associated with the inventory step-up to fair market value recorded at the Acquisition date, which are included in the cost of sales line of our consolidated statements of operations.

(e)	Other expense is described as follows:

•

Other expense for the quarter ended June 30, 2006 consists of $0.4 million of mark to market loss for two foreign exchange hedge agreements entered to control the foreign exchange risk associated with the initial acquisition price of CLD, which is included in the other expense line of our consolidated statements of operations.


	Six Months Ended June 30, 2006			January 28, 2005 through June 30, 2005			January 1, 2005 through January 27, 2005			Six Months Ended June 30, 2005
	Successor			Successor			Predecessor			Combined
Net loss	$	(2,335	)	$	(5,663	)	$	(28,392	)	$	(34,055	)
(Benefit) provision for income taxes		(1,012	)		(4,021	)		9			(4,012	)
Interest expense		13,242			11,301			995			12,296
Depreciation and amortization (a)		11,245			10,365			526			10,891
Non-cash interest income included in amortization above		(922	)		(911	)		—			(911	)

EBITDA		20,218			11,071			(26,862	)		(15,791	)
Finance program adjustments (b)		844			420			31			451
Other non-recurring charges (c)		4,872			8,498			28,657			37,155
Other non-cash charges (d)		3,209			6,246			1,089			7,335
Other expense (e)		360			—			—			—
Management fees paid to affiliates of Bain		—			—			83			83

Adjusted EBITDA		29,503			26,235			2,998			29,233

Interest expense		(13,242	)		(11,301	)		(995	)		(12,296	)
Non-cash interest income included in amortization above		922			911			—			911
Other non-cash interest		(808	)		36			351			387
Finance program adjustments (b)		(844	)		(420	)		(31	)		(451	)
Other non-recurring charges (c)		(4,872	)		(8,498	)		(28,657	)		(37,155	)
Non-cash debt financing write-off		—			—			5,751			5,751
Loss on sale of property, plant and equipment		131			3			—			3
Other expense		(359	)		(39	)		(92	)		(131	)
Changes in assets and liabilities		(11,327	)		(22,748	)		14,056			(8,692	)

Net cash used in operating activities	$	(896	)	$	(15,821	)	$	(6,619	)	$	(22,440	)

(a)	Depreciation and amortization amounts include amortization of deferred financing costs included in interest expense.

(b)

(c)	Other non-recurring charges are described as follows:

•

Other non-recurring charges for the period from January 1, 2005 through January 27, 2005 relate to seller transaction costs of $18.8 million incurred as part of the Acquisition which are included in the transaction costs associated with the sale of business line of our consolidated statements of operations, and a loss on the early extinguishment of debt of $9.9 million which is included in the loss from early extinguishment of debt line of our consolidated statements of operations.

•

Other non-recurring charges for the period from January 28, 2005 through June 30, 2005 relate to $8.0 million of transaction costs incurred in establishing a new asset backed facility for the sale of equipment notes and trade receivables, which is included in the Securitization, impairment and other costs line of our consolidated statements of operations, and a periodic accrual of $0.5 million under the one time retention bonus agreement entered into with certain management employees, which is included in the selling, general and administrative expense line of our consolidated statements of operations.

•

Other non-recurring charges for the six months ended June 30, 2006 consist of $1.8 million of costs related to the transfer of the Marianna, Florida product lines to Ripon, Wisconsin which are included in the selling, general and administrative expense line of our consolidated statements of operations, $2.5 million of costs associated with the closure of the Marianna, Florida production facility which are included in the Securitization, impairment and other costs line of our consolidated statements of operations and a periodic accrual of $0.6 million under the one time retention bonus agreement with certain management employees referred to above.

(d)	Other non-cash charges are described as follows:

•

Non-cash charges for the period from January 1, 2005 through January 27, 2005 of $1.1 million relate to non-cash incentive compensation expense resulting from the acceleration of vesting for incentive units at the date of the Acquisition, which are included in the selling, general and administrative expense line of our consolidated statements of operations.

•

Non-cash charges for the period from January 28, 2005 through June 30, 2005 relate to $6.2 million of cost associated with the inventory step-up to fair market value recorded at the Acquisition date, which are included in the cost of sales line of our consolidated statements of operations.

•

Non-cash charges for the six month period ended June 30, 2006 are comprised of $1.8 million of non-cash incentive compensation expense related to management incentive stock options which is included in the selling, general and administrative expense line of our consolidated statements of operations and a $1.4 million non-cash impairment charge related to the Ajax trademark, driven by the Company’s decision to discontinue sales of AJAX® products. The Ajax impairment is included in the Securitization, impairment and other costs line of our consolidated statements of operations.

(e)	Other expense is described as follows:

•

Other expense for the six months ended June 30, 2006 consists of $0.4 million of mark to market loss for two foreign exchange hedge agreements entered to control the foreign exchange risk associated with the initial acquisition price of CLD, which is included in the other expense line of our consolidated statements of operations.

Off-Balance Sheet Arrangements and Aggregate Contractual Obligations

On June 28, 2005, Alliance Laundry Equipment Receivables Trust 2005-A (“ALERT 2005A”), a trust formed by Alliance Laundry Equipment Receivables 2005 LLC (“ALER 2005”) a special-purpose bankruptcy remote subsidiary of Alliance Laundry, entered into a $330.0 million asset backed securitization funding facility (the “Asset Backed Facility”) backed by equipment loans and trade receivables originated by Alliance Laundry. We will sell or contribute all of the trade receivables and certain of the equipment loans that we originate to ALER 2005, which in turn will transfer them to the trust.

Funding availability for trade receivables is limited to a maximum of $60.0 million, while funding for equipment loan Notes is limited to $330.0 million less the amount of funding outstanding for trade receivable Notes. Funding of the Notes is subject to certain advance rate and eligibility criteria standard for transactions of this type. After June 27, 2009 (or earlier in the event of a rapid amortization event, an event of default or the termination of the Asset Backed Facility by Alliance Laundry), ALERT 2005A will not be permitted to request new borrowings under the Asset Backed Facility and the outstanding borrowings will amortize over a period of up to nine years thereafter. As of June 30, 2006, the balance of variable funding notes due to lenders under the Asset Backed Facility for equipment loans was $225.5 million.

Additional advances under the Asset Backed Facility are subject to certain continuing conditions, including but not limited to (i) the absence of a rapid amortization event or event of default, as defined in the Asset Backed Facility primary documents, (ii) compliance by Alliance Laundry, as servicer, with certain covenants, including financial covenants and (iii) no event having occurred which materially and adversely affects the operations of Alliance Laundry. In addition, advances under the Asset Backed Facility in respect of fixed rate equipment loans are subject to limitations on the weighted average interest rate and the aggregate loan balance of all fixed rate equipment loans then held by ALERT 2005A.

The risk of loss resulting from default or dilution on the trade receivables and equipment loans is protected by credit enhancement, provided in the form of cash reserves, letters of credit and overcollateralization. The timely payment of interest and the ultimate payment of principal on the Asset Backed Facility are guaranteed by Ambac Assurance Corporation. All of the residual beneficial interests in ALERT 2005A and cash flows remaining from the pool of receivables and loans after payment of all obligations under the asset backed facility will accrue to the benefit of Alliance Laundry. Except for amounts of the letters of credit outstanding from time to time as credit enhancement, Alliance Laundry will provide no support or recourse for the risk of loss relating to default on the assets transferred to ALERT 2005A. The amount of the irrevocable letter of credit related to the Asset Backed Facility at June 30, 2006 was $29.2 million. Alliance Laundry, as servicer, will be paid a monthly servicing fee equal to one-twelfth of 1.0% of the aggregate balance of such trade receivables and equipment loans.

Cash Flows

Below is a reconciliation of certain items of the combined statements of cash flows for the periods presented (in thousands):


	Six Months			January 28,			January 1,			Six Months
	Ended			2005 through			2005 through			Ended
	June 30,			June 30,			January 27,			June 30,
	2006			2005			2005			2005
	Successor			Successor			Predecessor			Combined
Cash flows from operating activities:
Net cash provided by (used in) operations	$	10,431		$	6,927		$	(20,675	)	$	(13,748	)
Net cash (used for) provided by working capital		(11,327	)		(22,748	)		14,056			(8,692	)

Net cash used in operating activities	$	(896	)	$	(15,821	)	$	(6,619	)	$	(22,440	)

Cash flows from investing activities:
Additions to property, plant and equipment	$	(2,492	)	$	(2,072	)	$	(188	)	$	(2,260	)
Cash paid for business development	$	(1,738	)	$	—		$	—		$	—
Proceeds on disposition of assets		1,226			1			—			1

Net cash used in investing activities	$	(3,004	)	$	(2,071	)	$	(188	)	$	(2,259	)

Cash flows from financing activities:
Principal payments on long-term debt	$	(2,000	)	$	(5,000	)	$	1		$	(4,999	)
Net increase in revolving line of credit borrowings		2,000			—			—			—
Proceeds from promissory notes		1,000			—			—			—
Proceeds from senior term loan		—			200,000			—			200,000
Proceeds from senior subordinated notes		—			149,250			—			149,250
Repayment of long-term debt		—			(275,920	)		—			(275,920	)
(Repurchase) issuance of common stock		(30	)		117,000			—			117,000
Distribution to old unitholders		—			(154,658	)		—			(154,658	)
Debt financing costs		—			(13,230	)		—			(13,230	)
Cash paid for capitalized offering related costs		—			(1,364	)		—			(1,364	)
Net proceeds - management note		—			—			(71	)		(71	)

Net cash provided by (used in) financing activities	$	970		$	16,078		$	(70	)	$	16,008

Cash used in operating activities for the six months ended June 30, 2006 of $0.9 million was driven by cash generated by operations of $10.4 million (net loss adjusted for depreciation, amortization and other non-cash adjustments) offset by working capital requirements of $11.3 million. The cash used in operations included $4.3 million of costs associated with the closure of the Marianna, Florida facility and the transfer of production lines to the Ripon, Wisconsin facility. Working capital requirements for the six months ended June 30, 2006 increased primarily for inventory and accounts receivable, with a decrease in working capital for accounts payable. The working capital investment in inventories at June 30, 2006 of $42.2 million increased $13.2 million as compared to the balance of $29.0 million at December 31, 2005 due to a $7.3 million build-up of manufactured finished goods to provide sales coverage during the transfer of the Marianna, Florida product lines to Ripon, Wisconsin and a $6.0 million increase in raw materials to support the transition and to purchase electronic control components from a supplier. The working capital investment in other accounts payable at June 30, 2006 of $36.1 million decreased $1.7 million as compared to the balance of $34.4 million at December 31, 2005 due primarily to the higher raw material purchases to support the closure of the Marianna, Florida facility and the transfer of production lines to the Ripon, Wisconsin facility.

Capital Expenditures

Our capital expenditures for the six months ended June 30, 2006 and June 30, 2005 were $2.5 million and $2.3 million, respectively. Capital spending in 2006 was principally oriented toward the transfer of the Marianna, Florida product lines to Ripon, Wisconsin, product enhancements and computer purchases. Capital spending in 2005 was principally oriented toward product enhancements and manufacturing process improvements.

Proceeds on disposition of assets within the consolidated statements of cash flows for the six months ended June 30, 2006 includes $1.2 million of proceeds from the sale of the Ajax intellectual property to Sankosha Engineering.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 2006, the FASB ratified the consensus on Emerging Issues Task Force (EITF) Issue No. 06-03, How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement, (EITF 06-03). The scope of EITF 06-03 includes any tax assessed by a governmental authority that is directly imposed on a revenue-producing transaction between a seller and a customer and may include, but is not limited to, sales, use, value added, and some excise taxes. The Task Force affirmed its conclusion that entities should present these taxes in the income statement on either a gross or a net basis, based on their accounting policy, which should be disclosed pursuant to APB Opinion No. 22, Disclosure of Accounting Policies. If such taxes are significant, and are presented on a gross basis, the amounts of those taxes should be disclosed. The consensus on EITF 06-03 will be effective for interim and annual reporting periods beginning after December 15, 2006. The Company currently records gross receipts, taxes and miscellaneous other taxes on a net basis in its consolidated statements of operations. Should the Company conclude that such amounts are more appropriately presented on a gross basis, it would have a material impact on total operating revenues and expenses, although operating income and net income would not be affected.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are potentially exposed to market risk associated with changes in interest and foreign exchange rates. From time to time we may enter into derivative financial instruments to hedge our interest rate exposures and to hedge exchange rate fluctuations between United States dollars and foreign currencies. An instrument will be treated as a hedge if it is effective in offsetting the impact of volatility in our underlying exposures. We do not enter into derivatives for speculative purposes. There have been no material changes in our market risk exposures as compared to those discussed in our Annual Report on Form 10-K (file no. 333-56857).

Effective March 4, 2005, we entered into a $67.0 million interest rate swap agreement with The Bank of Nova Scotia to hedge a portion of our interest rate risk related to our term loan borrowings under the Senior Credit Facility. Under the swap, which matures on March 4, 2008, we pay a fixed rate of 3.81%, and receive or pay quarterly interest payments based upon the three month LIBOR rate. Under the swap, we received $281 thousand during the six months ended June 30, 2006. The fair value of this interest rate swap agreement, which represents the amount that we would receive upon a settlement of this instrument, was $1.9 million at June 30, 2006.

Effective May 23, 2006, we entered into two foreign exchange contracts in the aggregate amount of 59.0 million Euros with Lehman Brothers Special Financing Inc. to hedge substantially all of the purchase price of CLD. On May 25, 2006 we paid $0.5 million for these foreign exchange hedges. The fair value of these foreign exchange contracts, which represents the amount that we would receive upon a settlement of these instruments, was $0.1 million at June 30, 2006.

ITEM 4. CONTROLS AND PROCEDURES

(a) We carried out an evaluation as of the end of the period covered by this report, under the supervision and with the participation of our management, including our Chairman and Chief Executive

Officer along with our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, as of the end of the period covered by this quarterly report on Form 10-Q, our Chief Executive Officer along with our Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rule 15d-15(e) under the Securities Exchange Act of 1934) are effective for the purposes set forth in the definition thereof in Exchange Act Rule 15d-15(e).

(b) There have been no changes in our internal control over financial reporting that have occurred during the quarter ended June 30, 2006 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

FORWARD-LOOKING STATEMENTS

With the exception of the reported actual results, the information presented herein contains predictions, estimates or other forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended, including items specifically discussed in the “Note 7 – Commitments and Contingencies” section of this document. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from those expressed or implied by such forward-looking statements. Although we believe that our plans, intentions and expectations reflected in such forward-looking statements are based on reasonable assumptions, we can give no assurance that such plans, intentions, expectations, objectives or goals will be achieved. Important factors that could cause actual results to differ materially from those included in forward-looking statements include: impact of competition; continued sales to key customers; possible fluctuations in the cost of raw materials and components; possible fluctuations in currency exchange rates, which affect the competitiveness of our products abroad as well as earnings and cash flows from CLD’s European operations; market acceptance of new and enhanced versions of our products; the impact of substantial leverage and debt service on us and other risks listed from time to time in our reports, including but not limited to our Annual Report on Form 10-K (file no. 333-56857). We do not undertake any obligation to update any such forward-looking statements unless required by law.

PART II OTHER INFORMATION


Item 1.		Legal Proceedings. Incorporated by reference from Note 8 to the Consolidated Financial Statements of Alliance Laundry Holdings LLC included in Item 1 of Part I of this quarterly report on Form 10-Q.

Item 1A.		Risk Factors. No material changes to the risk factors included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2005.

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds. Not Applicable.

Item 3.		Defaults upon Senior Securities. None.

Item 4.		Submission of Matters to a Vote of Security Holders. None.

Item 5.		Other Information. None.

Item 6.		Exhibits.

a) List of Exhibits.

10.1		Asset Purchase Agreement, dated as of June 15, 2006 between Sankosha Engineering Co., LTD., as Purchaser and Alliance Laundry Systems LLC, as Seller.

10.2		Trademark License Agreement, dated June 15, 2006 between Sankosha Engineering Co., LTD., as Licensor and Alliance Laundry Systems LLC, as Licensee.

10.3		Share Purchase Agreement, dated as of May 23, 2006 between Laundry Systems Group NV, as Seller and Alliance Laundry Systems LLC, as Purchaser.

10.4		Amendment and Restatement Agreement relating to a Share Purchase Agreement, dated May 23, 2006, between Laundry Systems Group NV, as Seller and Alliance Laundry Systems LLC, as Purchaser.

10.5		Purchase Agreement, dated as of May 23, 2006 by and among Alliance Laundry Systems LLC, as Buyer, and Laundry Systems Group NV, Cissell Manufacturing Company, Jensen USA Inc. and LSG North America, Inc., as Sellers.

10.6		Amendment No. 1 to the Purchase Agreement, dated as of July 13, 2006, by and among Alliance Laundry Systems LLC, Laundry Systems Group NV, Cissell Manufacturing Company, Jensen USA Inc., and LSG North America, Inc.

10.7		Supply Agreement, dated July 14, 2006 by and between Jensen USA Inc. and Alliance Laundry Systems LLC


10.8		First Amendment, dated as of July 14, 2006, to the Credit Agreement dated as of January 27, 2005, among Alliance Laundry Holdings LLC, Alliance Laundry Systems LLC, ALH Finance LLC, the several banks and other financial institutions or entities from time to time parties thereto, as Lenders, Lehman Brothers Inc., as sole advisor, sole lead arranger and sole bookrunner, The Bank of Nova Scotia, as syndication agent, LaSalle Bank National Association and Royal Bank of Canada, as co-documentation agents, and Lehman Commercial Paper Inc., as administrative agent.

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

Alliance Laundry Systems LLC has duly caused this quarterly report to be signed on its behalf by the undersigned thereunto duly authorized.


Signature	Title	Date
/s/ THOMAS F. L’ESPERANCE	CEO and President	8-10-06
Thomas F. L’Esperance

/s/ BRUCE P. ROUNDS	Vice President, Chief Financial Officer	8-10-06
Bruce P. Rounds

Alliance Laundry Corporation has duly caused this quarterly report to be signed on its behalf by the undersigned thereunto duly authorized.


Signature	Title	Date
/s/ THOMAS F. L’ESPERANCE	CEO and President	8-10-06
Thomas F. L’Esperance

/s/ BRUCE P. ROUNDS	Vice President, Chief Financial Officer	8-10-06
Bruce P. Rounds

Alliance Laundry Holdings LLC has duly caused this quarterly report to be signed on its behalf by the undersigned thereunto duly authorized.


Signature	Title	Date
/s/ THOMAS F. L’ESPERANCE	CEO and President	8-10-06
Thomas F. L’Esperance

/s/ BRUCE P. ROUNDS	Vice President, Chief Financial Officer	8-10-06
Bruce P. Rounds

EX-10.1 2 dex101.htm ASSET PURCHASE AGREEMENT, DATED AS OF JUNE 15, 2006 Asset Purchase Agreement, dated as of June 15, 2006

Exhibit 10.1

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this “Agreement”) is made as of the 15th day of June, 2006 by and between SANKOSHA ENGINEERING CO., LTD. (“Purchaser”), a Japanese corporation, and ALLIANCE LAUNDRY SYSTEMS LLC, a Delaware limited liability company (“Seller”).

RECITALS:

A. Seller is in the business of manufacturing and selling commercial laundry, pressing and finishing equipment and related equipment and accessories. Seller manufactures and sells pressing and finishing equipment and related accessories under the “AJAX” trade name and trademark (collectively, the “Products”).

B. Seller desires to sell, and Purchaser desires to purchase from Seller, certain of the intellectual property and intangible assets of Seller that relate to the Products, on the terms and conditions set forth in this Agreement.

AGREEMENTS:

In consideration of the premises and the mutual agreements herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. Sale and Transfer of Assets. Subject to the terms and conditions of this Agreement, and in reliance on the representations, warranties and covenants of the parties contained herein, Seller hereby sells, transfers, assigns and delivers to Purchaser, and Purchaser hereby purchases from Seller as of the Effective Time (as defined below), the following assets of Seller (tangible and intangible) to the extent the same relate to the Products (collectively, the “Purchased Assets”):

(a) Intellectual Property.

(i) all intellectual property rights relating to the Products, including those patents set forth on Schedule I hereto and all applications and registrations related to the foregoing;

(ii) all trade names, trademarks, and domain names that are used in connection with the manufacture, sale and distribution of the Products and all applications (to the extent transferable) and registrations related to the foregoing, and specifically including, but not limited to, all right title and interest of Seller in and to the trademark AJAX and all registrations and applications for registration thereof anywhere in the world, including those specifically set forth on Schedule I hereto, and all goodwill of Seller’s business (as it relates to the Products) relating to the foregoing;

(iii) all copyrights (if any), writings and designs;

(iv) all inventions, trade secrets, research and developments and improvements, including all confidential information relating to the foregoing;

(v) any and rights and claims related to the foregoing, including any and all infringement claims against any third parties relating thereto (whether occurring prior to or after the date of this Agreement).

All of the forgoing are hereinafter sometimes collectively referred to as the “Intangible Assets.”

(b) Technology, Records and Documents. All technologies, technical information, specifications, drawings and blueprints (including, but not limited to, those drawings identified in Schedule I attached hereto), processes and procedures (as they currently exist) in whatever form (whether oral, written, machine readable, visual or conceptual) developed, related to and/or used in connection with the design and manufacture of the Products, including such documents and information used by Seller in the manufacture of the Products, including any research and development records and documents and information otherwise in the possession of Seller related thereto (collectively, “Technical Information”). The term “Technical Information” shall also mean and include any such information which is owned by or in the possession and control of Seller’s affiliated and related companies relating to the Products; and

2. Retained Assets. All other assets and properties related to the Products, including without limitation machinery, equipment, furniture, fixtures and all other tangible personal property, inventory (whether raw materials, work-in-process or finished goods), supplies, accounts receivable, contract rights and all other assets not specifically enumerated in Section 1 above, shall be retained by and remain the property of Seller.

3. Liabilities. Purchaser shall not in any manner assume or be liable or responsible for any of the liabilities, debts, or obligations of Seller of any nature whatsoever, whether actual, contingent or accrued, known or unknown (“Excluded Liabilities”), which Excluded Liabilities shall be retained by, and be the sole and exclusive obligation of, Seller. Seller shall be solely and exclusively responsible for (and shall indemnify Purchaser from and against) and shall pay any and all United States federal, state and local sales, use, transfer, transfer gains or similar taxes payable in connection with the sale of the Purchased Assets.

4. Purchase Price; Payment; Allocation. The purchase price for the Purchased Assets shall be One Million Two Hundred Thousand Dollars ($1,200,000.00) (the “Purchase Price”). The Purchase Price shall be paid in full at the Closing by wire transfer to an account designated by Seller. The Purchase Price will be allocated, for tax purposes, among the Purchased Assets as follows:


Brand (trademark, logo)	$	138,400
Patents	$	52,200
Drawings, Intellectual Prop.	$	140,000
Goodwill and other intangibles	$	869,400

Total	$	1,200,000

5. Closing. The closing of the transactions contemplated by this Agreement shall take place simultaneously with the execution of this Agreement by the parties hereto (the “Closing”), and shall be effective as of 12:01 A.M. on the date of this Agreement (“Effective Time”). The Closing will take place at the offices of Whyte Hirschboeck Dudek S.C. in Milwaukee, Wisconsin. All matters at the Closing shall be considered to take place simultaneously and no delivery of any document shall be deemed complete until all transactions and delivery of documents are completed.

6. Representations and Warranties of Seller. Seller represents and warrants to Purchaser that as of the date of this Agreement:

(a) Authorization of Agreement. Seller is a limited liability company validly existing under the laws of the State of Delaware. Seller (a) has all necessary limited liability company power and authority to manufacture and sell the Products, (b) possesses all licenses, franchises, rights and privileges necessary to manufacture and sell the Products, and (c) has all necessary power and authority to execute and deliver this Agreement and the other agreements and ancillary documents to be executed and delivered pursuant to this Agreement and to consummate the transactions provided for herein and therein. The execution, delivery and performance of this Agreement have been duly authorized by all requisite action of Seller’s members, managers or other governing body. The execution and delivery of this Agreement and the other agreements to be executed and delivered pursuant to this Agreement and the consummation of the transactions contemplated hereby and thereby do not and will not, with or without the giving of notice or the passage of time, conflict with, result in or constitute a breach, default, right to accelerate or loss of rights under, or result in the creation of any lien, charge or encumbrance pursuant to any law, rule, regulation, statute, order, judgment or decree or any contract, agreement, lease, license or instrument to which Seller is a party or by which Seller or the Purchased Assets are bound or affected. This Agreement is, and each other agreement and document to be executed by Seller pursuant hereto will be, when so executed, a valid and binding obligation of Seller, enforceable in accordance with its terms.

(b) Title to Purchased Assets. Except with respect to the Intangible Assets, as to which Seller only makes the representations and warranties provided in Section 6(d) below and except for Liens (as defined below) all of which will be terminated at or prior to Closing, Seller owns all right, title and interest in and to the Purchased Assets and has good and marketable title, solely and exclusively, to all Purchased Assets, free and clear of any and all mortgages, security interests, title retention agreements, options or warrants to purchase, rights of first refusal, liens, easements, encumbrances, restrictions, claims or rights of ownership (whether express or implied, written or oral), and other burdens or claims of ownership rights or interests (or options to purchase any such rights or interests) of any nature whatsoever (“Liens”). None of the Purchased Assets is subject to any restriction with respect to the transferability thereof and Seller has the full power and right to sell, assign, convey and deliver the Purchased Assets to Purchaser as contemplated hereby.

(c) Litigation and Proceedings. There are no causes of action, investigations, inquiries, suits, actions or legal, administrative, arbitrative or other proceedings, or any claims or demands (“Claim”) pending or, to Seller’s knowledge, threatened against the Purchased Assets or against Seller with respect to or affecting the Purchased Assets, and/or Seller’s right, title or interest therein.

(d) Intangible Assets.

(i) Seller owns and has good and marketable title, solely and exclusively, to the patents (and all applications therefore), copyrights, registrations relating to all the registered trademarks, registered service marks and trade names, and the domain names included within the Intangible Assets in each case as set forth on Schedule I hereto, and Seller’s interest in the Intangible Assets is free and clear of any and all mortgages, security interests, title retention agreements, options or warrants to purchase, rights of first refusal, liens, easements, encumbrances or restrictions. None of the Intangible Assets is subject to any restriction with respect to the transferability thereof and Seller has the full power and right to sell, assign, convey and deliver the Intangible Assets to Purchaser as contemplated hereby. To Seller’s knowledge, no third party is using the trade mark or trade name Ajax (or any mark confusingly similar thereto) in violation of Seller’s rights in and to the Ajax mark in relation to the Products.

(ii) Except for annuity, maintenance, renewal and other similar or related fees, there are no royalties, honoraria, fees or other payments payable by Seller to any person by reason of the ownership, use, license, sale, disposition or use of the Intangible Assets and no agreement, understanding or arrangement of any nature whatsoever exists relative thereto.

(iii) No claim of infringement or other claim has been made, asserted, or, to the knowledge of Seller, threatened by or against Seller to the effect that any Intangible Asset or any Product currently manufactured, designed or sold by Seller (and/or its affiliated and related companies) interferes or has interfered with, infringes on or has infringed upon, misappropriates, unfairly competes or otherwise conflicts with any intellectual property rights of any other person. No claim of misappropriation or misuse of any invention, trade secret or other proprietary rights included among the Intangible Assets (including any claim that Seller must license or refrain from using any intellectual property rights of any third party), has been made, asserted, or, to the knowledge of Seller, threatened by or against Seller.

(iv) There is currently no dispute, action, suit or proceeding pending, or to the knowledge of Seller, threatened which challenges the legality, validity, enforceability, registration, use or ownership of any Intangible Assets.

(e) Seller has not entered into any agreement or arrangement with any third party granting any right, title or license in and to the Purchased Assets (or the right to use any of the Purchased Assets) in any manner whatsoever, including, but not limited to any trademark license, patent license or other right and/or privilege in connection with the Purchased Assets.

(f) “Knowledge” of Seller. When used in this Section in reference to Seller, the terms “knowledge,” “known” or “know” shall mean facts, circumstances, information and data actually known to the Chief Executive Officer, Chief Financial Officer, Chief Legal Officer or any member or director of Seller as of the date of this Agreement.

(g) Seller has complied with and is operating in compliance with all laws, rules, regulations, and orders applicable to Seller and the conduct of its business as it relates to the Products, and the ownership or operation of its properties, the violation of which would have a material adverse effect upon the Purchased Assets.

(h) Seller and the members, managers, officers, directors or agents of Seller have not employed any investment banker, business consultant, broker or finder, or incurred any liability for any investment banking, business consultant, brokerage or finders’ fees or commissions in connection with the transactions contemplated herein.

(i) No filing with, and no permit, authorization, consent or approval of, any governmental or regulatory agency is necessary in connection with the execution, delivery or performance by Seller of this Agreement or for the consummation by Seller of the transaction contemplated by this Agreement. All statutory requirements for the valid consummation by Seller of the transaction contemplated by this Agreement have been fulfilled; all authorizations, consents and approvals of all federal, state, local and foreign governmental agencies and authorities required to be obtained in order to permit consummation by Seller and Purchaser of the transactions contemplated by this Agreement have been obtained.

7. Representations and Warranties of Purchaser. Purchaser represents and warrants to Seller that as of the date of this Agreement:

(a) Corporate Organization. Purchaser is a corporation validly existing under the laws of the jurisdiction of its incorporation. Purchaser has all corporate power and authority necessary to own, operate and lease its properties and carry on its businesses as now conducted.

(b) Authorization of Agreement. Purchaser has all necessary corporate power and authority to execute and deliver this Agreement and the other ancillary agreements and documents to be executed and delivered pursuant to this Agreement and to consummate the transactions provided for therein. The execution and delivery of this Agreement and the other agreements to be executed, delivered and performed pursuant to this Agreement by Purchaser, and the performance by it of the obligations to be performed thereunder, have been duly authorized by all necessary and appropriate corporate action. The execution and delivery of this Agreement and the other ancillary agreements and documents to be executed and delivered pursuant to this Agreement and the consummation of the transactions contemplated thereby do not and will not conflict with or result in a breach of, or constitute a default under, the terms or conditions of Purchaser’s Articles of Incorporation or By-Laws (or similar governing document or agreement), or any law, rule, regulation, statute, order, judgment or decree or any agreement or instrument to which Purchaser is a party or by which Purchaser or its assets are bound or affected. This Agreement is, and each other ancillary agreement and document to be executed by Purchaser pursuant hereto will be when so executed, a valid and binding obligation of Purchaser, enforceable in accordance with its terms, except that enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and by general equitable principles.

8. Limitations on Buyer’s Rights to Sell Certain Products.

(a) Notwithstanding the sale of the Purchased Assets (including the trademark and trade name AJAX) to Purchaser hereunder, Purchaser agrees, for itself and its direct and indirect subsidiaries, affiliates, successors and assigns, that it will not, directly or indirectly, engage in the manufacture, sale or distribution of washers, washer extractors, standard dryers or tumbler dryers, in each case bearing the trademark AJAX (or any derivation thereof or name or mark confusing similar thereto) anywhere within the world, for a period of twenty (20) years from and

after the date of this Agreement. To the extent that Purchaser shall enter into a licensee agreement with a licensee granting such licensee the right to manufacture Products bearing the Ajax trademark, any such license shall contain a provision restricting such licensee from manufacturing washers, washer extractors, standard dryers or tumbler dryers under the Ajax trademark.

(b) If the provisions of this Section 8 shall be adjudicated by a court of competent jurisdiction to be invalid, prohibited or unenforceable for any reason, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Section 8 or affecting the validity or enforceability of this Section 8 or affecting the validity or enforceability of such provision in any other jurisdiction. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Section 8 or affecting the validity or enforceability of such provision in any other jurisdiction.

(c) In the event of the breach or threatened breach by Purchaser (or its affiliates, successors or assigns) of any of the provisions of this Section 8, Seller, in addition and supplementary to other rights and remedies existing in its favor, may apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce or prevent any violations of the provisions hereof (without posting a bond or other security).

9. Trademark License to Seller; Seller’s Continuing Business.

(a) Purchaser will grant to Seller a royalty free, paid up, world-wide, non-transferable license (the “Seller License”) to use the trade name and/or trademark AJAX on or in connection with (i) the sale of service and repair parts and components for a period of ten (10) years from the date of this Agreement; and (ii) the sale of Products and related goods, through October 31, 2006, to allow Seller to deplete its current finished goods inventories of such Products and related goods. Notwithstanding the foregoing, Seller shall not, at any time following the Closing, use the AJAX trade name in conjunction with Seller’s corporate or business name or the name of any division or subsidiary of Seller. The Seller License shall be in the form of Exhibit A attached hereto.

(b) Nothing in this Agreement shall prohibit Seller from manufacturing, selling or distributing any goods or products of any kind whatsoever that are competitive with the business of Purchaser; provided however that, in any event, following the Closing, Seller shall cease the use of the trademark AJAX (and any mark that is confusingly similar thereto) in connection with the sale of any goods or products (except to the extent permitted by the Seller License).

10. Closing Deliveries; Removal of Assets.

(a) Purchaser’s Deliveries at Closing. Purchaser shall deliver or cause to be delivered to Seller the following documents at or prior to Closing:

(i) Seller License duly executed by Purchaser; and

(ii) Payment of the Purchase Price in the manner provided in Section 4 above.

(b) Seller’s Deliveries at Closing. Seller shall deliver or cause to be delivered to Purchaser the following documents at or prior to Closing:

(i) A Bill of Sale and Assignment duly executed by Seller, in form reasonably satisfactory to Purchaser and its counsel, transferring and conveying all right, title and interest in and to the Purchased Assets (together with possession and control of the Purchased Assets, provided however that the drawings referenced in Schedule I shall be delivered to purchaser no later than thirty (30) days after the Closing);

(ii) Assignments of the patents, trademarks, trade names, domain names included among the Purchased Assets, in form reasonably acceptable to Purchaser and its counsel and suitable for recording, as appropriate, in the respective jurisdictions to which they apply;

(iii) A receipt for the Purchase Price; and

(iv) Releases/terminations of all mortgages, security interests and other liens against the Purchased Assets in form and substance satisfactory to Purchaser and its counsel.

(c) Removal of Purchased Assets. Purchaser shall arrange for and bear all costs (not including the costs of Seller’s personnel or occupancy costs of Seller’s premises) incurred in connection with the removal of the Purchased Assets from Seller’s premises. Seller will cooperate with Purchaser in the removal of the Purchased Assets from Seller’s premises, including, without limitation, by providing Purchaser with reasonable access to Seller’s premises after the Closing (provided that such access is pre-arranged with Seller in advance and during normal working hours of Seller); provided that Purchaser shall complete its removal of the Purchased Assets from Seller’s premises not later than thirty (30) days following the Closing, or as otherwise mutually agreed to by Seller and Purchaser after the Closing.

11. Survival of Representations and Warranties; Indemnification.

(a) Survival. All representations and warranties of a party contained in this Agreement or in any certificate or other document delivered pursuant hereto shall survive the Closing Date for a period of one (1) year following the Closing, except for the representations and warranties contained in Subsections 6(a), 6(b) and 6(d)(i) and 7(a) and 7(b), which shall survive indefinitely (the period of survival of any representation or warranty being referred to as its “Survival Period”).

(b) Indemnity. From and after the Closing, the parties shall indemnify each other as provided in this Section 11. The party seeking indemnification is sometimes referred to herein as the “Indemnified Party” and the party from which indemnification is sought is sometimes referred to as the “Indemnifying Party.” For purposes of this Agreement, “Damages” shall mean any losses, liabilities, damages, costs and/or expenses (including reasonable out-of-pocket attorneys’ fees and expenses) actually incurred in connection with any actions, suits, demands, assessments, judgments and settlements, in any such case reduced by the amount of insurance proceeds recovered from any person or entity with respect thereto. The indemnification obligations of Purchaser and Seller under this Section 11 shall constitute the sole and exclusive remedies of Seller and Purchaser, respectively, for the breach of any covenant, agreement, representation or warranty in this Agreement by Seller or Purchaser, as the case may be, and, Seller and Purchaser shall not be entitled to rescission of this Agreement or to any further indemnification rights or claims of any nature whatsoever in respect thereof, all of which such rights and/or claims are hereby waived by Purchaser and Seller.

(c) Seller’s Indemnification Covenants. Seller will indemnify Purchaser and its officers, directors, agents, employees and affiliates (“Purchaser Indemnitees”) and hold them harmless from and against Damages sustained or incurred by them as a result of, arising out of or incidental to:

(i) any breach or inaccuracy of any representation or warranty made by Seller in this Agreement or in any certificate or other document or instrument delivered by Seller to Purchaser in connection with the transactions contemplated hereby;

(ii) any failure of Seller to comply with, or any breach or nonfulfillment by Seller of, any covenant of Seller set forth in this Agreement or in any certificate or other document or instrument delivered by Seller to Purchaser in connection with the transactions contemplated hereby;

(iii) any failure of Seller to timely pay, perform or discharge when due any Excluded Liabilities; and

(iv) any and all claims asserted, or actions brought against, Purchaser relating to any products sold by Seller prior to the date of this Agreement or thereafter pursuant to the Seller License granted to Seller.

(d) Purchaser’s Indemnification Covenants. Purchaser will indemnify Seller and its officers, directors, agents, employees and affiliates (“Seller Indemnitees”) for and hold them harmless from and against Damages sustained or incurred by them as a result of, arising out of or incidental to:

(i) any breach or inaccuracy of any representation or warranty made by Purchaser in this Agreement or in any certificate or other document or instrument delivered by Purchaser to Seller in connection with the transactions contemplated hereby; or

(ii) any failure of Purchaser to comply with, or any breach or nonfulfillment by Purchaser of any covenant of Purchaser set forth in this Agreement, or in any certificate or other document or instrument delivered by Purchaser to Seller in connection with the transactions contemplated hereby;

(iii) any claim, demand, liability or obligation arising from or related to the Purchased Assets, Purchaser’s conduct of its business or the production or sale of any Products by Purchaser, its affiliates, successors or assigns, or any other act or omission of Purchaser occurring subsequent to the Effective Time; provided, however, that Purchaser shall not be required to indemnify Seller with respect to any claims alleging any infringement by the Intangible Assets upon the intellectual property rights of any third parties, to the extent such infringement relates to (i) Products that are manufactured or sold by Seller or (ii) Products that are manufactured or sold by Purchaser, provided, in the case of this clause (ii), that the Product(s) that is the subject of any such claim(s) was manufactured strictly in accordance with the Technical Information and without any modifications thereto.

(e) Claims for Indemnification. Promptly upon an Indemnified Party’s obtaining knowledge of any facts causing it to believe that it has or will have a claim for indemnification against any Indemnifying Party or Parties hereunder, the Indemnified Party shall give written notice

of such claim (a “Claim Notice”) to the Indemnifying Party or Parties. Such written notice shall set forth the nature and (to the extent then known) the amount of Damages incurred by or threatened against the Indemnified Party. Notwithstanding the foregoing, the right of indemnification hereunder shall not be affected by any failure of the Indemnified Party to give or by its delay in giving such notice unless, and then only to the extent that, the rights of the Indemnifying Party are prejudiced as a result of such failure or delay.

(f) Limitations on Indemnification.

(i) Notwithstanding any other provision of this Agreement, Purchaser shall not be entitled to make a claim against Seller under Section 11(c)(i), and Seller shall not be entitled to make a claim against Buyer under Section 11(d)(i), respectively, until the aggregate amount of Damages arising under Section 11(c)(i) or 11(d)(i), as the case may be, exceeds Fifty Thousand Dollars ($50,000.00) (the “Indemnification Threshold”). In the event that the aggregate amount of Damages recoverable from an Indemnifying Party exceeds the Indemnification Threshold, such party shall be responsible for all such Damages, but only to the extent they exceed the Indemnification Threshold, and subject to the Indemnification Cap (as defined below).

(ii) Notwithstanding any other provision of this Agreement, (A) the aggregate indemnification obligations of Seller under Section 11(c) and (B) the indemnification obligation of Buyer under Section 11(d), respectively, will not exceed an aggregate of One Million Two Hundred Thousand Dollars ($1,200,000.00) (the “Indemnification Cap”).

(iii) The obligation of Seller to indemnify under Section 11(c)(i) shall expire on the date on which the Survival Period applicable to the representation or warranty in question expires in accordance with Section 11(a); provided that a Purchaser Indemnitee’s right to indemnification shall be preserved as to any matter as to which it has delivered a Claim Notice to Seller prior to the expiration of such Survival Period.

12. Product Liability Claims. In addition to any other provisions of, and obligations of the parties under, this Agreement: (a) Seller shall indemnify, defend and hold Purchaser harmless from and against any and all product liability claims asserted against Purchaser arising from or attributable to any goods or products manufactured, distributed or sold by Seller, and (b) Purchaser shall indemnify, defend and hold Seller harmless from and against any and all product liability claims asserted against Seller arising from or attributable to any goods or products manufactured, distributed or sold by Purchaser.

13. Confidentiality. All confidential or proprietary information or work product relating to the Purchased Assets which is known to Seller as of the Closing will be the sole property of Purchaser. Seller shall take reasonable steps to protect all of the following from misuse, loss, theft, or accidental disclosure in accordance with Seller’s internal policies and procedures with regard to its own confidential and proprietary information: (i) the Technical Information, and (ii) to the extent included among the Purchased Assets, all inventions, trade secrets, research and developments and improvements, including all confidential information relating to the foregoing.

14. Miscellaneous.

(a) Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given or made (and shall be deemed to have been duly

given or made upon receipt) by delivery in person, by an internationally recognized overnight courier service, by facsimile or registered or certified mail (postage prepaid, return receipt requested) to the respective parties hereto at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 14(a)):


if to Seller:		Alliance Laundry Systems LLC P.O. Box 990 Shepard Street Ripon, WI 54971-0990 Attn: Vice President, Chief Financial Officer Facsimile No. (920) 748-1629

with a copy to:		Whyte Hirschboeck Dudek S.C. 555 E. Wells Street, Suite 1900 Milwaukee, Wisconsin 53202 3819 Attention: John F. Emanuel Facsimile No. (414) 223-5000

if to Purchaser:		Sankosha Engineering Co., Ltd. c/o Sankosha USA, Inc. 1901 Landmeier Road Elk Grove Village, Illinois 60007 Attention: President Facsimile No. 847-427-9634

With a copy to:		Masuda, Funai, Eifert & Mitchell, Ltd. 1475 E. Woodfield Road, Suite 800 Schaumburg, Illinois 60173 Attention: Joseph S. Parisi Facsimile No. (847) 734-1089

Notwithstanding the foregoing, written notice given to any person shall be effective upon its actual receipt by the person entitled to receive it.

(b) Public Announcements. Except for disclosures by the parties to their respective lenders, investors and professional advisors, and except for Seller’s public filings as required by the Securities and Exchange Commission, neither party hereto shall make, or cause to be made, any press release or public announcement in respect of this Agreement or the transactions contemplated hereby or otherwise communicate with any news media without the prior written consent of the other party unless otherwise required by law, regulation or applicable stock exchange rule or regulation, and the parties hereto shall cooperate as to the timing and contents of any such press release, public announcement or communication.

(c) Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by reason of any law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect for so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner

materially adverse to either party hereto. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.

(d) Entire Agreement. This Agreement, together with Seller License and all other agreements, documents and instruments to be delivered or executed at Closing, constitute the entire agreement of the parties hereto with respect to the subject matter hereof and thereof and supersedes all prior agreements and undertakings, both written and oral, between Seller and Purchaser with respect to the subject matter hereof and thereof.

(e) Assignment. This Agreement may not be assigned by operation of law or otherwise without the express written consent of Seller and Purchaser (which consent may be granted or withheld in the sole discretion of Seller or Purchaser); provided, however, that (i) Purchaser or Seller may assign this Agreement or any of their respective rights and obligations hereunder to one or more of their respective affiliates and (ii) either party may assign this Agreement to a person or entity which acquires and succeeds to the business of such party (as it relates to this Agreement) substantially as a going concern, in each case without the consent of the other party, provided that Purchaser and Seller shall remain liable for all of their respective obligations under this Agreement.

(f) Amendment. This Agreement may not be amended or modified except (a) by an instrument in writing signed by, or on behalf of, Seller and Purchaser or (b) by a waiver in accordance with Section 14(g).

(g) Waiver. Any party to this Agreement may (i) extend the time for the performance of any of the obligations or other acts of the other party, (ii) waive any inaccuracies in the representations and warranties of the other party contained herein or in any document delivered by the other party pursuant hereto or (iii) waive compliance with any of the agreements of the other party or conditions to such party’s obligations contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the party to be bound thereby. Any waiver of any term or condition shall not be construed as a waiver of any subsequent breach or a subsequent waiver of the same term or condition, or a waiver of any other term or condition of this Agreement. The failure of any party hereto to assert any of its rights hereunder shall not constitute a waiver of any of such rights. All rights and remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available.

(h) Disclaimer. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT, SELLER DOES NOT MAKE AND HAS NOT MADE ANY OTHER EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY WITH RESPECT TO THE PURCHASED ASSETS THEMSELVES (INCLUDING THE VALUE, CONDITION OR USE OF ANY PURCHASED ASSET), ANY BUSINESS OPPORTUNITIES INVOLVING THE PRODUCTS OR THE USE OF THE PURCHASED ASSETS, OR OTHERWISE WITH RESPECT TO ANY OTHER INFORMATION PROVIDED TO PURCHASER, INCLUDING, WITHOUT LIMITATION, AS TO THE PROBABLE SUCCESS OR PROFITABILITY OF THE OWNERSHIP OR USE OF THE PURCHASED ASSETS BY PURCHASER AFTER THE CLOSING.

(i) Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Wisconsin applicable to contracts executed in and to be performed in that State. All actions and proceedings arising out of or relating to this Agreement shall be heard and determined exclusively in any state or federal court in the State of Wisconsin. The parties hereto hereby (a) submit to the exclusive jurisdiction of any Wisconsin state or federal court for the purpose of any action arising out of or relating to this Agreement brought by any party hereto, and (b) irrevocably waive, and agree not to assert by way of motion, defense, or otherwise, in any such action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the action is brought in an inconvenient forum, that the venue of the action is improper, or that this Agreement or the transactions contemplated by this Agreement may not be enforced in or by any of the above-named courts.

(j) Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH OF THE PARTIES HERETO HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

(k) Benefit. This Agreement shall be binding upon and inure to the benefit and burden of and shall be enforceable by Seller and Purchaser and their respective successors and permitted assigns.

(l) Counterparts. This Agreement may be executed and delivered (including by facsimile transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement.

(m) Costs/Expenses. Except as otherwise provided herein, each party shall pay its own costs and expenses incurred in connection with this Agreement and the transaction contemplated hereby, even if the transactions contemplated hereby are not consummated or closed.

(n) Bulk Sales Compliance. Seller represents that the Purchased Assets do not constitute the majority of (or a substantial part of) Seller’s assets, and accordingly the transactions contemplated by this Agreement are not subject to the Wisconsin Bulk Sales Law.

(signature page to follow)

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


SELLER:		PURCHASER:

ALLIANCE LAUNDRY SYSTEMS LLC.		SANKOSHA ENGINEERING CO., LTD.

By:	/s/ Bruce P. Rounds	By:	/s/ Mitsuyuki Uchikoshi
	Bruce P. Rounds		Mitsuyuki Uchikoshi
Its:	VP-CFO	Its:	President

(Signature Page to Asset Purchase Agreement)

SCHEDULE I

DOMAIN NAMES

ajaxpress.info

ajaxpress.com

TRADEMARKS


Registration No.	Jurisdiction	Trademark	Registrant	Class(es)	Goods
94549086	France	AJAX & Design	ALLIANCE LAUNDRY SYSTEMS LLC	07, 11	Laundry And Dry Cleaning Machinery And Equipment For Commercial Use. Class 7. Tumblers And Dryers For Laundry And Textiles For Commercial And Industrial Use. Class 11.

607471	Japan	AJAX	ALLIANCE LAUNDRY SYSTEMS LLC	07	Laundry Presses And Dry-Cleaning Presses With Air Pressure Powers, Electric Switches And Electric Motors. Class 7.

505411	Mexico	AJAX	ALLIANCE LAUNDRY SYSTEMS LLC	11	Dryers And Tumblers For Clothing And Textiles, For Commercial And industrial Use. Class 11.

94549085	France	AJAX	ALLIANCE LAUNDRY SYSTEMS LLC	07, 11	Laundry And Dry Cleaning Machinery And Equipment For Commercial Use. Class 7. Tumblers And Dryers For Laundry And Textiles For Commercial And Industrial Use. Class 11.

3796/64	South Africa	AJAX	ALLIANCE LAUNDRY SYSTEMS LLC	07	Laundry Presses And Dry-Cleaning Presses. Class 7.

32296	Greece	AJAX	ALLIANCE LAUNDRY SYSTEMS LLC	07	Laundry Presses, Presses For Dry Cleaning, Laundry Apparatus And Machinery. Class 7.

334587	Switzerland	AJAX	ALLIANCE LAUNDRY SYSTEMS LLC	07	Laundry Presses, Dry Cleaning Presses, Laundry Machines. Class 7.

1129715	Germany	AJAX	ALLIANCE LAUNDRY SYSTEMS LLC	07, 11, 21	Foreign. Classes 7, 11 And 21.

436924	Benelux	AJAX	ALLIANCE LAUNDRY SYSTEMS LLC	07, 11, 21	Foreign. Classes 7, 11 And 21.

Schedule I-1


Registration No.	Jurisdiction	Trademark	Registrant	Class(es)	Goods
293609	Canada	AJAX	ALLIANCE LAUNDRY SYSTEMS LLC		Commercial Laundry And Dry Cleaning Equipment Namely: Laundry Presses And Dry Cleaning Presses. Commercial Laundry And Dry Cleaning Equipment Namely: Laundry Tumblers (Dryers). Laundry Washer-Extractors. Dry Cleaning Dry-To-Dry Units.

856311	China, People’s Republic of	AJAX	ALLIANCE LAUNDRY SYSTEMS LLC	07	Laundry Machinery And Equipment. Class 7.

305/1965	Hong Kong	AJAX	ALLIANCE LAUNDRY SYSTEMS LLC	07	Laundry Presses, Dry-Cleaning Presses, Laundry Appliances And Machines. Class 7.

289109	Mexico	AJAX	ALLIANCE LAUNDRY SYSTEMS LLC	7	Washing Machines And Devices, Including Laundry Machines, Dry Cleaning Equipment, As Well As The Parts And Components Thereof, Shall Be Considered An Infraction. Class 7.

1500201	United States	AJAX	ALLIANCE LAUNDRY SYSTEMS LLC	07	Laundry And Drycleaning Machines And Equipment For Commercial And industrial Use, Namely, Washer-Extractors, Tumblers, Dryers, Laundry Presses, Shirt Cabinet Presses Large And Small, Shirt Rotary Presses, Collar And Cuff Presses, Sleevers, Folding Tables, Drycleaning Presses, Form Finishers, Pants Toppers, Drycleaning Machines, Vapor Adsorbers And Controls Sold As A Unit With The Above Items. Class 7.

61629	Austria	AJAX	ALLIANCE LAUNDRY SYSTEMS LLC	7, 9, 17, 21	Machinery For Laundry And Cleaning Establishments, Including Ironers And Automatic Machines For Ironing And/Or Folding And/Or Packing Shirts, And Parts Thereof. Class 7, 9, 17 and 21.

Schedule I-2

PATENTS


US PATENT NO.	INVENTOR	PATENT TITLE	DATE ISSUED	DATE EXPIRES
4,843,745	OBERLY	PRESS AND METHOD OF MAKING SAME	July 4, 1989	July 4, 2006
5,065,535	GILL ET AL	INDEX SYSTEM FOR ROTARY GARMENT PRESS	November 19, 1991	November 19, 2008
5,692,326	MOHAN ET AL	SHIRT PRESSING APPARATUS W/MOVEABLE CUFF	December 7, 1997	June 7, 2016
5,970,637	MOHAN ET AL	AUTOMATIC SHIRT PRESSING SYSTEM W/VACUUM SYSTEMS	October 26, 1999	May 29, 2018

FOREIGN PATENT REGISTRATIONS


PATENT NO.	INVENTOR	PATENT TITLE	DATE ISSUED	DATE EXPIRES
57509-Taiwan		Garment Press	January 12, 1991

DRAWINGS


Drawing Type		#
AutoCAD (dwg)		3258
AutoCAD (dxf)		2828
ME10		82
Scan (tif)		5039
Scan (PDF)		49
Scan (bmp)		11
Scan (jpg)		153
Plot		2
Hardcopy Prints/Instructions		Range: 4,480 to 7,337

Schedule I-3

Ajax Component Breakdown


	Presses	LGCAB	DB	SMCAB	ACC
Assemblies	481	232	109	275	2
Fabricated Weldments	669	481	367	383	0
Purchased	951	974	656	1,277	4
Literature	93	50	13	70	1

EX-10.2 3 dex102.htm TRADEMARK LICENSE AGREEMENT, DATED JUNE 15, 2006 Trademark License Agreement, dated June 15, 2006

Exhibit 10.2

TRADEMARK LICENSE AGREEMENT

This Trademark License Agreement (the “Agreement”), dated and effective as of the 15th day of June, 2006 (the “Effective Date”), by and between SANKOSHA ENGINEERING CO., LTD., a Japanese corporation (“Licensor”) and ALLIANCE LAUNDRY SYSTEMS LLC, a Delaware limited liability company (“Licensee”).

WHEREAS, Licensor and Licensee have entered into an Asset Purchase Agreement, dated as of June 15, 2006 (the “Purchase Agreement”) pursuant to which Licensee agreed to sell to Licensor, and Licensor agreed to purchase from Licensee, the Purchased Assets (as defined in the Purchase Agreement), as more particularly set forth in the Purchase Agreement; and

WHEREAS, pursuant to the Purchase Agreement, Licensor has purchased the trademark AJAX and has agreed to license such trademark to Licensee according to the terms set forth in the Purchase Agreement and, more particularly, as provided herein; and

WHEREAS, Licensor and Licensee wish to enter into an agreement to reflect the terms of the Purchase Agreement whereby Licensee will be a non-exclusive licensee of the Licensed Mark (as hereinafter defined) in connection with the sale of complete, finished, commercial laundry pressing and finishing equipment and accessories therefore and service and repair parts and components for a limited period of time, all as set forth in this Agreement;

NOW, THEREFORE, in consideration of the mutual promises and covenants made herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

Definitions.

(a) “Licensed Products” means (i) complete, finished, commercial laundry pressing and finishing equipment and accessories therefor (“Whole Products”), and (ii) service and repair parts and components for Whole Products, which service and repair parts and components are manufactured in accordance, in all material respects, with the Technical Information (“Spare Parts”).

(b) “Licensed Mark” means the trademark “AJAX” and any registrations thereof in any country.

Other capitalized terms used but not otherwise defined herein shall have the meaning set forth in the Purchase Agreement.

Grant of License.

(a) Licensor hereby grants to Licensee a nontransferable, non-exclusive, royalty-free, fully paid-up and worldwide license to use the Licensed Mark only in connection with the sale of (a) Whole Products through and including October 31, 2006 in order to allow Licensee to deplete Licensee’s finished goods inventories; and (b) Spare Parts (manufactured or sold by Licensee) for a period of ten years after the date of this Agreement.

(b) Licensee shall not use the Licensed Mark on any goods or products other than Licensed Products manufactured or sold by Licensee. For avoidance of doubt, the parties

specifically agree the Licensee shall not have the right or license to manufacture or use the Licensed Mark upon or in conjunction with the manufacture and/or sale of any service and repair parts or components for any products manufactured by Licensor and its related companies, except to the extent that such service and repair parts or components are manufactured, in all material respects, in accordance with the Technical Information.

(c) Licensee shall not sublicense or grant any third parties any right to use or otherwise exploit the Licensed Mark. Notwithstanding the foregoing, Licensee shall have the right to sell Licensed Products to its distributors of Licensed Products throughout the respective time periods set forth in Section 2(a) above in conjunction with such distributors’ sale and distribution of Licensed Products on behalf of Licensee, provided that Licensee (on behalf of each such distributor) remains responsible and solely liable for all Quality Standards, quality assurances, marking and advertising and other obligations with respect to Licensee’s use of the Licensed Mark in accordance with the terms of this Agreement.

(d) Promptly after the execution of this Agreement, Licensee shall advise its distributors that Licensee has sold and transferred the Licensed Mark and other intellectual property as it relates to Licensed Products to Licensor and that in conjunction therewith, such distributors may only (i) use the Licensed Mark in conjunction with the sale of Licensed Products purchased from Licensee (or its predecessors), and (ii) after October 31, 2006, indicate in any advertising or other promotional/sales materials, that such distributors are authorized distributors of Spare Parts only (and not Whole Products); provided, however, that nothing contained herein shall restrict any such distributor from using the Licensed Mark (whether before or after October 31, 2006) in conjunction with its sale of Whole Products purchased from Licensee on or prior to October 31, 2006. Furthermore, Licensee shall not appoint any new or different distributors of Whole Products on and after the date of this Agreement, and shall not replace or substitute any distributors that may resign, be terminated or otherwise cease selling and/or distributing the Whole Products during the term of this Agreement.

Ownership of the Licensed Mark.

(a) Licensee hereby acknowledges and agrees that Licensor is and shall at all times remain the owner of all right, title and interest in and to the Licensed Mark and nothing in this Agreement shall give Licensee any right, title or interest in or to the Licensed Mark other than the right to use the Licensed Mark in accordance with this Agreement. Licensee shall do nothing inconsistent with Licensor’s ownership of the Licensed Mark. Any and all use of the Licensed Mark by Licensee shall inure solely and exclusively to the benefit of and be on behalf of Licensor. Licensee further agrees that during the term of this Agreement and thereafter, Licensee will not attack Licensor’s right, title or interest in and to the Licensed Mark or attack the validity or registration of the Licensed Mark and this Agreement.

(b) Licensee shall not at any time after the date hereof apply for or obtain any registration of the Licensed Mark (or any variations thereof, any similar marks or any marks in combination therewith) in any country or do or suffer to be done any other act or thing which might in any way impair the rights of Licensor in and to the Licensed Mark. Licensee hereby covenants that it will not directly or indirectly undertake any action anywhere which in

any manner might, to its knowledge, infringe, impair the validity, scope or title of Licensor in the Licensed Mark during the term of this Agreement or thereafter. Licensee agrees to cease use of the Licensed Mark in any manner with respect to Whole Products and Spare Parts immediately upon expiration of the periods set forth in paragraph 7 hereof, or earlier termination in accordance with the terms of this Agreement.

(c) Licensee agrees that it will not use the name of Licensor or the Licensed Mark or any other name or mark similar thereto as a part of its tradename, corporate name or trading designation, or in any other manner whatsoever, except to the extent authorized hereunder.

Markings and Advertising.

Licensee shall submit to Licensor for Licensor’s prior written approval, which such approval shall not be unreasonably withheld by Licensor, all packaging, advertising, labels, stickers, decals and other materials or matter upon which the Licensed Mark appears, or is intended to appear or be used in relation to the Licensed Products; provided however, that Licensor hereby approves Licensee’s use of the Licensed Mark in the same manner as the Licensed Mark has been used by Licensee as of the Effective Date (and the same shall be deemed to be satisfactory to and approved by Licensor for all purposes of this Agreement). Licensee shall only use the Licensed Mark in a manner, form, style and appearance reasonably satisfactory to Licensor. Licensee shall use all commercially reasonable efforts to amend to the reasonable satisfaction Licensor any packaging, advertising, labels, stickers, decals or other materials or matter which are not approved by Licensor.

Quality Assurances. Licensee hereby covenants that (a) the nature and quality of all Licensed Products sold by Licensee under the Licensed Mark pursuant to this Agreement, as well as any advertising and promotional materials relating to the same, shall be of at least the same grade and quality as that offered or provided by Licensee under the Licensed Mark immediately prior to the Closing (and Licensee shall not depart therefrom in any material respect without Licensor’s prior written consent), and (b) all Licensed Products will be manufactured, sold and distributed in accordance with all applicable laws and regulations. Periodically, upon the request of Licensor, Licensee shall furnish to Licensor, free of cost for its approval, a reasonable number of samples of each Licensed Product, its cartons, containers, and packaging and wrapping materials. The quality of such Licensed Products as well as any carton, container or wrapping material shall be subject to the approval of Licensor (which such approval shall not be unreasonably withheld by Licensor). In the event that the Licensed Products do not conform to the quality standards referenced in Paragraph 6 hereof in any material respects, Licensee shall cease the manufacture, assembly, sale and distribution of the Licensed Products until any such deficiencies therein have been remedied to the reasonable satisfaction of Licensor. Licensee shall at all times be and remain solely and exclusively responsible for all warranty claims and other claims of any nature whatsoever made by any third parties whatsoever relative to the Licensed Products sold by Licensee.

Quality Standards. Licensor is familiar with the quality of the Licensed Products offered or provided by Licensee immediately prior to the Closing, and such quality is acceptable to Licensor as the current standard of quality for the Licensed Products and is hereby approved by Licensor. If Licensor has a reasonable basis to conclude that Licensee is not adhering to the quality assurances as set forth in Section 5 or the quality standards as set forth in this

Section 6 (collectively the “Quality Standards”), Licensor shall have the right and privilege to inspect: (i) upon 15 days prior written notice and only during normal business hours, the premises upon which Seller manufacturers and/or assembles the Licensed Products (but only that portion of the premises in which the Licensed Products are manufactured or assembled), and (ii) the bill of materials and methods of manufacture and/or assembly of the Licensed Products, in each case only to the extent necessary or appropriate to determine Licensee’s compliance or non-compliance with Quality Standards. Licensor will not be permitted to use any electronic recording devices of any nature (including audio and/or video recording devices) during any such physical inspection of Licensee’s premises.

Term and Termination.

(a) The term of this Agreement shall commence on the Effective Date and shall expire (i) on October 31, 2006 relative to the sale of Whole Products (the “Whole Products Expiration Date”) and (ii) on June 15, 2016 relative to the sale of Spare Parts (the “Spare Parts Expiration Date”), unless sooner terminated in accordance with the terms and provisions of this Agreement. Thereafter, this Agreement may only be renewed upon the express written consent of the parties hereto.

(b) Any termination of this Agreement as provided herein shall not in any manner affect the rights and obligations of the parties hereto which have accrued hereunder prior to such termination, including without limitation, the rights and obligations of the parties relative to the warranties and indemnities set forth herein.

(c) Upon and after the passage of the Whole Products Expiration Date (as to Whole Products) and the Spare Parts Expiration Date (as to Spare Parts) or other termination of this Agreement, all rights granted to Licensee hereunder (as to Whole Products and/or Spare Parts, as the case may be) shall forthwith cease and revert to Licensor and Licensee will refrain from any further use of the Licensed Mark or any further reference to it, direct or indirect, or any mark confusingly similar to the Licensed Mark. Notwithstanding anything to the contrary herein, Licensee shall not manufacture, assemble, sell or dispose of any Licensed Products covered by this Agreement after any termination based upon or as the result of (a) any breach of this Agreement by Licensee or the failure of Licensee to affix notice of trademark registration to any cartons or containers, packaging or wrapping material, or advertising, promotional or display material, in accordance with the terms of this Agreement, or (b) the departure by Licensee from the Quality Standards approved by Licensor pursuant to this Agreement. In addition to the foregoing obligations, Licensee shall destroy or, at Licensee’s option, return to Licensor any and all technical information and technical data in the possession of Licensee that is or was used by Licensee to manufacture and/or sell Licensed Products. Licensee shall not retain any copies, summaries or other compilations of any such technical information.

Relationship of the Parties. The parties shall be deemed independent contractors and shall have no authority to bind the other to any contract, agreement or matter.

Notice. All notices and communications provided for in this Agreement shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by an internationally recognized overnight courier service, by facsimile or registered or certified mail (postage prepaid, return receipt requested) to the appropriate address as set forth in the Purchase Agreement, unless another address is substituted in writing by a party to this Agreement.

10.

Assignment. This Agreement is entered into in reliance upon and in consideration of the character, qualifications and representations of the parties. Neither this Agreement nor any of the rights, privileges or obligations herein shall be assigned, transferred or divided in any manner by either party without the prior written approval of the other party; provided, however, that (i) the Licensor or Licensee may assign this Agreement and their respective rights and obligations hereunder to one or more of their respective affiliates, and (ii) either party may assign this Agreement to a person or entity which acquires and succeeds to the business of such party (as it relates to this Agreement) without the consent of the other party. The foregoing to the contrary notwithstanding, Licensee shall not sublicense it rights under this Agreement without the express written consent of Licensor.

11.

Severability. If any section, paragraph, sentence, clause or other provision of this Agreement is held by a court of competent jurisdiction to be illegal, null and void or unenforceable, such determination shall not affect the remainder of this Agreement, and such remainder shall remain in full force and effect, to extent permitted by law.

12.

Applicable Law & Venue. This Agreement and the rights and obligations of the parties hereto shall be governed by and construed in accordance with the laws of the State of Wisconsin, without regard to the application of any conflicts of law principles. Any action commenced hereunder shall be venued in the Eastern District of Wisconsin or Milwaukee County, Wisconsin.

13.

Waiver. The waiver of either party of any right hereunder or failure to perform or breach by the other party shall not be deemed as a waiver of any other right hereunder or of any other breach or failure by said other party whether of a similar nature or otherwise.

14.

Scope of Agreement. This Agreement supersedes and terminates any and all prior agreements or contracts concerning the subject matter hereof, whether oral or in writing, which have been entered into between Licensor and Licensee prior to the Effective Date. This Agreement, together with the Purchase Agreement, constitutes the entire agreement between the parties pertaining to the subject matter hereof. No change, termination, waiver, amendment or modification of any of the provisions hereof shall be binding upon the parties, unless in a writing signed by duly authorized representatives of the parties. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

15.

Indemnification. Licensee, at its sole cost and expense, hereby agrees to hold harmless, defend and indemnify Licensor from and against any and all liability, damages, claims, demands, losses, judgments, actions, causes of actions, and costs and expenses (including, but not limited to, attorneys’ fees, paralegal fees and other professional fees and expenses), of any nature whatsoever which may be asserted against and/or suffered or incurred by Licensor, by reason of, relating to or arising out of in any manner Licensee’s sale and distribution of Licensed Products, including, but not limited to, any claims arising out of or in connection with Licensee’s design, development, manufacture, assembly, packaging, distribution, sale, advertising or use of the Licensed Products, (hereinafter collectively referred to as “Liability Claims”). Liability Claims shall also include, but not be limited to, any of the following that

relate directly to Licensed Products that were manufactured or sold by Licensee: (i) any claims arising by reason of any alleged trademark, copyright or patent infringement (ii) violation of any proprietary rights of any third parties, (iii) breach of warranty, (iv) negligence, or (v) any personal injury or death sustained by any third party whatsoever. In the event that any Liability Claims of any nature whatsoever are asserted against Licensor in any forum or jurisdiction, Licensee shall assume the defense and all costs of any suit or claim and shall indemnify and hold Licensor harmless from and against any and all losses, costs, damages, or expenses arising out of any such Liability Claims, and will pay or cause to be paid any and all judgments, awards or other amounts entered or awarded against Licensor.

16.

Purchase Agreement. Nothing contained in this Agreement shall be deemed to supersede, restrict, impair or diminish in any respect any of the obligations, agreement, covenants, representations or warranties of Licensor or Licensee contained in the Purchase Agreement.

(signature page follows)

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


LICENSOR:		LICENSEE:

SANKOSHA ENGINEERING CO., LTD.		ALLIANCE LAUNDRY SYSTEMS LLC

By:	/s/ Mitsuyuki Uchikoshi	By:	/s/ Bruce P. Rounds
Name:	Mitsuyuki Uchikoshi	Name:	Bruce P. Rounds
Title:	President	Title:	VP-CFO

(Signature Page to Trademark License Agreement)

EX-10.3 4 dex103.htm SHARE PURCHASE AGREEMENT, DATED AS OF MAY 23, 2006 Share Purchase Agreement, dated as of May 23, 2006

Exhibit 10.3

LAUNDRY SYSTEMS GROUP NV

as Seller

and

ALLIANCE LAUNDRY SYSTEMS LLC

as Purchaser

SHARE PURCHASE AGREEMENT

May 23, 2006

SHARE PURCHASE AGREEMENT


BETWEEN:	(1)	LAUNDRY SYSTEMS GROUP NV, a limited liability company (“naamloze vennootschap”) organised and existing under the laws of Belgium, having its registered office at 8560 Wevelgem, Nieuwstraat 146, Belgium, and registered at the Crossroads Databank for Enterprises under company number 0440.449.284; represented for the purposes of this Agreement by Mr. Jesper Munch Jensen and Erik Vanderhaegen in their capacity as Chief Executive Officer and Chief Financial Officer respectively;

		hereinafter referred to as the “Seller”;

AND:	(2)	ALLIANCE LAUNDRY SYSTEMS LLC, a limited liability company organised and existing under the laws of the state of Delaware, United States of America, having its principal place of business at Shepard Street, Ripon, Wisconsin 54971, United States of America;

		represented for purposes of this agreement by Thomas F. L’Esperance, in his capacity as Chief Executive Officer and President;

		hereinafter referred to as the “Purchaser”;

		the parties above are hereinafter jointly referred to as the “Parties”, and each individually a “Party”.

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WHEREAS:

The Seller is a public limited liability company listed on the Euronext Brussels stock exchange and the ultimate parent company of a group of companies engaged in supplying equipment and systems to the laundry industry and organized in two business divisions: the heavy-duty laundry division and the commercial laundry division.

B.	The Purchaser is a limited liability company that engages in the manufacture of commercial laundry products and the provision of services for laundromats, multi-housing laundries, on-premise laundries and drycleaners.

Following preliminary discussions between the Parties, they are desirous to pursue a transaction leading to the acquisition by the Purchaser of the Seller’s European commercial laundry business division and activities as carried out by the CLD Companies (such transaction hereinafter referred to as the “Transaction”, and such business division, hereinafter the “CLD”).

D.	Simultaneously with the Closing under this Agreement, the Purchaser shall acquire from Affiliated Companies of the Seller certain shares and assets located in the United States of America pursuant to a share and asset purchase agreement (the “U.S. Purchase Agreement”).

Certain information and documentation has already been made available by the Seller to the Purchaser (i) between December 19, 2005 and December 22, 2005 as well as between January 10 and January 11, 2006 at a designated data room located at the offices of the Seller, ‘t Hofveld 6 F2, 1702 Groot-Bijgaarden, Belgium, (ii) on April 6 and 7, 2006 at a designated data room located at the offices of Stibbe, Rue Henri Wafelaertsstraat 47-51, 1060 Brussels, Belgium, and (iii) by way of direct communication among the Parties and/or their legal counsel (it being understood in this respect that a full copy of the information contained in the data rooms indicated by (i) and (ii) above, was provided by Seller’s legal counsel to Purchaser’s legal counsel on April 12, 2006), to allow the Purchaser and its advisors to conduct a first phase legal, pensions and environmental non-operational due diligence (the “First Phase Due Diligence”).

F.	The Seller wishes to sell to the Purchaser, and the Purchaser wishes to purchase from the Seller, the Shares of the Company (as defined below), upon the terms and subject to the conditions set forth in this share purchase agreement (hereinafter the “Agreement”).

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NOW, THEREFORE, the Parties have agreed as follows:

1	DEFINITIONS AND INTERPRETATION

1.1

Definitions

1.1.1

In this Agreement the following terms shall have the meaning as specified or referred to in this Clause 1.1.1:

“Acquired Operations” has the meaning set forth in the U.S. Purchase Agreement.

“Adjusted EBITDA” means earnings of the CLD Companies and the Acquired Operations before interest and income taxes plus depreciation, amortization and any LSG group service fees which would no longer be necessary as a result of the Transaction (the latter as outlined in the overview attached to this Agreement as Schedule 1.1.1.A), as shown in the CLD Pro Forma Annual Accounts 2005 and calculated on the basis of IFRS accounting principles applied on a basis consistent with the methodology used in preparing the IFRS Restatement, it being understood that for the IPH product line, the contribution margin after the allocation of production overhead will be utilized rather than EBITDA due to the inability to accurately allocate selling, general and administrative expenses.

“Acquired Companies” has the meaning set forth in the U.S. Purchase Agreement.

“Affiliated Company” means an affiliated company (“société liée” / “verbonden vennootschap”) as defined in Article 11 of the Belgian Code of Companies.

“Aggregate Purchase Price” means the sum of (i) the Final Purchase Price and (ii) the Purchase Price as such term is defined in the U.S. Purchase Agreement.

“Benchmark Amount” has the meaning set out in Clause 13.1.3 (b).

“Beneficiary” means the Purchaser or a CLD Company as set out in Clause 11.1.1.

“Business Day” means any day other than a Saturday, a Sunday or a bank holiday in Belgium.

“Cash” means all cash on hand and on deposit in bank accounts plus any marketable securities with maturities of 90 days or less plus deposits in transit less outstanding checks.

“Cash/Indebtedness Adjustment” has the meaning set out in Clause 3.3.2.

“CLD” means the European commercial laundry division and activities of the Seller as carried out by the CLD Companies.

“CLD Pro Forma Annual Accounts 2005” means the pro forma financial statements for the business year ended on December 31, 2005, of the Seller’s commercial laundry division as acquired by the Purchaser under this Agreement and the U.S. Purchase Agreement (including, for the avoidance of doubt, both the CLD Companies and the Acquired Operations), established inter alia on the basis of the CLD Company Annual Accounts 2005 (as far as the CLD Companies are concerned), prepared on the basis of IFRS accounting principles applied on a basis consistent with the methodology used in preparing the IFRS Restatement and reflecting all applicable eliminations of inter-company activity and balances, as such financial statements are attached to this Agreement as Schedule 1.1.1.B.

“CLD Companies” means the Company and its Subsidiaries.

“CLD Company Annual Accounts 2005” means the annual accounts for the business year ending on

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December 31, 2005, of each of the CLD Companies (as available), audited for consolidation purposes (i.e. audited for purposes of the preparation by the Seller’s statutory auditor of its audit report with respect to the Seller’s consolidated annual accounts as at December 31, 2005), prepared on the basis of IFRS accounting principles applied on a basis consistent with the methodology used in preparing the IFRS Restatement, and reflecting all applicable eliminations of inter-company activity and balances, as such financial statements are attached to this Agreement as Schedule 1.1.1.C.

“Closing” means the transfer of ownership of the Shares pursuant to Clause 5.1 and completion of the Seller’s Closing Actions and the Purchaser’s Closing Actions pursuant to Clauses 5.2 and 5.3, respectively.

“Closing Accounts” means the Company’s unaudited financial statements as of the last day of the month immediately preceding the Closing Date, as referred to in Clause 3.3.4.

“Closing Actions” means the Seller’s Closing Actions and the Purchaser’s Closing Actions.

“Closing Cash” has the meaning set forth in Clause 3.2.

“Closing Indebtedness” has the meaning set forth in Clause 3.2.

“Closing Cash/Indebtedness Statement” has the meaning set forth in Clause 3.3.4.

“Closing Date” means the date on which the Closing shall take place pursuant to Clause 5.1.

“Closing Working Capital Statement” means the unaudited financial statement setting forth Purchaser’s calculation of the Final Working Capital of the Company as set out in Clause 3.3.4.

“Company” means IPSO-LSG NV, a limited liability company (“naamloze vennootschap”) organized and existing under the laws of Belgium, with registered office at 8560 Wevelgem, Nieuwstraat 146, Belgium, and company number 0453.859.040.

“Current Assets” means all amounts included in the balance sheet captions stocks and contracts in progress, amounts receivable within one-year, and deferred charges and accrued income, to be accounted for and presented on a basis consistent with the methodology used in preparing the IFRS Restatement.

“Current Liabilities” means all amounts included in the balance sheet captions amounts payable within one year, accrued charges and deferred income, and provisions for liabilities and charges accounted for and presented on a basis consistent with the methodology used in preparing the IFRS Restatement.

“Disclosure Letter/Schedules” means the disclosure letter and disclosure schedules to this Agreement disclosing information constituting exceptions to the Seller’s Representations.

“Disputed Item” has the meaning set out in Clause 3.3.5.

“Final Closing Cash” has the meaning set out in Clause 3.3.7.

“Final Closing Indebtedness” has the meaning set out in Clause 3.3.7.

“Final Purchase Price” has the meaning set out in Clause 3.3.3 .

“Final Working Capital” means the Current Assets of the Company less the Current Liabilities of the Company (excluding all (i) Cash (ii) Indebtedness, (iii) income tax assets and deferred income tax assets, (iv) receivables and payables between Seller or its Affiliated Companies (other than the Company) on one hand and the Company on the other hand, and (v) amounts included within the balance sheet caption “amounts receivable after one year”), calculated as at the last day of the month immediately preceding the Closing Date in accordance with the calculation principles as set forth in Schedule 3.3, taking into account the effects of the Pre-Closing Restructuring and assuming that the inter-company amounts described in Clause 7.7 of this Agreement have been eliminated, but not taking into account any effects of the sale and purchase of the CLD Companies under this Agreement or the sale and purchase contemplated by the U.S. Purchase Agreement.

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“First Phase Due Diligence” has the meaning set forth in recital E.

“IFRS Restatement” means the IFRS restatement, in June 2005, by the Seller of its consolidated annual accounts for the business year ended on December 31, 2004, which annual accounts had originally been prepared in accordance with Belgian GAAP.

“Income Taxes” means all Taxes on or measured by income, profits, receipts or earnings (for the avoidance of doubt excluding VAT).

“Indebtedness” means, without duplication and with the exception of (a) the items listed in Schedule 1.1.1.D to this Agreement and (b) Indebtedness of Ipso Rent and Ipso Rent Deutschland that is (i) incurred as of the date of this Agreement (excluding, in the case of each entity, off-balance sheet liabilities and any Indebtedness relating to the heavy-duty activities of Seller or any of its Affiliated Companies) or (ii) incurred after the date of this Agreement in accordance with Clause 7.4.2(a) hereof, (1) all obligations of the respective CLD Company for borrowed money or for the deferred purchase price of property or services (exclusive of deferred purchase price arrangements in the nature of open or other accounts payable owed to suppliers on normal terms in connection with the purchase of goods and services in the ordinary course of business) and all obligations of the respective CLD Company evidenced by bonds (including but not limited to the EUR 7,500,000 subordinated bond loan issued by the Company), debentures, notes, letters of credit, overdrafts or other similar instruments; (2) all capitalized lease obligations of the respective CLD Company, including, for the avoidance of doubt, the principal amount owed by the Company under the Laser Cutting Lease as of the last day of the month immediately preceding the Closing Date; (3) net liabilities of the respective CLD Company under all hedging obligations, currency forward exchange contracts, interest rate protection agreements or swap arrangements; (4) factoring arrangements; (5) whether or not so included as liabilities in accordance with Belgian GAAP, German GAAP, Norwegian GAAP or IFRS, all indebtedness of the types referred to in clauses (1) through (3) above (excluding prepaid interest thereon) secured by an encumbrance on property owned or being purchased by the respective CLD Company (including indebtedness arising under conditional sale or other title retention agreements), other than operating leases, whether or not such indebtedness shall have been assumed by such CLD Company or is limited in recourse; (6) all asset financing obligations of the respective CLD Company; (7) any guarantee of the obligations of another person and (8) any interest on and any premiums, prepayment or termination fees, expenses or breakage costs due upon prepayment of, in each case, any of the foregoing.

“Independent Expert” means the expert to be appointed in accordance with Clause 3.3.6.

“Initial Purchase Price” means the aggregate price for the Shares as defined in Clause 3.1.1.

“Key Employee(s)” means the key managers of the CLD (the term “managers” including for the avoidance of doubt both employees and independent consultants), as listed in Schedule 1.1.1.E.

“Liens” means all liens, pledges, security interests, usufructs (“usufruit” / “vruchtgebruik”), options, rights of first refusal, charges, claims, attachments (“saisie” / “beslag”) or other restrictions or third party rights of any kind or nature.

“Loss” means any damage (including connected expenses and costs of investigation, defense or enforcement of rights), loss, liability, debt, penalty or payment incurred, borne or made by the relevant Party.

“Material Adverse Change” means any material adverse changes, facts or circumstances (including but not limited to national and/or international developments in financial, political and/or economic circumstances) in respect of the CLD Companies and/or the Acquired Operations, whether or not known by the Purchaser on the date of this Agreement (other than the items set out on Schedule 13.1.3(b)) and that, on a cumulative basis, are or can reasonably be expected to result in (i) an adverse impact on the CLD Companies and the Acquired

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Operations taken as a whole in excess of EUR 3,500,000 (three million five hundred thousand Euro) in the aggregate (calculated without giving effect to any Tax effect), or (ii) a decrease in the CLD Companies’ and/or the Acquired Operations’ consolidated historical or projected EBITDA in excess of EUR 450,000 (four hundred and fifty thousand Euro), with the exception of any change, fact or circumstance or effect resulting from A) an industry-wide change, fact or circumstance that does not disproportionately affect the CLD Companies’ or the Acquired Operations’ business, (B) an act of terrorism not specifically directed at the CLD Companies or the Acquired Operations, or (C) a discontinuation by the U.K. distributor JLA, a limited company under English law, with offices at Meadowcroft Lane, Halifax Road, Ripponden, West Yorkshire HX6 4AJ, United Kingdom, and company number 01094178 (hereinafter “JLA”) of its commercial relationship with the Company, in which respect the Purchaser acknowledges that it is aware of the fact that JLA has expressed reservations with respect to its willingness to continue said commercial relationship in view of the prospective acquisition of the CLD Companies by the Purchaser, as contemplated by this Agreement.

“Material Contracts” means any and all contracts as set forth in Schedule 1.1.1.F to this Agreement which are or have been entered into by a CLD Company.

“Non-Compete Period” has the meaning set out in Clause 12.4.1.

“Non-Solicitation Period” has the meaning set out in Clause 12.4.1.

“Objection Notice” has the meaning set out in Clause 3.3.5.

“Parties” means the Seller and the Purchaser (each of them being referred to individually as a “Party”).

“Pre-Closing Dividend” means the dividend, if any, to be declared and paid in accordance with Clause 3.2.

“Pre-Closing Restructuring” means the restructuring of the Seller’s corporate group structure prior to Closing as set out in Clause 7.12.

“Protected Business” has the meaning set out in Clause 12.4.2.

“Purchaser” means ALLIANCE LAUNDRY SYSTEMS LLC, a limited liability company organised and existing under the laws of the state of Delaware, United States of America, having its principal place of business at Shepard Street, Ripon, Wisconsin 54971, United States of America.

“Purchaser’s Closing Actions” means the actions to be taken by the Purchaser on the Closing Date, as set out in Clause 5.3.

“Purchaser’s Representations” means the representations made by the Purchaser pursuant to Schedule 10 to this Agreement.

“Reference Working Capital” means the amount as set forth in Clause 3.3.1.

“Responsible Party” has the meaning set forth in Clause 11.4.2.

“Schedules” means any and all schedules to this Agreement.

“Second Phase Data Room(s)” has the meaning set forth in Clause 7.1.1.

“Second Phase Direct Information” has the meaning set forth in Clause 7.1.1.

“Second Phase Due Diligence” has the meaning set forth in Clause 7.1.1.

“Second Phase Due Diligence Request List” has the meaning set forth in Clause 7.1.1.

“Seller” means LAUNDRY SYSTEMS GROUP NV, a limited liability company (“naamloze vennootschap”) organised and existing under the laws of Belgium, having its registered office at 8560 Wevelgem, Nieuwstraat 146, Belgium, and registered under company number 0440.449.284.

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“Seller’s Closing Actions” means the actions to be taken by the Seller on the Closing Date, as set out in Clause 5.2.

“Seller’s Representations” means the representations made by the Seller pursuant to Schedule 9 to this Agreement.

“Shares” means all outstanding shares in the Company which are being sold by the Seller to the Purchaser under this Agreement, as referred to in Clause 2.1.2.

“Subsidiaries” means each of Ipso Rent, Ipso Rent Deutschland and Ipso Norge.

“Tax(es)” means (i) all federal, state, regional, provincial, local or foreign taxes, charges, fees, imposts, levies or other assessments, including, without limitation, all net income, gross receipts, capital, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp duty, stamp duty reserve, stamp duty land, occupation, property, abandoned property and estimated taxes, customs duties, fees, assessments and charges of any kind whatsoever, as well as (ii) all interest, penalties, fines, additions to tax or additional amounts imposed by any taxing authority in connection with any item described in clause (i).

“Third Party Claim” has the meaning set out in Clause 11.4.1.

“U.S. Purchase Agreement” means the share and asset purchase agreement as referred to in recital (D) above.

“Working Capital Adjustment” has the meaning set out in Clause 3.3.1.

1.1.2

Whenever a reference is made “to the Seller’s knowledge” or a representation or statement is qualified by any similar expression:

(a.)

reference is made not only to the knowledge of the Seller, but also to that of Jesper Munch Jensen (CEO of the Seller) and Erik Vanderhaegen (CFO of the Seller) and/or any of the Key Employees; and

(b.)

the Seller (and the other persons referred to in paragraph (a.) above) shall be deemed to have knowledge of any fact that a reasonably diligent person placed in the same circumstances could be expected to discover in the course of conducting a reasonably comprehensive investigation.

1.1.3

Save as otherwise provided herein, an action or transaction taken or entered into by a company (including in particular the Seller and the CLD Companies) shall be deemed to have been taken or entered into in the “ordinary course of business” only if such action or transaction falls within the scope of operational activities of such company as previously carried out but excluding actions or transactions which are unrelated to the operational activities of the company as previously carried out.

1.2

Interpretation

1.2.1

The titles and headings included in this Agreement are for convenience only and do not express in any way the intended understanding of the Parties. They shall not be taken into account in the interpretation of the provisions of this Agreement.

1.2.2

The Schedules to this Agreement form an integral part thereof and any reference to this Agreement includes the Schedules and vice versa.

1.2.3

The original version of this Agreement has been drafted in English. Should this Agreement be translated into French, Dutch or any other language, the English version shall prevail among the Parties to the fullest extent permitted by Belgian law, provided, however, that whenever French and/or Dutch translations of certain words or expressions are contained in the original English version of this Agreement, such translations shall be conclusive in determining the Belgian legal concept(s) to which the Parties intended to refer.

1.2.4

When using the expressions “shall use its best efforts” or “shall use its best endeavors” (or any similar expression or any derivation thereof) in this Agreement, the Parties intend to refer to the Belgian law concept of “obligation de moyen” / “middelenverbintenis”.

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1.2.5

When using the words “shall cause” or “shall procure that” (or any similar expression or any derivation thereof), the Parties intend to refer to the Belgian law concept of “porte-fort” / “sterkmaking”.

1.2.6

The words “herein”, “hereof”, “hereunder”, hereby”, “hereto”, “herewith” and words of similar import shall refer to this Agreement as a whole and not to any particular clause, paragraph or other subdivision.

1.2.7

The words “include”, “includes”, including” and all forms and derivations thereof shall mean including but not limited to.

1.2.8

All terms defined in this Agreement shall have the same meaning regardless of whether they are used in the singular or plural number.

1.2.9

For the calculation of a period of time, such period shall start the next following day after the day on which the event triggering such period of time has occurred. The expiry date shall be included in the period of time. If the expiry date is not a Business Day, the expiry date shall be postponed until the next Business Day.

1.2.10

Unless otherwise provided herein, all periods of time shall be calculated in calendar days.

1.2.11

Unless otherwise provided herein, all references to a fixed time of a day shall mean Brussels time.

2	SALE AND PURCHASE

2.1

The Shares

2.1.1

Subject to the terms and conditions of this Agreement (including in particular the conditions precedent set out in Clause 4), the Seller hereby sells to the Purchaser such number of shares as set out in Clause 2.1.2, and the Purchaser hereby purchases all of these shares from the Seller.

2.1.2

The shares sold to the Purchaser pursuant to this Agreement (the “Shares”) are 27,399 registered shares, numbered from 1 to 27,399, owned by the Seller and representing 100% of the outstanding corporate capital in IPSO-LSG NV, a limited liability company (“naamloze vennootschap”) organized and existing under the laws of Belgium, with registered office at 8560 Wevelgem, Nieuwstraat 146, Belgium, and company number 0453.859.040 (hereinafter referred to as the “Company”), it being understood that the Company shall at Closing own the following shares:

400 registered shares without serial number, representing 50% of the outstanding corporate capital in Ipso Rent NV, a limited liability company (“naamloze vennootschap”) organized and existing under the laws of Belgium, with registered office at 8560 Wevelgem, Nieuwstraat 146, Belgium, and company number 0479.135.260 (hereinafter “Ipso Rent”) (joint venture with C.C. Company BVBA, a limited liability company (“besloten vennootschap met beperkte aansprakelijkheid”) organized and existing under the laws of Belgium, with registered office at 8600 Diksmuide, Kasteelstraat 2, Belgium, and company number 0464.692.059); and

a 50% share in Ipso Rent Deutschland GmbH, a limited liability company (“Gesellschaft mit beschränkter Haftung”) organized and existing under the laws of Germany, with registered office at 99869 Wangenheim, Hauptstrasse 59A, Germany, and registered with the Trade Registry of Erfurt (Germany) under number HRB 13428 (hereinafter “Ipso Rent Deutschland”) (joint venture with Treysse GmbH Wäscherei und Reinigungstechnik GmbH, a limited liability company (“Gesellschaft mit beschränkter Haftung”) organized and existing under the laws of Germany, with registered office at 99869 Wangenheim, Hauptstrasse 59A, Germany and registered with the Trade Registry of Erfurt (Germany) under number HRB 12811); and

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1,000 registered shares (670 of which are class A shares and 330 of which class B shares) representing 100% of the outstanding corporate capital in Ipso Norge, a limited liability company (“Aksjeselskap”) organized and existing under the laws of Norway, with registered office at 1414 Trollase, Oppegard, Trollasveien 6, Norway, and with company registration number 989 486 225 (wholly owned) (hereinafter “Ipso Norge”).

Ipso Rent, Ipso Rent Deutschland and Ipso Norge are hereinafter jointly referred to as the “Subsidiaries” or each individually a “Subsidiary”.

2.1.3

At any time prior to the Closing Date, Purchaser may designate one or more of its Affiliated Companies to participate in the purchase of the Shares and assign its rights and obligations under this Agreement to such Affiliated Company provided that (a) no such designation shall relieve Purchaser of any of its obligations under this Agreement, (b) all such designees agree in writing to be bound by this Agreement as if they were parties hereto, and (c) Purchaser and designees shall be jointly and severally liable hereunder.

2.1.4

The ownership of the Shares shall be transferred to the Purchaser on the Closing Date against payment of the Initial Purchase Price in accordance with Clause 3.4.1.

2.1.5

On the Closing Date, the Purchaser shall acquire the Shares free and clear of all Liens.

2.1.6

The sale contemplated hereunder is indivisible and it shall be valid only if it applies to all of the Shares, without prejudice to Clause 2.1.3. No partial enforcement of this Agreement shall be allowed.

3	PURCHASE PRICE

3.1

Initial Purchase Price

3.1.1

The aggregate amount of the purchase price payable at Closing for the Shares shall be EUR 50,400,000 (fifty million four hundred thousand Euro) (the “Initial Purchase Price”). The Initial Purchase Price may be increased or decreased, as the case may be, pursuant to the price adjustment procedure set out in Clause 3.3.

3.2

Treatment of Cash and Indebtedness

As of the Closing Date, the Seller shall use its best efforts for the Company to have no Cash and no Indebtedness other than the Permitted Intercompany Indebtedness as referred to in Clause 7.7.2 and the principal amount owed by the Company under the leasing agreement nr. BE8/66076-LF-0 between KBC Lease Belgium NV and the Company dated January 17, 2005 with respect to a Triumph laser cutter TC 5000R – 1600 and L 3050, including STOPA tower TKL (the “Laser Cutting Lease”). The Seller shall compute the amount of outstanding Cash minus Indebtedness for the Company (including, the principal amount owed by the Company under the Laser Cutting Lease) as at the last day of the month immediately preceding the Closing Date, but excluding the Permitted Intercompany Indebtedness. If and only if and only to the extent such amount is positive, the Company may declare and pay to the Seller a dividend equal to such amount prior to or at Closing, insofar allowed under the Belgian Company Code (the “Pre-Closing Dividend”).

Furthermore, the Seller shall use its best efforts for the Company to repay all of its outstanding Indebtedness prior to or on the Closing Date, with the exception of the Permitted Intercompany Indebtedness and Indebtedness owed by the Company under the Laser Cutting Lease. The Seller shall inform the Purchaser of the timing and implementation of such repayment process.

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Any remaining Cash of the Company as of the last day of the month immediately preceding the Closing Date (minus the gross amount of the Pre-closing Dividend, if such amount has been declared and paid) shall be referred to as the “Closing Cash”. Any remaining Indebtedness of the Company as the last day of the month immediately preceding the Closing Date, including, for the avoidance of doubt, the principal amount owed by the Company as at the last day of the month immediately preceding the Closing Date under the Laser Cutting Lease, but excluding the Permitted Intercompany Indebtedness, shall be referred to as the “Closing Indebtedness”.

3.3

Purchase Price Adjustment

3.3.1

Subsequent to the Closing, the Initial Purchase Price shall be increased to the extent the amount of the Final Working Capital for the Company is greater than EUR 8,356,000 (the “Reference Working Capital”), or decreased if the amount of the Final Working Capital for the Company is less than the Reference Working Capital, in each case by the amount of such increase or decrease on a euro to euro basis (the “Working Capital Adjustment”).

3.3.2

Subsequent to the Closing, the Initial Purchase Price shall be increased to the extent Closing Cash exceeds Closing Indebtedness, or decreased if Closing Indebtedness exceeds Closing Cash, in each case such increase or decrease shall be on a euro to euro basis (the “Cash/Indebtedness Adjustment”)

3.3.3

The Working Capital Adjustment and the Cash/Indebtedness Adjustment shall be determined in accordance with Clause 3.3.4 and paid in accordance with Clause 3.4.2. The Initial Purchase Price, as adjusted by the Working Capital Adjustment and the Cash/Indebtedness Adjustment, is the “Final Purchase Price”.

3.3.4

Within 60 days following the Closing Date, the Purchaser shall prepare and deliver to the Seller a copy of the unaudited balance sheet of the Company as of the last day of the month immediately preceding the Closing Date (the “Closing Accounts”) and a statement setting forth Purchaser’s calculation of the Final Working Capital of the Company (the “Closing Working Capital Statement”). The Closing Accounts shall be prepared in accordance with IFRS accounting principles applied on a basis consistent with the methodology used in preparing the CLD Pro Forma Annual Accounts 2005.

Within 60 days following the Closing Date, the Purchaser shall also prepare and deliver to the Seller a statement setting forth the Closing Cash and Closing Indebtedness (if any) as of the last day of the month immediately preceding the Closing Date (the “Closing Cash/Indebtedness Statement”). The Closing Accounts, the Closing Working Capital Statement and the Closing Cash/Indebtedness Statement shall be computed in Euros and calculated as of the last day of the month immediately preceding the Closing Date.

3.3.5

The Closing Working Capital Statement and the Closing Cash/Indebtedness Statement shall be final and binding on the Parties unless the Seller shall, within 20 days following the delivery of the Closing Accounts, Closing Working Capital Statement and Closing Cash/Indebtedness Statement, deliver to the Purchaser written notice of objection (the “Objection Notice”), specifying in reasonable detail each disputed item on the Closing Working Capital Statement and the Closing Cash/Indebtedness Statement (each, a “Disputed Item”) and describing in reasonable detail the basis for each Disputed Item, including the data that forms the basis thereof and the amount in dispute. Notwithstanding the delivery of an Objection Notice, the Closing Working Capital Statement and the Closing Cash/Indebtedness Statement shall be final and binding to the extent any item is not a Disputed Item.

3.3.6

If the Objection Notice is delivered, the Parties shall consult with each other with respect to the Disputed Items and use commercially reasonable efforts to resolve the dispute. If the Parties are unable to reach agreement on all Disputed Items within 30 days (subject to extension by mutual agreement) after delivery of the Objection Notice, either Purchaser or Seller may refer any unresolved Disputed Items to the Brussels office of Deloitte & Touche, or if the latter is conflicted out to the Brussels office of KPMG (the “Independent Expert”). Not later than five days after the appointment of the Independent Expert, (i) the Purchaser shall deliver the Closing Accounts, the Working Capital Statement and the Closing

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Cash/Indebtedness Statement to the Independent Expert and (ii) the Seller shall deliver a copy of the Objection Notice previously delivered to the Purchaser to the Independent Expert. The Independent Expert shall be directed to render a written report as promptly as practicable and, in any event within 30 days of the Independent Expert’s engagement, to strictly limit its inquiry to the Disputed Items set forth in the Objection Notice and to resolve those unresolved Disputed Items set forth in the Objection Notice. The Independent Expert may not resolve a Disputed Item in an amount that is either greater or less than the range of the dispute for such item established by the Working Capital Statement, the Closing Cash/Indebtedness Statement and the Objection Notice. The Independent Expert, acting as an expert and not an arbitrator, shall resolve such Disputed Items in accordance with this Agreement. The resolution of all Disputed Items by the Independent Expert shall be final and binding on the Parties. The fees and expenses of the Independent Expert shall be borne proportionately by Purchaser and Seller based on the extent to which Purchaser’s and Seller’s respective determinations as submitted to the Independent Expert differ from such Independent Expert’s determination.

3.3.7

The amount of the Final Working Capital shall be equal to (i) the amount of Final Working Capital set forth on the Closing Working Capital Statement, if the Seller does not timely deliver an Objection Notice, or (ii) the amount (A) as agreed to by Seller and Purchaser, or (B) as determined by the Independent Expert, if the Seller timely delivers an Objection Notice.

The amount of “Final Closing Cash” and “Final Closing Indebtedness” shall be equal to (i) the amount of Final Closing Cash and Final Closing Indebtedness set forth on the Closing Cash/Indebtedness Statement, if the Seller does not timely deliver an Objection Notice, or (ii) the amount (A) as agreed to by Seller and Purchaser, or (B) as determined by the Independent Expert, if the Seller timely delivers an Objection Notice.

3.3.8

The Parties shall give each other and their respective advisors and accountants and other appropriate personnel such assistance and access to the assets and books and records, including working papers and other data, and relevant personnel of the CLD Companies and the Acquired Operations as they may reasonably request during normal business hours in order to enable them to prepare or review the Closing Working Capital Statement and the Closing Cash/Indebtedness Statement or any objections or proposed changes thereto, as applicable.

3.4

Payment of the Purchase Price

3.4.1

Subject to the conditions precedent set out in Clause 4, the Purchaser shall pay the Initial Purchase Price to the Seller on the Closing Date by wire transfer of immediately available funds to the account designated by the Seller at least three Business Days prior to the Closing Date.

3.4.2

The Working Capital Adjustment shall be payable (i) by the Purchaser to the Seller if the Final Working Capital exceeds the Reference Working Capital, or (ii) by the Seller to the Purchaser if the Reference Working Capital exceeds the Final Working Capital.

The Closing Cash/Indebtedness Adjustment shall be payable (i) by the Purchaser to the Seller if Final Closing Cash exceeds Final Closing Indebtedness or (ii) by the Seller to the Purchaser if Final Closing Indebtedness exceeds Final Closing Cash.

The Working Capital Adjustment and the Closing Cash/Indebtedness Adjustment shall be consolidated such that only a single payment shall be made, by the Purchaser or the Seller, as the case may be. Such payment shall:

(i) be due within three Business Days after the determination of Final Working Capital, Final Closing Cash and Final Closing Indebtedness in accordance with Clause 3.3.7;

(ii) be made in Euros, by wire transfer of immediately available funds to an account designated in writing by the Seller or Purchaser, as the case may be; and

(iii) be accompanied by a payment of interest on the amount to be paid, counting from the date on which the payment shall be due and payable in accordance with sub-clause (i) of the present paragraph up to, but excluding, the date of actual payment at the rate of 7.00% per year; such interest shall be calculated daily on the basis of a 365-day year and the actual number of days elapsed, without compounding.

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4	CONDITIONS PRECEDENT

4.1

General Principles

4.1.1

The obligations of the Seller to sell, and of the Purchaser to purchase the Shares from the Seller and to pay the Initial Purchase Price as set out in Clauses 2 and 3 are subject to the satisfaction of each of the conditions precedent set out in Clauses 4.2 (which can only be waived by both Parties acting jointly), 4.3 (which may be waived by the Seller, in whole or in part) and 4.4 (which may be waived by the Purchaser, in whole or in part).

4.2

Conditions Precedent to all Parties’ Obligations

4.2.1

The Parties shall have obtained all necessary consents and authorizations of public authorities that are required to be obtained by them in order to consummate the transactions contemplated by this Agreement, including (without limitation) from any competent national or supranational (including but not limited to the EC Commission) competition or other regulatory authority or any other relevant body having similar competences.

4.2.2

All conditions precedent under the U.S. Purchase Agreement shall have been satisfied or waived.

4.3

Conditions Precedent to the Seller’s Obligations

4.3.1

All of the Purchaser’s obligations set out in Clause 8 must have been duly fulfilled in all material respects to the extent they relate to the period prior to Closing.

4.3.2

The Seller shall have obtained written confirmation by the Purchaser that all the Purchaser’s Representations are true and accurate in all material respects as of the Closing Date, as set forth in Clause 10.1.2.

4.4

Conditions Precedent to the Purchaser’s Obligations

4.4.1

All of the Seller’s obligations set out in Clause 7 must have been duly fulfilled in all material respects to the extent they relate to the period prior to Closing.

4.4.2

The Purchaser and its professional advisors shall have performed the Second Phase Due Diligence as set forth in Clause 7.1 and the Purchaser shall, as a result thereof, not have delivered a written notice within the 7 day timeframe set forth in Clause 13.1.3 or 13.1.5, indicating that a termination event as set out in such Clauses has occurred.

4.4.3

All disputes brought before the Independent Expert in accordance with Clause 13.1.3 and 13.1.5, shall have been settled by the Independent Expert in accordance with said Clauses.

4.4.4

The Purchaser shall have obtained written confirmation by the Seller that all the Seller’s Representations are true and accurate as of the Closing Date, as set forth in Clause 9.3, and no disputes shall be pending before the arbitrators in accordance with Clause 9.3.2 .

4.4.5

The board of directors of the Company shall have formally approved the transfer of the Shares in accordance with Article 8 of the Company’s articles of association.

4.5

Best Efforts concerning the Satisfaction of the Conditions Precedent

4.5.1

The Party responsible for the satisfaction of any of the conditions precedent as specified in this Clause 4 shall use its best efforts to ensure the due satisfaction hereof as soon as possible.

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4.5.2

The Party responsible for the satisfaction of any of the conditions precedent as specified in this Clause 4 shall promptly give notice to the other Party of (i) the satisfaction of the relevant condition precedent or (ii) the occurrence of any action, fact or event that makes or can reasonably be expected to make the satisfaction of any of the conditions precedent impossible or unlikely.

4.6

No Implied Waiver of the Parties’ Rights and Remedies

Except as specifically provided herein, a Party’s rights and remedies under this Agreement (including the Purchaser’s right to bring a claim against the Seller under Clause 11) shall not be affected by:

4.6.1

the waiver by such Party of any condition precedent based on the fulfilment of any obligation of the other Party; or

4.6.2

the delivery by such Party of a written confirmation that all of the conditions precedent set out in Clauses 4.2, 4.3 and/or 4.4 have been satisfied (or waived by such Party).

5	CLOSING

5.1

Date and Place

The transfer of ownership of the Shares to the Purchaser against payment of the Initial Purchase Price (the “Closing”) shall take place at a location to be mutually agreed to by the parties on July 14, 2006 or three business days following the satisfaction or waiver of all conditions precedent set out in Clause 4, whichever is the later (the “Closing Date”) or at such other place or on such other date as may be agreed between the Parties, it being understood that the Closing of this Agreement and the closing of the U.S. Purchase Agreement shall occur contemporaneously.

5.2

Obligations of the Seller

On the Closing Date, the Seller shall do all of the following (the “Seller’s Closing Actions”):

5.2.1

the Seller or a duly authorized attorney-in-fact of the Seller shall record the transfer of the Shares to the Purchaser in the Company’s share register, and shall sign such share register to that effect;

5.2.2

the Seller shall deliver to the Purchaser written confirmation by the Seller that all of the conditions precedent set out in Clause 4.2 and 4.3 as well as all conditions precedent to the Seller’s obligations under the U.S. Purchase Agreement have been satisfied or waived; and

5.2.3

the Seller shall deliver to the Purchaser:

(a.)

a receipt for the Initial Purchase Price, in the form attached as Schedule 5.2.3 (a);

(b.)

the letters of resignation of certain of the CLD Companies’ directors, in accordance with Clause 7.5;

(c.)

the bank guarantee as referred to in Clause 7.8;

(d.)

executed copies of the addendums with Declerck Elektronika BVBA, Mr. Declerck and other persons, as applicable, as referred to in Clause 7.13;

(e.)

executed copies of the addendum with JM Vandoorne BVBA as referred to in Clause 7.15;

(f.)

executed copies of the Ipso Spain Distribution Agreement as referred to in Clause 6.2.1;

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(g.)

evidence confirming the satisfaction of the loans as referred to in Clause 7.17;

(h.)

documentation, reasonably satisfactory to Purchaser, evidencing the transfer of intellectual property as referred to in Clause 7.19.

5.3

Obligations of the Purchaser

On the Closing Date, the Purchaser shall do all of the following (the “Purchaser’s Closing Actions”):

5.3.1

the Purchaser shall pay the Initial Purchase Price to the Seller, in accordance with Clause 3.4;

5.3.2

the Purchaser or a duly authorized attorney-in-fact of the Purchaser shall sign the Company’s share register to accept transfer of the Shares from the Seller; and

5.3.3

the Purchaser shall deliver to the Seller written confirmation by the Purchaser that all of the conditions precedent set out in Clause 4.2 and 4.4 as well as all conditions precedent to the Purchaser’s obligations under the U.S. Purchase Agreement have been satisfied or waived;

5.3.4

the Purchaser shall deliver to Seller executed copies of the Ipso Spain Distribution Agreement as referred to in Clause 6.2.1.

5.4

Effectiveness of Closing Actions

5.4.1

The effectiveness of each of the Seller’s Closing Actions is conditional upon the occurrence of all of the Purchaser’s Closing Actions and vice-versa.

5.4.2

The effectiveness of the Closing Actions under this Agreement are conditional upon the occurrence of all closing actions under the U.S. Agreement and vice versa.

6	OBLIGATIONS OF ALL PARTIES ON OR PRIOR TO THE CLOSING DATE

6.1

Filings with Public Authorities

6.1.1

As soon as practicable after the date of this Agreement, the Parties shall make all filings with, and notifications to, public authorities required for the satisfaction of the condition precedent set out in Clause 4.2, and shall comply with all other required formalities in order to consummate the transactions contemplated in this Agreement (including any notification required to be made to public authorities for information purposes, such as the notifications to certain Belgian Ministers required under Article 36 of the Law of December 30, 1970 on Economic Expansion) and the Seller shall cause the CLD Companies to provide all necessary assistance for such filings and notifications.

6.1.2

The Parties shall consult with each other in so far as is reasonably practicable before (i) making such filings and notifications, or (ii) complying with all requests from any public authority.

6.2

IPSO SPAIN DISTRIBUTION AGREEMENT

6.2.1

On the Closing Date, Seller and the Purchaser shall enter into a Distribution Agreement providing for the exclusive distribution of IPSO branded products by Ipso Spain in Spain for a period of three years, in the form of the draft attached as Schedule 6.2.1, but with such changes as the parties may mutually agree to in order to reflect (i) that the Supplier will be the Company, rather than the Purchaser, (ii) the three year term, (iii) the exclusive nature of the arrangement, (iv) that the products will be IPSO branded products only, (v) that the Distribution Agreement will be governed by, and enforceable under, Belgian law and (v) such other less significant changes as the parties may mutually agree.

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7	OBLIGATIONS OF THE SELLER

7.1

Second Phase Due Diligence

7.1.1

After the date of this Agreement the Purchaser and its professional advisors shall be allowed to perform a confirmatory legal, tax, business, financial, insurance, operational and accounting due diligence investigation with respect to the CLD Companies and the Acquired Operations for a period of six weeks as from the date on which all of the requested information shall have been made available as determined by this Clause 7.1.1 (the “Second Phase Due Diligence”).

Without limiting the following provisions of this Clause 7.1, attached hereto as Schedule 7.1.1 is the due diligence request list for the Second Phase Due Diligence (the “Second Phase Due Diligence Request List”). The Second Phase Due Diligence will be deemed to have commenced on the date on which the Seller has made available all of the materials indicated with an asterisk on the attached Schedule 7.1.1, at the Second Phase Data Room(s) (as defined hereinafter in this Clause 7.1.1) or otherwise, including, at the Seller’s sole discretion, by way of direct communication to the Purchaser (such direct information referred to herein as the “Second Phase Direct Information”), which should occur within 5 (five) Business Days after the date of this Agreement.

The Seller shall deliver a notice to the Purchaser indicating that the Seller believes that it has made available all such material as of the date of such notice. The Purchaser will have five Business Days to object to such notice by notifying the Seller of any asterisked materials which have not been delivered or made available. In case an objection would so be notified by the Purchaser, the Parties will work together in good faith to resolve any disagreements and to agree upon the start date for the Second Phase Due Diligence; in case no objection would so be notified by the Purchaser, the Second Phase Due Diligence will be deemed to have commenced on the date of the notice delivered by the Seller to the Purchaser in accordance with the first sentence of this paragraph.

The Purchaser shall have the opportunity to review the CLD Pro Forma Annual Accounts 2005 and all working papers relating thereto (excluding the auditors’ working papers), and shall have the right to contest such CLD Pro Forma Annual Accounts 2005.

For purposes of the Second Phase Due Diligence, the Seller shall, and shall cause the CLD Companies to:

(a.)

grant the Purchaser and its professional advisors access to (a) data room(s) at (a) location(s) in accordance with the data room procedures attached hereto as Schedule 7.1.1.(a) (such data room(s) herein referred to as the “Second Phase Data Room(s)” and such data room procedures herein referred to as the “Second Phase Data Room Procedures”);

(b.)

allow the Purchaser and its professional advisors, during normal business hours and subject to the Seller’s prior approval (not to be unreasonably withheld), to visit the CLD Companies’ registered offices and such other premises owned, used or leased by the CLD (including but not limited to the Louisville, Kentucky; Portland, Tennessee; Fort Mill, South Carolina; Panama City, Florida; as well as the Wevelgem and Deinze, Belgium facilities) as the Purchaser may reasonably request, provided that such visits shall not interfere with the CLD’s business and that representatives of the Seller shall in any case be present during such visits;

(c.)

allow the Purchaser and its professional advisors to meet, during normal business hours and subject to the Seller’s prior approval (not to be unreasonably withheld), with such officers, Key Employees, consultants, agents, accountants, attorneys, environmental consultants and other representatives of the CLD as the Purchaser may reasonably request, provided that such meetings shall not interfere with the CLD’s business and that representatives of the Seller shall in any case be present during such visits; and

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(d.)

allow the Purchaser and its advisors to examine, at the Second Phase Data Room(s) or by way of direct communication to the Purchaser (as determined by the Seller at its sole discretion), all such contracts, books and records, and other documents and data relating to the CLD that are not included in the Second Phase Data Room(s) or the Second Phase Direct Information from time to time, as the Purchaser or its advisors may reasonably request at any time during the Second Phase Due Diligence, it being understood that such contracts, books records, and other documents and data shall, after such examination be incorporated into and form part of the Second Phase Data Room(s) or the Second Phase Direct Information, as the case may be.

The Seller will keep and make available to the Purchaser an updated list of the contents of the Second Phase Data Room and of the Second Phase Direct Information.

7.1.2

The Purchaser shall in any event formally notify the Seller in writing within 3 Business Days of the Purchaser’s CEO or CFO being informed or becoming aware of any material negative findings during the Second Phase Due Diligence, it being understood that the Purchaser has instructed its advisors to inform its CEO or CFO of any such material negative findings without delay. Prior to Closing, all diligence findings which are specified in any notice delivered pursuant to Clause 7.1.2 shall be set forth on Schedule 7.1.2.

7.1.3

Set forth on Schedule 7.1.3 are the material negative findings that became known to the Purchaser’s CEO or CFO during the period commencing January 26, 2006 through the date hereof, it being understood that the Purchaser has instructed its advisors to inform its CEO or CFO of any such material negative findings prior to the date hereof.

7.1.4

For purposes of Clause 7.1.2 and Clause 7.1.3, the term “material negative findings” shall in any case (without limitation) include findings with respect to any liabilities, facts or matters that can be used for purposes of determining whether a termination event as set forth in Clause 13.1.3 or 13.1.5 has occurred.

7.1.5

The Purchaser acknowledges that its advisors are aware of the notification duty set forth in Clauses 7.1.2 and 7.1.3.

7.2

Collaboration

Between the date of this Agreement and the Closing Date, the Seller shall collaborate fully with the Purchaser and shall use its best efforts to cause the CLD Companies’ management and employees to collaborate fully with the Purchaser in order to prepare and facilitate:

the change of control over the CLD Companies, and the CLD Companies’ integration in the Purchaser’s group; and

ii.

the closing of bank financing by the Purchaser, including, without limitation, the provision of interim financial statements and other information reasonably requested by Purchaser’s financing sources, it being understood that the bank financing is not a condition to Closing.

7.3

Operation of the CLD Business

Between the date of this Agreement and the Closing Date, the Seller shall, and shall cause the CLD Companies to:

7.3.1

conduct the CLD business only in the ordinary course except as may be agreed in writing between the Parties or contemplated in this Agreement;

7.3.2

preserve the CLD business as a going concern, and in particular to:

(a.)

preserve the validity of all permits and authorizations of the CLD;

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(b.)

maintain in full force all insurance policies of the CLD;

(c.)

use its best efforts to preserve the CLD assets in good operating condition; and

(d.)

use its best efforts to preserve intact the current business organization of the CLD, keep available the services of the current officers, employees, and agents of the CLD, and maintain the CLD’s relations and goodwill with its customers, suppliers, landlords, creditors and others having business relationships with the CLD; and

7.3.3

notify the Purchaser promptly upon becoming aware of the loss or foreseeable loss of any major customer or supplier, any product recall or any other significant change in the status of the business, operations, and finances of the CLD.

7.4

Restrictions on the Seller and the CLD Companies

7.4.1

Between the date of this Agreement and the Closing Date, the Seller agrees and undertakes not to approve any resolution in a general meeting of the CLD Companies having any of the following purposes, without the Purchaser’s prior written consent (which consent shall not be unreasonably withheld or delayed):

(a.)

declaring any dividend, except for the Pre-Closing Dividend as set forth under Clause 3.2;

(b.)

increasing or decreasing the CLD Companies’ capital, or making any other amendment to the CLD Companies’ Articles of Association;

(c.)

approving the contribution or the sale by the CLD Companies of any individual company, of its business as a whole (“universalité” / “algemeenheid”) or of a division of the CLD Companies (“branche d’activité” / “bedrijfstak”), except, as the case may be, for purposes of the Pre-Closing Restructuring as set forth under Clause 7.12; or

(d.)

winding-up, merging or splitting of any of the CLD Companies.

7.4.2

Between the date of this Agreement and the Closing Date, the Seller shall cause the CLD Companies not to do any of the following without the Purchaser’s prior written consent (which consent shall not be unreasonably withheld or delayed) and except as otherwise provided in this Agreement:

(a.)

incur any financial or trade indebtedness in excess of EUR 50,000 per item and EUR 250,000 in aggregate other than in the ordinary course of business, it being understood that (i) the Seller shall cause the CLD Companies not to incur any Indebtedness between the last day of the month immediately preceding the Closing Date and the Closing Date and (ii) IPSO Rent and IPSO Rent Deutschland shall not be permitted to incur any financial or trade indebtedness after the date of this Agreement,

(b.)

waive or release any indebtedness owed to them, or any right or security interest;

(c.)

acquire or dispose of any asset other than (i) in the ordinary course of business or (ii) for purposes of the Pre-Closing Restructuring as set forth under Clause 7.12;

(d.)

pledge their business assets (“gage sur fonds de commerce” / “pand op handelzaak”) or create any other security interest over any of their assets;

(e.)

provide any guarantee or security interest, or enter into any agreement, with a view to securing any obligation of a third party;

(f.)

grant any loan or advance any monies to any third party, or enter into any similar transaction; or grant any credit facilities to any debtor other than payment terms given to trade debtors in accordance with the CLD Companies’ general sales conditions;

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(g.)

enter into, amend or terminate any agreement or commitment in the ordinary course of business which (a) involves or can reasonably be expected to involve an obligation or liability (of any nature whatsoever) for the CLD Company concerned in excess of EUR 250,000 in aggregate, or which (b) is not capable of being terminated by the CLD Company without compensation at any time with less than three month’s notice;

(h.)

enter into, amend or terminate any agreement or commitment, outside the ordinary course of business;

(i.)

acquire or dispose of any shares or other interests in any company or other legal entity;

(j.)

set up any subsidiary or branch office in Belgium or abroad;

(k.)

enter into, amend or terminate any lease or leasing agreement in respect of real properties owned or used by the CLD Companies;

(l.)

declare any interim dividend by its board of directors (without prejudice to Clause 3.2);

(m.)

increase its capital through the authorized capital procedure (“capital autorisé” / “toegestaan kapitaal”);

(n.)

make any change to its accounting practices or policies, save as required pursuant to changes in (the interpretation of) IFRS rules provided that these changes and their impact on the historical financial statements have been disclosed to the Purchaser in writing;

(o.)

grant to any particular trade debtor a period in which to make payment, in excess of the period of time in which trade debts are usually payable in accordance with the CLD Companies’ general sales conditions;

(p.)

use extended terms or unusual levels of promotion for its products towards its ordinary customers;

(q.)

take steps to procure payment by any trade debtors in advance of the date on which trade debts are usually payable in accordance with the CLD Companies’ general sales conditions or (if different) the period extended to any particular trade debtor in which to make payment;

(r.)

delay making payment to any trade creditors beyond the date on which payment of the relevant trade debt should be paid in accordance with credit periods authorized by the relevant creditors;

(s.)

dismiss any Key Employee other than for serious cause;

(t.)

grant any increased compensation or additional compensation (of any nature whatsoever) to any director or officer in excess of what is provided for in the agreements they currently have with the CLD Companies, except for bonuses over 2005 granted in the ordinary course of business;

(u.)

grant any salary increase or additional remuneration (of any nature whatsoever) to any Key Employee in excess of what is provided for in their employment agreement or any applicable collective bargaining agreement, except for bonuses over 2005 granted in the ordinary course of business;

(v.)

discontinue or amend the employee pension schemes, save as required by law;

(w.)

institute any material civil, criminal, arbitration, or other proceedings; or settle, or otherwise take any action to release or reduce any rights of the CLD Companies in respect of any material litigation in which the CLD Companies are a defendant;

(x.)

make any Tax election, change any Tax election, settle any Tax audit or change or adopt any method of Tax accounting that could reasonably be expected to constitute a Material Adverse Change; or

(y.)

enter into any agreement or commitment to do any of the above.

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7.5

Directors’ Resignation

The Seller shall procure that the CLD Companies’ directors whose names are set out in Schedule 7.5(i) and, upon request of the Purchaser, any other CLD Companies’ Director that is an employee, director or representative of the Seller or one of its Affiliated Companies, shall resign from their position as of the Closing Date and shall execute a letter of resignation, substantially in the form of the draft attached as Schedule 7.5(ii), on or before the Closing Date.

7.6

Works Council

The Seller shall duly inform the Company’s Works Council of the transactions contemplated in this Agreement in accordance with applicable law, it being understood that, in view of the envisaged post-Closing operations of the Company that have to date been communicated by the Purchaser to the Seller, there is no need to consult with the Company’s Works Council under applicable law prior to Closing.

7.7

Intercompany Accounts

7.7.1

Between the date of this Agreement and the last day of the month immediately preceding the Closing Date, the Company shall acquire at arm’s length terms and conditions certain stocks (finished goods and spare parts) of CLD-related equipment which are currently held by the Seller and its Affiliated Companies (not being a CLD Company) and a detailed overview of which is attached hereto as Schedule 7.7.1. Payment by the Company of the purchase prices for these CLD related stocks shall be made on or before the last day of the month immediately preceding the Closing Date and either in cash or by way of set-off of amounts owed by the Company to the Seller or its relevant Affiliated Company (not being a CLD Company) selling the CLD related stocks.

7.7.2

Except for intercompany Indebtedness existing between any of the following entities: the Company, any of the Subsidiaries, any of the Acquired Operations or any Acquired Company, but only to the extent the net balance of all such intercompany Indebtedness is zero or unless otherwise agreed to in writing by the Purchaser (“Permitted Intercompany Indebtedness”), the Seller shall cause all amounts owed:

(i)

to any of the CLD Companies, Ipso Laundromat LLC (“Laundromat”), Cissell Distribution Center Corp. (“Cissell Distribution”) or Global Fox Financial, Inc. (“Global Fox”) by the Seller or any Affiliated Company of the Seller (not being a CLD Company, Laundromat, Cissell Distribution, Global Fox or an Acquired Operation); and

(ii)

by any of the CLD Companies, Laundromat, Cissell Distribution or Global Fox to the Seller or any Affiliated Company of the Seller (not being a CLD Company, Laundromat, Cissell Distribution, Global Fox or an Acquired Operation),

7.7.3

The Seller shall inform the Purchaser of the timing and implementation of the process set forth in Clauses 7.7.1 and 7.7.2.

7.8

Bank Guarantee Securing Payment of Amounts Due by the Seller

The Seller shall deliver to the Purchaser an unconditional and irrevocable first demand bank guarantee governed by Belgian law, and issued by a bank of first standing in Europe securing payment of any amount that might be due by the Seller to the Purchaser under Clause 10 or any other provision of this Agreement or under the U.S. Purchase Agreement, up to an aggregate amount of EUR 5,000,000.00 (five million Euro) for a period of 5 years and substantially in the form of the draft attached as Schedule 7.8.

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The Seller further covenants that it shall at all times ensure its credit worthiness, and in particular, the Seller shall duly notify the Purchaser of any plan to decide upon a delisting, dissolution, liquidation or other material corporate restructuring of the Seller.

7.9

Notification of Breaches of Seller’s Representations

7.9.1

As from the date of this Agreement, the Seller shall promptly give notice to the Purchaser of the occurrence of any action, fact or event that results or can reasonably be expected to result in any of Seller’s Representations being untrue or inaccurate as of the date of this Agreement or the Closing Date. This notice shall be given within five days of the Seller becoming aware of the occurrence of such action, fact or event and in any event prior to the Closing Date, and shall set out the details of such action, fact or event.

7.10

Notification of Breaches of Seller’s Obligations

As from the date of this Agreement, the Seller shall promptly give notice to the Purchaser of the occurrence of any action, fact or event that constitutes or can reasonably be expected to constitute a breach of any of the Seller’s obligations contained in this Clause 7 (or Clause 6). This notice shall be given within five days of the Seller becoming aware of the occurrence of such action, fact or event and in any event prior to the Closing Date, and shall set out the details of such action, fact or event.

7.11

Inter-company Agreements

Between the date of this Agreement and the Closing Date, except with regard to those arrangements as set forth in Schedule 7.11, the Seller shall cause all inter-company agreements between any CLD Company, Laundromat, Cissell Distribution or Global Fox, on the one hand, and/or the Seller or any of its Affiliated Companies (other than the CLD Companies, Laundromat, Cissell Distribution or Global Fox), on the other hand, to be terminated at arm’s length terms and conditions as of the Closing Date, and all obligations thereunder to be cancelled and released. Such termination shall have no impact on the Initial Purchase Price or any adjustment thereto pursuant to Clause 3. Notwithstanding the foregoing, the termination of all agreements relating to intercompany Indebtedness shall be governed by Clause 7.7.

It is stipulated for the avoidance of doubt that there is no termination obligation under this Clause 7.11 for agreements existing with respect to Permitted Intercompany Indebtedness.

7.12

Pre-Closing Restructuring

7.12.1

Between the date of this Agreement and the last day of the month immediately preceding the Closing Date, the Seller shall alter its corporate group structure (the “Pre-Closing Restructuring”), by way of an acquisition at fair market-value by the Seller from the Company of:

(a.)

all shares in Jensen Industrial Group A/S, a limited liability company (“aktieselskab”) organized and existing under the laws of Denmark, with registered office at 3700 Ronne, Industrivej 2, Denmark, and company registration number 20594977;

(b.)

the shares representing a 41% stake in LSG North America, with registered agent A. Victor Wray, 401 S. Tryon Street, Suite 2600, Charlotte, North Carolina, United States of America, and with employer identification number 20-2709242;

(c.)

all shares in Ipso Capital Inc., with registered agent A. Victor Wray, 401 S. Tryon Street, Suite 2600, Charlotte, North Carolina, United States of America, and with employer identification number 20-2114595 (hereinafter “Ipso Capital”); and

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(d.)

all (i) shares in Ipso Spain S.L., a limited liability company (“sociedad de responsabilidad limitada”) organized and existing under the laws of Spain, with registered office at 08207 Sabadell, Barcelona, Avenida Matadepera 89,1°, Spain, and with company registration number CIF B 64120793 (hereinafter “Ipso Spain”) and (ii) written and oral agreements entered into by any CLD Company with respect to, or on behalf of Ipso Spain and its distribution processes, including those agreements listed on Schedule 7.12.

The Seller shall inform the Purchaser of the timing and implementation of this Pre-Closing Restructuring.

7.12.2

Between the date of this Agreement and the Closing Date, Seller shall provide reasonable advance notice to Purchaser of any equipment loan intended to be made by IPSO Capital. Such notice shall include all information and documentation reasonably requested by Purchaser to evaluate such loan according to Purchaser’s existing underwriting criteria for the purpose of determining, in Purchaser’s sole discretion, whether to fund any such loan. If Purchaser decides to fund such loan, Purchaser shall either advance funds to IPSO Capital or assume any such IPSO Capital loan as of the Closing Date and reimburse Seller all amounts previously advanced by Seller with respect thereto.

7.13

Declerck Elektronika BVBA

Between the date of this Agreement and the Closing Date, the Seller shall cause the Company to negotiate and agree upon:

•

an addendum to the asset purchase agreement dated November 2, 2005 between Declerck Elektronika BVBA and the Company containing (i) a detailed description of all the transferred know-how and intellectual property rights thereunder, and (ii) a representation by Declerck Elektronika BVBA that it was the exclusive and undisputed holder of such transferred know-how and intellectual property rights at the moment of transfer; and

•

an addendum to the management agreement dated September 30, 2005 between Declerck Elektronika BVBA and the Company containing a written confirmation of Mr Danny Declerck, Declerck Elektronika BVBA and, if requested by Purchaser, Mssrs. Rudi Logghe and Piet De Meester, that all know-how and intellectual property rights that have arisen or will arise during the performance of the management agreement, have automatically been transferred to the Company or will automatically transfer to the Company upon Closing.

The Seller shall cause the Company to obtain the written consent of the Purchaser before agreeing on the form and contents of the new addendums referred to here above which consent shall not be unreasonably withheld or delayed by the Purchaser.

7.14

Transfer of certain Employees

The Seller shall cause the Company to transfer the employees that are on the payroll of the Company but working for the Seller or an Affiliated Company of the Seller (not being a CLD Company), as listed in Schedule 7.14, to be transferred to the Seller or an Affiliated Company of the Seller (not being a CLD Company), as the case may be, prior to Closing without any cost or liability to the Company or its Subsidiaries.

7.15

JM Vandoorne BVBA

Between the date of this Agreement and the Closing Date, the Seller shall procure that a new addendum to the consulting agreement between the Company and JM Vandoorne BVBA dated October 6, 2004, as amended (the “Consulting Agreement”), be executed, which shall be subject to Closing occurring and then enter into force as from the Closing Date, whereby it will be stipulated that

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(i) from and after the Closing no services shall be delivered by JM Vandoorne BVBA to Seller or any of its Affiliated Companies;

(ii) all know-how and intellectual property rights of Jean-Marc Vandoorne and JM Vandoorne BVBA that have arisen or will arise during the performance of the Consulting Agreement and any previous consulting, employment or similar service agreements agreements with the Company, have automatically been transferred to the Company or will automatically transfer to the Company prior to or at Closing;

(iii) JM Vandoorne BVBA shall not be entitled to any payment pursuant to Clauses 6.2 or 6.4 of the Consulting Agreement with respect to the periods ending as of the second anniversary of the Closing Date; and

(iv) the change of control and other termination arrangements as set forth in the Second Addendum to the Consulting Agreement dated October 1, 2005, shall be eliminated and replaced as follows:

(a) JM Vandoorne BVBA shall be entitled to an additional payment equal to 24 months of its consulting fees, i.e. an aggregate amount of EUR 435,200 (not including VAT) (the “Additional Payment”) in the following cases:

(i) if the Consulting Agreement is not terminated within two years as from the Closing;

(ii) if the Consulting Agreement is terminated within two years as from the Closing Date by JM Vandoorne BVBA. and

(iii) if the Consulting Agreement is terminated within two years as from the Closing Date by the Company for any reason other than gross fault or willful negligence.

(b) JM Vandoorne BVBA shall in any event be required to give 90 days’ notice before terminating the Consulting Agreement to be eligible for any Additional Payment.

For the avoidance of doubt, Jean-Marc Vandoorne shall execute the new addendum in his individual capacity for purposes of transferring the intellectual property rights as set out in sub-Clause (iii) above.

The Seller shall cause the Company to obtain the written consent of the Purchaser before agreeing on the form and contents of the new addendum referred to here above, which consent shall not be unreasonably withheld or delayed by the Purchaser.

7.16

Heavy Duty Laundry

Between the date of this Agreement and the last day of the month immediately preceding the Closing Date, the Seller shall cause each CLD Company to transfer to the Seller or an Affiliated Company of the Seller (not being a CLD Company), at arm’s length terms and conditions, all assets and liabilities related to the heavy duty activities (including but not limited to (i) any finance transactions with regard to heavy duty products and (ii) the heavy duty activities undertaken by the Company’s “Jensen Projects” division, including those employees engaged in said “Jensen Projects” division that are listed in Schedule 7.16 (which employees shall be transferred at no cost and without any liabilities for the Company or the Subsidiaries) and thus, for the avoidance of doubt, excluding the activities related to products manufactured by the Company (Ipso II) in Deinze, Belgium and the D’Hooge-related activities undertaken by said “Jensen Projects” division),.

7.17

Mortgages and Floating Charges

Between the date of this Agreement and the Closing Date, Seller shall use its best efforts to obtain, at its own cost and expense, the formal release by the mortgagees/pledgees of the mortgages and floating charge set out on Schedule 7.17 and the filing of the appropriate documents required for the discharge (“doorhaling”) of these mortgages and floating charge at the Mortgage Keeper’s Office (“hypotheekkantoor”).

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7.18

Payment of Registration Taxes

Between the date of this Agreement and the Closing Date, Seller shall cause the Company to pay all registration taxes due in respect of the lease agreements governing the Company’s Wevelgem and Deinze facilities, including any penalties, fines, or additional amounts imposed in respect thereof. Alternatively, such amounts will be included in Final Working Capital and accrued on the Closing Working Capital Statement.

7.19

Transfer of Intellectual Property

Between the date of this Agreement and the Closing Date, Seller, at its cost, shall take or cause to be taken such actions and execute, deliver and file, or cause to be executed, delivered and filed, such instruments, documents, transfers and conveyances as may be required or otherwise reasonably requested to ensure that a CLD Company is the record owner of all registered CLD related intellectual property, or has the right to register such intellectual property, including without limitation, the intellectual property set forth on Schedule 7.19.

8	OBLIGATIONS OF THE PURCHASER

8.1

Extraordinary General Meeting of the Company and the Subsidiaries

8.1.1

Provided that Closing takes place, the Purchaser shall cause an extraordinary general meeting of the Company to be held on the Closing Date, having the following agenda:

(a)

acknowledgement of the resignation of each of the relevant directors whose names are set out in Schedule 7.5(i) as a director;

(b)

appointment of new directors.

8.1.2

Provided that the Purchaser is legally entitled to hold such meeting, the Purchaser shall use its reasonable best efforts to cause an extraordinary general meeting of Ipso Rent to be held as soon as possible after the Closing Date, having the following agenda:

(a)

acknowledgement of the resignation of each of the relevant directors whose names are set out in Schedule 7.5(i) as a director; and

(b)

appointment of new directors.

8.2

Works Council

Between the date of this Agreement and the Closing Date, the Purchaser shall promptly give notice to the Seller of any change in the envisaged post-Closing operations of the Company that results or can under applicable law reasonably be expected to result in an obligation to inform and/or consult with the Company’s Works Council prior to Closing.

8.3

Notification of Breaches of Purchaser’s Representations

8.3.1

As of the date of this Agreement, the Purchaser shall promptly give notice to the Seller of the occurrence of any action, fact or event that results or can reasonably be expected to result in any of Purchaser’s Representations being untrue or inaccurate as of the date of this Agreement or the Closing Date. This notice shall be given within five days of the Purchaser becoming aware of the occurrence of such action, fact or event and in any event prior to the Closing Date, and shall set out the details of such action, fact or event.

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8.4

Notification of Breaches of Purchaser’s Obligations

As of the date of this Agreement, the Purchaser shall promptly give notice to the Seller of the occurrence of any action, fact or event that constitutes or can reasonably be expected to constitute a breach of any of the Purchaser’s obligations contained in this Clause 8 (or Clause 6). This notice shall be given within five days of the Purchaser becoming aware of the occurrence of such action, fact or event and in any event prior to the Closing Date, and shall set out the details of such action, fact or event.

9	REPRESENTATIONS OF THE SELLER

9.1

General Principles

9.1.1

The Seller represents to the Purchaser as of the date of this Agreement in the terms set out in Schedule 9 to this Agreement (the “Seller’s Representations”) and warrants to the Purchaser that the Seller’s Representations are true and accurate as of the date of this Agreement.

9.1.2

The Seller acknowledges that the Seller’s Representations have had a conclusive effect (“un caractère déterminant” / “een doorslaggevende invloed”) on the Purchaser’s decision to purchase the Shares and to enter into this Agreement.

9.2

Limitations of contents and scope of Seller’s Representations as at the date of this Agreement

As at the date of this Agreement, the contents and scope of any Seller’s Representation shall be limited only by:

9.2.1

the content of this Agreement, including Schedules (excluding Schedule 7.1.3), but only to the extent that any reasonable and diligent person would interpret a specific clause or schedule as pertaining to and limiting a certain Seller’s Representation;

9.2.2

the information which is fully and fairly disclosed in the Disclosure Letter/Schedules but only to the extent that any reasonable and diligent person would interpret a specific disclosure as pertaining to and limiting a certain Seller’s Representation; and

9.2.3

those matters which are set out in Schedule 13.1.3 (b).

9.3

Updating of Seller’s Representations on Closing

9.3.1

The Seller warrants to the Purchaser that the Seller’s Representations shall be true and accurate as of the Closing Date, as if they had been repeated on such date, it being understood that:

(a.)

the items indicated in Clause 9.2 shall limit the contents and scope of the Seller’s Representations for purposes of determining whether the Seller’s Representations are true and accurate as at the Closing Date in accordance with this Clause 9.3.1; and

(b.)

for purposes of determining whether the Seller’s Representations are true and accurate as at the Closing Date in accordance with this Clause 9.3.1, the Seller’s Representations shall be true and accurate as at the Closing Date without giving any effect to any limitation contained in any of the Seller’s Representations indicated by the words “in all material respects”, “in any material respect”, “material(ly)” or “substantial(ly)”) except, where the failure of the Seller’s Representations to be so true and accurate, individually or in the aggregate, would not reasonably be expected to result in (i) an adverse impact on the CLD Companies and the Acquired Operations taken as a whole in excess of EUR 3,500,000 (three million five hundred thousand Euro) in the aggregate (calculated without giving effect

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to any Tax effect), or (ii) a decrease in the CLD Companies’ and/or the Acquired Operations’ consolidated historical or projected EBITDA in excess of EUR 450,000 (four hundred and fifty thousand Euro) (such circumstance hereinafter referred to as a “Repetition Default”).

9.3.2

Prior to the Closing Date, the Seller shall deliver a written notice to the Purchaser specifying whether or not a Repetition Default has occurred, and describing in reasonable detail the basis thereof (if any). In case of a Repetition Default, the Purchaser shall have the right to terminate this Agreement on or before the Closing Date (and if on the Closing Date, prior to the Closing taking place). Any disputes between the Parties with respect to the occurrence of a Repetition Default in accordance with this Clause 9.3 shall be settled in accordance with Clause 14.10.

9.4

Limitations of contents and scope of Seller’s Representations for purposes of Clause 11

9.4.1

After the Closing Date and (for the avoidance of doubt) provided that Closing occurs, the contents and scope of Seller’s Representations, as repeated pursuant to Clause 9.3, shall for purposes of Clause 11.1.1(a), be limited by:

(a)

the items indicated in Clause 9.2;

(b)

subject to Clause 9.4.2, all matters set forth on Schedule 7.1.2 and Schedule 7.1.3, each of which has been used for purposes of determining whether a termination event has occurred under Clause 13.1.3 or 13.1.5, irrespective of whether on the basis of such matters:

•

such a termination event has occurred, and the Purchaser thus has the right to terminate this Agreement under Clause 13.1.3 or 13.1.5 but has not exercised such right; or

•

such a termination event has not occurred, and the Purchaser thus does not have the right to terminate this Agreement under Clause 13.1.3. or 13.1.5;

(c)

subject to Clause 9.4.2., all matters specified in the Seller’s notice pursuant to Clause 9.3.2 irrespective of whether on the basis of such matters:

•

a Repetition Default has occurred under Clause 9.3, and the Purchaser thus has the right to terminate this Agreement under Clause 9.3.2 but has not exercised such right; or

•

no Repetition Default has occurred under Clause 9.3, and the Purchaser thus does not have the right to terminate this Agreement under Clause 9.3.

9.4.2

A matter as set forth in sub-clause (b) or (c) of Clause 9.4.1 shall:

(a)

subject to sub-clause (b) of this Clause 9.4.2, only limit the Seller’s Representations to the extent that any reasonable and diligent person would interpret such matter as pertaining to and limiting a certain Seller’s Representation; and

(b)

not limit the Seller’s Representations in case such matter was known by the Seller before the signing of this Agreement.

9.5

Effect of Purchaser’s Knowledge

Without prejudice to Clause 9.2 and 9.4, the Purchaser’s right to bring a claim against the Seller for breach of Seller’s Representations under Clause 11 shall not be affected by:

(a.)

any information that the Purchaser and/or its lawyers, auditors or other advisors obtained in the course of conducting their audits and due diligence investigations of the CLD Companies; or

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(b.)

any other information known to the Purchaser, with the exception of information that the Purchaser was required to notify to the Seller pursuant to Clauses 7.1.2 and 7.1.3, but that has notwithstanding such requirement not so been notified to the Seller.

9.6

Seller’s Waiver of Rights against the CLD Companies

The Seller hereby agrees to waive with effect from the Closing Date any rights, remedies or claims which it may have in respect of any inaccuracy or omission in any information or advice supplied or given by the CLD Companies in connection with assisting the Seller in the making of any of the Seller’s Representations.

10	REPRESENTATIONS OF AND INDEMNIFICATION BY THE PURCHASER

10.1

Representations of the Purchaser

10.1.1

The Purchaser represents to the Seller as of the date of this Agreement in the terms set out in Schedule 10 to this Agreement (the “Purchaser’s Representations”) and warrants to the Seller that the Purchaser’s Representations are true and accurate in all material respects as of the date of this Agreement.

10.1.2

The Purchaser warrants to the Seller that the Purchaser’s Representations shall be true and accurate in all material respects on the Closing Date, as if they had been repeated on the Closing Date.

10.2

Indemnification by the Purchaser

10.2.1

The Purchaser agrees and undertakes to indemnify the Seller for any Loss suffered by it:

(a) which would not have been suffered by it if every of the Purchaser’s Representations, as updated as at Closing pursuant to Clause 10.1.2 (if applicable), had been true and accurate in all material respects, and then subject to the limitations and other conditions set out in Clause 11.2 which shall apply mutatis mutandis (insofar relevant); and

(b) which would not have been suffered by it if all obligations of the Purchaser under this Agreement had been duly fulfilled.

10.2.2

If the Seller becomes aware of any action, fact or event that may give rise to a claim against the Purchaser under this Clause 10, such claims shall be made by the Seller in accordance with the procedure set out in Clauses 11.3 and 11.4 which shall apply mutatis mutandis (insofar relevant).

11	INDEMNIFICATION BY THE SELLER

11.1

General Principles

11.1.1

General Indemnification Obligations

Subject to the limitations and other conditions set out in this Clause 11, the Seller agrees and undertakes to indemnify the Purchaser or, if the Purchaser so chooses, but without duplication, the relevant CLD Company/Companies (each of the Purchaser and the CLD Companies referred to herein as a “Beneficiary”, and together, as the “Beneficiaries”) for any Loss suffered by the Purchaser or the CLD Companies:

(a.)

which would not have been suffered by them if all the Seller’s Representations, as updated as at Closing pursuant to Clause 9.3 (if applicable), and as qualified and limited pursuant to Clause 9.2 or 9.4 (as applicable), had been true and accurate;

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(b.)

which would not have been suffered by them if all obligations of the Seller under this Agreement had been duly fulfilled; or

(c.)

resulting or arising from any liability (“passif” / “passiva”), obligation or debt (of whatever nature) of the CLD Companies having a cause or origin prior to December 31, 2005, which have not been provided or accounted for in the CLD Company Annual Accounts 2005 but should have been provided or accounted for therein in accordance with Belgian generally accepted accounting principles (Belgian GAAP) or IFRS accounting principles.

11.1.2

Special Indemnification Obligations

Subject to the limitations and other conditions set out in this Clause 11, the Seller further agrees and undertakes to indemnify the Beneficiaries (without duplication as between them), for:

(a.)

any Loss resulting or arising from any environmental or soil liabilities in connection with the former D’Hooge site located at Ghent (for the avoidance of doubt, not including the current Deinze site for which the Seller’s Representations remain applicable and unaffected);

(b.)

any Loss (including any Taxes imposed on or with respect to the Purchaser or any CLD Company) resulting or arising from any of (i) the Pre-Closing Restructuring, (ii) the inter-company debt elimination as set forth in Clause 7.7, or (iii) the termination of the inter-company agreements as set forth in Clause 7.11;

(c.)

any (i) Income Taxes or social security contributions imposed on or with respect to any CLD Company, for any period, or any portion thereof, ending on or prior to the Closing Date (and in case of Taxes or social security contributions imposed for a portion of a period beginning before and ending after the Closing Date, such Taxes or social security contributions shall be apportioned on the basis of an interim closing of the books at the end of the Closing Date); (ii) Taxes imposed on or with respect to the Purchaser or any CLD Company as a result of the contemplated transfer of Shares, as the case may be, including, without limitation, any transfer taxes; (iii) Taxes imposed on or with respect to any CLD Company as a result of such company being liable for Taxes of any other person, or (iv) Taxes imposed on or with respect to the Purchaser or any CLD Company as a result of the incorporation of Ipso Norge;

(d.)

any Loss (including any Taxes imposed on or with respect to the Purchaser or any CLD Company) resulting or arising from the transfer of employees from the Company as set out in Clause 7.14;

(e.)

any Loss (including any Taxes imposed on or with respect to the Purchaser or any CLD Company) resulting or arising from the reorganization of WMC Holdings, Inc. pursuant to the U.S. Purchase Agreement and the Plan of Reorganization, dated as of March 31, 2005, by and among the Seller, the Company, WMC Holdings, Inc. and LSG North America;

(f.)

any Loss (including any Taxes imposed on or with respect to the Purchaser or any CLD Company) resulting or arising from any liabilities related to heavy duty laundry activities performed by any of the CLD Companies (other than Losses related to products manufactured by the Company (Ipso II) in Deinze) or from the transfer of heavy duty assets and liabilities as set out in Clause 7.16;

(g.)

any Loss (including any Taxes imposed on or with respect to the Purchaser or any CLD Company) resulting or arising in connection with the formation of Ipso Spain and the reorganization of the Company’s distribution process in Spain (including but not limited to (i) the threatened dispute with Tecnitramo S.A.L. and (ii) Losses resulting or arising in connection with any agreements relating to Ipso Spain which were entered into by, on behalf of, or with respect to, any CLD Company);

(h.)

any Loss resulting or arising in connection with any litigation referred to under Section 1.5 (b) of the U.S. Purchase Agreement (Excluded Liabilities); and

(i.)

any (including any Taxes imposed on or with respect to the Purchaser or any CLD Company) Loss

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resulting or arising from the re-qualification into employment agreements of any of the consultancy or independent contractor agreements entered into by the Company or the Subsidiaries prior to Closing but only if such re-qualification is based on facts or circumstances existing prior to Closing.

11.1.3

Double Recovery

If the same action, fact or event can lead to indemnification under several paragraphs of Clause 11.1.1 and/or of Clause 11.1.2, the Beneficiary may bring a claim under more than one paragraph but can only be indemnified once.

11.1.4

Computation of Certain Losses

For the purposes of this Clause 11, and without prejudice to Clause 11.1.6:

(i)

any Loss suffered by a CLD Company (other than Ipso Rent and Ipso Rent Deutschland) shall be deemed to be suffered by the Purchaser in the same amount and shall be limited thereto; and

(ii)

any Loss suffered by Ipso Rent or Ipso Rent Deutschland shall be deemed to be suffered by the Purchaser for 50% of such Loss and shall be limited thereto.

11.1.5

Nature of any Payment to Purchaser

Any amount paid by the Seller to the Purchaser under this Clause 11 shall constitute a reduction of the Initial Purchase Price.

11.1.6

Tax Gross-Up

If any tax authority imposes a Tax on any amount paid to any Beneficiary under this Clause 11, then the amount so payable shall be grossed up by such amount as will ensure that after payment of such Tax there shall be left a sum equal to the amount which would otherwise be payable under this Agreement.

11.1.7

Assignment of Seller’s Warranty to Third Parties

Any person to whom the Purchaser would transfer any or all of the Shares or assign all or part of its rights and obligations under this Agreement in accordance with Clause 2.1.3 or Clause 14.5 is hereby constituted third party beneficiary pursuant to Article 1121 of the Belgian Civil Code (“stipulation pour autrui” / “beding ten behoeve van een derde”) for the purposes of this Clause 11. Accordingly, such transferee shall be entitled to bring any claim under this Clause 11 against the Seller directly.

11.1.8

CLD Companies as Third Party Beneficiary

For the avoidance of doubt, the CLD Companies are hereby constituted third party beneficiaries pursuant to Article 1121 of the Belgian Civil Code (“stipulation pour autrui” / “beding ten behoeve van een derde”) for the purposes of this Clause 11.

11.1.9

Computation of Amounts

For the purposes of Clauses 11.2.2, 11.2.3 and 11.2.4, any computation of amounts shall be measured on an aggregate basis with the U.S. Purchase Agreement, thus taking into account any claims under the U.S. Purchase Agreement, it being understood that claims in respect of any of the matters listed in Article IX and Sections 10.2(c) through 10.2(g) of the U.S. Purchase Agreement shall not be aggregated with other claims against the Seller for the purposes of Clause 11.2.4 (Maximum Liability).

11.2

Limitation of Seller’s Liability

11.2.1

Time Limitations

The Seller shall not be liable under this Clause 11 in respect of any claim unless a notice of the claim is given by the Purchaser to the Seller in accordance with Clause 11.3.1:

(a.)

in the case of any claim with respect to Taxes, before the date that is sixty days after December 31, 2011.

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(b.)

in the case of any claim with respect to ownership title to the Shares, before the date on which such claim is barred by all applicable statutes of limitation;

(c.)

in the case of any claim with respect to environmental representations, within 5 years following the Closing Date; and

(d.)

in the case of any other claim, within 18 months following the Closing Date.

11.2.2

Minimum Claims

(a.)

The Seller shall not be liable under this Clause 11 in respect of any claim arising from any single circumstance where the amount of the claim does not exceed 0.5% of the Aggregate Purchase Price.

(b.)

Where the amount of the claim referred to in paragraph (a.) exceeds EUR 0.5% of the Aggregate Purchase Price, the total amount of the claim shall be recoverable from the Seller and not only the amount of the excess.

11.2.3

Aggregate Minimum Claims

(a.)

The Seller shall not be liable under this Clause 11 in respect of any claim unless the aggregate amount of all claims for which the Seller would otherwise be liable (disregarding the provisions of this Clause 11.2.3) exceeds 1% of the Aggregate Purchase Price.

(b.)

Where the aggregate amount recoverable in respect of all claims referred to in paragraph (a.) exceeds 1% of the Aggregate Purchase Price, only the amount of the excess shall be recoverable from the Seller.

11.2.4

Maximum Liability

The aggregate liability of the Seller under this Clause 11 shall not exceed 15% of the Aggregate Purchase Price.

11.2.5

Claims not subject to the above limitations on amount and time

(a.)

Notwithstanding any other provision in this Agreement, Clauses 11.2.1 to and including 11.2.4 shall not apply to any claim made in respect of:

(i)

the matters set out in Clause 11.1.2 (Special Indemnification Obligations); or

(ii)

Seller’s liability for breach of its obligations under this Agreement as set out in Clause 11.1.1(b) of this Agreement,

it being however understood that:

•

regarding limitation on time:

•

the Seller shall not be liable in respect of any such claim unless a notice of the claim is given by the Purchaser to the Seller in accordance with Clause 11.3.1 before the date on which such claim is barred by all applicable statutes of limitation, unless such period of time is shorter than the period during which the claim would be able to be brought under Clause 11.2.1, in which case Clause 11.2.1 will nevertheless apply; and

•

by derogation to the above, Clause 11.2.1(a) shall in any case apply to claims made in respect of the matters set out in Clause 11.1.2 (Special Indemnification Obligations) with respect to Taxes.

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•

regarding limitation on amount:

the aggregate liability of the Seller under this Agreement and the U.S. Purchase Agreement shall not exceed the Aggregate Purchase Price.

(b.)

Furthermore, claims in respect of any of the matters listed in paragraph (a) shall not be aggregated with other claims against the Seller for the purposes of Clauses 11.2.2 to and including 11.2.4 (Minimum and Maximum Liability).

11.2.6

Provisions in the Accounts

The Seller shall not be liable under this Clause 11 in respect of any claim to the extent that the matter giving rise to the claim is recorded (i) as a Current Liability in connection with the final determination of the Final Working Capital or (ii) as a liability in the CLD Pro Forma Annual Accounts 2005 or the CLD Company Annual Accounts 2005.

11.2.7

Tax Savings arising from the Losses

Any amount for which the Seller would otherwise have been liable under this Clause 11 in respect of any Losses suffered by the Purchaser or a CLD Company shall be reduced by the amount (if any) by which any Taxes for which the CLD Company would otherwise have been liable is actually and finally reduced or extinguished as a result of the matter giving rise to such Losses provided that such effective Tax savings are made in respect of the taxable period in which such matter was taken into account in the CLD Company’s tax return.

If the amount of the Tax savings is determined in accordance with this Clause 11.2.7 after payment by the Seller of any amount in discharge of a claim, the Purchaser shall pay, or shall procure that the relevant CLD Company pays, to the Seller an amount equal to the difference between:

(i)

the amount paid by the Seller in discharge of the claim; and

(ii)

the amount that the Purchaser or the relevant CLD Company would have received if such Tax savings had been taken into account in determining the amount due by the Seller in accordance with this Clause 11.2.7.

11.2.8

Insurance Proceeds and Other Recoveries from Third Parties

(a.)

Any amount for which the Seller would otherwise have been liable under this Clause 11 in respect of any Losses suffered by the Purchaser or the CLD Companies shall be reduced by the net amount of any indemnification or other recovery actually received by the CLD Company concerned from any third party (including insurance proceeds) in respect of such Losses.

(b.)

The net amount of such indemnification or other recovery shall be equal to the amount received by the CLD Company, less any reasonable costs and expenses incurred by the CLD Company in respect of such indemnification or other recovery.

(c.)

If the Seller pays an amount in discharge of any claim and the Purchaser or the relevant CLD Company subsequently recovers from any insurance company or any other third party a sum relating to the subject matter of such claim, the Purchaser shall pay, or shall procure that the relevant CLD Company pays, to the Seller an amount equal to the difference between:

(i)

the amount paid by the Seller in discharge of the claim; and

(ii)

the amount that the Purchaser or the relevant CLD Company would have received if the amount of such recovery had been taken into account in determining the amount due by the Seller in accordance with this Clause 11.2.8.

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For the avoidance of doubt, the Purchaser or the relevant CLD Company shall not be required to seek recovery under its insurance policies prior to making a claim against the Seller.

11.2.9

Mitigation of Losses

The Purchaser shall use its best efforts to limit the extent of any Losses which might give rise to a claim against the Seller under this Agreement.

11.2.10

Fraud and Intentional Misconduct

None of the limitations contained in this Clause 11.2 shall apply to any claim which arises or is increased, or to the extent to which it arises or is increased, as a consequence of fraud or intentional misconduct (“dol” / “bedrog”) by the Seller (or by a CLD Company on or before the Closing Date).

11.2.11

Excess Provisions and Overstatements of Liabilities

If and to the extent that the amount of any provision made in the CLD Pro Forma Annual Accounts 2005 in respect of (i) slow moving and obsolescence reserve (one line), (ii) warranties, (iii) bad debts (specific and general), (iv) provision for defined benefit plans and other similar pension obligations and (v) workers compensation is found to be in excess of, or unnecessary in respect of, the matter for which such provision was made; the amount of such excess or unnecessary provision shall be credited against any amount due by the Seller under this Clause 11 for matters of the type for which such provision was made.

11.2.12

Other limitations

The Seller shall not be liable under this Clause 11:

(a)

if and to the extent the matter giving rise to a claim arises as a result of a request or with the consent of the Purchaser;

(b)

if and to the extent a claim would not have arisen but for a change in legislation or regulation after the Closing Date;

(c)

if and to the extent that a claim arises as a result of any non-mandatory change by the Purchaser after the Closing Date in the accounting or valuation principles applied by (any of) the CLD Companies; or

(d)

in respect of any liability which is contingent unless and until such contingent liability has become an actual liability and is due and payable, provided, however, that this Clause (d) shall not have the effect of preventing the Purchaser from validly making a claim in respect of a contingent liability within the applicable time limit, even though it has not become an actual liability.

11.3

Claims by the Purchaser

11.3.1

Notification of the Claim

(a.)

If the Purchaser becomes aware of any action, fact or event that may give rise to a claim against the Seller under this Clause 11, the Purchaser shall give a notice to the Seller within thirty (30) days after becoming aware of such event and within the time limits provided in Clause 11.2.1 or 11.2.5 (as applicable).

(b.)

Such notice shall set out the legal and factual basis of the claim, including such details as are available of the specific actions, facts or events in respect of which the claim is made, together with a first estimate of the amount of Losses which are the subject of the claim. A copy of the material documents establishing the basis of the claim, to the extent available, shall be enclosed in the notice.

(c.)

Failure of the Purchaser to notify a claim to the Seller in the manner provided above shall not relieve the Seller of any liability it may have in respect of such a claim except to the extent it has suffered a prejudice as a consequence of such failure.

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11.3.2

Acceptance of the Claim by the Seller

The Seller shall be deemed to accept any claim made by the Purchaser in accordance with Clause 11.3.1 and shall be liable to indemnify the Beneficiary for the amount of Losses requested in such a claim (subject to the limitations set out in Clause 11.2) unless the Seller has given the Purchaser a notice objecting to the claim within thirty (30) days following notification of such claim.

11.3.3

Disagreement on the Claim

If the Seller and the Purchaser are unable to reach an agreement on the amount of the Losses to be indemnified by the Seller within fifteen (15) days following notification of the Seller’s objections, the matter shall be decided in accordance with Clause 14.10 (Arbitration).

11.3.4

Investigation by the Seller

In connection with any claim made by the Purchaser, the Purchaser shall, and shall cause the CLD Companies to:

(a.)

allow the Seller and its advisors to investigate the actions, facts or events alleged to give rise to such claim and whether and to what extent any amount is payable in respect of such claim, provided that no such investigation shall interfere with the CLD’s business; and

(b.)

give, subject to them being paid all reasonable costs and expenses, all such information and assistance to the Seller and its advisors, including (a) access to the CLD Companies’ premises and personnel, upon reasonable advance notice and during normal business hours, and (b) the right to examine and copy all such contracts, books and records, and other documents and data as the Seller and its advisors may reasonably request, subject to the Seller agreeing in such form as the Purchaser may reasonably require to keep all such information confidential and to use it only for the purpose of investigating and defending the claim in question.

11.3.5

Payment by the Seller

(a.)

If the Seller has accepted or is deemed to have accepted the amount of the Losses claimed by the Purchaser pursuant to Clause 11.3.2, or if the Seller and the Purchaser have agreed another amount, the Seller shall pay such amount to the Beneficiary within fifteen (15) days of such acceptance or agreement.

(b.)

If the matter giving rise to a claim has been decided by arbitration, the Seller shall pay any amount due to the Beneficiary including any interest within fifteen days of the final decision ordering the Seller to make such payment (or on any other date as may be decided by the arbitration panel, whichever is the earlier).

(c.)

Payment shall be made in accordance with the instructions as shall be notified to the Seller by the Purchaser.

11.4

Third Party Claims

11.4.1

If the claim notified by the Purchaser to the Seller in accordance with Clause 11.3.1 arises as a result of or in connection with a claim by or a liability to a third party (a “Third Party Claim”) then the following shall apply:

(a.)

The Purchaser shall, or shall cause the relevant CLD Company to, provide the Seller with copies of all documents and correspondence from that third party, and all other correspondence and documents relating to the Third Party Claim as the Seller may reasonably request, within fifteen (15) days

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following receipt of such documents and correspondence by the Purchaser or the relevant CLD Company, subject to the Seller agreeing to keep all such information and documents confidential and to use them only for the purpose of dealing with the Third Party Claim.

(b.)

The Seller shall promptly and not later than one month thereafter notify to the Purchaser:

(i)

whether it disputes the Purchaser’s or the relevant CLD Company’s right to indemnification with respect to such Third Party Claim; and

(ii)

if it does not dispute such right of indemnification, whether or not it desires to defend the Purchaser or the relevant CLD Company against such Third Party Claim.

Notwithstanding the above notice periods, the Purchaser is allowed to take any reasonable provisional measures, subject to informing the Seller promptly thereof.

(c.)

If, within the one month provided for under paragraph (b) above, the Seller notifies the Purchaser that it does not dispute the Purchaser’s or the relevant CLD Company’s right of indemnification and desires to defend the Purchaser or the relevant CLD Company against such Third Party Claim, the Seller shall have the right to assume and control the defense of such Third Party Claim by appropriate proceedings with counsel reasonably acceptable to the Purchaser, at the Seller’ sole cost and expense.

The Purchaser shall make or cause the relevant CLD Company to make available to the Seller and its representatives all books and records relating to such Third Party Claim and shall render to the Seller such assistance and access to the Company, as provided in Clause 11.3.4.

The Purchaser and the relevant CLD Company may participate in, but not control, any such defense or settlement at its sole cost and expense: the Seller shall consult with the Purchaser and the relevant CLD Company in relation to the conduct of any proceedings arising out of the Third Party Claim, and ensure that the Purchaser’s or the relevant CLD Company remarks shall be taken into account in so far as such remarks are reasonable, provided that all decisions in relation to such proceedings shall be made by the Seller always taking into account the relevant CLD Company’s corporate interest.

(d.)

If the Seller:

(i)

disputes the Purchaser’s or the relevant CLD Company’s right to indemnification with respect to a Third Party Claim; or

(ii)

does not dispute such right to indemnification but prefers not to assume the defense of such Third Party Claim; or

(iii)

does not dispute such right to indemnification and, notwithstanding having indicated that it desires to defend the Purchaser or the relevant CLD Company against such Third Party Claim, fails to timely assume and prosecute the defense of such Third Party Claim; or

(iv)

does not react in due time to the Purchaser’s notification in accordance with under Clause (b) above,

then the Purchaser or the relevant CLD Company shall assume and control the defense of such Third Party Claim at their or its costs and expenses (without prejudice to its or their rights under this Clause 11).

In that case, the Seller may participate in, but not control, any such defense or settlement at its sole cost and expense: the Purchaser shall, and shall cause the CLD Companies to, consult with the Seller in relation to the conduct of any proceedings arising out of the Third Party Claim, and ensure that Seller’s remarks shall be taken into account in so far as such remarks are reasonable and made in the Purchaser’s or the relevant CLD Company’s corporate interest, provided that all decisions in relation to such proceedings shall be made by the Purchaser or the CLD Company concerned.

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11.4.2

The Party responsible for the defense of any Third Party Claim in accordance with Clause 11.4.1 (the “Responsible Party”) shall, to the extent reasonably requested by the other party, keep informed on the status of any Third Party Claim for which such party is not the Responsible Party, including, without limitation, all proposed settlement negotiations.

11.4.3

Neither Party shall enter into any settlement of any Third Party Claim without the written prior consent of the other party, which consent shall not be unreasonably withheld or delayed (a) without a valid reason (especially in so far as disputes with clients are concerned) or (b) if such admission of liability or settlement is in the corporate interest (“intérêt social” / “vennootschapsbelang”) of the CLD Company concerned.

The Responsible Party shall promptly notify the other party of each settlement offer (including whether the Responsible Party is willing or not to accept the proposed settlement offer) with respect to a Third Party Claim. Such other party agrees to notify the Responsible Party in due course whether or not such party is willing to accept the proposed settlement offer.

If the Purchaser or the relevant CLD Company does not consent to any settlement offer of a Third Party Claim (whether or not it is the Responsible Party), the Purchaser or such CLD Company may continue to contest or defend such Third Party Claim and, in such event, the maximum liability of the Seller with respect to such Third Party Claim shall not exceed the full amount of such settlement offer (without prejudice to the limitations set out in Clause 11.2).

If the Seller does not consent to any settlement offer of a Third Party Claim (whether or not it is the Responsible Party with respect to such Third Party Claim), the Seller may continue to contest or defend such Third Party Claim and, in such event, the Seller shall be liable for the full amount of the Loss sustained by the Purchaser or the relevant CLD Company as a result of such Third Party Claim, subject to the limitations set out in Clause 11.2.

12	OBLIGATIONS OF THE PARTIES EXTENDING AFTER THE CLOSING DATE

12.1

Further Assurances

The Parties agree and undertake to furnish to each other such further information, to execute such other documents, and to do such other things (before or after the Closing Date), as the other Party may reasonably request for the purposes of fulfilling its obligations and undertakings under this Agreement.

The Seller furthermore undertakes to co-operate with the Purchaser as reasonably requested in connection with any Tax filings, Tax audits and other legitimate matters related to Tax after the Closing Date.

12.2

Confidentiality relating to this Agreement and announcements

12.2.1

Each Party is prohibited from disclosing all or any part of this Agreement or even its existence at any time, and no announcement in connection with the existence or the subject matter of this Agreement (including any announcement to the CLD Companies’ employees, customers or suppliers) shall be made, without the express prior written consent of all Parties (which consent shall not be unreasonably withheld or delayed), except:

(a.)

to the extent that disclosure shall be required by law (including, without limitation, applicable stock exchange regulations), in which case the Parties will consult with each other prior to any communication;

(b.)

in the event that either Party seeks indemnification or any other remedy from the other Party under this Agreement in any arbitration proceedings, insofar as the use of such information is strictly necessary for the proceedings; or

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(c.)

to the extent strictly necessary in order to allow either Party to comply with any legal requirement to make any announcement or to provide information to any public authority, provided, however, that such Party shall consult with the other Parties insofar as is reasonably practicable before complying with such an obligation.

12.2.2

Clause 12.2.1 shall be without prejudice to the right of the Parties to proceed to (i) disclosures and communication of information and documents to their financial partners, experts and advisors involved in the Transaction, subject to the latter being held to confidentiality undertaking that permits compliance with the terms of Clause 12.2.1.

12.2.3

Without prejudice to Clauses 12.2.1 and 12.2.2 above, the Parties shall, in view of the specific regulations applicable to the Seller on account of its listing on the Euronext stock exchange and to the Purchaser on account of its status as an issuer of debt securities issued pursuant to the Securities Exchange Act of 1933, simultaneously (to the extent possible) announce to the market, the Belgian Banking and Finance Commission and the U.S. Securities and Exchange Commission, by way of press releases in the form as attached hereto in Schedule 12.2.3(a) and (b): (i) the signing of this Agreement to the extent required by law, and (ii) as soon as practical after the Closing Date and to the extent required by law, the Closing of the Transaction.

12.2.4

To the extent and for the period of time required by applicable Belgian insider trading regulations, the Parties shall, and shall cause their Affiliated Companies and their directors, officers, managers, representatives and advisors, to observe all and any requirements under such regulations, including, without limitation, abstaining from dealing in the shares of the Seller.

12.2.5

The Parties shall consult with each other concerning the means by which the CLD Companies’ employees, customers, and suppliers and others having dealings with the CLD Companies shall be informed of this Agreement, and the Purchaser shall have the right to be present when any such communication is made.

12.2.6

The Parties shall take all necessary actions to ensure that no accidental or unauthorized disclosure of confidential information occurs.

12.2.7

If the Closing does not take place, the Purchaser shall, upon Seller’s request, return to the Seller or destroy all written information in accordance with the confidentiality agreement entered into by them on August 11, 2005, which is incorporated by reference into this Agreement for purposes of this Clause 12.2.7.

12.3

Confidentiality relating to the business and affairs of the Parties and the CLD

12.3.1

The Seller agrees and undertakes, and shall cause its Affiliated Companies, to keep in confidence any information relating to the business and affairs of the CLD and the CLD Companies (including any and all trade secrets, technical information on the CLD products, customer lists, price lists, financial projections and budgets, employees’ salaries and other information concerning the personnel) and not to disclose such information to any third party at any time, before or after the Closing Date, unless and to the extent that such information is or becomes generally known to and available for use by the public other than as a result of the Seller’s fault or the fault of any other person bound by a duty of confidentiality to the Seller.

12.3.2

The Seller agrees and undertakes, and shall cause its Affiliated Companies, to keep in confidence any information relating to the business and affairs of the Purchaser and not to disclose such information to any third party at any time, before or after the Closing Date, unless and to the extent that such information is or becomes generally known to and available for use by the public other than as a result of the Seller’s fault or the fault of any other person bound by a duty of confidentiality to the Seller.

12.3.3

The Purchaser agrees and undertakes, and shall cause its Affiliated Companies, to keep in confidence any information relating to the business and affairs of the Seller and not to disclose such information to any third party at any time, before or after the Closing Date, unless and to the extent that such information is or becomes generally known to and available for use by the public other than as a result of the Purchaser’s fault

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or the fault of any other person bound by a duty of confidentiality to the Purchaser provided that from and after the Closing Date the Purchaser shall be under no confidentiality obligation to the Seller or its Affiliated Companies (not being a CLD Company) with respect to the CLD Companies.

12.4

Non-competition and non-solicitation obligations in case Closing occurs

12.4.1

Provided that Closing takes place as envisaged by this Agreement, the Seller hereby agrees and undertakes not to do any of the things set out in Clause 12.4.2 paragraph (a) for a period of three years as from the Closing Date (the “Non-Compete Period”) and not to do any of the things set out in Clause 12.4.2 paragraphs (b) to and including (f) for a period of two years as from the Closing Date (the “Non-Solicitation Period”), except with (i) the Purchaser’s prior written consent, (ii) as explicitly contemplated by the Ipso Spain Distribution Agreement as referred to in Clause 6.2.1 or (iii) in connection with the heavy-duty activities conducted by Jensen Projects, as such activities are conducted on the date hereof, regardless of whether the Seller is acting:

(a.)

for itself or on behalf of any individual, company or other legal entity;

(b.)

alone or in conjunction with any other person;

(c.)

in its own capacity or as a director, manager, partner or shareholder of any company or other legal entity, or as an employee, consultant or agent of any individual, company or other legal entity;

(d.)

directly or indirectly through agents, intermediaries, Affiliated Companies or any other individual, company, legal entity or other vehicle (including any joint venture); or

(e.)

in any other capacity and in any other manner whatsoever.

12.4.2

Pursuant to Clause 12.4.1 the Seller shall refrain from:

(a.)

participating in any business involved in the sale or production of any products or replacement parts being sold, promoted, advertised, marketed, distributed (directly or indirectly) (i) into any washing equipment of less than 125 kg capacity and any drying equipment of less than 200 lb capacity within the stand-alone commercial laundry, dry cleaning, laundromats, and multi-housing market segments; as well as (ii) into on-premise laundry installations which do not have washing equipment of at least 100 kg through put, per hour, capability installed in the laundry facility (the “Protected Business”);

(b.)

inducing or attempting to induce any person who is or at any time was a customer, supplier or other business relation of the CLD Companies to cease doing business with the CLD Companies, to materially reduce its business with the CLD Companies or to do business with the CLD Companies on less favorable terms, or in any way interfering with the relationship between the CLD Companies and any of its customers, suppliers or other business relations, insofar as the CLD Companies’ operations in the Protected Business are concerned;

(c.)

inducing or attempting to induce any prospective customer of the CLD not to do business with the CLD Companies, insofar as the CLD Companies’ operations in the Protected Business are concerned;

(d.)

inducing or attempting to induce any employee of the CLD Companies to leave his employ with the CLD Companies, regardless of whether such employee would commit a breach of contract by leaving his employ, or in any way interfering with the relationship between the CLD Companies and any of its employees;

(e.)

employing (or otherwise engaging as an independent contractor or in any other capacity) any employee of the CLD Companies or any person who was an employee of the CLD Companies at any time during the Non-Solicitation Period;

(f.)

inducing or attempting to induce any director of the CLD Companies or any person having a consultancy or similar agreement with the CLD Companies to leave his position with the CLD

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Companies or to terminate his agreement with the CLD Companies, or in any way interfering with the relationship between the CLD Companies and any of its directors or any of the persons referred to in this paragraph.

12.4.3

The non-compete and non-solicitation obligations set out in this Clause 12.4 are geographically limited to Belgium, the United States of America and the countries or areas in which the Seller currently operates or sells products (as listed in Schedule 12.4.3).

12.4.4

The Seller acknowledges that the provisions of this Clause 12.4 are reasonable and necessary to protect the legitimate interests of the Purchaser. However, if any of the provisions of this Clause 12.4 should ever be held to exceed the limitations in duration, geographical area or scope, or other limitations imposed by applicable law, they shall not be nullified but the Parties shall be deemed to have agreed to such provisions that conform with the maximum permitted by applicable law, and any provision of this Clause 12.4 exceeding such limitations shall be automatically reformed accordingly.

12.5

Non-competition and non-solicitation obligations in case Closing does not occur

12.5.1

The Parties agree that, in case this Agreement would be terminated on or before the Closing Date or in case the Closing of the Transaction would for whatever reason not take place as envisaged by this Agreement, during a period of 2 years as from (i) the date on which the Agreement is terminated (in case of termination) or (ii) the date of this Agreement (in case Closing otherwise does not occur), they shall not, and shall cause their Affiliated Companies not to, directly or indirectly, except with the other Party’s prior written consent:

(a.)

solicit or endeavour to entice away from or discourage from being employed by the other Party or any of the Affiliated Companies of the other Party, any person who is or shall be a director, officer, manager or employee thereof, whether or not such person would commit a breach of contract by reason of leaving services; and/or

(b.)

use the services of any director, officer or manager of the other Party or any of the Affiliated Companies of the other Party, be it as an employee, consultant, director or otherwise.

12.5.2

The Purchaser agrees that, in case this Agreement would be terminated on or before the Closing Date or in case the Closing of the Transaction would for whatever reason not take place as envisaged by this Agreement, during a period of 3 years as from (i) the date on which the Agreement is terminated (in case of termination) or (ii) the date of this Agreement (in case Closing otherwise does not occur), it shall not, except with the Seller’s prior written consent or if and to the extent such information is or becomes generally known to and available for use by the public other than as a result of the Purchaser’s fault or the fault of any other person bound by a duty of confidentiality to the Purchaser, use any information relating to the Seller or the CLD Companies that is disclosed to it by the Seller or the CLD Companies during the First Phase Due Diligence, the Second Phase Due Diligence or otherwise within the framework of the Transaction, such as in the course of the negotiations with respect to this Agreement or the process leading up to the envisaged Closing of the Transaction, for purposes of competing with the Seller or the CLD Companies, regardless of whether the Purchaser is acting:

(a.)

for itself or on behalf of any individual, company or other legal entity;

(b.)

alone or in conjunction with any other person;

(c.)

in its own capacity or as a director, manager, partner or shareholder of any company or other legal entity, or as an employee, consultant or agent of any individual, company or other legal entity;

(d.)

directly or indirectly through agents, intermediaries, Affiliated Companies or any other individual, company, legal entity or other vehicle (including any joint venture); or

(e.)

in any other capacity whatsoever.

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The obligations set out in this Clause 12.5.2 are geographically limited in the same manner as those set out in Clause 12.4.

12.5.3

The Parties acknowledge that the provisions of this Clause 12.5 are reasonable and necessary to protect legitimate interests of the Parties protected thereby. However, if any of the provisions of this Clause 12.5 should ever be held to exceed the limitations in duration, geographical area or scope, or other limitations imposed by applicable law, they shall not be nullified but the Parties shall be deemed to have agreed to such provisions that conform with the maximum permitted by applicable law, and any provision of this Clause 12.5 exceeding such limitations shall be automatically reformed accordingly.

12.6

Continuation of commercial relationships

(i)

they shall not proceed to a cancellation of any commercial agreements presently existing between them which cancellation would become effective before December 31, 2007, except in case of breach under such agreements;

(ii)

any commercial agreements presently existing between the Parties with a fixed term which would expire prior to December 31, 2007, shall be renewed for a period of time ending no earlier than December 31, 2007.

12.7

Release of director’s liability in case Closing occurs

12.7.1

Provided that Closing takes place as envisaged by this Agreement, the Purchaser, to the fullest extent permitted by law, undertakes and shall cause the Company (or any transferee of the relevant shares held by Purchaser in the Company or by the Company in the Subsidiaries) to vote in favour of a resolution releasing the resigning directors whose names are set out in Schedule 7.5(i) from any liability arising from the performance of their duties:

(i) at the general meeting of the respective CLD Companies with respect to the financial year ending on December 31, 2005; and

(ii) at the general meeting of the respective CLD Companies with respect to the financial year ending on December 31, 2006, for the performance of their duties until the Closing Date.

12.8

Use of the name “Ipso”

Provided that Closing takes place as contemplated by this Agreement, the Seller shall cease, and shall cause any of its Affiliated Companies (not being a CLD Company) to cease, to use or do business under, directly or indirectly, or assist any third party in using or doing business under, the name or mark “IPSO” or any derivative or combination thereof or any name or mark confusingly similar thereto, including without limitation, the names “Ipso Spain” and “Ipso Capital”.

12.9

Use of the names “LSG” and “Jensen”

12.9.1

Provided that Closing takes place as contemplated by this Agreement, the Purchaser agrees and undertakes to remove, and to cause the CLD Companies to remove, the words “LSG”, “Jensen” or any derivative or combination thereof from any assets owned or used by the CLD Companies, any products manufactured or distributed by the CLD Companies, any commercial or marketing documentation and signs as early as practicable and at the latest within six months after the Closing Date.

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12.9.2

Purchaser acknowledges and recognizes the use by the Seller and its Affiliated Companies, of the word combination “Laundry Systems Group” and, in the abbreviated format, the letter combination “LSG” and the letter and word combination “LSG Group” in conducting its business, such as its tradename, corporate name, logos and group name.

12.9.3

It is hereby expressly agreed that (A) Purchaser shall at all times (1) refrain from registering anywhere in the world a trademark containing the letters and/or words “LSG” or “LSG Group” (with or without dots or other signs between the letters), and (2) directly or indirectly, in any way and for whatever cause refrain from disputing, objecting to or undertaking any steps to prevent the use in any manner and anywhere in the world by Seller and any of its Affiliated Companies of the words “Laundry” and “Systems”, alone or in combination with each other or with the words or letters “Group” and “LSG” and (B) Seller and its Affiliated Companies shall never (Y) use or register as a trademark the word “Alliance” or any derivative thereof alone or in combination with “Laundry”, “Systems”, “Group” or “LSG” anywhere in the world and (Z) directly or indirectly, in any way and for whatever cause dispute, object to or undertake any steps to prevent the use in any manner and anywhere in the world by Purchaser and any of its Affiliated Companies of the words “Alliance”, “Laundry”, “Systems” or “Group” alone or in combination with each other, it being understood that the Purchaser shall at all times refrain from using anywhere in the world, in any way and for whatever cause the words “Laundry Systems Group” in this order, alone or in combination with other letters or words.

12.10

JM Vandoorne BVBA

Provided that Closing takes place as contemplated by this Agreement, the Seller agrees and undertakes to reimburse the Purchaser (or, if the Purchaser so chooses, the Company) for the Additional Payment that is due to JM Vandoorne BVBA in connection with its consulting agreement in accordance with the compensation scheme set forth in Clause 7.15, as follows:

•

The Seller shall reimburse the Purchaser an amount equal to 50% of the Additional Payment as made by the Company to JM Vandoorne BVBA in case the consulting agreement is not terminated within two years as from the Closing Date, and the Additional Payment is thus due in accordance with Clause 7.15 (iv) (a) sub (i).

•

The Seller shall reimburse the Purchaser an amount equal to 100% of the Additional Payment as made by the Company to JM Vandoorne BVBA in case JM Vandoorne BVBA terminates the consulting agreement within one year as from the Closing Date, and the Additional Payment is thus due in accordance with Clause 7.15 (iv) (a) sub (ii);

•

The Seller shall reimburse the Purchaser an amount equal to 50% of the Additional Payment as made by the Company to JM Vandoorne BVBA in case JM Vandoorne BVBA terminates the consulting agreement within the second year as from the Closing Date, and the Additional Payment is thus due in accordance with Clause 7.15 (iv) (a) sub (ii).

It is stipulated for the avoidance of doubt that the Seller shall not be obliged to reimburse the Additional Payment under this Clause 12.10 in case the consulting agreement is terminated by the Company, and the Additional Payment is thus due in accordance with Clause 7.15(iv) (a) sub (iii).

13	TERMINATION

13.1

Termination Events

13.1.1

This Agreement may be terminated (“résilié” / “beëindigd”) at any time by mutual consent of the Seller and the Purchaser.

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13.1.2

This Agreement may be terminated (“résilié” / “beëindigd”) by either Party upon giving a fifteen-day advance notice to the other Party, if the Closing has not occurred (other than through the failure of the Party seeking to terminate this Agreement to comply fully with its obligations under this Agreement or through a dispute being pending before the Independent Expert in accordance with Clause 13.1.3 or 13.1.5 or before the arbitration tribunal in accordance with Clause 9.3.2) on or before 90 days as from the signing of this Agreement, or such other date as the Parties may agree upon.

13.1.3

This Agreement may be terminated (“résolu” / “ontbonden”) by the Purchaser, at its sole discretion, on or before the Closing Date (and if on the Closing Date, prior to the Closing taking place):

(a.)

If the Adjusted EBITDA over the accounting year ending on December 31, 2005 is less than EUR 7.1 million.

Any disputes with respect to the determination and calculation of the Adjusted EBITDA and the CLD Pro Forma Annual Accounts 2005 for purposes of this Clause 13.1.3(a) shall be finally settled by the Independent Expert, appointed and acting mutatis mutandis in accordance with Clause 3.3.6.

The Purchaser shall in any event deliver a written notice to the Seller within 7 days as from the earlier of:

(i)

the end of the 6^th week following the date on which the Second Phase Due Diligence will have commenced or will be deemed to have commenced in accordance with Clause 7.1.1

(ii)

the end of its and its advisors’ reviews conducted under the Second Phase Due Diligence,

specifying whether or not a termination event as set out in this Clause 13.1.3(a) has occurred, and describing in reasonable detail the basis for such termination event (if any). The determination and calculation as set forth in this written notice shall be final and binding on the Parties unless the Seller shall within 7 days as from the above Purchaser’s written notice deliver to the Purchaser written notice of objection hereto, specifying in reasonable detail each disputed item, including the data that forms the basis thereof and the amount in dispute. In case the Seller so delivers a notice of objection, the dispute is referred to the Independent Expert in accordance with the foregoing.

(b.)

In case the disclosures made by the Seller, including, without limitation, the disclosures set forth on Schedule 7.1.3 (with the exclusion of any First Phase Due Diligence findings of the Purchaser as set out in Schedule 13.1.3(b)) or the Second Phase Due Diligence (pursuant to a notice delivered to the Seller as set out in Clause 7.1.2) should reveal any:

•

liabilities, whether actual or contingent; or

•

objective facts or matters which, have or are reasonably likely to have an impact on the continued operations of the CLD business in going concern and rebus sic stantibus, assuming that the current operations of the CLD business are in compliance with the situation as reflected in the Seller’s Representations.

which :

•

have a one-off downward cash effect on one or more of the CLD Companies plus the Acquired Operations which in the aggregate is in excess of the Benchmark Amount (calculated without regard to the Tax implications); or

•

if of a recurring nature, have a net present value downward effect on one or more of the CLD Companies plus the Acquired Operations which in the aggregate is in excess of the Benchmark Amount (calculated without regard to the Tax implications),

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it being understood that, for purposes of this Clause 13.1.3(b):

•

“Benchmark Amount” shall mean (I) EUR 2,000,000 plus (ii) the product of (A) the excess of Adjusted EBITDA as reflected in the CLD Pro Forma Annual Accounts 2005 over EUR 7.6 million times (B) 7.75, provided that in no event shall the Benchmark Amount exceed EUR 4.75 million;

•

any “one-off downward cash effect” shall be offset by any one time upward cash effect also discovered by the Purchaser in the course of its Second Phase Due Diligence; and

•

a “one-off downward cash effect” shall exclude asset valuations that do not impact cash liabilities, cash or EBITDA.

For purposes of this Clause 13.1.3(b), the liabilities, facts and matter referred to above will not be taken into account in case they result from: (A) commercial agreements existing at the date hereof between the Parties or between the Seller’s Affiliates on the one hand and the Purchaser’s Affiliates on the other, or (B) a discontinuation by the U.K. distributor JLA, of its commercial relationship with the Company, in which respect the Purchaser acknowledges that it is aware of the fact that JLA has expressed reservations with respect to its willingness to continue said commercial relationship in view of the prospective acquisition of the CLD Companies by the Purchaser, as contemplated by this Agreement).

Any disputes with respect to the determination and calculation of the above liabilities (including, without limitation, the determination and calculation of Adjusted EBITDA and CLD Pro Forma Annual Accounts 2005), objective facts or matters shall be finally settled by the Independent Expert, appointed and acting mutatis mutandis in accordance with Clause 3.3.6.

The Purchaser shall in any event deliver a written notice to the Seller within 7 days as from the earlier of:

the end of the 6^th week following the date on which the Second Phase Due Diligence will have commenced or will be deemed to have commenced in accordance with Clause 7.1.1; and

the end of its and its advisors’ reviews conducted under the Second Phase Due Diligence,

specifying whether or not, on the basis of information known to it at such time, a termination event as set out in this Clause 13.1.3(b) has occurred, and describing in reasonable detail the basis for such termination event (if any). The determination and calculation as set forth in this written notice shall be final and binding on the Parties unless the Seller shall within 7 days deliver to the Purchaser written notice of objection hereto, specifying in reasonable detail each disputed item, including the data that forms the basis thereof and the amount in dispute. In case the Seller so delivers a notice of objection, the dispute is referred to the Independent Expert in accordance with the foregoing.

13.1.4

This Agreement may be terminated (“résolu” / “ontbonden”) by a fifteen-day advance notice given on or before the Closing Date (and if on the Closing Date, prior to the Closing taking place) by either Party if a material breach of any provision of this Agreement has been committed by the other Party. If an advance notice has been given, this Agreement shall terminate on the earlier of the expiration date of the notice period or the Closing Date, unless the breach has been cured to the reasonable satisfaction of the terminating Party.

13.1.5

This Agreement may be terminated (“résolu” / “ontbonden”) by the Purchaser upon giving a fifteen-day advance notice to the Seller if any Material Adverse Change shall occur on or before the Closing Date (and if on the Closing Date, prior to the Closing taking place). Any disputes with respect to the occurrence of a Material Adverse Change shall be finally settled by the Independent Expert, appointed and acting mutatis mutandis in accordance with Clause 3.3.6.

If an advance notice has been given and has not been disputed by the Seller, this Agreement shall terminate on the earlier of the expiration date of such fifteen-day day advance notice period or the Closing Date.

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The Purchaser shall in any event deliver a written notice to the Seller within 7 days as from the earlier of:

the end of the 6^th week following the date on which the Second Phase Due Diligence will have commenced or will be deemed to have commenced in accordance with Clause 7.1.1; and

the end of its and its advisors’ reviews conducted under the Second Phase Due Diligence,

specifying whether or not a termination event as set out in this Clause 13.1.5 has occurred, and describing in reasonable detail the basis for such termination event (if any). The determination and calculation as set forth in this written notice shall be final and binding on the Parties unless the Seller shall within 7 days as from the above Purchaser’s written notice deliver to the Purchaser written notice of objection hereto, specifying in reasonable detail each disputed item, including the data that forms the basis thereof and the amount in dispute. In case the Seller so delivers a notice of objection, the dispute is referred to the Independent Expert in accordance with the foregoing.

13.1.6

This Agreement may be terminated by Purchaser in accordance with Clause 9.3.

13.2

Effect of Termination

If this Agreement is terminated pursuant to Clause 13.1, this Agreement shall become void and of no effect without liability of any Party (or any of its directors, officers, employees, stockholders, Affiliates, agents, representatives or advisors) to the other Party hereto, provided that, if such termination shall result from the wilful (a) failure of either Party to fulfil a condition to the obligations of the other Party or (b) failure of either Party to fulfil an obligation hereof, such Party shall be fully liable for any and all liabilities and damages incurred or suffered by the other Party as a result of such failure. The provisions of this Clause 13.2 and of Clause 12.2 (Confidentiality relating to this Agreement and announcements), 12.3 (Confidentiality relating to the business and affairs of the Parties and the CLD), 12.5 (Non-competition and non-solicitation obligations in case Closing does not occur), 12.6 (Continuation of commercial relationships), 14.2 (Amendments and waivers), 14.3 (Notices), 14.6 (Costs), 14.7 (Severability), 14.9 (Governing law) and 14.10 (Arbitration) shall survive any termination hereof.

14	MISCELLANEOUS

14.1

No Exclusive Remedy

The Parties’ rights and remedies under Clause 10 (Indemnification by the Purchaser), Clause 11 (Indemnification by the Seller) and Clause 13 (Termination) shall not exclude or limit any other rights or remedies that may be available to them under Belgian law, such as (without limitation) the right to apply to a court of competent authority in any jurisdiction for relief by way of injunction or restraining order or the right to seek specific performance of this Agreement, it being however understood that, except in case of fraud or intentional misconduct (“bedrog / dol”), each of the Parties hereby to the fullest extent permitted by law waives:

(i)

the right to seek the termination of this Agreement (at any time, including after the Closing Date) otherwise than pursuant to and in accordance with Clause 13 of this Agreement, be it pursuant to the theory of “wilsgebreken / vices de consentement”, article 1641 et seq. of the Belgian Civil Code, Article 1184 of the Belgian Civil Code or otherwise; and

(ii)

the right to seek damages otherwise than pursuant to and in accordance with Clause 10, 11 or 13.2 of this Agreement (as applicable), be it pursuant to pre-contractual or extra-contractual liability, article 1641 et seq. of the Belgian Civil Code, Article 1184 of the Belgian Civil Code or otherwise.

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14.2

Amendments and Waivers

14.2.1

No amendment of this Agreement shall be effective unless in writing and signed by duly authorized representatives of all Parties.

14.2.2

No failure or delay of a Party to exercise any right or remedy under this Agreement shall be considered a waiver of:

(i)

such right or remedy; or

(ii)

any other right and remedy under this Agreement,

except in case the period of time provided for the exercise of such right or remedy has lapsed.

In particular, but without prejudice to the generality of the foregoing, no failure by the Purchaser to exercise its right to terminate this Agreement under Clause 13 for breach of Seller’s Representations or other obligations shall constitute a waiver of any other rights and remedies of the Purchaser arising out of such a breach.

14.2.3

Except as provided otherwise herein, no waiver shall be effective unless given in writing and signed by a duly authorized representative of the Party giving the waiver.

14.3

Notices

14.3.1

Any notice in connection with this Agreement must be in writing in English and shall be validly given with respect to each Party if:

(a.)

delivered by hand (with written confirmation of receipt) to the persons listed hereinafter;

(b.)

sent by fax (with confirmation received by registered mail or an internationally recognized overnight delivery service within three Business Days) to the fax numbers and addresses set out hereinafter; or

(c.)

sent by registered mail or an internationally recognized overnight delivery service to the addresses set out hereinafter;

or to such other addressee, fax number or address as a Party may notify to the other Parties in accordance with this Clause 14.3.


If to Seller:	Name:	Laundry Systems Group NV
	Address:	‘t Hofveld 6F2, B-1702 Groot-Bijgaarden, Belgium
	Attention:	Erik Vanderhaegen
	Facsimile	+32 2 482 33 90

With a copy to:

	Name:	Stibbe
	Address:	Rue Henri Wafelaertsstraat 47-51, B- 1060 Brussels, Belgium
	Attention:	Jan Peeters
	Facsimile	+32 2 533 52 12

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If to Purchaser:	Name:	Alliance Laundry Systems LLC
	Address:	P.O. Box 990, Ripon, Wisconsin 54971
	Attention:	Scott L. Spiller
	Facsimile	+1 920 748-4334

with a copy to:

	Name:	Debevoise & Plimpton LLP
	Address:	919 Third Avenue, New York, New York 10022, United States of America
	Attention:	Margaret Andrews Davenport
	Facsimile	+ 1 212 909-6836

and to:

	Name:	Loyens Advocaten / Avocats
	Address:	Woluwe Atrium, Neerveldstraat 101-103 B-1200 Brussels, Belgium
	Attention:	Grégoire Jakhian
	Facsimile	+ 32 2 743 43 10

14.3.2

Any notice shall be effective upon receipt and shall be deemed to have been received:

(a.)

at the time of delivery, if delivered by hand or overnight delivery service;

(b.)

on the next working day in the place to which it is sent, if sent by fax (provided, however, that if no confirmation is received within three Business Days, the notice shall be deemed to have been received on the date such confirmation is received);

(c.)

on the first working day following the date of posting if sent by registered mail, provided both the sender and the addressee reside in Belgium; or

(d.)

three Business Days (in the place to which it is sent) following the date of posting if sent by registered mail when either the sender or the addressee does not reside in Belgium.

14.4

Interest

Except as otherwise provided herein, interest shall accrue automatically (without any formal notice to pay being required) on any overdue amount under this Agreement at the rate of 7.00% per year from the due date up to the date of payment.

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14.5

Assignment of Rights and Obligations

14.5.1

Except as otherwise provided herein (such as but not limited to Clause 2.1.3), neither Party may assign all or part of its rights and obligations under this Agreement to any third party (through a sale, a capital contribution, a donation, or any similar transaction) without the express prior written consent of the other Party (which consent shall not be unreasonably withheld or delayed). As long as such consent has not been obtained, the assigning Party shall continue to be liable for all obligations that it purported to assign (without prejudice to any other right or remedy that the other Party may have for breach of this Clause 14.5.1).

14.5.2

However, notwithstanding the foregoing:

(a.)

any Party shall be allowed to assign all or part of its rights and obligations under this Agreement to one or more Affiliated Companies, provided that (i) such assignment shall be expressed to have effect only for so long as the assignee remains an Affiliated Company of the assigning Party, (ii) the assigning Party and such assignee shall be jointly and severally liable, and (iii) such assignment shall not in any way operate so as to increase or reduce the respective rights and obligations between the assigning Party or its assignee on the one hand and the other Party on the other hand; and

(b.)

the Purchaser (or any designee of the Purchaser pursuant to Clause 2.1.3) shall be allowed to assign all or part of its rights and obligations as a result of a de iure transfer in the framework of a corporate restructuring (e.g. merger, contribution or the sale as a whole (“universalité” / “algemeenheid”) or of a division (“branche d’activité” / “bedrijfstak”).

14.5.3

Subject to the restrictions set out in this Clause 14.5, the provisions of this Agreement shall inure to the benefit of and shall be binding upon the Parties and their respective successors and assigns.

14.6

Costs

14.6.1

Each Party shall bear all costs and expenses incurred by it in connection with the preparation, negotiation, execution and performance of this Agreement, except as otherwise provided in this Agreement.

14.6.2

Under no circumstances shall any CLD Company bear any cost or expense incurred by the Seller in connection with this Agreement.

14.7

Severability

14.7.1

If any provision in this Agreement shall be held to be illegal, invalid or unenforceable, in whole or in part, under any applicable law, such provision shall be deemed not to form part of this Agreement, and the legality, validity or enforceability of the remainder of this Agreement shall not be affected.

14.7.2

If such illegal, invalid or unenforceable provision affects the entire nature of this Agreement, each Party shall use its best efforts to immediately negotiate in good faith a legally valid replacement provision.

14.8

Entire Agreement

14.8.1

This Agreement (along with the documents referred to therein) contains the entire agreement between the Parties with respect to the matters to which it refers and contains everything the Parties have negotiated and agreed upon within the framework of this Agreement. It replaces and annuls any agreement, communication, offer, proposal, or correspondence, oral or written, exchanged or concluded between the Parties, relating to the same subject matter.

14.8.2

In the event of any conflict between this Agreement and the U.S. Purchase Agreement or any other document executed in connection with the transactions contemplated hereby, the terms of this Agreement shall prevail and govern the conflicting issues, if any, it being understood that for the non-conflicting issues the U.S. Purchase Agreement shall remain applicable (including but not limited to Sections 12.7 and 12.8 of the U.S. Purchase Agreement).

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14.9

Governing Law

This Agreement shall be governed by and construed in accordance with Belgian law.

14.10

Arbitration

14.10.1

All disputes arising out of or in connection with this Agreement that the Parties are unable to settle amicably, shall, with the exception of disputes which are referred to the Independent Expert (which shall be finally settled by the Independent Expert), be finally settled under the Rules of Arbitration of the International Chamber of Commerce.

14.10.2

The arbitration panel shall be composed of three arbitrators.

14.10.3

The arbitration shall be held in Brussels. The proceedings and award shall be in the English language.

14.11

Counterparts

This Agreement may be executed in one or more counterparts, each of which when so executed shall be deemed to be an original copy of this Agreement, and all of which, when taken together, shall be deemed to constitute one and the same instrument.

14.12

Power of Attorney to Initial the Data Room documents, Schedules and Exhibits

The Seller hereby gives a power of attorney to each of Jan Peeters, Antoine Greindl and Sophie Steevens to initial on their behalf each of the pages of this Agreement, as well as the Disclosure Letter/Schedules and Exhibits to this Agreement.

The Purchaser hereby gives a power of attorney to each of Guy Palmaers, Jeroen Bral, Hans Dhondt and Stefaan De Boeck to initial, and sign, only in the case of the Disclosure Letter/Schedules, on its behalf each of the pages of this Agreement as well as the Disclosure Letter/Schedules and Exhibits to this Agreement.

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Done in , on May 23, 2006, in two originals. Each party acknowledges receipt of its own original.

The Seller:

/s/ Erik Vanderhaegen

/s/ Jesper Munch Jensen

Name:

Erik Vanderhaegen

Name:

Jesper Munch Jensen

Title:

Chief Financial Officer

Title:

Chief Executive Officer


The Purchaser:

		/s/ Thomas F. L’Esperance
Name:		Thomas F. L’Esperance
Title:		Chief Executive Officer and President

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Table of Contents


1	DEFINITIONS AND INTERPRETATION		3

	1.1	Definitions	3
	1.2	Interpretation	7

2	SALE AND PURCHASE		8

	2.1	The Shares	8

3	PURCHASE PRICE		9

	3.1	Initial Purchase Price	9
	3.2	Treatment of Cash and Indebtedness	9
	3.3	Purchase Price Adjustment	10
	3.4	Payment of the Purchase Price	11

4	CONDITIONS PRECEDENT		12

	4.1	General Principles	12
	4.2	Conditions Precedent to all Parties' Obligations	12
	4.3	Conditions Precedent to the Seller’s Obligations	12
	4.4	Conditions Precedent to the Purchaser's Obligations	12
	4.5	Best Efforts concerning the Satisfaction of the Conditions Precedent	12
	4.6	No Implied Waiver of the Parties’ Rights and Remedies	13

5	CLOSING		13

	5.1	Date and Place	13
	5.2	Obligations of the Seller	13
	5.3	Obligations of the Purchaser	14
	5.4	Effectiveness of Closing Actions	14

6	OBLIGATIONS OF ALL PARTIES ON OR PRIOR TO THE CLOSING DATE		14

	6.1	Filings with Public Authorities	14
	6.2	IPSO SPAIN DISTRIBUTION AGREEMENT	14

7	OBLIGATIONS OF THE SELLER		15

	7.1	Second Phase Due Diligence	15
	7.2	Collaboration	16
	7.3	Operation of the CLD Business	16
	7.4	Restrictions on the Seller and the CLD Companies	17
	7.5	Directors' Resignation	19
	7.6	Works Council	19
	7.7	Intercompany Accounts	19
	7.8	Bank Guarantee Securing Payment of Amounts Due by the Seller	19
	7.9	Notification of Breaches of Seller's Representations	20
	7.10	Notification of Breaches of Seller's Obligations	20
	7.11	Inter-company Agreements	20
	7.12	Pre-Closing Restructuring	20
	7.13	Declerck Elektronika BVBA	21
	7.14	Transfer of certain Employees	21
	7.15	JM Vandoorne BVBA	21
	7.16	Heavy Duty Laundry	22
	7.17	Mortgages and Floating Charges	22
	7.18	Payment of Registration Taxes	23
	7.19	Transfer of Intellectual Property	23

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8	OBLIGATIONS OF THE PURCHASER		23

	8.1	Extraordinary General Meeting of the Company and the Subsidiaries	23
	8.2	Works Council	23
	8.3	Notification of Breaches of Purchaser’s Representations	23
	8.4	Notification of Breaches of Purchaser’s Obligations	24

9	REPRESENTATIONS OF THE SELLER		24

	9.1	General Principles	24
	9.2	Limitations of contents and scope of Seller's Representations as at the date of this Agreement	24
	9.3	Updating of Seller’s Representations on Closing	24
	9.4	Limitations of contents and scope of Seller's Representations for purposes of Clause 11	25
	9.5	Effect of Purchaser's Knowledge	25
	9.6	Seller's Waiver of Rights against the CLD Companies	26

10	REPRESENTATIONS OF AND INDEMNIFICATION BY THE PURCHASER		26

	10.1	Representations of the Purchaser	26
	10.2	Indemnification by the Purchaser	26

11	INDEMNIFICATION BY THE SELLER		26

	11.1	General Principles	26
	11.2	Limitation of Seller's Liability	28
	11.3	Claims by the Purchaser	31
	11.4	Third Party Claims	32

12	OBLIGATIONS OF THE PARTIES EXTENDING AFTER THE CLOSING DATE		34

	12.1	Further Assurances	34
	12.2	Confidentiality relating to this Agreement and announcements	34
	12.3	Confidentiality relating to the business and affairs of the Parties and the CLD	35
	12.4	Non-competition and non-solicitation obligations in case Closing occurs	36
	12.5	Non-competition and non-solicitation obligations in case Closing does not occur	37
	12.6	Continuation of commercial relationships	38
	12.7	Release of director’s liability in case Closing occurs	38
	12.8	Use of the name “Ipso”	38
	12.9	Use of the names "LSG" and “Jensen”	38
	12.10	JM Vandoorne BVBA	39

13	TERMINATION		39

	13.1	Termination Events	39
	13.2	Effect of Termination	42

14	MISCELLANEOUS		42

	14.1	No Exclusive Remedy	42
	14.2	Amendments and Waivers	43
	14.3	Notices	43
	14.4	Interest	44
	14.5	Assignment of Rights and Obligations	45
	14.6	Costs	45
	14.7	Severability	45
	14.8	Entire Agreement	45
	14.9	Governing Law	46
	14.10	Arbitration	46
	14.11	Counterparts	46
	14.12	Power of Attorney to initial the Data Room documents, Schedules and Exhibits	46

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List of Schedules


Schedule 1.1.1A:		Outline of group service fees which would no longer be necessary as a result of the Transaction (for purposes of defining Adjusted EBITDA)

Schedule 1.1.1B:		CLD Pro Forma Annual Accounts 2005

Schedule 1.1.1C:		CLD Company Annual Accounts

Schedule 1.1.1D:		Carve-outs for the definition of Indebtedness

Schedule 1.1.1E:		Key Employees

Schedule 1.1.1F:		Material Contracts

Schedule 3.3:		Calculation Principles for Final Working Capital

Schedule 5.2.3(a):		Form of receipt for the Initial Purchase Price

Schedule 6.2.1		Form of Ipso Spain Distribution Agreement

Schedule 7.1.1:		Second Phase Due Diligence Request List

Schedule 7.1.1(a):		Second Phase data room procedures

Schedule 7.1.2		Second Phase Diligence Findings

Schedule 7.1.3		Accelerated Phase One Diligence Findings

Schedule 7.5(i):		List of resigning directors

Schedule 7.5(ii):		Form of resignation letter

Schedule 7.7.1:		CLD related stocks

Schedule 7.8:		Bank Guarantee

Schedule 7.11:		Inter-company arrangements

Schedule 7.12		Ipso Spain Agreements to be transferred to Seller or an Affiliated Company of the Seller

Schedule 7.14:		Employees on the Company’s payroll to be transferred to the Seller or an Affiliated Company of the Seller

Schedule 7.16:		Heavy-Duty Laundry (“Jensen Projects”) Employees

Schedule 7.17:		Mortgages and Floating Charges

Schedule 7.19		Intellectual Property to be Transferred.

Schedule 9:		Seller’s Representations

Schedule 10:		Purchaser’s Representations

Schedule 12.2.3(a):		Seller’s press releases

Schedule 12.2.3(b)		Purchaser’s press release

Schedule 12.4.3:		Countries and areas where the non-compete and non-solicitation obligations shall apply

Schedule 13.1.3(b):		First Phase Due Diligence

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Schedule 9: Seller’s Representations under the Agreement

1	Binding Effect of this Agreement

1.1

The Seller has (a) the capacity and corporate authority and (b) has obtained all required consents and approvals to (i) enter into and execute this Agreement, (ii) sell the Shares, and (iii) perform its obligations hereunder.

1.2

This Agreement has been duly executed by the Seller and constitutes the legal, valid, binding and enforceable obligation of the Seller in accordance with its terms.

1.3

The execution and performance of this Agreement and the consummation of the Transaction do not and will not (i) conflict with or violate the articles of association, certificate of incorporation, bylaws or other organizational documents of the Seller, the Company or the Subsidiaries, (ii) conflict with or give rise to a right of modification, suspension, termination, cancellation or acceleration of any obligation or to loss of a benefit under any law, judicial/arbitration or administrative decision (“vonnis”, “arrest”, “beschikking”, “administratieve beslissing”) applicable to the Seller, the Company or the Subsidiaries; or any agreement, permit, authorization, obligation, or covenant to which the Seller, the Company or the Subsidiaries are subject or a party, (iii) require the Seller, the Company or the Subsidiaries to file any documents with or notify any public authority or other third party, or to obtain any consent or approval from any public authority or other third party in connection with this Agreement, other than such filing, notification, approval and consent to which a reference is made in this Agreement, and/or (iv) result in the creation of any encumbrance whatsoever upon any of the properties or assets of the Company or the Subsidiaries of any nature and wherever located.

2	Existence and Organisation of the Company and the Subsidiaries

2.1

The Company

2.1.1

The Company is a limited liability company (“société anonyme” / “naamloze vennootschap”) duly incorporated and validly existing for an unlimited duration under the laws of Belgium.

2.1.2

The Company is duly registered with all competent authorities in accordance with the laws of Belgium.

2.1.3

Disclosure Schedule 2.1.3 contains true and complete copies of the up-to-date coordinated version of the articles of association (“statuts” / “statuten”) of the Company.

2.1.4

The Company has not been dissolved by any shareholders’ resolution and no shareholders’ meeting has been called for that purpose.

2.1.5

The Company has not been annulled or dissolved by any judicial decision, has not been declared bankrupt and has not obtained a judicial composition (“concordat judiciaire” / “gerechtelijk akkoord”) nor is there any such procedure or action pending or, to the Seller’s knowledge, threatened against it.

2.1.6

The Company is no party to any merger, split, contribution or sale of a division (“branche d’activités” / “bedrijfstak”) or a business as a whole (“universalité” / “algemeenheid”) or any other restructuring.

2.1.7

The Company has all requisite corporate power to own, lease or license its properties and assets, and to carry out its business as it is now being conducted, and said business has been conducted and is being conducted in conformity with (i) the Company’s articles of association and (ii) in all material respects with all applicable laws and regulations.

2.1.8

All accounts, books, registers, financial and other records of whatever kind, of the Company to be maintained by law (including books and records maintained for Tax purposes) are kept at the Company’s offices, and are properly and accurately maintained.

2.1.9

The Company is qualified to do business and is in good standing in each jurisdiction in which the

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character of the properties owned, operated or leased by it or the nature of the activities conducted by it make such qualification and good standing necessary (to the extent the concept of good standing or any similar concept is applicable to such jurisdiction).

2.2

The Subsidiaries

2.2.1

Disclosure Schedule 2.2.1 contains the particulars (name, registered office and other places of business, registered capital, total number of shares and number of shares held by the Company) of the Subsidiaries, as well as a copy of the up-to-date consolidated version of the articles of association or other organizational documents of each Subsidiary. The Company has no other subsidiary, branch or office, except for Ipso Spain S.L. (“Ipso Spain”) (the shares of which shall be transferred by the Company to the Seller prior to Closing pursuant to Clause 7.12 of the Agreement).

2.2.2

Each of the Subsidiaries is duly incorporated and validly existing for an unlimited duration respectively under the laws of Belgium (for Ipso Rent), Germany (for Ipso Rent Deutschland) and Norway (for Ipso Norge).

2.2.3

Each of the Subsidiaries is duly registered with all competent authorities respectively in accordance with the laws of resp. Belgium (for Ipso Rent), Germany (for Ipso Rent Deutschland) and Norway (for Ipso Norge).

2.2.4

None of the Subsidiaries has been dissolved by any shareholders’ resolution and no shareholders’ meeting has been called for that purpose.

2.2.5

None of the Subsidiaries has been annulled or dissolved by any judicial decision, has been declared bankrupt and has obtained a judicial composition (“concordat judiciaire” / “gerechtelijk akkoord”) or otherwise filed or commenced any proceedings for judicial or extra-judicial arrangement or settlement with its creditors nor is there any such procedure or action pending or, to the Seller’s knowledge, threatened against it.

2.2.6

None of the Subsidiaries is a party to any merger, split, contribution or sale of a division (“branche d’activités” / “bedrijfstak”) or a business as a whole (“universalité” / “algemeenheid”) or any other restructuring.

2.2.7

Each of the Subsidiaries has all requisite corporate power to own, lease or license its properties and assets, and to carry out its business as it is now being conducted, and said business has been conducted and is being conducted in conformity with (i) its articles of association and (ii) in all material respects with all applicable laws and regulations.

2.2.8

All accounts, books, registers, financial and other records of whatever kind, of each of the Subsidiaries to be maintained by law (including books and records maintained for Tax purposes) are kept at the respective Subsidiaries’ seat, and have been properly and accurately maintained.

2.2.9

Each of the Subsidiaries is qualified to do business and is in good standing in each jurisdiction in which the character of the properties owned, operated or leased by it or the nature of the activities conducted by it make such qualification and good standing necessary (to the extent the concept of good standing or any similar concept is applicable to such jurisdiction).

3	Capital of the Company and the Subsidiaries

3.1

The Shares

3.1.1

The Shares represent the entire issued and outstanding share capital of the Company.

3.1.2

The Shares are registered shares without nominal value (“nominale waarde” / “valeur nominale”).

3.1.3

All Shares have been duly and validly issued in compliance with applicable law and are fully paid up.

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The Company has duly performed the filing with the Clerk’s Office of the relevant Commercial Court required by article 625 of the Belgian Company Code regarding one own share it acquired pursuant to its acquisition of all assets and liabilities from D’Hooge NV (December 21, 2001).

3.1.4

The Company has not issued and is not in a process to issue any shares, with or without voting rights, founders’ shares (“parts de fondateur” / “oprichtersaandelen”), profit shares (“parts bénéficiaires” / “winstaandelen”), options, calls, bonds, convertible bonds, bonds with subscription rights, warrants or any other securities, other than the Shares.

3.1.5

There is no agreement or commitment of any kind whereby the Company is or could be obligated to (i) issue any new shares or other securities, or (ii) purchase or redeem any of its existing shares or other securities.

3.2

Capital and Shares of the Subsidiaries

3.2.1

The shares owned by the Company in each Subsidiary as set out in Disclosure Schedule 2.2.1 have been duly and validly issued in compliance with applicable law. They are fully paid in, and represent the following percentage of the entire issued and outstanding capital:

(i)

Ipso Rent: 50%

(ii)

Ipso Rent Deutschland: 50%

(iii)

Ipso Norge: 100%

3.2.2

The Company has full, exclusive and unconditional title to the number of shares owned by it in each Subsidiary, free and clear of all liens, pledges, security interests, usufructs (“usufruit” / “vruchtgebruik”), options, rights of first refusal, charges, claims, attachments (“saisie” / “beslag”) or other restrictions of any kind or nature (“Liens”) other than those provided for (i) by law, (ii) in the Subsidiaries’ respective articles of association or (iii) as far as Ipso Norge is concerned, in the option agreements set forth in Disclosure Schedule 3.2.2.

3.2.3

There are no shareholders’ agreements or similar agreements entered into by the Company or any Subsidiary regarding the shares in the Subsidiaries or regarding the Company or the Subsidiaries, other than (i) as reflected in the Company’s c.q. the Subsidiaries’ respective articles of association and (ii) the shareholders’ agreements for Ipso Norge set forth in Disclosure Schedule 3.2.3.

3.2.4

There are no restrictions affecting the transfer of or the rights attached to the shares held by the Company in the Subsidiaries other than those provided for (i) by law, (ii) in the articles of association of the Subsidiaries or (iii) as far as Ipso Norge is concerned, in the option agreements set forth in Disclosure Schedule 3.2.2. None of the rights attached to these shares, and in particular voting rights or rights to dividends, have been transferred to any other shareholder or any third party or may be exercised by any other shareholder or any third party, by virtue of a power of attorney, a proxy or a similar authorization.

3.2.5

The voting rights attached to the shares held by the Company in the Subsidiaries have never been suspended, for any reason whatsoever, and to the Seller’s knowledge there are no reasons that may justify such a suspension.

3.2.6

The Subsidiaries have not issued any founders’ shares, profit shares, bonds, convertible bonds, subscription rights or any other securities other than the ordinary shares representing their respective share capital. There is no agreement or commitment of any kind whereby a Subsidiary would be obligated to issue any shares or other securities, or to purchase, redeem or otherwise acquire any of its shares or other securities.

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4	Ownership of the Shares and Rights Attached to the Shares

4.1

The Seller has full and exclusive ownership of the Shares, and on delivery by the Seller to the Purchaser, the Purchaser will acquire good and valid title thereto. The Shares are free and clear of all Liens, except as provided for by law or the Company’s articles of association.

4.2

All Shares have voting rights. These voting rights have never been suspended, for any reason whatsoever, and to the Seller’s knowledge there are no reasons that may justify such a suspension.

4.3

There are no restrictions affecting the transfer of or the rights attached to the Shares, other than those provided for by law or in the articles of association of the Company. None of the rights attached to the Shares, and in particular voting rights or rights to dividends, have been transferred to, or may be exercised by, any person other than the owner of the Shares by virtue of a power of attorney or otherwise.

4.4

There are no shareholders’ agreements or similar documents regarding the Shares, the Company or the Subsidiaries entered into by the Seller other than as reflected in the Company’s articles of association.

4.5

All prior transfers of the Shares, whereto the Seller was a party, were effected legally, validly and in good faith and no claims whatsoever exist or are, to the Seller’s knowledge, threatened with respect to any such transfers.

5	Free Transferability of the Shares

5.1

The Shares are freely transferable, except for what is mentioned in Article 8 of the articles of association of the Company.

5.2

No shareholder of the Company or third party may exercise any right of first refusal in connection with the sale of the Shares to the Purchaser, or any call option on all or part of the Shares or any similar right, except for what is mentioned in Article 8 of the articles of association of the Company.

5.3

There is no agreement contemplating the transfer of ownership of, or of any rights with respect to, all or part of the Shares other than this Agreement.

6	Interests in other companies

6.1

None of the Subsidiaries or the Company holds any shares or other interest, whether directly or indirectly, in any corporation, company, partnership, association or other legal entity, other than the shares held by the Company in the Subsidiaries and in Ipso Spain (the shares of which shall be transferred by the Company to the Seller prior to Closing pursuant to Clause 7.12 of the Agreement).

6.2

Except for Ipso Spain (the shares of which shall be transferred by the Company to the Seller prior to Closing pursuant to Clause 7.12 of the Agreement), the Company and the Subsidiaries do not have any subsidiaries, branches, representation offices or other places of business other than those set out in Disclosure Schedule 6.2.

7	Annual Accounts, CLD Annual Accounts and CLD Company Annual Accounts

7.1

Disclosure Schedule 7.1 contains a true copy of (i) the audited statutory annual accounts and the corresponding statutory auditor’s report of the Company, Ipso Rent and Ipso Rent Deutschland for the financial year ending December 31, 2005, (ii) the CLD Pro Forma Annual Accounts 2005, and (iii) the CLD Company Annual Accounts 2005.

7.2

The audited statutory annual accounts of the Company and the Subsidiaries for the financial year ending December 31, 2005:

7.2.1

were prepared in accordance with (i) applicable laws and regulations as well as (ii) Belgian GAAP (for Ipso and Ipso Rent), resp. German GAAP (for Ipso Rent Deutschland) applicable at December 31, 2005;

7.2.2

were prepared in compliance with the valuation rules historically adopted by each of the relevant Subsidiaries and the Company; and

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7.2.3

truly and accurately reflect the assets and liabilities, financial condition and results of the relevant Subsidiaries or the Company, subject to the comments in the corresponding statutory auditor’s report.

7.3

The CLD Pro Forma Annual Accounts 2005 and the CLD Company Annual Accounts 2005:

7.3.1

have been prepared in accordance with (i) applicable laws and regulations as well as (ii) IFRS accounting principles applicable as at their respective closing dates and as applied on a basis consistent with the methodology used in preparing the IFRS Restatement;

7.3.2

have been prepared in compliance with the historic valuation rules respectively adopted by the relevant Subsidiaries and the Company and as applied on a basis consistent with the methodology used in preparing the IFRS Restatement; and

7.3.3

truly and accurately reflect the assets and liabilities, financial condition and results of (i) the CLD Companies and Acquired Operations taken as a whole (for the CLD Pro Forma Annual Accounts 2005) c.q. (ii) the respective CLD Companies (for the CLD Company Annual Accounts 2005).

7.4

All statutory annual accounts of the Company, Ipso Rent and Ipso Rent Deutschland have been duly approved by the relevant general meeting and filed within the time period prescribed by the applicable laws.

8	Absence of Changes since December 31, 2005

Since December 31, 2005 and until the Closing Date, and except as otherwise provided in the Agreement:

(i)

the Company and the Subsidiaries have carried out their activities in the ordinary course of business and have not committed themselves to any agreement or transaction that is not normally and ordinarily made in the course of their business; inter alia, the CLD Companies have not used extended terms or unusual levels of promotion for their products towards their customers;

(ii)

all Taxes and all material invoices and remunerations due and payable by the Company and the Subsidiaries have been paid on their due date;

(iii)

there has been no material adverse change in the capitalization, financial condition, operations, prospects, liquidity, assets, rights or liabilities of the Company or the Subsidiaries, and to the Seller’s knowledge no such change is threatened or anticipated;

(iv)

the Company and its Subsidiaries have carried out their business in the same manner as before and so as to maintain the same as a going concern;

(v)

the Company has not distributed, declared or paid any dividends or “tantièmes”, or otherwise distributed or taken corporate action to distribute any funds to directors or shareholders of the Company or its Subsidiaries;

(vi)

no contract, liability or commitment (whether in respect of expenditure or otherwise) has been entered into by the Company or the Subsidiaries which (i) is not at arm’s length, (ii) is of a long term (i.e. in excess of 12 months) or (iii) is of an unusual nature (i.e. not in the ordinary course of business);

(vii)

the Company and the Subsidiaries have not disposed of or agreed to dispose of any assets except in the ordinary course of business;

(viii)

no debtor has been released by the Company or the Subsidiaries on terms that he pays less than the book value of its debt and no debt owing to the Company or the Subsidiaries has been deferred, subordinated or written off or proven to any extent irrecoverable;

(ix)

no changes have been made in the remuneration, benefits or other terms of employment of any Key Employee; and

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(x)

the business of the Company and the Subsidiaries has not been affected by the loss of any important customer or important source of supply, or by any product recall, and the Seller is not aware of any fact or circumstance likely to give rise to any such effect whether before or after the Closing Date;

it for the avoidance of doubt being understood that Ipso Norge and Ipso Spain have been incorporated in 2006 (on February 7 and February 27 respectively) within the framework of the reorganization of the Company’s distribution process in Norway and Spain respectively (which prior to incorporation of Ipso Norge c.q. Ipso Spain was organized through independent distributors instead of through Ipso Norge c.q. Ipso Spain). In this respect the Company has not entered into any agreements, commitments or other undertakings on behalf of Ipso Norge or Ipso Spain which could trigger its joint and several liability as their promoter in accordance with applicable (Norwegian c.q. Spanish) law.

Taxes

9.1

Compliance in respect of Taxes

The Company and the Subsidiaries have complied in all material respects with all applicable laws in respect of Taxes.

9.2

The Company and the Subsidiaries:

9.2.1

have timely filed all national, regional, local and other domestic or foreign Tax returns, reports and declarations, required to be filed with respect to Taxes, in conformity with all applicable laws and regulations, and such returns, reports and declarations are accurate in all material respects;

9.2.2

have timely paid, or will by the Closing timely pay, all Taxes that are due or claimed to be due on or prior to the Closing by any national, regional, local or other domestic or foreign Tax authorities; there is no further liability for any such Taxes, and no interest or penalties accrued or accruing with respect thereto, except as has been fully reserved or accrued for in the CLD Company Annual Accounts 2005;

9.2.3

have not executed or filed with any national, regional, local or other domestic or foreign Tax authority any agreement or arrangement extending the period of filing of any Tax return, report or declaration or the period of assessment, payment or collection of any Taxes;

9.2.4

have, to the Seller’s knowledge, made full disclosure to the Purchaser with respect to, and made full provisions in their books and records for Taxes not yet due or owing, where allowed pursuant to applicable laws and regulations as well as applicable generally accepted accounting principles; and

9.2.5

have, to the Seller’s knowledge, filed timely and correctly all protests, requests for relief, reimbursement of Taxes to which the Company or the Subsidiaries could be legally entitled.

9.3

Other Tax Matters

9.3.1

No audit or investigation of the Company or the Subsidiaries by any Tax authorities is ongoing with respect to Tax matters, save as set forth in Disclosure Schedule 9.3.1.

9.3.2

No dispute between the Company or the Subsidiaries and the relevant Tax authorities is ongoing, save those set forth in Disclosure Schedule 9.3.1. There are no Tax liens or mortgages on any asset of the Company or the Subsidiaries. Save as set forth in Disclosure Schedule 9.3.1, there are no law suits, proceedings, investigations or claims initiated or pending against the Company or the Subsidiaries with respect to Taxes of any nature and, to the Seller’s knowledge, there is no basis for such law suits, proceedings, investigations or claims. No relief (by way of deducting, reduction, set off, exemption or otherwise) from, against or in respect of any taxation or charge has been claimed by or given to the Company or the Subsidiaries which could, to the Seller’s knowledge, be withdrawn, postponed, restricted or otherwise lost as a result of any act, omission, event or circumstance arising or occurring at any time before the Closing Date. All deferred Tax liabilities of the Company and the Subsidiaries, if any, are reflected in the CLD Company Annual Accounts 2005 and the respective amounts have been fully reserved for.

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9.3.3

The Company and the Subsidiaries have not entered into, nor are, nor have been a party to, nor, to the Seller’s knowledge, have otherwise been involved in any scheme or arrangement designed for the purpose of unlawfully avoiding Taxes, and have, to the Seller’s knowledge, not unlawfully invoked an exemption or reduction of Tax.

9.3.4

Set forth in Disclosure Schedule 9.3.4 is a list and description of the tax carry forward losses (“pertes récupérables” / “aftrekbare bedrijfsverliezen”) and investment credits (“déductions pour investissements” / “investeringsaftrek”) available to the Company or the Subsidiaries, which are admitted by the relevant Tax authorities.

9.3.5

No claim has been made by any Tax authority in a jurisdiction where any of the Subsidiaries or the Company does not file Tax returns to the effect that such company is or may be liable for Taxes in that jurisdiction.

9.3.6

Neither the Company nor the Subsidiaries (A) are a party to, bound by, or obligated under, any Tax sharing agreement pursuant to which it will have any obligation to make any payment to any person (other than one of the other Subsidiaries or the Company) after Closing and (B) are or may be liable for Taxes of any other person as a member of a consolidated or an affiliated group, or as a transferee or successor, or similar principle, in any taxing jurisdiction.

9.3.7

The Purchaser will not be required to deduct or withhold any amount from the purchase price for the Shares pursuant to the Agreement.

9.3.8

No transaction or operation entered into by the CLD Companies has been carried out on conditions which can give rise to material adverse Tax adjustments.

10	Environmental

10.1

Neither the Company nor any of the Subsidiaries is under any obligation to carry out any investigation, clean-up work, corrective action or other remedial work or has any financial responsibility for the costs of such investigation, clean-up work, corrective action or other remedial work, under any law, judicial decision, arbitration award or decision of any public authority to which it is subject. The Company or the Subsidiaries have not been subject to any environmental audit, study, inspection or test performed by or on behalf of any administration or governmental authority except as disclosed in Disclosure Schedule 10.1. No such authority has given any direction or order to the Company or the Subsidiaries in connection with environmental matters and the Company or the Subsidiaries are not or have not been subject to any pending or, to the Seller’s knowledge, threatening orders, claims, actions or complaints of third parties, including neighbours, authorities or associations, except as disclosed in Disclosure Schedule 10.1.

10.2

Except as disclosed in Disclosure Schedule 10.2, (i) the soil, subsoil and groundwater of the land presently and previously owned, leased or used by the Company and the Subsidiaries are not contaminated or polluted above levels allowed under applicable laws and regulations, and (ii) the Company and the Subsidiaries have not caused any soil, subsoil, groundwater or other contamination or pollution in, on, above or under the land currently or formerly owned, leased or used by it above levels allowed under applicable laws and regulations.

10.3

The land and buildings presently and previously owned, leased or used by the Company and the Subsidiaries are and have not been used for the handling, processing, treatment, storage or disposal of hazardous substances, except as provided for in the respective environmental permits. No underground tanks or other underground storage receptacles for those substances are located in such land or buildings, except as disclosed in Disclosure Schedule 10.3.

10.4

To the Seller’s knowledge, there is no asbestos nor PCB in the buildings presently and previously owned, leased or used by the Company and the Subsidiaries.

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10.5

The Company and the Subsidiaries have not, in a way that could give rise to any material liability or obligation, (i) disposed of, or arranged for the disposal of, any waste, or drained any waste water, or pumped any surface water or groundwater, nor (ii) carried out any other activity likely to have an adverse effect on the environment, the public health and the health of their personnel.

10.6

An environmental permit was delivered to each of the Company, Ipso Rent and Ipso Rent Deutschland. A copy of all these permits is hereto attached as Disclosure Schedule 10.6.

10.7

Set forth in Disclosure Schedule 10.7 is a true and complete list of all environmental permits, assessments, audits, investigations, reports, studies and documents in its possession, custody or control relating to the Company and the Subsidiaries or any of the Company’s or Subsidiaries’ current or former facilities or properties.

10.8

The Company and the Subsidiaries are and have at all times been in material compliance with environmental laws and environmental permits.

11	Employment Matters and Pensions

11.1

Disclosure Schedule 11.1 sets out a true and complete list of all employees or other personnel engaged in the Company or the Subsidiaries, and a true and complete description of their names, addresses, job description, duration of agreement, possible protected employee status (trade union representative), date of birth, length of service and, taking into account any applicable indexation, their current salary, commissions, remunerations in kind, bonuses, pensions, group insurance contributions and other fringe benefits.

11.2

Set forth in Disclosure Schedule 11.2 is a true and complete list of all persons and companies rendering consulting services to the Company or the Subsidiaries and of all independent contractors, subcontractors, management companies or any other person or company working in an independent capacity for or on behalf of the Company or the Subsidiaries, including a true and complete description of their names, addresses, job description, duration of the agreements, their current fees, commissions, remunerations in kind, bonuses, pensions, and other fringe benefits.

11.3

The Company and the Subsidiaries have complied in all material respects with applicable individual labour and consulting or contractor agreements, all applicable collective bargaining agreements, all judgments in connection with their existing or former employees, and all applicable laws pertaining to employment and remuneration.

11.4

All remunerations and moneys to be paid to the employees or consultants or contractors of the Company and the Subsidiaries have been calculated and paid in conformity with the applicable legal and Tax rules. All social security payments and withholding tax payments due at or prior to the date of this Agreement in connection with said employment, consulting or contractor agreements have been made in due time and the Company and the Subsidiaries have complied with all applicable Tax and social security legislation pertaining thereto.

11.5

The Company and the Subsidiaries are under no obligation nor have they made any provision to increase the aggregate annual remuneration, pension or group insurance benefit payable to employees save in accordance with applicable laws, regulations or collective bargaining agreements, except as set forth in Disclosure Schedule 11.5. No benefits or rights other than those described in the individual labour agreements, consulting or contractor agreements or the applicable collective bargaining agreements have been granted to the employees, consultants or contractors. The Company and the Subsidiaries have not entered into nor have they proposed to introduce any share incentive scheme, share option scheme, profit sharing, commissions, bonus packages (except for the bonus packages over 2005 and (through the setting of bonus targets) 2006, granted c.q. set in the ordinary course of business) or other such incentive schemes nor any additional agreement for the granting of life and group insurance.

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11.6

Disclosure Schedule 11.6 sets forth a full list and true and complete copies of all pension plans, insurance policies in case of disability and hospitalisation insurance entered into by the Company or the Subsidiaries. Each such pension plan, insurance policy in case of disability and hospitalisation insurance has been administered in all material respects in accordance with its terms and the Company and the Subsidiaries have met their obligations with respect thereto. The pension plans are in all material respects in compliance with the applicable laws, including the Pensions Act of 28 April 2003 and the regulations thereunder and the Discrimination Act of 25 February 2003.

11.7

All employees of the Company and its Subsidiaries who fulfil the eligibility conditions of the pension plans, the insurance in case of disability and the hospitalisation insurance are duly affiliated.

11.8

The Company and the Subsidiaries do not have any obligation of whatever nature towards any present or former director or employee in connection with retirement or early retirement, except as set forth in Disclosure Schedule 11.6. All obligations of the Company and the Subsidiaries which are due and payable with respect to all former and current pension policies have been fully and finally settled and all liabilities of the Company and the Subsidiaries in respect of or in relation to the accrued pension or pre-pension entitlements of former and current employees have been properly and duly funded or provided for in the CLD Company Annual Accounts 2005. None of the Company and the Subsidiaries has entered into any retirement benefit plans that are or become subject to defined benefit accounting treatment under Belgian GAAP, German GAAP or IFRS (as applicable).

11.9

The Company and the Subsidiaries have not entered into any specific ad hoc contracts or undertakings with any former or current employee or director with respect to the termination of its employment or engagement with the Company or the Subsidiaries, including but not limited to undertakings providing for a notice period or payment of an indemnity which exceed those that would apply in the absence of such contract or undertaking under applicable laws, regulations, collective bargaining agreements and/or practice, except as set forth in Disclosure Schedule 11.7.

11.10

The Company and the Subsidiaries have not been notified of any pending governmental investigations relating to employment matters before or by any commission, inspection or other administrative or governmental authority involving the Company or any of the Subsidiaries.

11.11

There is no strike or work stoppage ongoing or, to the Seller’s knowledge, threatened against the Company or any of the Subsidiaries.

11.12

To the Seller’s knowledge, no events or circumstances exist that could lead to a re-qualification into employment agreements of any of the consultancy or independent contractor agreements entered into by the Company or the Subsidiaries.

12	Affiliate Transactions and Relationships

12.1

None of the Subsidiaries or the Company shall owe any amounts to the Seller or Affiliated Companies of the Seller (other than the CLD Companies) as at Closing.

12.2

There shall be no amounts owed to the Company or the Subsidiaries by the Seller or Affiliated Companies of the Seller (other than the CLD Companies) by virtue of a loan, a current account or otherwise, as at Closing.

12.3

Except as set forth in Disclosure Schedule 12.3, there are no outstanding inter-company accounts between one or more of the Subsidiaries on the one hand and the Company on the other hand, or between the Subsidiaries.

13	Insurance Policies

13.1	Disclosure Schedule 13.1 sets out a true and complete list and copy of all insurance policies maintained by the Company and the Subsidiaries.

13.2

All the assets of the Company and the Subsidiaries of an insurable nature are and have, to the Seller’s knowledge, at all times been adequately insured against fire and other risks customarily insured against by and

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in such amounts as are customary for persons carrying on the same classes of business as those carried on by the Company and the Subsidiaries. The Company and the Subsidiaries are adequately covered against such casualties, risks and contingencies (including, but not limited to, accident, injury, third party loss and loss of profits), and in such amounts, types and forms, as are customarily covered by persons carrying on the same classes of business as those carried on by the Company and the Subsidiaries.

13.3

All of the aforementioned insurance policies are currently in full force and effect and all premiums due have been paid. Nothing has been done or omitted to be done which would make any insurance policy void, avoidable or non operative.

13.4

Neither the Seller nor the Company or the Subsidiaries have received any notification of the cancellation or suspension of any of the aforementioned insurance policies or any notification of the cancellation or suspension thereof, or of the continuation or renewal thereof on less favourable terms and conditions, and no coverage has been ended or limited by any insurance carrier to which the Seller, the Company or the Subsidiaries have applied for or received insurance during the past three years. There are no pending or, to the Seller’s knowledge, threatening claims, demands or offsets which would tend to impair the full value of these policies.

14	Intellectual Property

14.1

Disclosure Schedule 14.1 sets out a true and complete list (i) (a) and complete and correct copies of all registered trademarks and service marks, including any registered trade names and logos, and corporate names, (b) of all designs and models, design patents, utility patents, copyrights on computer programs and domain names, owned by the Company and/or the Subsidiaries, whether used or not and (c) of all registrations, applications for registration and any other documents indicating or proving the ownership of any of the intellectual property listed in (a) and (b) (the “Registered Owned Proprietary Rights”); (ii) (a) and complete and correct copies of all trademarks, service marks, trade names and logos and corporate names and (b) of all designs and models, design patents, utility patents, copyrights (including copyrights on computer programs but excluding on photographs, brochures, posters, publicity and promotional materials, internal reports, memos and other texts), know-how, trade secrets, utility/design patents under development and domain names, whether registered or not, that are provided under an explicit and written license contract to the Company or any of the Subsidiaries as a licensee, whether used or not (the “Licensed Rights”); and (iii) all license, dealership, franchise or other agreements (as a licensor, sub-licensor or licensee) relating to the Owned Proprietary Rights and Licensed Rights.

One or more of the Company and its Subsidiaries (a) are, to the best of their knowledge and without guaranteeing the non-existence of any rights of any third party on an identical or similar work independently developed by any third party, the sole and exclusive owner but in any case the owner of, and have, to the best of their knowledge and without guaranteeing the non-existence of any rights of any third party on an identical or similar work independently developed by any third party, the sole and unrestricted right but in any case the right to use, all of (i) the Registered Owned Proprietary Rights and (ii) except for any Licensed Rights, any unregistered trade names and logos, copyrights (other than copyrights on computer programs), know-how, trade secrets, secret processes and utility/design patents under development that are used in and required to carry out their business and to conduct their operations (“Unregistered Owned Proprietary Rights”) and (b) have the right to use the Licensed Rights.

14.2

The Company and/or the Subsidiaries have the right to assign any interest or rights held in any Registered Owned Proprietary Rights and Unregistered Owned Proprietary Rights (together, “Owned Proprietary Rights”). The Company and the Subsidiaries have obtained all rights and transfers of rights in any Owned Proprietary Rights, including any transfers from employees, agents, independent consultants, clients, subcontractors or contractors.

14.3

All Owned Proprietary Rights and Licensed Rights are valid, existing and in force, and the Company and the Subsidiaries have taken all actions reasonably necessary to ensure full protection of the Owned Proprietary

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Rights or Licensed Rights (including, but not limited to, making and maintaining in full force and effect all necessary filings, registrations and issuances). All registrable Owned Proprietary Rights and Licensed Rights have been duly registered by the Company and/or the Subsidiaries with all appropriate domestic, foreign or international administrative agencies. Each such registration is current and valid and no cancellation or invalidity proceedings have been initiated or, to the Seller’s knowledge, threatened with respect to any such registration.

14.4

Each license, dealership, franchise or other agreements existing with respect to the Owned Proprietary Rights and the Licensed Rights and as referred to in Disclosure Schedule 14.1 is valid, existing and in force for the term specified and there has not been, and, to the Seller’s knowledge, there does not exist any basis for, any claim of breach or default, with respect to such agreements.

14.5

To the Seller’s knowledge, neither the Company nor any of the Subsidiaries are infringing upon or otherwise violating the rights of any third party with respect to any of the Owned Proprietary Rights or Licensed Rights. There are no claims or proceedings pending or, to the Seller’s knowledge, threatened, which would challenge the rights of the Company and the Subsidiaries in respect of the Owned Proprietary Rights and Licensed Rights.

14.6

To the Seller’s knowledge no third party is infringing upon or otherwise violating the rights of the Company and the Subsidiaries with respect to any of the Owned Proprietary Rights or Licensed Rights.

14.7

By using the Owned Proprietary Rights or Licensed Rights or by pursuing their business, the Company and the Subsidiaries are, to the Seller’s knowledge, not infringing upon or otherwise violating the rights of any third party. No proceedings have been instituted or, to the Seller’s knowledge, threatened, nor has any claim been made with respect to any such infringement or violation.

14.8

As of Closing, each of the Company and the Subsidiaries will own or have valid rights to use all intellectual property which is required to enable them to carry out their business and conduct their operations in substantially the same manner as they presently operate.

14.9

The Company and the Subsidiaries do not use any intellectual property other than the Owned Proprietary Rights and the Licensed Rights.

14.10

The Company and the Subsidiaries have taken all actions reasonably necessary to maintain the secrecy of all confidential Owned Proprietary Rights or Licensed Rights (including requiring the execution of valid and enforceable agreements by employees or any other person to whom such confidential intellectual property is made available).

14.11

Disclosure Schedule 14.11 contains a list of all trademarks which contain the element “LSG”, “IPSO” or “IPSOMAT”, as found in and printed from the public online trademarks register database of the Benelux Trademarks Office (http://register.bmb-bbm.org).

14.12

Reference is made to Disclosure Schedule 16.6.9. The Seller represents that (i) neither the technology at stake in the legal proceedings initiated by B&B Controls NV against the Company and Declerck Elektronika BVBA nor any element thereof is used in the commercial laundry division of the Company; (ii) without limiting the foregoing, there is no interrelation between the technology developed by Declerck Elektronika BVBA/the Company for B&B Controls NV and the technology used by the Company in the commercial laundry devices or for the production of such devices, and; (iii) to the best of the Seller’s knowledge, the use of such technology does not and in no way would infringe upon any intellectual property developed for B&B Controls NV.

15	Information Technology

15.1

Disclosure Schedule 15.1 sets forth a full list of the computer systems and hardware owned or leased by the Company and the Subsidiaries (the “Information Technology”), including information for each Information Technology asset on ownership title, make and model, serial number and relevant characteristics. The Company and the Subsidiaries own or have valid leases to use the Information Technology currently used or held for use by them.

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15.2

All software installed on the Information Technology is either owned by or validly licensed to the Company or the Subsidiaries, and copies of all software license contracts entered into by the Company and the Subsidiaries are attached to Disclosure Schedule 15.2. Each of these software license contracts is in full force and effect and is valid and enforceable against the Company or the Subsidiaries and against the other parties thereto in accordance with their terms, and, to the Seller’s knowledge, all parties to these software license contracts are and at all times have been in all material respects in compliance with all applicable terms and requirements thereof.

15.3

All hardware and software used by the Company or the Subsidiaries but owned by a third party is (except for Information Technology set forth on Disclosure Schedule 15.1) listed in Disclosure Schedule 15.3. Copies of all software license contracts entered into in writing by the Company and the Subsidiaries and relating to such software, or if these contracts are not available all order forms and/or invoices relating to such software are attached to Disclosure Schedule 15.3. Each of these software license contracts is in full force and effect and is valid and enforceable against the Company or the Subsidiaries and against the other parties thereto in accordance with their terms, and, to the Seller’s knowledge, all parties to these software license contracts are and at all times have been in all material respects in compliance with all applicable terms and requirements thereof.

15.4

Disclosure Schedule 15.4 contains copies of all Information Technology contracts with third-party providers of communications, hardware and software maintenance, application development, network management and media management. Each of these Information Technology contracts is in full force and effect and is valid and enforceable against the Company or the Subsidiaries and against the other parties thereto in accordance with their terms, and, to the Seller’s knowledge, all parties to these Information Technology contracts are and at all times have been in all material respects in compliance with all applicable terms and requirements thereof.

16	Regulatory and Litigation

16.1

Disclosure Schedule 16.1 sets forth all licenses, permits, certificates, consents, approvals and other authorizations necessary or otherwise material to the Company and the Subsidiaries.

16.2

The Company and the Subsidiaries have all administrative or other licenses, permits, certificates, consents, approvals and other authorizations required for the conduct of their activities in the places and in the manner in which such activities are presently carried out, including, but not limited to environmental, building, and operating permits, export and import licenses. The Company and the Subsidiaries are operating in all material respects in conformity with all conditions imposed by such authorizations. No such authorization has expired or has been suspended, revoked, or cancelled nor is any such authorization, to the Seller’s knowledge, threatened with suspension, modification, revocation or cancellation. To the extent necessary, requests for renewal of such authorizations have been timely filed. No such authorization requires any notification prior or after the execution and delivery of this Agreement in order to be maintained or to remain valid. The Company and the Subsidiaries have made all investments necessary to maintain their activities in all material respects in compliance with such authorizations.

16.3

To the Seller’s knowledge, the Company and the Subsidiaries are complying and have complied with all applicable laws, regulations, court decisions, arbitration awards and other legal requirements affecting their business and operations in each jurisdiction in which they do business. To the Seller’s knowledge, no part of the business and operations of the Company or the Subsidiaries is threatened by contemplated changes in such legal requirements.

16.4

No agreement, commitment or arrangement to which the Company and the Subsidiaries are a party directly or indirectly infringes Belgian or EU competition law or any legislative or administrative act issued thereunder.

16.5

The Company and the Subsidiaries are not bound by any non-competition obligation and the Company and the Subsidiaries have not entered into any written or oral agreement, commitment or understanding limiting or restraining it from carrying out their activities by engaging or competing, in any business, with any third party.

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16.6

Except as set forth in Disclosure Schedule 16.6, no claim, investigation, lawsuit, arbitration, administrative proceedings or other legal proceedings involving the Company or the Subsidiaries is pending or, to the Seller’s knowledge, threatened before any court, arbitral tribunal or any other competent authority.

17	Assets

17.1

Ownership title to assets and security interests

17.1.1

The Company and each Subsidiary has valid ownership title to, or in case of assets leased valid leasehold interest in all land, buildings, plants, machinery, equipment, furniture, vehicles, interests in other companies, accounts receivable, inventory, cash and other fixed and current assets (“actifs immobilisés et circulants” / “vaste en vlottende activa”) which are being used for the conduct of its business.

17.1.2

Except as set forth in Disclosure Schedule 17.1.2, none of the assets used by the Company or the Subsidiaries in their business are subject to a contractual clause that reserves the ownership of such assets to the benefit of a third party.

17.1.3

All of the assets owned by the Company and each of the Subsidiaries are free and clear of all mortgages, pledges, security interests, usufructs (“usufruit” / “vruchtgebruik”), options, pre-emption rights, easements (“servitude” / “erfdienstbaarheid”), restrictions or any other third party rights of any kind, except for:

(i)

the security interests or other third party rights disclosed in Disclosure Schedule 17.1.3;

(ii)

the security interests or other third party rights mentioned on the relevant CLD Company’s statutory accounts per December 31, 2005; and

(iii)

security interests created by operation of law.

17.1.4

All of the filings and other formalities necessary to establish or protect the ownership of the Company and of the Subsidiaries on their assets have been made in accordance with applicable law.

17.1.5

As at Closing, there shall be no mortgage (“hypothèque” / “hypotheek”) on the real properties of the Company and/or of the Subsidiaries nor any overall pledge on the assets (“gage sur fonds de commerce” / “pand op de handelszaak”) of the Company and/or of the Subsidiaries to the benefit of any third party.

17.2

Real Property owned by the Company or the Subsidiaries

17.2.1

Disclosure Schedule 17.2.1 sets forth a list of all real property owned by the Company and the Subsidiaries, including true and complete copies of the respective ownership deeds. The Company and the Subsidiaries are the sole legal owner and have valid title, free and clear of any mortgages, liens, mandates to mortgages, security interests or other encumbrances, to these real properties. The Company and the Subsidiaries do not have any ownership rights or other interests in real properties than those listed in Disclosure Schedule 17.2.1.

17.2.2

The buildings owned by the Company or the Subsidiaries have in all material respects been constructed in conformity with all applicable building permits, zoning and other regulatory requirements (including but not limited to fire protection requirements).

17.2.3

There are no disputes existing or, to the Seller’s knowledge, threatened with adjoining landowners or building owners.

17.2.4

None of the real property owned by the Company is leased to any third party.

17.3

Real Property Leased to the Company

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17.3.1

Disclosure Schedule 17.3 contains a list of all of the real property leased to the Company and the Subsidiaries as lessee, including true and complete copies of all lease agreements relating to such real property. All lease agreements and all options to renew these leases or to purchase the real property are valid and duly registered and, where appropriate in order to secure their enforceability against third parties, recorded with all competent authorities including the Mortgage Registrar (“conservation des hypothèques” / “hypotheekkantoor”).

17.3.2

All of the rental payments and all of the expenses concerning the leased real property have been fully and timely paid and all of the terms and conditions of the lease agreements have been respected in all material respects. None of the leases to which the Company or the Subsidiaries are a party are, to the Seller’s knowledge, threatened with suspension or cancellation.

17.3.3

The Company and the Subsidiaries enjoy peaceful and undisturbed possession of all real property leased to them.

17.3.4

The Company and the Subsidiaries have not agreed to any agreement by which they would sub-lease the real property or assign any rights under any lease.

17.3.5

The leased real property has not been built or leased and is not occupied in material violation of any building, zoning or other regulatory requirements (including but not limited to fire protection requirements).

17.4

Condition and Sufficiency of Assets

17.4.1

Subject to ordinary wear and tear, all buildings, plants, machinery, equipment, furniture, vehicles, and all other tangible assets (“immobilisations corporelles” / “materiële vaste activa”) owned or used by the Company or the Subsidiaries are in good operating condition and repair, and are adequate for the uses to which they are being put, and none of them is in need of maintenance or repairs except for ordinary, routine maintenance and repairs that are not material in nature or cost.

17.4.2

All fixed and tangible assets owned or used by the Company or the Subsidiaries are sufficient for the continued conduct of their business after the Closing in substantially the same manner as conducted prior to the Closing. The Seller is not aware of any reason why the Purchaser may not anticipate full utilization of said assets for the balance of the lifetime for which they were designed, manufactured, built and/or installed.

17.5

Inventory

17.5.1

All inventory of raw materials, supplies, work-in-progress, finished goods and returned products of the Company and the Subsidiaries consists of a quality and quantity usable and sellable in the ordinary course of business, except for obsolete items and items of below-standard quality, most of which have been written off or written down to net realizable value in the CLD Company Annual Accounts 2005. All inventory has been recorded in the CLD Company Annual Accounts 2005 at the lower of cost or market value.

17.5.2

The quantities of each item of inventory (whether raw materials, supplies, work-in-process, finished goods or returned products) are reasonable in the present circumstances of the Company or the Subsidiaries.

18	Material Contracts

18.1

Disclosure Schedule 18.1 contains a complete and accurate list and true and complete copies of all Material Contracts to which the Company or any Subsidiary is a party or by which the Company or any Subsidiary or any of their assets may be bound.

18.2

Each of these Material Contracts is in full force and effect and is valid and enforceable against the Company or the Subsidiaries and against the other parties thereto in accordance with their terms.

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18.3

The Company and the Subsidiaries and all other parties to these Material Contracts are and at all times have been in all material respects in compliance with all applicable terms and requirements of each of these Material Contracts.

18.4

No event has occurred and no circumstance exists that (with or without notice or lapse of time or both) is likely to result in a material violation or breach of any of these Material Contracts.

* *

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Table of Contents


1	Binding Effect of this Agreement	51

2	Existence and Organisation of the Company and the Subsidiaries	51

3	Capital of the Company and the Subsidiaries	52

4	Ownership of the Shares and Rights Attached to the Shares	54

5	Free Transferability of the Shares	54

6	Interests in other companies	54

7	Annual Accounts, CLD Annual Accounts and CLD Company Annual Accounts	54

8	Absence of Changes since December 31, 2005	55

9	Taxes	56

10	Environmental	57

11	Employment Matters and Pensions	58

12	Affiliate Transactions and Relationships	59

13	Insurance Policies	59

14	Intellectual Property	60

15	Information Technology	61

16	Regulatory and Litigation	62

17	Assets	63

18	Material Contracts	64

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Schedule 10: Purchaser’s Representations under the Agreement

1	Binding Effect of this Agreement

1.1

The Purchaser has (and, upon designation in accordance with Clause 2.1.3 of the Agreement, the designee shall have) (a) the capacity and corporate authority and (b) obtained all required consents and approvals to (i) enter into and execute this Agreement, (ii) purchase the Shares, and (iii) perform its obligations hereunder.

1.2

This Agreement has been duly executed by the Purchaser and constitutes the legal, valid, binding and enforceable obligation of the Purchaser in accordance with its terms. Upon designation in accordance with Clause 2.1.3 of the Agreement, the Agreement shall constitute the legal, valid, binding and enforceable obligation of the designee in accordance with its terms.

1.3

The execution and performance of this Agreement and the consummation of the Transaction do not and will not (i) conflict with or violate the articles of association, certificate of incorporation, bylaws or other organizational documents of the Purchaser (and, upon designation in accordance with Clause 2.1.3 of the Agreement, of the designee), (ii) conflict with or give rise to a right of modification, suspension, termination, cancellation or acceleration of any obligation or to loss of a benefit under any law, judicial/arbitration or administrative decision (“vonnis”, “arrest”, “beschikking”, “administratieve beslissing”) applicable to the Purchaser (and, upon designation in accordance with Clause 2.1.3 of the Agreement, to the designee),; or any agreement, permit, authorization, obligation, or covenant to which the Purchaser (and, upon designation in accordance with Clause 2.1.3 of the Agreement, the designee), is subject or a party, and/or (iii) require the Purchaser (and, upon designation in accordance with Clause 2.1.3 of the Agreement, the designee), to file any documents with or notify any public authority or other third party, or to obtain any consent or approval from any public authority or other third party in connection with this Agreement, other than such filing, notification, approval and consent to which a specific reference is made in this Agreement.

2	Existence and Organisation of the Purchaser

2.1

The Purchaser is a limited liability company duly incorporated and validly existing for an unlimited duration under the laws of the state of Delaware, United States of America.

2.2

The Purchaser is duly registered with all competent authorities in accordance with the laws of the state of Delaware, United States of America.

2.3

Upon designation in accordance with Clause 2.1.3 of the Agreement, the designee shall be a company duly incorporated, duly registered and validly existing under the laws of Belgium.

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Table of Contents


1	Binding Effect of this Agreement	67

2	Existence and Organisation of the Purchaser	67

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EX-10.4 5 dex104.htm AMENDMENT AND RESTATEMENT AGREEMENT Amendment and Restatement Agreement

Exhibit 10.4

LAUNDRY SYSTEMS GROUP NV

as Seller

and

ALLIANCE HOLDING BVBA

as Purchaser

AMENDMENT AND RESTATEMENT AGREEMENT

relating to a Share Purchase Agreement dated 23 May 2006

July 13, 2006

AMENDMENT AND RESTATEMENT AGREEMENT


BETWEEN:	(1)	LAUNDRY SYSTEMS GROUP NV, a limited liability company (“naamloze vennootschap”) organised and existing under the laws of Belgium, having its registered office at 8560 Wevelgem, Nieuwstraat 146, Belgium, and registered at the Crossroads Databank for Enterprises under company number 0440.449.284; represented for the purposes of this Agreement by Mr. Jesper Munch Jensen and Erik Vanderhaegen in their capacity as Chief Executive Officer and Chief Financial Officer respectively;

		hereinafter referred to as the “Seller”;

AND:	(2)	ALLIANCE HOLDING BVBA, a private limited liability company organised and existing under the laws of Belgium, having its registered office at Nieuwstraat 146, 8560 Wevelgem, Belgium

		represented for purposes of this agreement by Thomas F. L’Esperance, in his capacity as manager;

		hereinafter referred to as the “Purchaser”;

		the parties above are hereinafter jointly referred to as the “Parties”, and each individually a “Party”.

WHEREAS:

The Seller and Alliance Laundry Systems LLC have entered into a share purchase agreement dated May 23, 2006, in relation to the acquisition by Alliance Laundry Systems LLC of the European CLD activities of the Seller (the “Share Purchase Agreement”). By means of a Designation Letter dated as of July 13, 2006, Alliance Laundry Systems LLC assigned, in accordance with Clauses 2.1.3 and 14.5.1 of the Share Purchase Agreement, all its rights and obligations under the Share Purchase Agreement to the Purchaser.

B.	The Share Purchase Agreement provides that the Purchaser would acquire all shares of Ipso-LSG NV and certain of its subsidiaries, including Ipso Rent NV, Ipso Rent Deutschland GmbH and Ipso Norge, but not including Ipso Spain S.L.

C.	Pursuant to Clause 7.12 of the Share Purchase Agreement, the Seller is obliged to alter its corporate group structure by way of an acquisition at fair market-value by the Seller from Ipso-LSG NV of certain shareholdings (the “Pre-Closing Restructuring”).

D.	IPSO-LSG NV currently holds one share (with serial number 1.250) in the capital of D’HOOGE ILG, the transfer of which to the Seller was not included under the Pre-Closing Restructuring.

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E.	Upon further negotiation, both Parties have now agreed to include Ipso Spain S.L as subsidiary of Ipso-LSG NV under the Transaction and to include the transfer of the one share in the capital of D’HOOGE-ILG to the Seller under the Pre-Closing Restructuring.

Pursuant to Clause 3.2 of the Share Purchase Agreement, the Seller is obliged to use its best efforts for the Company to repay all of its outstanding Indebtedness prior to or on the Closing Date, with the exception of the Permitted Intercompany Indebtedness and Indebtedness owed by the Company under the Laser Cutting Lease.

Notwithstanding the foregoing, on the Closing Date, the Company will still owe an amount of EUR 5,105,846 (five million one hundred and five thousand eight hundred forty-six Euro) to the Seller (the “IPSO Debt”), resulting from the outstanding balances (including interest thereon), at the Closing Date, under:

(i)

a Current Account Agreement between the Company and the Seller dated March 31, 2005 (a copy of which is attached as Schedule F(1)); and

(ii)

a Subordinated Loan Agreement between the Company and the Seller dated June 21, 2005 (a copy of which is attached as Schedule F(2)).

Upon further negotiation, Parties have agreed to keep the IPSO Debt in place at Closing provided (i) the Initial Purchase Price is decreased with the amount of the IPSO Debt and (ii) the IPSO Debt is repaid in full ultimately by July 17, 2006.

Pursuant to Clause 7.17 of the Share Purchase Agreement, the Seller must use its best efforts to obtain, at its own cost and expense, the formal release by the mortgagees/pledgees of the mortgages and floating charge set out in Schedule 7.17 to the Share Purchase Agreement as well as the filing of the appropriate documents required for the discharge (“doorhaling”) of these mortgages and floating charge at the Mortgage Keeper’s Office (“hypotheekkantoor”). As, on the date of this Amendment and Restatement Agreement, such formal release and discharge has not been obtained for all mortgages and floating charge set out in the above mentioned Schedule 7.17. The Parties have agreed that, following the Closing Date, Seller will continue using its best efforts to obtain, at its costs and expense, such formal release and discharge for all mortgages and floating charge as soon as possible.

H.	The Parties therefore wish to amend and restate certain provisions of the Share Purchase Agreement as set out in this Amendment and Restatement Agreement.

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NOW, THEREFORE, the Parties have agreed as follows:

1.	DEFINITIONS AND INTERPRETATION

1.1	Terms, expression or legal concepts defined in, or to which a meaning is ascribed in or by, the Share Purchase Agreement shall, except as otherwise expressly provided herein or as the context otherwise requires, have the same meanings when used herein as they have in the Share Purchase Agreement.

Clause 1.2 (Interpretation) of the Share Purchase Agreement shall apply to this Amendment and Restatement Agreement as if expressly set out herein (mutatis mutandis) with each reference therein to the Share Purchase Agreement being deemed to be a reference to this Amendment and Restatement Agreement.

1.2	In this Amendment and Restatement Agreement the following terms shall have the meaning as specified or referred to in this Clause 1.2:

“Amendment and Restatement Agreement” means this agreement amending and restating the Share Purchase Agreement.

“D’HOOGE-ILG” means D’HOOGE-ILG NV, a limited liability company (naamloze vennootschap) incorporated and existing under the laws of Belgium, having its registered offices at 9050 Ledeberg (Gent), Gaston Crommenlaan 2, Belgium, and with company number 0450.666.750.

“IPSO Debt” means the EUR 5,105,846 (five million one hundred and five thousand eight hundred forty-six Euro) debt of the Company towards the Seller as set out in Recital (F) of this Amendment and Restatement Agreement.

“Ipso Spain” means Ipso Spain S.L., a limited liability company (“sociedad de responsabilidad limitada”) organized and existing under the laws of Spain, with registered office at 08207 Sabadell, Barcelona, Avenida Matadepera 89,1°, Spain, and with company registration number CIF B 64120793.

“Share Purchase Agreement” means the share purchase agreement dated May 23, 2006 in relation to the acquisition by the Purchaser of the European CLD activities of the Seller.

2.	EFFECTIVE DATE

2.1

Upon execution of this Amendment and Restatement Agreement i) Ipso Spain shall be deemed to have been a Subsidiary under the Transaction and ii) the transfer of the one share in the capital of D’HOOGE-ILG to the Seller shall be deemed to have been included under the Pre-Closing Restructuring, as of the date of signing of the Share Purchase Agreement, i.e. May 23, 2006 (the “Effective Date”). Consequently, all the amendments and restatements under Clause 4 hereof shall be deemed to have duly taken place on the Effective Date.

2.2

The Seller’s Representations as set forth in Schedule 9 to the Share Purchase Agreement, as restated in accordance with Clause 4.10 of this Amendment and Restatement Agreement, are on the date hereof repeated by the Seller solely with respect to Ipso Spain. In this respect the following is stipulated:

(i)

The Seller’s Representations as repeated in accordance with the present Clause 2.2 are limited in accordance with Clause 9.2 of the Share Purchase Agreement, applied mutatis mutandis.

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(ii)

On and with effect as of the date hereof, the Seller makes the additional disclosures set forth in Schedule 2.2 to this Amendment and Restatement Agreement in relation to Ipso Spain, against the Seller’s Representations as repeated in accordance with the present Clause 2.2. Said Schedule 2.2 to this Amendment and Restatement Agreement shall be considered to constitute a Disclosure Schedule within the meaning of Clause 9.2.2 of the Share Purchase Agreement.

(iii)

The Purchaser hereby for the avoidance of doubt waives all and any rights that it might have pursuant to Clause 7.3 (Operations of the CLD Business) and 7.4 (Restrictions on the Seller and the CLD Companies) of the Share Purchase Agreement with respect to the additional disclosures set forth in Schedule 2.2 to this Amendment and Restatement in relation to Ipso Spain.

2.3	Upon execution of this Amendment and Restatement Agreement all the amendments and restatements under Clause 5 shall be effective as of the date of this Amendment and Restatement Agreement.

3.	IPSO DEBT

3.1	Parties acknowledge that, on 30 June 2006 as well as on the Closing Date, the IPSO Debt is still outstanding and has not yet been paid by the Company.

3.2	Parties agree that, for the purposes of the Share Purchase Agreement, the IPSO Debt must be considered as being Permitted Intercompany Indebtedness as defined in Clause 7.7.2 of the Share Purchase Agreement.

3.3	Parties furthermore agree that the Initial Purchase Price is to be decreased with the amount of the IPSO Debt and thus becomes EUR 45,294,154 (forty five million two hundred and ninety four thousand one hundred and fifty four Euro).

3.4	The Purchaser shall procure the Company to repay the IPSO Debt in full to the Seller ultimately by July 17, 2006.

3.5

The Purchaser confirms that, upon repayment of the IPSO Debt in accordance with Clause 3.4 above, the Company will no longer owe any amount to the Seller. Upon such repayment, the Seller will therefore be deemed to have waived any rights or claims it may have against the Company with respect to the IPSO Debt.

For the avoidance of doubt, the Company is hereby constituted as third party beneficiary pursuant to Article 1121 of the Belgian Civil Code (“stipulation pour autrui” / “beding ten behoeve van een derde”) for the purposes of this Clause 3.5.

4.	AMENDMENTS EFFECTIVE AS OF THE EFFECTIVE DATE

The following Clauses of the Share Purchase Agreement are amended and restated as follows:

4.1	The definitions of Subsidiaries under Clause 1.1.1 of the Share Purchase Agreement shall be restated as follows:

- ““Subsidiaries” means each of Ipso Rent, Ipso Rent Deutschland, Ipso Norge and Ipso Spain.”

4.2	Schedule 1.1.1.D to the Share Purchase Agreement shall be restated as set forth in Schedule 3.2 to this Amendment and Restatement Agreement.

4.3	Clause 2.1.2 of the Share Purchase Agreement shall be restated as follows:

“[…], it being understood that the Company shall at Closing own the following shares:

[…]; and

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1,000 registered shares (510 of which are class A shares and 490 of which class B shares) representing 100% of the outstanding corporate capital in Ipso Spain S.L., a limited liability company (“sociedad de responsabilidad limitada”) organized and existing under the laws of Spain, with registered office at 08207 Sabadell, Barcelona, Avenida Matadepera 89,1°, Spain, and with company registration number CIF B 64120793 (wholly owned) (hereinafter “Ipso Spain” ).

Ipso Rent, Ipso Rent Deutschland, Ipso Norge and Ipso Spain are hereinafter jointly referred to as the “Subsidiaries” or each individually a “Subsidiary”.”

4.4	Clause 5.2.3 (f) of the Share Purchase Agreement shall be deleted.

4.5	Clause 5.3.4 of the Share Purchase Agreement shall be deleted.

4.6	Clause 6.2 of the Share Purchase Agreement (including Schedule 6.2.1) shall be deleted.

4.7	Schedule 7.5.1 (i) to the Share Purchase Agreement shall be restated as follows:

“Names of directors resigning their office in accordance with Clause 7.5. of the Agreement:

Jesper Munch Jensen, as director of the Company, Ipso Norge and Ipso Spain.

Erik Vanderhaegen, as director of the Company, Ipso Rent, Ipso Norge and Ipso Spain.”

4.8	Clause 7.12.1 (d) of the Share Purchase Agreement shall be restated as follows:

“one share (with serial number 1.250) in the capital of D’HOOGE-ILG NV, a limited liability company (naamloze vennootschap) incorporated and existing under the laws of Belgium, having its registered offices at 9050 Ledeberg (Gent), Gaston Crommenlaan 2, Belgium, and with company number 0450.666.750.”

Schedule 7.12 to the Share Purchase Agreement shall be deleted.

4.9	A Clause 8.1.3 shall be added the Share Purchase Agreement, reading as follows:

“Provided that Closing takes place, the Purchaser shall cause an extraordinary general meeting of Ipso Norge and Ipso Spain to be held (c.q. a shareholders’ resolution to be taken) on or as soon as possible after the Closing Date, having the following agenda (c.q. covering the following points):

(a)

acknowledgement of the resignation of each of the relevant directors whose names are set out in Schedule 7.5 (i) as a director; and

(b)

appointment of new directors.”

4.10

The Seller’s Representations as set forth in Schedule 9 to the Share Purchase Agreement shall apply to Ipso Spain, and the additional disclosures made by the Seller with respect to Ipso Spain under Schedule 3.10 to this Amendment and Restatement Agreement shall be considered to constitute a Disclosure Schedule.

The following sections of the Seller’s Representations shall be restated:

the last sentence of Section 2.2.1 shall be deleted (“The Company has no other subsidiary, branch or office, except for Ipso Spain S.L. (“Ipso Spain”) (the shares of which shall be transferred by the Company to the Seller prior to Closing pursuant to Clause 7.12 of the Agreement)”);

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Section 2.2.2 shall be restated as follows: “Each of the Subsidiaries is duly incorporated and validly existing for an unlimited duration respectively under the laws of Belgium (for Ipso Rent), Germany (for Ipso Rent Deutschland), Norway (for Ipso Norge) and Spain (for Ipso Spain)”;

Section 2.2.3 shall be restated as follows: “Each of the Subsidiaries is duly registered with all competent authorities respectively in accordance with the laws of resp. Belgium (for Ipso Rent), Germany (for Ipso Rent Deutschland) Norway (for Ipso Norge) and Spain (for Ipso Spain).”

an additional reference shall be added to Section 3.2.1 as follows: “(iv) Ipso Spain: 100%”;

the last sentence of Section 3.2.2 shall be restated as follows: “[…] (iii) as far as Ipso Norge and Ipso Spain are concerned, in the option agreements set forth in Disclosure Schedule 3.2.2”;

the last sentence of Section 3.2.3 shall be restated as follows: “[…] (ii) the shareholders’ agreements for Ipso Norge and Ipso Spain set forth in Disclosure Schedule 3.2.3”;

the first sentence of Section 3.2.4 shall be restated as follows: “[…] (iii) as far as Ipso Norge and Ipso Spain are concerned, in the option agreements set forth in Disclosure Schedule 3.2.2”

Section 6.1 shall be restated as follows: “None of the Subsidiaries or the Company holds any shares or other interest, whether directly or indirectly, in any corporation, company, partnership, association or other legal entity, other than the shares held by the Company in the Subsidiaries”

Section 6.2 shall be restated as follows: “The Company and the Subsidiaries do not have any subsidiaries, branches, representation offices or other places of business other than those set out in Disclosure Schedule 6.2.”

4.11	Clause 11.1.2 (g) of the Share Purchase Agreement shall be restated as follows:

“[…], the Seller agrees and undertakes to indemnify the Purchaser […] for any Loss suffered by the Purchaser or the CLD Companies (without duplication):

[…]

(g) any Loss (including any Taxes imposed on or with respect to the Purchaser or any CLD Company) resulting or arising in connection with the (i) formation of Ipso Spain, (ii) the reorganization of the Company’s distribution process in Spain (including but not limited to the threatened dispute with Tecnitramo S.A.L.) and (iii) the change of control over Ipso Spain resulting from the Transaction (including but not limited to the possible termination of the employment agreements entered into by Ipso Spain as a result of such change of control),

[…]”

4.12	The reference to Ipso Spain in Clause 12.4.1 of the Share Purchase Agreement (i.e. “(ii) as explicitly contemplated by the Ipso Spain Distribution Agreement as referred to in Clause 6.2.1”) shall be deleted.

4.13	Clause 3.1.1 of the Share Purchase Agreement shall be restated as follows:

“The aggregate amount of the Purchase Price payable at Closing for the Shares shall be EUR 45,294,154 (forty five million two hundred and ninety four thousand one hundred and fifty four Euro) (the “Initial Purchase Price”). The Initial Purchase Price may be increased or decreased, as the case may be, pursuant to the price adjustment procedure set out in Clause 3.3”

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5.	AMENDMENTS EFFECTIVE AS OF THE DATE HEREOF

5.1	The definition of Aggregate Purchase Price under Clause 1.1.1 of the Share Purchase Agreement shall be restated as follows:

- ““Aggregate Purchase Price” means the sum of (i) the Final Purchase Price, (ii) the Purchase Price as such term is defined in the U.S. Purchase Agreement and (iii) the IPSO Debt as defined in Clause 7.7.2.”

5.2	Clause 7.7.2 of the Share Purchase Agreement shall be restated as follows:

“Except for (i) intercompany Indebtedness existing between any of the following entities: the Company, any of the Subsidiaries, any of the Acquired Operations or any Acquired Company, but only to the extent the net balance of all such intercompany Indebtedness is zero, (ii) the IPSO Debt or (iii) unless otherwise agreed to in writing by the Purchaser (the IPSO Debt and the intercompany Indebtedness referred to in subclause (i) will be jointly referred to as “Permitted Intercompany Indebtedness”), the Sellers shall cause all amounts owed:

(i)

to any of the CLD Companies, Ipso Laundromat LLC (“Laundromat”), Cissell Distribution Center Corp. (“Cissell Distribution”) or Global Fox Financial, Inc. (“Global Fox”) by the Seller or any Affiliated Company of the Seller (not being a CLD Company, Laundromat, Cissell Distribution, Global Fox or an Acquired Operation); and

(ii)

or any balance thereof remaining after having been set off against each other, taking into account the purchase of stocks as set out in Clause 7.7.1, to be paid in full in cash on or before the last day of the month immediately preceding the Closing Date. For the avoidance of doubt, in the event that aggregate Permitted Intercompany Indebtedness exceeds EUR 5,105,846 (five million one hundred and five thousand eight hundred forty-six Euro), all amounts in excess of EUR 5,105,846 (five million one hundred and five thousand eight hundred forty-six Euro) shall be accrued on the Closing Working Capital Statement.

For the purposes of this Agreement, “IPSO Debt” shall mean the EUR 5,105,846 (five million one hundred and five thousand eight hundred forty-six Euro) debt of the Company towards the Seller resulting from the outstanding balances (including any interests thereon), on the Closing Date, under:

(i)

a Current Account Agreement between the Company and the Seller dated March 31, 2005; and

(ii)

a Subordinated Loan Agreement between the Company and the Seller dated June 21, 2005.”

5.3	A second paragraph shall be added to Clause 7.17 of the Share Purchase Agreement, which will read as follows:

“Following the Closing Date, the Seller shall continue to use its best efforts to obtain, at its own cost and expense, as soon as possible the formal release by the mortgagees/pledgees as well as the discharge (“doorhaling”) of those mortgages/floating charge for which no formal release and discharge (“doorhaling”) was obtained prior to or on the Closing Date.”

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5.4	Clause 11.1.2(b) of the Share Purchase Agreement shall be restated as follows:

“any Loss (including any Taxes imposed on or with respect to the Purchaser or any CLD Company) resulting or arising from any of (i) the Pre-Closing Restructuring, (ii) the inter-company debt elimination as set forth in Clause 7.7, including without limitation, Losses arising from the Subordinated Loan Agreement dated as of December 19, 2003, by and between the Company and the Seller and the Subordinated Loan Agreement, dated as of June 21, 2005 by and between the Company and the Seller, and in each case, any third party claims related thereto, or (iii) the termination of the inter-company agreements as set forth in Clause 7.11”;

5.5	Clause 11.1.2(f) of the Share Purchase Agreement shall be restated as follows:

“any Loss (including any Taxes imposed on or with respect to the Purchaser or any CLD Company) resulting or arising from any liabilities related to heavy duty laundry activities performed by any of the CLD Companies (other than Losses related to products manufactured by the Company (Ipso II) in Deinze) whether before or after the Closing, or from the transfer of heavy duty assets and liabilities whether before or after the Closing, as set out in Clause 7.16 and the Transfer Agreement, dated as of July 13, 2006, by and among the Company and the Seller,; including, for the avoidance of doubt, any Losses resulting or arising from the guarantees mentioned under item 5 of Schedule 1.1.1.D;”

6.	IPSO SPAIN EMPLOYMENT CONTRACTS

The Seller shall use its best efforts to have Mr D. Antonio Fernandez Garcia and Mr Jordi Martinez Somavilla enter into a side letter to their current employment contracts with Ipso Spain (contrato laboral de alta direccion) on or before the Closing Date in the form of the draft attached as Schedule 4 to this Amendment and Restatement Agreement.

7.	MISCELLANEOUS

6.1

Entire Agreement

This Amendment and Restatement Agreement together with the Share Purchase Agreement (along with the documents referred to therein) contains the entire agreement between the Parties with respect to the matters to which it refers and contains everything the Parties have negotiated and agreed upon within the framework of this Amendment and Restatement Agreement. It replaces and annuls any agreement, communication, offer, proposal, or correspondence, oral or written, exchanged or concluded between the Parties, relating to the same subject matter.

6.2

Governing Law and Disputes

This Amendment and Restatement Agreement shall be governed by and construed in accordance with Belgian law. All disputes arising out of or in connection with this Amendment and Restatement Agreement shall be settled in accordance with Clause 14.10 of the Share Purchase Agreement.

6.3

Counterparts

This Amendment and Restatement Agreement may be executed in one or more counterparts, each of which when so executed shall be deemed to be an original copy of this Amendment and Restatement Agreement, and all of which, when taken together, shall be deemed to constitute one and the same instrument.

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6.4

Power of Power of Attorney to Initial the Schedules and Exhibits

The Seller hereby gives a power of attorney to each of Jan Peeters, Marc Van tieghem, Wouter Ghijsels and Sophie Steevens to initial on its behalf each of the pages of this Amendment and Restatement Agreement, as well as the Schedules and Exhibits to this Amendment and Restatement Agreement.

The Purchaser hereby gives a power of attorney to each of Guy Palmaers, Hans Dhondt and Stefaan De Boeck to initial on its behalf each of the pages of this Amendment and Restatement Agreement, as well as the Schedules and Exhibits to this Amendment and Restatement Agreement.

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Done on July 13, 2006, in two originals. Each party acknowledges receipt of its own original.


The Seller:

/s/ Erik Vanderhaegen		/s/ Jesper Munch Jensen
Name:	Erik Vanderhaegen	Name:	Jesper Munch Jensen
Title:	Chief Financial Officer	Title:	Chief Executive Officer


The Purchaser:

/s/ Bruce P. Rounds
Name:		Bruce Rounds
Title:		Manager

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EX-10.5 6 dex105.htm PURCHASE AGREEMENT, DATED AS OF MAY 23, 2006 Purchase Agreement, dated as of May 23, 2006

EXHIBIT 10.5

PURCHASE AGREEMENT

Dated May 23, 2006

By and Among

Alliance Laundry Systems LLC

and

Laundry Systems Group NV

and

Cissell Manufacturing Company

and

Jensen USA Inc.

and

LSG North America, Inc.

Table of Contents


		Page
ARTICLE I

SALE AND PURCHASE

1.1	Stock	1
1.2	Assets	2
1.3	Excluded Assets	3
1.4	Assumption of Liabilities	4
1.5	Excluded Liabilities	4
1.6	Purchase Price	5
1.7	Allocation of the Purchase Price	5
1.8	Indebtedness	6
1.9	Consent of Third Parties.	6

ARTICLE II

CLOSING

2.1	Place and Date	6
2.2	Transactions to be Effected at the Closing	7

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE SELLERS

3.1	Authorization, etc	7
3.2	Corporate Status.	7
3.3	Books and Records	8
3.4	Acquired Companies.	8
3.5	No Conflicts; etc.	8
3.6	Absence of Changes	9
3.7	Financial Statements	9
3.8	Litigation	9
3.9	Compliance with Laws; Governmental Approvals and Consents; Government Contracts.	9
3.10	Assets.	10
3.11	Material Contracts.	10
3.12	Intellectual Property.	11
3.13	Real Property.	12
3.14	Environmental Matters	13
3.15	Employees, Labor Matters, etc	14

Table of Contents

(continued)


		Page
3.16	Employee Benefit Plans and Related Matters; ERISA.	15
3.17	Taxes	16
3.18	Insurance	18
3.19	U.S. Indebtedness	18
3.20	Inventory	18
3.21	Information Technology	18

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF BUYER

4.1	Corporate Status; Authorization, etc	19
4.2	No Conflicts, etc	19
4.3	Litigation	20

ARTICLE V

COVENANTS

5.1	Second Phase Due Diligence.	20
5.2	Corporate Names	21
5.3	Payment of Taxes and the Filing of Tax Returns	21
5.4	Cissell.	21
5.5	Non-Solicitation	21
5.6	Further Assurances; Cooperation	21
5.7	Confidential Nature of this Agreement and Publicity	22
5.8	Records; Access	22
5.9	Operation of the Acquired Operations and the Acquired Companies	23
5.10	Notification of Breaches of Representations or Covenants.	23
5.11	Confidentiality	24
5.12	Intellectual Property Registrations	24
5.13	Unique IPH Product Line Assets	24
5.14	Limitations on the Representations and Warranties of the Sellers.	25

ARTICLE VI

CONDITIONS PRECEDENT

6.1	Conditions to Obligations of Each Party	26
6.2	Conditions to Obligations of the Buyer	26
6.3	Conditions to Obligations of the Sellers	28

Table of Contents

(continued)


		Page
ARTICLE VII

EMPLOYMENT MATTERS

7.1	Employment of Sellers’ Employees.	28
7.2	Benefit Plans	29
7.3	Workers’ Compensation	29
7.4	Employment Taxes.	29

ARTICLE VIII

TERMINATION

8.1	Termination	30
8.2	Effect of Termination	30

ARTICLE IX

TAX MATTERS

9.1	Indemnification.	31
9.2	Tax Returns, Elections, etc.	31
9.3	Tax Audits, Assistance and Cooperation.	32
9.4	Disputes	33
9.5	Refunds and Tax Credits	34
9.6	Carrybacks	34

ARTICLE X

SURVIVAL; INDEMNIFICATION; CERTAIN REMEDIES

10.1	Survival	34
10.2	Indemnification by Seller	35
10.3	Indemnification by Buyer	36
10.4	Certain Limitations and Computations.	36
10.5	Other Limitations	37
10.6	Payment Adjustments, etc.	38
10.7	Direct Claims.	39
10.8	Third Party Claim Procedures.	40
10.9	Limitation on Damages	42
10.10	Effect of Waiver of Condition	42
10.11	Third Party Beneficiaries.	42

iii

Table of Contents

(continued)


		Page
ARTICLE XI

DEFINITIONS

11.1	Certain Terms	42
11.2	Construction	50

ARTICLE XII

MISCELLANEOUS

12.1	Expenses	50
12.2	Severability	51
12.3	Notices	51
12.4	Headings	52
12.5	Entire Agreement	52
12.6	Counterparts	52
12.7	Governing Law; Specific Performance	52
12.8	Arbitration	52
12.9	Binding Effect	53
12.10	Assignment	53
12.11	No Third Party Beneficiaries	53
12.12	Amendment; Waivers, etc	53
12.13	Schedules	53

Table of Exhibits


Exhibit A		IPH Supply Agreement

Exhibit B		Letter Agreement with respect to “Jensen”-labeled products

Exhibit C		IPH Transitional Services Agreement

Exhibit D		Fort Mill Transitional Services Agreement

Exhibit E		Louisville Lease

Exhibit F		Amendments to the Fort Mill Letter Agreements

Table of Schedules


Schedule 1.2(h)		IPH Product Line

Schedule 1.3(l)		Excluded Contracts

Schedule 1.7		Allocation of Purchase Price

Disclosure Schedule 3.2(a)		Corporate Status

Disclosure Schedule 3.4(a)		Capitalization of the Acquired Companies

Disclosure Schedule 3.5(a)		No Conflicts

Disclosure Schedule 3.5(b)		Governmental Approval or other Consent

Disclosure Schedule 3.7		Annual Accounts and CLD Pro Forma Annual Accounts 2005

Disclosure Schedule 3.8		Litigation

Disclosure Schedule 3.9(a)		Compliance with Applicable Laws

Disclosure Schedule 3.9(b)		Government Approvals and other Consents Necessary for or Material to the Conduct of the Acquired Operations

Disclosure Schedule 3.10(a)		Liens Against Acquired Assets

Disclosure Schedule 3.10(c)		Services provided by LSG or any Affiliate to the Acquired Operations

Disclosure Schedule 3.11(a)		Material Contracts

Disclosure Schedule 3.11(b)		Material Disputes or Termination Events Pending or Threatened under any Material Contract

Disclosure Schedule 3.12(a)		Owned Intellectual Property

Disclosure Schedule 3.12(b)		Owned Intellectual Property that is being Infringed or Used Without a License or Permission

Disclosure Schedule 3.12(d)		Work for Hire Arrangements

Disclosure Schedule 3.13(a)		Owned Real Property and Leased Real Property

Disclosure Schedule 3.13(b)		Leases Requiring the Consent of Lessor

Disclosure Schedule 3.13(e)		Rights to Purchase or Rights of First Refusal regarding Real Property

Disclosure Schedule 3.14		Environmental Matters

Disclosure Schedule 3.15(a)		List of Employees and Consultants of Acquired Companies and Sellers


Disclosure Schedule 3.15(b)		Collective Bargaining and Labor Agreements

Disclosure Schedule 3.15(c)		Labor Disputes

Disclosure Schedule 3.16(a)		Material Benefit Plans

Disclosure Schedule 3.16(g)		Assets and Obligations of Cissell Manufacturing Company Pension Plan

Disclosure Schedule 3.16(h)		Post-Employment Benefits of Employees in the Acquired Operations

Disclosure Schedule 3.17		Tax Matters

Disclosure Schedule 3.18		Insurance

Disclosure Schedule 3.19		Outstanding Indebtedness of Sellers and Acquired Companies

Disclosure Schedule 3.20		Inventory

Disclosure Schedule 3.21		Information Technology

Schedule 5.1(b)		Material Negative Findings Identified during Second Phase Due Diligence

Schedule 5.1(c)		Material Negative Findings Identified between January 26, 2006, and the Date of Signing

Schedule 5.14(a)		Known Items

Schedule 6.2(i)		Termination of Contracts as a Condition to Obligations of the Buyer

Schedule 6.2(j)		Consents required as a Condition to Obligations of the Buyer

Schedule 7.1(b)		Excluded Employees

Schedule 11.1(a)		Outstanding Guarantees of the Sellers to be Assumed by the Buyer

Schedule 11.1(b)		Sellers’ Knowledge

vii

PURCHASE AGREEMENT

PURCHASE AGREEMENT dated as of May 23, 2006 (this “Agreement”), by and among Alliance Laundry Systems LLC, a Delaware limited liability company (the “Buyer”), Laundry Systems Group NV, a limited liability company organized and existing under the laws of Belgium (“LSG”), Cissell Manufacturing Company, a Rhode Island corporation (“Cissell”), Jensen USA Inc., a North Carolina corporation (“Jensen”), LSG North America, Inc., a North Carolina corporation (“LSG North America” and, together with LSG, Cissell and Jensen, the “Sellers”). Capitalized terms used in this Agreement are defined in Section 11.1.

WHEREAS, Cissell owns all of the issued and outstanding shares of capital stock of Cissell Distribution Center Corp., a Tennessee corporation (“Cissell Distribution”);

WHEREAS, LSG North America owns all of the issued and outstanding shares of Global Fox Financial, Inc., a Florida corporation (“Global Fox”);

WHEREAS, LSG’s U.S. commercial laundry division is engaged in the manufacturing, marketing and distribution of commercial laundry products and the financing of commercial laundry equipment through the Sellers (other than LSG), including without limitation, the Cissell operations conducted by Cissell and Cissell Distribution, the IPSO USA operations conducted by Jensen in Fort Mill, South Carolina, the IPH washer-extractor product line in Panama City, Florida, the laundromat operations conducted by IPSO Laundromat, LLC (“Laundromats LLC”) and the financing activities of Global Fox (such operations being herein called, collectively, the “Acquired Operations”);

WHEREAS the Buyer wishes to purchase (whether directly or indirectly through one or more Subsidiaries of the Buyer) from the Sellers, and the Sellers wish to sell to the Buyer, (i) the Acquired Assets (as defined herein), (ii) all of the issued and outstanding shares of Cissell Distribution (the “Cissell Stock”) and (iii) all of the issued and outstanding shares of Global Fox (the “Global Fox Stock”, and together with the Cissell Stock, the “Acquired Stock”), upon the terms and subject to the conditions set forth in this Agreement; and

WHEREAS the Buyer has agreed to assume, directly or indirectly, through one or more Subsidiaries, the Assumed Liabilities (as defined herein),

NOW, THEREFORE, in consideration of the premises and of the respective representations, warranties, covenants, agreements and conditions contained herein, the parties hereto hereby agree as follows:

ARTICLE I

SALE AND PURCHASE

1.1 Stock. On the terms and subject to the conditions set forth in this Agreement, at the Closing, the Sellers will sell, transfer, assign, convey and deliver to the Buyer (or the Buyer’s designee as contemplated by Section 12.10) free and clear of any Liens other than Permitted Liens, and the Buyer will accept and purchase from the Sellers, all of such Sellers’ right, title and interest in and to the Acquired Stock.

1.2 Assets. On the terms and subject to the conditions of this Agreement, at the Closing, the Sellers will sell, transfer, assign, convey and deliver to the Buyer (or the Buyer’s designee as contemplated by Section 12.10) free and clear of any Liens other than Permitted Liens, and the Buyer will accept and purchase from the Sellers, all of the Sellers’ right, title and interest in the following assets (collectively, the “Acquired Assets”):

(a) all accounts receivable, trade receivables and equipment note receivables, of or indebtedness owed to, each Seller relating primarily to the Acquired Operations, and any claim, remedy or other right relating to the foregoing;

(b) all machinery, equipment, tools, dies, tooling, supplies, materials, computer hardware, furniture, office equipment, vehicles and other items of tangible personal property of every kind owned or leased by each Seller (wherever located and whether or not carried on the Sellers’ books), in each case, relating primarily to the Acquired Operations, together with any express or implied warranty by the manufacturer, sellers or lessors of any item or component part thereof and all maintenance records and other documents relating thereto;

(c) all inventories and deferred items of any Seller relating primarily to the Acquired Operations, wherever located, including all finished goods, work in process, raw materials, spare parts and all other materials and supplies to be used or consumed by the Sellers in the production of finished goods;

(d) all Government Approvals and all pending applications or renewals therefor of each Seller relating primarily to the Acquired Operations;

(e) all right, title and interest of each Seller in and to all Intellectual Property and intellectual property licenses owned, used or held for use by each Seller and relating primarily to the Acquired Operations, including, rights to sue for and remedies against past, present and future infringements thereof, and rights of priority and protection of interests therein under the laws of any jurisdiction and all tangible embodiments thereof (wherever located and whether or not carried on the Sellers’ books);

(f) all Owned Real Property and Leased Real Property and all other interests in real property of the Sellers relating primarily to the Acquired Operations, in each case together with all buildings, additions, structures, improvements, fixtures and all other attachments or appurtenances thereto, but excluding the real property and related assets described in Section 1.3(d);

(g) all other intangible rights and property of each Seller relating primarily to the Acquired Operations, including going concern value and goodwill;

(h) all engineering drawings, Intellectual Property, finished goods inventory and all unique tooling and dedicated capital equipment used for the manufacture of Jensen’s IPH washer-extractor product line, as set forth in Schedule 1.2(h), (collectively, the “IPH Product Line”);

(i) all sales and promotional literature and other selling material owned, associated with, used or employed in or by the Sellers and relating primarily to the Acquired Operations;

(j) copies of all Records, invoices, client lists, customer lists, supplier lists, mailing lists and other data owned, associated with, used or employed by each Seller and relating primarily to the Acquired Operations, including research and development reports, production reports, service and warranty records, equipment logs, operating guides and manuals, financial and accounting Records, studies, correspondence and, to the extent permitted by any Applicable Law, copies of all personnel Records;

(k) all rights of each Seller under all Contracts, sales and purchase orders and production releases relating primarily to the Acquired Assets or the Acquired Operations and under all commitments, quotations, bids, offers and solicitations and all rights and claims (including refunds and claims thereto) with respect to all Assumed Liabilities and any confidentiality agreements with third parties relating primarily to the Acquired Operations;

(l) all rights of each Seller to deposits, prepaid expenses, claims for refunds and rights to offset in respect thereof relating primarily to the Acquired Operations;

(m) all rights, claims (including refunds (other than rights and claims of the Sellers to Tax refunds of Income Taxes relating to any Pre-Closing Period) and claims thereto) and causes of action relating primarily to the Acquired Operations, including all rights to indemnification under any Contract pursuant to which any Seller acquired any of the Acquired Assets and all insurance benefits and rights under any insurance policies of any Seller relating primarily to the Acquired Assets or the Acquired Operations, including all insurance benefits arising from or related primarily to the Acquired Operations or Assumed Liabilities prior to Closing;

(n) all renewal rights, rights to contingent commissions, profit-sharing commissions, or other similar commission rights and other similar rights of each Seller relating primarily to the Acquired Operations;

(o) all claims of each Seller against any third party relating primarily to the Acquired Operations, whether choate or inchoate, known or unknown, contingent or non-contingent;

(p) all membership interests in Laundromats LLC, a limited liability company organized under the laws of North Carolina; and

(q) all other assets, rights and claims of every kind and nature, real or personal, tangible or intangible, of each Seller relating primarily to the Acquired Operations, whether or not similar to the items specifically set forth above, except for the Excluded Assets.

1.3 Excluded Assets. The Sellers will retain (and the Acquired Assets will not include) the following assets (collectively, the “Excluded Assets”):

(a) all Cash held by any of the Sellers immediately prior to Closing;

(b) any personal and real properties or assets formerly owned, leased, operated or used by any Acquired Company, Seller or any of their respective Affiliates or any predecessors in interest of the foregoing;

(c) all assets, Intellectual Property and Real Property located at Jensen’s existing manufacturing facility located at 99 Aberdeen Loop, Panama City, Florida, other than those items described in Section 1.2(h);

(d) the buildings, additions, structures and improvements, fixtures (including any HVAC mechanical or other mechanical systems) located at Cissell’s existing manufacturing facility at 831 South First Street, Louisville, Kentucky, and the land thereunder (including any easements, licenses, rights and appurtenances specifically relating to the foregoing real property) as described in the Louisville Lease, but excluding any equipment, machinery and other items of personal property located thereon or therein;

(e) all assets used primarily in the heavy-duty laundry business as indirectly or directly conducted by LSG;

(f) all rights and claims of the Sellers to (i) Tax refunds of Income Taxes relating to any Pre-Closing Period and (ii) all Tax Returns of the Sellers;

(g) all capital stock held by LSG or any of its Affiliates (other than the Acquired Stock and the equity interests of Laundromats LLC);

(h) all rights in and to the “AMKO” name;

(i) all raw materials and work-in progress of the IPH Product Line (except as provided by the IPH Supply Agreement);

(j) all reserves reflected on the Annual Accounts with respect to Litigation pending as of the Closing;

(k) all rights of the Sellers under this Agreement or any of the Ancillary Agreements; and

(l) all rights of the Sellers under any Contract set forth on Schedule 1.3(l).

1.4 Assumption of Liabilities. Subject to the terms and conditions set forth herein, the Buyer agrees, effective at the Closing, to assume all Liabilities (other than the Excluded Liabilities) primarily relating to the conduct of the Acquired Operations on or before the Closing Date (the “Assumed Liabilities”).

1.5 Excluded Liabilities. Notwithstanding the provisions of Section 1.4, any Ancillary Agreement or any other provision hereof or any Schedule or Exhibit hereto or thereto and regardless of any disclosure to the Buyer, the Buyer shall not assume and be responsible for the following Liabilities (collectively, the “Excluded Liabilities”):

(a) all Liabilities arising out of or related to the Excluded Assets, including all Liabilities arising under or related to any Environmental Law;

(b) all Liabilities resulting from all Litigation (i) pending as of the Closing to the extent resulting from the conduct or ownership of the Acquired Operations, the Acquired Assets or the Acquired Stock prior to the Closing, including, without limitation, (x) the pending Litigation listed

on Schedule 3.8 and (y) any pending Litigation in which IPSO LSG NV (“IPSO Belgium”) and any Seller or Acquired Company is a named party, or (ii) arising out of or relating to any occurrence or event (actual or alleged) transpiring or existing prior to the Closing, including all incurred but not reported claims and/or occurrences;

(d) all Liabilities arising from or relating to Jensen to the extent such Liabilities relate to businesses or operations other than the Acquired Operations;

(e) all Liabilities with respect to employees employed in the IPH Product Line;

(f) all Liabilities expressly excluded in Article VII;

(g) all Liabilities for Income Taxes of, or in respect of, the Acquired Operations, the Acquired Assets, Sellers or Sellers’ Affiliates (recognizing that, by operation of law, Liabilities for Income Taxes of Cissell Distribution and Global Fox are Liabilities of such Persons but are subject to the Sellers’ indemnification obligations pursuant to Section 9.1(a)(i) of this Agreement);

(h) all Liabilities relating to the Pre-Closing Restructuring as defined in the Share Purchase Agreement, dated as of the date hereof among LSG and the Buyer (the “Share Purchase Agreement”);

(i) all Liabilities relating to the reorganization of WMC Holdings, Inc. pursuant to the Agreement and Plan of Reorganization, dated as of March 31, 2005, by and among LSG, IPSO Belgium, WMC Holdings, Inc. and LSG North America;

(j) all Indebtedness (other than Permitted Intercompany Indebtedness, as defined herein); and

(k) all Liabilities arising under or relating to any Contract set forth on Schedule 1.3(l).

1.6 Purchase Price. On the terms and subject to the conditions set forth in this Agreement, the purchase price for the Acquired Assets and the Acquired Stock shall be €8.6 million (the “Purchase Price”).

1.7 Allocation of the Purchase Price. Within 30 days after signing this Agreement, the Buyer shall provide to LSG a proposed allocation of the Purchase Price and other relevant items among the Acquired Assets and the Acquired Stock, such allocation to be made in accordance with Section 1060 of the Code and using the fair market values (by class of assets described in Section 1.338-6(b) of the U.S. Treasury Regulations). For these purposes, the assets of Laundromats LLC (and not the Laundromats Membership Interests) shall be considered Acquired Assets. If LSG does not object within five business days after its receipt of such allocation, such allocation shall be treated as the agreed final allocation. If LSG objects in writing to any particular item in the Buyer’s proposed allocation within five business days after the receipt thereof, the Buyer and LSG shall use their best efforts to agree on such item in a timely fashion. To the extent permitted by Applicable Law, the Buyer and the Sellers shall use the agreed-upon final allocation for all Tax reporting purposes.

1.8 Indebtedness. All Indebtedness of the Acquired Companies, and to the extent relating to the Acquired Operations, all Indebtedness of the Sellers, shall be repaid and/or extinguished on or prior to the last day of the month immediately preceding the Closing Date, except for Indebtedness existing between any two of the following entities: any CLD Company, any of the Acquired Operations or any Acquired Company, but only to the extent the net balance of all such intercompany Indebtedness is zero (the “Permitted Intercompany Indebtedness”).

1.9 Consent of Third Parties.

(a) To the extent that any Contract or other asset included in the Acquired Assets is not capable of being assigned, transferred, subleased or sublicensed without the consent or waiver of a third party (whether or not a Governmental Authority), or if such assignment, transfer, sublease or sublicense would constitute a breach thereof or a violation of Applicable Law, this Agreement (and any related documents delivered at the Closing) shall not constitute an actual or attempted assignment, transfer, sublease or sublicense thereof unless and until such consent or waiver of such third party has been duly obtained or such assignment, transfer, sublease or sublicense has otherwise become lawful (any Contract, license or other asset otherwise included in the Acquired Assets and not assigned, transferred, subleased or sublicensed as a result of this Section 1.9(a) is hereinafter referred to as an “Unassigned Asset”).

(b) To the extent that the consents and waivers referred to in Section 1.9(a) are not obtained prior to the Closing and until the impracticalities of transfer referred to therein are resolved, each Seller shall use all reasonable efforts to (i) continue its efforts to obtain such consents and waivers, (ii) provide or cause to be provided to the Buyer the benefits of any Unassigned Asset, (iii) cooperate in any arrangement, reasonable and lawful as to both the Sellers and the Buyer, designed to provide such benefits to the Buyer and (iv) enforce for the account of the Buyer any rights of the Sellers arising from such Unassigned Asset, including all rights to indemnification, insurance and the right to elect to terminate in accordance with the terms thereof, in each case after consulting with and upon the advice and direction of the Buyer. In connection with the foregoing, the Sellers agree to make their personnel, and applicable Records, reasonably available to the Buyer (at no cost to the Buyer) in order to effect all actions reasonably required to be taken by the Sellers under this Section 1.9(b). The Sellers shall be responsible for all expenses incurred by the Sellers in connection with the foregoing, including all fees, costs and expenses incurred in connection with obtaining any consents or waivers from third parties with respect to the Unassigned Assets.

ARTICLE II

CLOSING

2.1 Place and Date. The closing of the transactions contemplated by this Agreement (the “Closing”) shall take place at the offices of Debevoise & Plimpton LLP, 919 Third Avenue, New York, New York 10022, at 10:00 a.m. Eastern Daylight Time on the date that is two Business Days after the conditions set forth in Article VI have been satisfied or waived (other than conditions that by their terms are to be satisfied at the Closing but subject to the satisfaction or waiver of such conditions) or such other time or place upon which the parties may agree (but in no event prior to the date upon which all conditions in Article VI have been satisfied or waived) (the “Closing Date”).

2.2 Transactions to be Effected at the Closing. At the Closing:

(a) the Sellers shall deliver to the Buyer, free and clear of any Liens, one or more certificates representing all of the Acquired Stock, duly endorsed in blank or accompanied by stock powers or other instruments of transfer duly executed in blank, and bearing or accompanied by all requisite stock transfer stamps;

(b) the Sellers shall deliver to the Buyer a bill of sale and such other assignments, endorsements, and other instruments as may be reasonably necessary to convey and vest in the Buyer all of the Sellers’ right, title and interest in and to all of the Acquired Assets. Simultaneously with such delivery, the Sellers shall take such action as may be reasonably necessary or reasonably requested by the Buyer to place the Buyer in possession and control of the Acquired Assets; and

(c) the Buyer shall pay to the entity or entities designated by LSG, by wire transfer of immediately available funds to an account or accounts designated by LSG at least three Business Days prior to the Closing Date, an amount equal to the Purchase Price.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE SELLERS

As of the date hereof and as of the Closing Date, each Seller jointly and severally represents and warrants to the Buyer as follows:

3.1 Authorization, etc. Each Seller has the power and authority to execute and deliver this Agreement and each Ancillary Agreement to which it is a party, to perform fully its obligations thereunder and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by each Seller of this Agreement and each Ancillary Agreement to which it is a party has been duly authorized. This Agreement and each Ancillary Agreement to which any Seller is a party constitutes a legal, valid and binding obligation of each Seller enforceable against it in accordance with its terms.

3.2 Corporate Status.

(a) Each Seller and Acquired Company is duly organized, validly existing and in good standing (to the extent the concept of good standing or any similar concept is applicable to such jurisdiction) under the laws of the jurisdiction of its incorporation as set forth on Disclosure Schedule 3.2(a), and has all power (corporate or otherwise) and authority to carry on its business (including its portion of the Acquired Operations) and to own or lease and operate its properties as and in places where such business is conducted.

(b) Each of the Acquired Companies is duly qualified or licensed and in good standing to do business in each jurisdiction in which the character of the property owned, leased or operated by it or the nature of the business it conducts makes such qualification necessary. Sellers have made available to the Buyer true and correct copies of the Organizational Documents of each of the Sellers and the Acquired Companies as now in effect.

(c) IPSO USA Inc. is the tradename for an unincorporated division of the Sellers and is not a corporation, limited liability company, partnership or any other business entity that has been incorporated, organized or formed under any Applicable Law.

3.3 Books and Records. The Records of the Acquired Companies and, to the extent relating to the Acquired Assets and the Acquired Operations, the Sellers and their respective Affiliates, have been, or prior to the Closing, will be made available to the Buyer.

3.4 Acquired Companies.

(a) Disclosure Schedule 3.4(a) sets forth (i) with respect to Cissell Distribution and Global Fox (x) the number of shares of authorized capital stock of each such Acquired Company, (y) the par value of such shares and (z) the number of issued and outstanding shares of each class of capital stock of each such Acquired Company, the names of the record holders thereof and the number of shares held by each such holder and (ii) with respect to Laundromats LLC, the name of the sole member and its ownership interests therein (the “Laundromats Membership Interests”).

(b) The Sellers own beneficially and of record the Acquired Stock and the Laundromats Membership Interests, free and clear of any Liens. Upon delivery of and payment for the shares of Acquired Stock and the Laundromats Membership Interests at the Closing, the Buyer will acquire good and valid title to all of the shares of Acquired Stock and the Laundromats Membership Interests free and clear of any Lien other than any Lien created by the Buyer.

(c) All of the issued and outstanding shares of capital stock and membership interests of the Acquired Companies are duly authorized, have been validly issued and are fully paid and non-assessable (with respect to capital stock only), were not issued in violation of any Applicable Law or the Sellers preemptive right of any equityholder. There is no warrant, right, option, conversion privilege, stock purchase plan, put, call, or other contractual obligation relating to the offer, issuance, purchase or redemption, exchange, conversion, voting or transfer of any shares of capital stock or membership interest of the Acquired Companies or other securities convertible into or exchangeable for capital stock, membership interests or other equity interests in any Acquired Company (now, in the future, or upon the occurrence of any contingency) or that provides for any stock appreciation or similar right. There are no agreements to register any securities of any Acquired Company or sales or resales thereof under Applicable Law.

(d) None of the Acquired Companies directly or indirectly owns any equity or similar interest in, or any interest convertible into or exchangeable or exercisable for any equity or similar interest in, any corporation, partnership, joint venture or other business association or entity, with respect to which interest any of the Acquired Companies is required to invest or for which any of the Acquired Companies has liability which is not limited.

3.5 No Conflicts; etc.

(a) The execution, delivery and performance by each Seller of this Agreement and each of the Ancillary Agreements to which it is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not conflict with, contravene, result in a violation or breach of or default under (with or without the giving of notice or the lapse of time or both), give rise to a right or claim of termination, amendment, modification, vesting, acceleration or cancellation of any right or obligation or loss of any material benefit under, or result in the creation of any Lien (or any obligation to create any Lien) upon any of the assets of the Acquired Companies or the Acquired Operations under (i) any Applicable Law binding upon or applicable to any Acquired Company, Seller or any Affiliate thereof, (ii) the Organizational Documents of such Seller or Acquired Company, or (iii) except as set forth in Disclosure Schedule 3.5(a), any Material Contract or other agreement or instrument to which any Acquired Company is a party or by which the Acquired Operations may be bound or affected.

(b) Except as specified in Disclosure Schedule 3.5(b), no Governmental Approval or other Consent is required to be obtained or made by any Seller in connection with the execution and delivery of this Agreement and the Ancillary Agreements or the consummation of the transactions contemplated hereby and thereby.

3.6 Absence of Changes. Since December 31, 2005, each Seller and each of its Affiliates has conducted the Acquired Operations only in the ordinary course consistent with past practice, and the Acquired Operations has not experienced any event or condition, and to such Seller’s Knowledge no event or condition is threatened, that, individually or together with other events or conditions, has had or is reasonably likely to have a Material Adverse Change.

3.7 Financial Statements. Disclosure Schedule 3.7 contains true copies of (a) the Annual Accounts and the corresponding auditor’s report and (b) the CLD Pro Forma Annual Accounts 2005. The Annual Accounts and the CLD Pro Forma Annual Accounts have each been prepared on a basis of IFRS accounting principles applicable at December 31, 2005, on a basis consistent with the methodology used in preparing the IFRS Restatement and in accordance with (i) Applicable Law, (ii) with respect to LSG, Belgian GAAP and (iii) with respect to the Sellers (other than LSG) and the Acquired Companies, U.S. GAAP. The Annual Accounts (subject to the comments in the corresponding statutory auditor’s report) and the CLD Pro Forma Annual Accounts truly and accurately reflect, in all material respects, the Acquired Assets, Assumed Liabilities and financial condition and results of the Acquired Operations, for the respective periods indicated.

3.8 Litigation. Except as set forth in Disclosure Schedule 3.8, there is no Litigation pending or threatened (i) by or against any Acquired Company, or to the extent relating to the Acquired Assets or the Acquired Operations, the Sellers and their respective Affiliates or (ii) against or relating to the transactions contemplated by this Agreement or any Ancillary Agreement, and no Seller knows or has reason to be aware of any basis for the same.

3.9 Compliance with Laws; Governmental Approvals and Consents; Government Contracts.

(a) Except as disclosed in Disclosure Schedule 3.9(a), since December 31, 2005, each Acquired Company, and to the extent relating to the Acquired Assets, each Seller has complied in all material respects with all Applicable Laws, and to the Knowledge of the Sellers, no Seller or Acquired Company has received any notice alleging any such conflict, violation, breach or default.

(b) Disclosure Schedule 3.9(b) sets forth all Governmental Approvals and other Consents necessary for, or otherwise material to, the conduct of the Acquired Operations. All such Governmental Approvals and Consents have been duly obtained and are in full force and effect, (ii) requests for renewal of Government Approvals and Consents have, to the extent necessary, been timely filed, and (iii) each Seller and Acquired Company is in compliance in all material respects with each of such Governmental Approvals and Consents held by it with respect to the Acquired Assets and the Acquired Operations. To the Knowledge of the Sellers, there has been no violation, cancellation, suspension, modification, revocation or default of any Governmental Approval or any notice of violation, cancellation, suspension, modification, revocation, default or dispute affecting any Governmental Approval, and, no basis exists for any such action, including, without limitation, as a result of the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements.

(c) To the Knowledge of the Sellers, there are no proposed laws, rules, regulations, ordinances, orders, judgments, decrees, governmental takings, condemnations or other proceedings which would be applicable to or binding upon any Seller or Acquired Company or the Acquired Operations and which might adversely affect the properties, assets, liabilities, operations or prospects of the Acquired Operations, either before or after the Closing Date.

3.10 Assets.

(a) Except as disclosed in Disclosure Schedule 3.10(a), the Sellers are the owners of and have good and marketable title to all of the Acquired Assets, free and clear of all Liens other than Permitted Liens, including but not limited to the Acquired Assets reflected in the Annual Accounts or acquired since the date thereof (except as may be disposed of in the ordinary course of business after the date hereof and in accordance with this Agreement).

(b) Except for the Excluded Assets, the Acquired Assets and the Acquired Stock, taken as a whole, constitute all of the properties, assets and rights relating to or used or held for use in connection with the Acquired Operations. Except for the Excluded Assets, there are no assets, properties or rights used in the operation of the Acquired Operations and owned by any Person other than the Sellers that will not be leased, sold or licensed to the Buyer under valid, current leases or license arrangements.

(c) The Acquired Assets are held for use, and are in reasonably good repair and operating condition (subject to normal wear and tear), and to the Knowledge of the Sellers, there are no facts or conditions affecting the Acquired Assets which could, individually or in the aggregate, interfere in any material respect with the use, occupancy or operation thereof as currently used, occupied or operated, or their adequacy for such use. Disclosure Schedule 3.10(c) lists all services currently provided by LSG or any Affiliate thereof to the Acquired Operations that are not otherwise listed in the transitional services agreements included among the Ancillary Agreements.

3.11 Material Contracts.

(a) Except as disclosed on Disclosure Schedule 3.11(a), no Acquired Company or, with respect to the Acquired Operations, Seller, is party to or bound by:

(i) orders and other Contracts for the purchase or sale of materials, supplies, products or services, each of which involves aggregate payment obligations in excess of €250,000.00;

(ii) any Lease, sub-lease or other Contract granting rights of occupancy or use of real property;

(iii) employment, consulting, agency, service, collective bargaining or other similar Contracts relating to the benefit of current, future or former employees, officers, directors, sales representatives, distributors, dealers, agents, independent contractors or consultants;

(iv) (A) loan agreements, pledges, notes, mortgages, indentures, security agreements, deeds of trust, guarantees, keep well agreements and other agreements and other instruments and arrangements relating to the borrowing of money or obtaining extensions of credit or guaranties of liabilities, obligations and commitments and (B) letters of credit and surety, indemnity, performance and similar bonds;

(v) licenses, licensing arrangements and other Contracts providing in whole or in part for the use of, or limiting the use of any Intellectual Property or Information Technology;

(vi) joint venture, partnership, equityholder or similar Contracts;

(vii) asset purchase agreements and other acquisition or divestiture agreements, including but not limited to any agreements relating to the sale, lease or disposal of any of the Acquired Assets (other than sales of Inventory in the ordinary course of business);

(viii) Contracts with any employee, director, officer, stockholder or Affiliate;

(ix) Contracts prohibiting or restricting the ability of any Seller, with respect to the Acquired Operations, or Acquired Company to compete with any Person, engage in any business or operate in any geographical areas;

(x) brokers or finders agreements; or

(xi) any Contracts with any Governmental Authority.

(b) Each Contract disclosed on Disclosure Schedule 3.11(a) (each, a “Material Contract”) is in full force and effect and enforceable against each party thereto in accordance with the express terms thereof. There does not exist under any Material Contract any violation, breach or event of default, or alleged violation, breach or event of default, or event or condition that, after notice or lapse of time or both, would constitute a violation, breach or event of default thereunder on the part of any Acquired Company, Seller or its Affiliates or any other party thereto. Except as set forth on Disclosure Schedule 3.11(b), there are no material disputes or termination events pending or threatened under any Material Contract to which any Acquired Company is a party or by which any of the assets, properties or rights of the Acquired Operations is bound. The Sellers have made available to the Buyer true and complete copies of all written Material Contracts and accurate written descriptions of all material terms of all oral Material Contracts.

3.12 Intellectual Property.

(a) Owned Intellectual Property. Disclosure Schedule 3.12(a) lists all Owned Intellectual Property that is registered or subject to a pending application for registration. The Acquired Companies and Sellers are the exclusive owners of the Owned Intellectual Property free and clear of any Liens. The Owned Intellectual Property together with the Intellectual Property used pursuant to the Contracts set forth on Disclosure Schedule 3.11(a) constitutes all of the Intellectual Property used or held for use in the Acquired Operations or by any Acquired Company. Except as set forth

on Disclosure Schedule 3.12(a), immediately after the Closing, the Buyer will own all of the Owned Intellectual Property and will have a right to use all other Intellectual Property relating to the Acquired Operations or used by any Acquired Company, free from any Liens and on the same terms and conditions as in effect prior to the Closing.

(b) No Infringement. Neither the conduct of the business of the Acquired Operations, nor the conduct of the business of the Acquired Companies, infringes or otherwise conflicts with the rights of any Person in respect of any Intellectual Property other than infringements or conflicts that would not individually or in the aggregate reasonably be expected to materially and adversely affect the Acquired Assets or the Acquired Operations. None of the Owned Intellectual Property is being infringed or otherwise used or being made available for use by any Person without a license or permission from the Acquired Companies or Sellers, except as set forth on Disclosure Schedule 3.12(b).

(c) Protection of Intellectual Property. The Sellers and the Acquired Companies have taken all actions reasonably necessary to ensure full protection of the Owned Intellectual Property under any Applicable Law (including making and maintaining in full force and effect all necessary filings, registrations and issuances). Each Acquired Company and each Seller has taken all actions reasonably necessary to maintain the secrecy of all confidential Intellectual Property relating to the Acquired Operations or used by the Acquired Companies (including requiring the execution of valid and enforceable agreements by employees or any other Person to whom such confidential Intellectual Property is made available). To the Knowledge of Sellers, no Acquired Company or Seller is using or enforcing any material Owned Intellectual Property in a manner that would reasonably be expected to result in the cancellation or unenforceability of such Owned Intellectual Property.

(d) Work for Hire Arrangements. Except as set forth on Disclosure Schedule 3.12(d), all employees, agents, consultants or contractors who have contributed to or participated in the creation or development of any Intellectual Property or Software on behalf of any Acquired Company, or any predecessor in interest thereto, or Seller or any predecessor in interest thereto that relates to the Acquired Operations (i) created such materials in the scope of his or her employment, (ii) is a party to a “work-made-for-hire” agreement under which the applicable Acquired Company or Seller is deemed to be the original owner/author of all rights, title and interest therein; or (iii) has executed an assignment or an agreement to assign in favor of such Acquired Company or Seller (or such predecessor in interest, as applicable) of all right, title and interest in such material.

3.13 Real Property.

(a) Disclosure Schedule 3.13(a) sets forth a true, correct and complete list of all Owned Real Property and Leased Real Property (together, the “Real Property”), including the addresses of such Real Property and, in the case of Owned Real Property, a correct legal description of such Owned Real Property. In respect of each Lease, Disclosure Schedule 3.13(a) sets out the name of the lessor, the date of the Lease, the term expiry date, any options to renew and the rent payable thereunder. The Acquired Companies and the Sellers have good and marketable fee title to the Owned Real Property and good and valid leasehold interests in the Leased Real Property, in each case free and clear of all Liens except Permitted Liens.

(b) As to each Lease, (i) such Lease is in full force and effect and is enforceable against the landlord which is party thereto in accordance with its terms, (ii) to the Sellers’ Knowledge, there

exists no material default or event of default (or any event which with notice or lapse of time or both would become a material default or event of default) on the part of any Acquired Company or Seller under such Lease, (iii) all rent, additional rent and other charges reserved therein or required thereby have been paid to the extent they are due and payable, (iv) the lessor under such Lease has satisfied all its repair or construction obligations, if any, to date pursuant to the terms of such Lease, and (v) to the Sellers’ Knowledge, no lessor under such Lease is in default in any material respect under any terms thereof. True and complete copies of all Leases have been delivered to the Buyer. No Acquired Company or Seller has received any written notice of any default or event of default under any Lease or any other termination notice with respect thereto. Except as set forth in Disclosure Schedule 3.13(b), the execution, delivery and performance of this Agreement and the Ancillary Agreements and the transactions contemplated hereby and thereby do not require the consent of any lessor under, and will not contravene any provision or cause a default or event of default under, such Lease.

(c) No Acquired Company or Seller has received written notice of a proceeding or, to Sellers’ Knowledge, is aware of any threatened proceeding in eminent domain or other similar proceeding affecting the Owned Real Property. There exists no material writ, injunction, decree, order or judgment outstanding relating in any material respect to the ownership, lease, use, occupancy or operation by any Person of the Real Property.

(d) The Real Property is in good operating condition for its current use and operation in the Acquired Operations. All buildings, structures, improvements and appurtenance situated on the Real Property are in good operating condition and in a state of good maintenance and repair and are adequate and suitable for the purposes for which they are currently being used.

(e) Except as set forth in Disclosure Schedule 3.13(e), no Acquired Company or Seller has granted, and the Real Property is not subject to, any options to purchase or rights of first refusal. None of the Real Property or any building, structure, improvement or appurtenance (or equipment therein) situated thereon, nor the current use thereof by the Acquired Companies or any Seller, violates any restrictive covenants or any provision of any Applicable Law or any zoning regulation, or encroaches on any property owned by others so as to adversely affect the continued use of such Real Property in the Acquired Operations for the purposes for which it is currently used, except for any such violation or encroachment which does not materially interfere, individually or in the aggregate with all other violations or encroachments, with the continued use of such Real Property in the Acquired Operations for the purposes for which it is currently used.

3.14 Environmental Matters. Except for matters that are set forth on Disclosure Schedule 3.14:

(a) Each Acquired Company and, to the extent relating to the Acquired Assets and the Acquired Operations, each Seller and its Affiliates, has been and is in compliance with all applicable Environmental Laws and has obtained and is in compliance with all applicable Environmental Permits;

(b) No Acquired Company, and, to the extent relating to the Acquired Assets and the Acquired Operations, no Seller or any of its Affiliates (nor, to Sellers’ Knowledge, any predecessor in interest of any of the foregoing) has received any notice of violation, notification of liability or request for information, and no Litigation is pending or to Sellers’ Knowledge threatened by any Person involving any Acquired Company, Seller, or any of their respective Affiliates relating to or

arising out of any Environmental Law. No order has been issued and, since January 1, 2001, no penalty or fine has been assessed involving the Acquired Companies and, to the extent relating to the Acquired Assets or Acquired Operations, the Sellers or its Affiliates, relating to or arising out of any Environmental Law;

(c) No Releases of Hazardous Substances have occurred at, on, above, under or from any properties currently or formerly owned, leased, operated or used by any Acquired Company and, to the extent relating to the Acquired Assets or the Acquired Operations, any Seller or any of its Affiliates or any predecessors in interest of the foregoing that has resulted in or could reasonably be expected to result in any material cost, liability or obligation under any Environmental Law;

(d) Neither the Sellers nor their Affiliates, nor to the Knowledge of any Seller, any other Person, has caused or taken any action that could reasonably be expected to result in any material liability or obligation relating to (x) the environmental conditions at, on, above, under, or about any properties or assets currently or formerly owned, leased, operated or used by any Acquired Company, or with respect to the Acquired Assets or the Acquired Operations, by any Seller or any of its Affiliates or any predecessors in interest of the foregoing, or (y) the past or present use, management, handling, transport, treatment, generation, storage, disposal, Release or threatened Release of Hazardous Substances by any Acquired Company, or with respect to the Acquired Assets or the Acquired Operations, by any Seller or any of its Affiliates;

(e) No material work, repair, construction or capital expenditure is required in respect of the Acquired Operations or the Acquired Assets to comply with any Environmental Law; and

(f) The Sellers have provided to the Buyer all environmental, health and safety site assessments, audits, investigations, studies and other documents in the possession, custody or control of any Acquired Company and the Sellers relating to properties or assets formerly owned, leased, operated or used by the Sellers, the Acquired Companies or any of their respective Affiliates for the Acquired Operations or relating to the Acquired Assets, any Seller or any of its Affiliates.

3.15 Employees, Labor Matters, etc. In each case with respect to the Acquired Operations:

(a) Disclosure Schedule 3.15(a) sets forth a complete and correct list of all employees of and consultants to any Seller (other than employees and consultants of Jensen who are not employees or consultants of the IPSO USA operations) or Acquired Company, and a description of all compensation arrangements, including base salaries, wage rates and bonus opportunities, applicable to such employees or consultants. Except as set forth on Disclosure Schedule 3.15(a), none of the Sellers or Acquired Companies is a party to or is bound by any employment Contract with any Person and all employees of the Sellers and Acquired Companies are employees who may be terminated at any time without the payment of any severance or termination amounts, except (i) as may be provided for in a severance plan that has been disclosed to the Buyer pursuant to Section 3.16 or (ii) as required by Applicable Law.

(b) None of the Sellers or any of the Acquired Companies is a party to or bound by any collective bargaining or other labor agreement except as set forth on Disclosure Schedule 3.15(b), and, except as set forth on Disclosure Schedule 3.15(b), there are no labor unions or other organizations representing, purporting to represent or, to Sellers’ Knowledge, attempting to represent any Employees. There is no pending or, to Sellers’ Knowledge, threatened strike, slowdown, picketing, work stoppage, concerted refusal to work overtime or other similar labor activity with respect to any Employees; and

(c) Except as set forth on Disclosure Schedule 3.15(c), there are no labor disputes currently subject to any grievance procedure, arbitration or litigation, including, without limitation, any pending complaint filed with the Equal Employment Opportunity Commission. Each Seller and each Acquired Company has complied in all material respects with all Applicable Laws pertaining to employment or termination of employment, including, but not limited to, all such Applicable Laws relating to labor relations, equal employment opportunities, fair employment practices, occupational safety and health, prohibited discrimination or distinction and other similar employment activities.

(d) Sellers have provided to the Buyer true and accurate copies of all employee handbooks.

3.16 Employee Benefit Plans and Related Matters; ERISA.

(a) Disclosure Schedule 3.16(a) lists each material Benefit Plan. Except as set forth on Disclosure Schedule 3.16(a), none of the Acquired Companies sponsors any Benefit Plan. There are no pending or, to Sellers’ Knowledge, threatened claims by or on behalf of any Person or otherwise involving any Benefit Plan or the assets of any Benefit Plan (other than routine claims for benefit). Except as set forth on Disclosure Schedule 3.16(a), no Benefit Plan provides benefits or otherwise has any benefit-related obligations to any Person who is not an Employee.

(b) With respect to each Benefit Plan, Sellers have provided or made available to Buyer true and complete copies of all written Benefit Plans; descriptions of all unwritten Benefit Plans; all trust agreements; insurance contracts or other funding arrangements; to the extent required by ERISA, the two most recent actuarial and trust reports; the two most recent Forms 5500 that have been filed and all schedules thereto; the most recent IRS determination letter; the current summary plan description; all currently effective material communications received from or sent to the IRS, the Pension Benefit Guaranty Corporation (“PBGC”) or the Department of Labor (including a written description of any oral communication); an actuarial study of any post-employment life or medical benefits provided under any such Benefit Plan, if any; currently effective statements or other material communications regarding withdrawal or other material multiemployer plan liabilities, if any; and all amendments and modifications to any such document. All accounting practices and actuarial and other assumptions used in connection with the preparation of all documents described above or in the determination of any funding obligation for any Benefit Plan are reasonable and materially consistent with all Applicable Laws.

(c) None of the Sellers, the Acquired Companies or any of their respective Affiliates has incurred or reasonably expects to incur in connection with any Benefit Plan (either directly or indirectly, including as a result of any indemnification obligation) any material liability or obligation (other than liability for premiums due to the PBGC) under or pursuant to Title I or IV of ERISA (or any comparable provision of the Applicable Laws of any jurisdiction other than the United States) or the penalty, excise tax or joint and several liability provisions of the Code relating to employee benefit plans and, to Sellers’ Knowledge, no event, transaction or condition has occurred or exists that could result in any such material liability of any Seller, any Acquired Company or any of their respective Affiliates or, following the Closing, the Buyer.

(d) Each Benefit Plan intended to be qualified under Section 401(a) of the Code has received a favorable determination letter from the IRS as to its qualification under section 401(a) of the Code and no fact or condition exists or has occurred which could reasonably be expected to result in the disqualification of any such Plan.

(e) Each Benefit Plan has been operated, funded and administered in all material respects in compliance with its terms and all Applicable Laws, including but not limited to ERISA and the Code.

(f) No Benefit Plan has undergone a termination or partial termination within the meaning of section 401 or 411 of the Code or section 4043 of ERISA, or within the meaning of regulations promulgated under such sections. No Benefit Plan sponsored by Cissell is a “multiemployer plan” within the meaning of section 4001(a)(3) of ERISA, nor is it a “multiple employer plan” within the meaning of section 4063 or section 4064 of ERISA.

(g) Disclosure Schedule 3.16(g) sets forth the assets, accumulated benefit obligation and projected benefit obligation of the Cissell Manufacturing Company Pension Plan (the “Plan”) as of September 30, 2005, in each case determined in accordance with U.S. GAAP.

(h) No Employee is or may become entitled to post-employment benefits of any kind by reason of employment in the Acquired Operations, including, without limitation, death or medical benefits (whether or not insured), other than (i) coverage provided pursuant to the terms of any Benefit Plan specifically identified as providing such coverage in Disclosure Schedule 3.16(h) or mandated by section 4980B of the Code or (ii) retirement benefits payable under any Benefit Plan qualified under section 401(a) of the Code.

(i) The consummation of the transactions contemplated by this Agreement, the Share Purchase Agreement and the Ancillary Agreements, by itself or in combination with any other event, will not result in an increase in the amount of compensation or benefits or the acceleration of the vesting or timing of payment of any compensation or benefits payable to or in respect of any Employee, nor will such consummation entitle any Person to any payments or enhanced benefits that would be an “excess parachute payment” as defined in Section 280G of the Code that would not be deductible as a result of the operation of Section 280G of the Code.

(j) None of the Sellers, the Acquired Companies or any of their respective Affiliates has incurred or, to Seller’s Knowledge, is likely to incur, any liability or obligation under the Worker Adjustment and Retraining Notification Act of 1988 (“WARN Act”) or any comparable state or local plant closing law.

3.17 Taxes. Except as set forth on Disclosure Schedule 3.17:

(a) All material Tax Returns in respect of the Acquired Assets and Acquired Companies required to be filed on or before the Closing Date have been or will be filed on or prior to the Closing Date, all such Tax Returns are or will be true and correct in all material respects, and Taxes shown as due thereon have been or will have been paid on or prior to the Closing Date;

(b) There are no outstanding liens for Taxes (other than Permitted Liens) upon any of the Acquired Assets or the assets of any Acquired Company;

(c) No Acquired Company is a party to any Tax sharing agreement, Tax indemnification agreement or similar agreement (collectively, “Tax Sharing Agreement”) and shall not be obligated to make any payments to any person after Closing in respect thereof;

(d) There are no outstanding adjustments for tax purposes applicable to any Acquired Company required as a result of changes in methods of accounting effected on or before the Closing Date;

(e) All Taxes which any Seller or any Acquired Company has been required to collect or withhold have been duly and timely collected or withheld and have been set aside in accounts for such purposes, or, to the extent due, have been duly and timely paid to the proper governmental authority;

(f) Laundromats LLC is, and has always been, classified as a disregarded entity for U.S. federal, state and local income tax purposes, and Global Fox and Cissell Distribution are classified as corporations for U.S. federal, state and local income tax purposes;

(g) No Acquired Company is liable for Taxes of any Person (other than Taxes imposed by the United States or any political subdivision thereof on any consolidated, combined, unitary or affiliated group of which any Acquired Company is a member) by virtue of being a member of a consolidated, combined, unitary or affiliated group, by contract, or as a transferee or successor or pursuant to a similar principle, in any taxing jurisdiction;

(h) There is no audit, investigation or other proceeding by any Governmental Authority in process or pending or, to the knowledge of any Seller, threatened in writing with respect to any Tax Returns of any Acquired Company or in respect of Assumed Liabilities that are Taxes;

(i) No deficiencies exist or have been asserted with respect to any Taxes of any Acquired Company or in respect of Assumed Liabilities that are Taxes that have not been settled and no Acquired Company has received written notice that it has not filed a Tax Return or paid Taxes required to be filed or paid by it;

(j) No Acquired Company is a party to any action or proceeding for assessment or collection of any Taxes;

(k) No Acquired Company has waived any statute of limitations in respect of any Taxes or agreed to any extension of time with respect to an assessment or deficiency for any Taxes (other than pursuant to extensions of time to file Tax Returns obtained in the ordinary course and other than Tax Returns filed on a consolidated, combined or unitary basis with LSG North America or any of its Affiliates) which waiver or extension is still in effect. No Seller has waived any statute of limitations in respect of any Assumed Liabilities that are Taxes which waiver is still in effect;

(l) No Acquired Company has participated in any “listed transaction” within the meaning of U.S. Treasury Regulation 1.6011-4(c)(3)(i)(A);

(m) None of the assets of any Acquired Company is “tax-exempt use property” within the meaning of Section 168(h) of the Code; and

(n) No Acquired Company will be required to include any material item of income in, or exclude any material item of deduction from, taxable income for any taxable period (or portion thereof) beginning after the Closing Date as a result of any agreement to or requirement to make any adjustments pursuant to Section 481 of the Code (or any predecessor provision) or any similar provision of foreign, state or local law by reason of a change in accounting methods made prior to the Closing, or has any knowledge that the U.S. Internal Revenue Service or any other taxing authority has proposed any such adjustment or change in accounting methods or has any application pending with any taxing authority requesting permission for any changes in accounting methods that relate to the business or operations of any Acquired Company. There is no taxable income of any Acquired Company that will be reportable in a taxable period beginning after the Closing Date as a result of (i) an installment sale or open transaction disposition that occurred prior to the Closing or (ii) a prepaid amount received prior to the Closing.

3.18 Insurance. Disclosure Schedule 3.18 contains a complete and correct list and summary description of all insurance policies maintained by (i) the Acquired Companies and (ii) by any Seller for the benefit of or in connection with the Acquired Assets or the Acquired Operations. During Second Phase Diligence, the Sellers will deliver to the Buyer complete and correct copies of all such policies together with all riders and amendments thereto. Such policies (or other policies providing substantially similar insurance coverage) have been in effect continuously during the past three years and remain in full force and effect. The Sellers have complied in all material respects with the terms and provisions of such policies. No Seller has received any notice of any pending material increase of premiums with respect to, or pending cancellation or non-renewal of, or disallowance of any claim under, any of the insurance policies. No Acquired Company and, with respect to the Acquired Operations, no Seller has been refused any insurance and no coverage has been limited by any insurance carrier to which any Acquired Company or Seller has applied for or received insurance during the past three years.

3.19 U.S. Indebtedness. Except as set forth in Disclosure Schedule 3.19, no Acquired Company, or with respect to the Acquired Operations, no Seller, has any outstanding Indebtedness other than Indebtedness that will be terminated or extinguished on or prior to the last day of the month immediately preceding the Closing Date.

3.20 Inventory. All inventory of raw materials, supplies, work-in-progress, finished goods and returned products of the Acquired Companies and, to the extent they relate to the Acquired Operations, of the Sellers (collectively, the “Inventory”), is of good, usable and merchantable quality in all material respects and, except as set forth on Disclosure Schedule 3.20, does not include obsolete or discontinued items. The quantities of each item of Inventory are not excessive, but are reasonable in the present circumstances of the Acquired Companies and the Acquired Operations. Except as set forth on Disclosure Schedule 3.20, and in each case in all material respects, (i) all Inventory is of a quality and quantity usable and sellable in the ordinary course of business and meeting any applicable governmental quality control standards; (ii) all Inventory that is finished goods is saleable as current Inventory at the current prices thereof in the ordinary course of business; (iii) all Inventory has been recorded at the lower of cost or market; and (iv) all obsolete items and items of below-standard quality have been reserved therefor, written off or written down to net realizable value in the Annual Accounts of the Sellers and the Acquired Companies.

3.21 Information Technology. The Sellers and the Acquired Companies own or have valid licenses or leases to use the computers, servers, telecommunications equipment, peripherals, other

hardware, software and other technology rights (the “Information Technology”) currently used or held for use by the Acquired Operations or the Acquired Companies. The material tangible assets included in the Information Technology and the material licenses, leases, maintenance, telecommunications, development, management and other agreements (the “Information Technology Contracts”) related to the Information Technology are listed on Disclosure Schedule 3.21. The material tangible assets in the Information Technology shall be covered by the representations in Section 3.10 and the Information Technology Contracts shall be deemed Material Contracts and covered by the representations in Section 3.11. Immediately after the Closing, the Buyer will own all of the owned Information Technology and, except as set forth on Disclosure Schedule 3.21, will have a right to use all other Information Technology used by or held for use by the Acquired Companies or the Acquired Operations free from any Liens and on the same terms and conditions as in effect prior to the Closing. The Information Technology owned by the Sellers and the Acquired Companies together with the Information Technology covered by the Information Technology Contracts comprises all of the Information Technology used or held for use in the Acquired Operations or by any Acquired Company.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF BUYER

As of the date hereof and as of the Closing Date, the Buyer represents and warrants to the Sellers as follows:

4.1 Corporate Status; Authorization, etc. The Buyer is duly organized, validly existing and in good standing, under the laws of the State of Delaware with full power and authority to execute and deliver this Agreement and the Ancillary Agreements to which it is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by the Buyer of this Agreement, and the Ancillary Agreements to which it is a party and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action of the Buyer. This Agreement and each of the Ancillary Agreements to which it is a party will be legal, valid and binding obligations of the Buyer, enforceable against it in accordance with their respective terms.

4.2 No Conflicts, etc. The execution, delivery and performance by the Buyer of this Agreement and each of the Ancillary Agreements to which it is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not conflict with or result in a violation of or under (with or without the giving of notice or the lapse of time, or both) (i) the Organizational Documents of the Buyer, (ii) any Applicable Law applicable to the Buyer or any of its properties or assets or (iii) any Contract, agreement or other instrument applicable to the Buyer or its properties or assets, except, in the case of clause (iii), for violations and defaults that, individually and in the aggregate, have not and will not materially impair the ability of the Buyer to perform its obligations under any of the Ancillary Agreements to which it is a party. There is no Governmental Approval or other Consent required to be obtained or made by the Buyer in connection with the execution and delivery of this Agreement or the Ancillary Agreements or the consummation of the transactions contemplated hereby and thereby.

4.3 Litigation. There is no Litigation pending or threatened against the Buyer relating to the transactions contemplated by this Agreement, and the Buyer knows or has no reason to be aware of any basis for the same.

ARTICLE V

COVENANTS

5.1 Second Phase Due Diligence.

(a) Prior to the Closing, the Buyer shall be entitled, through its employees and representatives, to perform a confirmatory legal, business, financial, operational, insurance, tax and accounting due diligence investigation of the Sellers, the Acquired Companies and the Acquired Operations in accordance with Clause 7.1 of the Share Purchase Agreement (the “Second Phase Due Diligence”).

(b) The Buyer agrees to formally notify LSG in writing within three Business Days of either the Chief Financial Officer or the Chief Executive Officer of the Buyer being informed or becoming aware of any material negative findings during the Second Phase Due Diligence, it being understood that the Buyer has instructed its advisors to inform its Chief Executive Officer or Chief Financial Officer of any such material negative findings without delay. Prior to Closing, all diligence findings which are specified in any notice delivered pursuant to this Section 5.1(b) shall be set forth on Schedule 5.1(b).

(c) Set forth on Schedule 5.1(c) are the material negative findings that became known to the Buyer’s Chief Executive Officer or Chief Financial Officer during the period commencing January 26, 2006, through the date hereof, it being understood that the Buyer has instructed its advisors to inform its Chief Executive Officer or Chief Financial Officer of any such material negative findings prior to the date hereof.

(d) For purposes of this Section 5.1, the term “material negative findings” shall in any case (without limitation) include findings with respect to any liabilities, facts or matters that can be used for purposes of determining whether a termination event under Clause 13.1.3 or 13.1.5 of the Share Purchase Agreement has occurred.

(e) The Buyer acknowledges that its advisors are aware of the notification duty set forth in sub-Sections (b) and (c) above.

5.2 Corporate Names. Cissell shall change its corporate name effective as of the Closing and thereafter each of the Sellers shall cease to use or do business under, directly or indirectly, or assist any third party in using or doing business under, any of the names “Cissell”, “IPSO”, “IPSO USA” or “Pantex” or any derivative or combination thereof or any name or mark confusingly similar thereto or any other name included in the Acquired Assets or used by the Acquired Companies or any other name or mark confusingly similar thereto.

5.3 Payment of Taxes and the Filing of Tax Returns. From the date hereof until Closing, the Sellers will make payments of Taxes and estimated Taxes and will file all Tax Returns in respect of the Acquired Assets and Acquired Companies, in each case in the ordinary course of business and consistent with past practices.

5.4 Cissell.

(a) For the period from the Closing Date through the fifth anniversary thereof, the Sellers will cause Cissell to at all times remain an on-going concern and LSG shall not, and shall not cause any of its Affiliates to liquidate, wind-up or otherwise dissolve Cissell without the prior written consent of the Buyer, which consent may be withheld in the Buyer’s sole discretion.

(b) Cissell agrees to take all actions necessary to maintain its rights under the Agreement and Plan of Merger, dated as of May 26, 1994, among Cissell and Dyson-Kissner-Moran Corporation and the other parties thereto and, as may be requested from time to time by the Buyer, to take all actions necessary to enforce its rights, including without limitation the rights set forth in Article IX thereunder for the benefit of Buyer.

5.5 Non-Solicitation. For the period from the Closing Date through the second anniversary thereof, without the prior written consent of the Buyer, no Seller shall, and each Seller shall cause its Affiliates not to, directly or indirectly, for the benefit of such Seller or for any other Person, solicit the employment of any employees, directors, consultants, independent contractors or agents or former employees, directors, consultants, independent contractors or agents of the Buyer, the Acquired Companies or the Acquired Operations provided that, (i) the Buyer hereby consents to the solicitation by the Sellers of employees of the Buyer’s Mariana, Florida, facility in the same manner in which such solicitation is conducted as of the date hereof and (ii) following the Closing, the Sellers and their Affiliates shall be permitted to solicit former employees of the Acquired Companies or the Acquired Operations who (A) are not employed by the Buyer immediately following the Closing or (B) are terminated by the Buyer, and provided further that neither the Sellers nor any of their Affiliates shall (x) induce any employee to terminate such employment or (y) solicit the employment of Phyllis Decker from the date hereof through the first anniversary of the Closing Date. For the avoidance of doubt, clause (y) shall only apply to the Sellers and their Affiliates if the Buyer offers an employment contract to Phyllis Decker pursuant to Section 7.1(b) that is effective as of the Closing Date with a minimum duration of one year.

5.6 Further Assurances; Cooperation. From time to time before or after the Closing, as and when requested by the Buyer or the Sellers, the Sellers or the Buyer, as the case may be, shall execute and deliver, or cause to be executed and delivered, all such documents and instruments and shall take, or cause to be taken, all such further or other actions, as the requesting party may reasonably deem necessary or desirable to consummate the transactions contemplated by this Agreement and the Ancillary Agreements, including, without limitation, transferring all Acquired Assets, obtaining all of the necessary governmental and third party Consents and, in the case of the

Sellers, reasonably cooperating with the Buyer and the Buyer’s representatives and advisors in connection with the financing of the transactions contemplated by this Agreement, including without limitation assisting the Buyer with the updating or replacement of the existing policy of title insurance applicable to the facility located at 130 Davis Street in Portland, Tennessee, it being understood that the financing is not a condition to the Closing.

5.7 Confidential Nature of this Agreement and Publicity. The Sellers and the Buyer agree that, from the date hereof through the Closing Date, no public release or announcement concerning the transaction contemplated hereby (including the disclosure of any part of this Agreement or even its very existence) shall be issued by either party without the prior consent of the other party (which consent shall not be unreasonably withheld), except as such release or announcement may be required by Applicable Law, or the rules or regulations of any United States or foreign securities exchange, in which case the party required to make the release or announcement shall allow the other party reasonable time to comment on such release or announcement in advance of such issuance. This Section 5.7 shall be without prejudice to the right of the parties to disclose information and documents (including this Agreement) to their advisors, financial partners or potential financial partners, provided that such Persons agree to maintain the confidentiality of the information.

5.8 Records; Access. On the Closing Date, the Sellers shall deliver or cause to be delivered to the Buyer all the original Contracts, documents, records, books, books of account, invoices and files of the Acquired Companies or relating to the Acquired Operations (collectively, “Records”), subject to the following exceptions:

(a) the Buyer recognizes that certain Records may contain incidental information relating to the Sellers or may relate primarily to Excluded Assets and/or Excluded Liabilities and that the Sellers may retain such Records and shall provide copies of the relevant portions thereof to the Buyer;

(b) the Sellers may retain any Tax Returns and any Records relating thereto (including payroll Records and paid invoices). The Buyer shall be provided with copies of such Tax Returns and Records only to the extent that they relate to the Acquired Companies, the Acquired Operations or the Acquired Assets or to the Buyer’s obligations under this Agreement. The Sellers shall not dispose of or destroy such Records without first offering to turn over possession thereof to the Buyer (at the Buyer’s expense) by written notice to the Buyer at least 60 days prior to the proposed date of such disposition or destruction; and

(d) After the Closing, upon reasonable written notice, the Buyer and the Sellers agree to furnish or cause to be furnished to each other and their representatives, employees, counsel and accountants reasonable access, during normal business hours, to such information and Records pertinent to the Acquired Operations and assistance (relating to the Acquired Operations) as is reasonably necessary for financial reporting, benefits administration and accounting matters, the preparation and filing of any Tax Returns or other filings required to be made with any Governmental Authority, the defense of any Tax claim or assessment or other claim or in respect of other legitimate matters related to Taxes; provided, however, that such access does not unreasonably disrupt the normal operations of the Sellers, the Buyer or the Acquired Operations.

5.9 Operation of the Acquired Operations and the Acquired Companies. During the period from the date hereof to the Closing, except as otherwise contemplated by this Agreement or as Buyer otherwise agrees in writing in advance, the Sellers shall conduct the Acquired Companies and the Acquired Operations in the ordinary course consistent with past practice and use their commercially reasonable efforts to preserve the Acquired Operations and their relationship with their customers, suppliers, landlords, creditors and employees. During the period from the date hereof to the Closing, except as otherwise contemplated by this Agreement or as Buyer shall otherwise consent, the Sellers shall not, with respect to the Acquired Operations or any Acquired Company: (i) terminate or materially modify any Material Contract or lease or enter into any Contract other than in the ordinary course of business consistent with past practice; (ii) accelerate the delivery or sale of products or the incurrence of capital expenditures, or use extended terms or unusual levels of promotion for its products towards its ordinary customers or otherwise offer discounts on sale of products or premiums on purchase of raw materials, except in the ordinary course of business; (iii) make any Tax election, change any Tax election, settle any Tax audit or change or adopt any method of Tax accounting that could be reasonably expected to have a material adverse effect on the Acquired Company or the Buyer; (iv) take any action to change accounting policies or procedures (including procedures with respect to revenue recognition, payments of accounts payable and collection of accounts receivable) except as required by a change in generally accepted accounting principles occurring after the date hereof; (v) engage in any transactions outside the ordinary course of business between the date hereof and through the Closing that would materially increase the Taxes for which the Buyer is responsible under this Agreement or that could reasonably be expected to have a material adverse effect on the Taxes of any Acquired Company after the date hereof, other than transactions expressly contemplated or permitted by this Agreement or the Share Purchase Agreement; (vi) engage in any transaction that would result in any change in the ownership or form of organization of any Acquired Company, other than transactions expressly contemplated or permitted by this Agreement or the Share Purchase Agreement; and (vii) announce an intention, enter into any formal or informal agreement or otherwise make a commitment, to do any of the foregoing. The Sellers shall promptly notify the Buyer in writing upon becoming aware of any event, condition or circumstance occurring from the date hereof to the Closing that would, or would be reasonably likely to, cause a material change in the Acquired Operations or any Acquired Company, including, but not limited to, the loss or foreseeable loss of a major customer or supplier or a significant product recall.

5.10 Notification of Breaches of Representations or Covenants.

(a) At all times prior to the Closing, the Sellers shall promptly notify the Buyer in writing of any fact, condition, event or occurrence that will or may result in a breach of any of the Sellers’ representations and warranties or covenants upon becoming aware of the same. This notice shall be given within five days of any Seller becoming aware of such fact, condition, event or occurrence and shall describe the details of such fact, condition, event or occurrence.

(b) At all times prior to Closing, the Buyer shall promptly notify the Seller in writing of any fact, condition, event or occurrence that will or may result in a breach of any of the Buyer’s representations and warranties or covenants upon becoming aware of the same. This notice shall be given within five days of the Buyer becoming aware of such fact, condition, event or occurrence and shall describe the details of such fact, condition, event or occurrence.

(c) Prior to the Closing Date, LSG shall deliver a written notice to the Buyer specifying whether or not a Repetition Default has occurred as described in Section 6.2(a) and describing in reasonable detail the basis thereof (if any). In the event of a Repetition Default, the Buyer shall have the right to terminate this Agreement on or before the Closing Date (and if on the Closing Date, prior to the Closing taking place). Any disputes between the Buyer and Sellers with respect to the occurrence of a Repetition Default shall be settled in accordance with Section 12.8.

5.11 Confidentiality. Except as otherwise provided in this Agreement,

(i) the Sellers will, and will cause their Affiliates (and their respective accountants, counsel, consultants, employees and agents to whom they disclose such information) to keep confidential all information in the possession of the Sellers after the Closing that in any way relates to the Acquired Companies, the Acquired Operations or the Acquired Assets; and

(ii) the Buyer will, and will cause its Affiliates (and their respective accountants, counsel, consultants, employees and agents to whom they disclose such information) to, keep confidential all information in the possession of the Buyer that relates to the Sellers and is not information solely related to the Acquired Companies, the Acquired Operations (other than the Excluded Assets) and the Acquired Assets.

The provisions of this Section 5.11 shall not apply to the disclosure by either party hereto or their respective Affiliates of any information, documents or materials (i) which are, or become, publicly available, other than by reason of a breach of this Section 5.11 by the disclosing party or any Affiliate of the disclosing party, (ii) received from a third party not bound by any confidentiality agreement with the other party hereto, (iii) required by Applicable Law to be disclosed by such party, or (iv) necessary to establish such party’s rights under this Agreement or any Ancillary Agreement, provided that, in the case of clauses (iii) and (iv), the Person intending to make disclosure of confidential information will promptly notify the party to whom it is obliged to keep such information confidential and, to the extent practicable, provide such party a reasonable opportunity to prevent public disclosure of such information.

5.12 Intellectual Property Registrations. Prior to the Closing, the Sellers shall prepare or cause to be prepared and shall file or cause to be filed for recording in the United States Patent and Trademark Office or other filing offices, as appropriate, documents in substance and form reasonably satisfactory to the Buyer so that all Owned Intellectual Property subject to an application or registration or issued in the name of an entity that is not a Seller or Acquired Company shall be owned as of record in the name of such Seller or Acquired Company.

5.13 Unique IPH Product Line Assets. Following the Closing, the Sellers hereby agree to transfer and convey to the Buyer all engineering drawings, Intellectual Property, finished goods inventory and all unique tooling and dedicated capital equipment used for the manufacture of Jensen’s IPH washer-extractor product line (collectively, the “IPH Assets”) to the extent such IPH Assets have not been identified and disclosed on Schedule 1.2(h) and are subsequently discovered by either party. All transfers made in accordance with this Section 5.13 shall be at the sole expense of the Sellers, without any cost or liability to the Buyer.

5.14 Limitations on the Representations and Warranties of the Sellers.

(a) As of the date of this Agreement, the contents and scope of any representation or warranty made by any Seller shall be limited only by:

(i) the content of this Agreement, including any Schedule hereto (other than Schedule 5.1(c)), but only to the extent that any reasonable and diligent person would interpret a specific section or Schedule as pertaining to and limiting a representation or warranty made by a Seller in or pursuant to this Agreement;

(ii) the information which is fully and fairly disclosed in the Disclosure Schedules but only to the extent that any reasonable and diligent person would interpret a specific disclosure as pertaining to and limiting a representation or warranty made by a Seller; and

(iii) those diligence findings which are described in Schedule 5.14(a).

(b) After the Closing Date and (for the avoidance of doubt) provided that Closing occurs, the contents and scope of any representation or warranty made by any Seller, as repeated pursuant to Clause 6.2(a), shall for the purposes of Section 10.2(a) be limited by:

(i) the items indicated in Section 5.14(a);

(ii) subject to Section 5.14(c), all matters set forth in Schedules 5.1(b) and 5.1(c), each of which has been used for purposes of determining whether a termination event has occurred under Clause 13.1.3 or Clause 13.1.5 of the Share Purchase Agreement, irrespective of whether on the basis of such matters (A) such a termination event has occurred, and the Buyer thus has the right to terminate the Share Purchase Agreement pursuant to Clause 13.1.3 or Clause 13.1.5 thereof but has not exercised such right or (B) such a termination event has not occurred, and the Buyer thus does not have the right to terminate the Share Purchase Agreement pursuant to Clause 13.1.3 or Clause 13.1.5 thereof; and

(iii) subject to Section 5.14(c), all matters specified in the Seller’s notice pursuant to Section 5.10(c) irrespective of whether (A) a Repetition Default has occurred, and the Buyer thus has the right to terminate this Agreement under Section 5.10(c), but has not exercised that right or (B) no Repetition Default has occurred and the Buyer thus does not have the right to terminate this Agreement under Section 5.10(c).

(i) subject to sub-clause (ii) of this Section 5.14(c), only limit the representations and warranties made by the Sellers in this Agreement to the extent that any reasonable and diligent person would interpret such matter as pertaining to and limiting a representation and warranty made by a Seller; and

(ii) not limit the representations and warranties made by the Sellers in this Agreement with respect to any matter that was known by any Seller prior to the execution of this Agreement.

ARTICLE VI

CONDITIONS PRECEDENT

6.1 Conditions to Obligations of Each Party. The obligations of the parties to consummate the transactions contemplated hereby shall be subject to the fulfillment on or prior to the Closing Date of the following conditions:

(a) No Injunction, etc. Consummation of the transactions contemplated hereby shall not have been restrained, enjoined or otherwise prohibited by any Applicable Law, including any order, injunction, decree or judgment of any court or other Governmental Authority. No court or other Governmental Authority shall have determined any Applicable Law to make illegal the consummation of the transactions contemplated hereby and no proceeding with respect to the application of any such Applicable Law to such effect shall be pending.

6.2 Conditions to Obligations of the Buyer. The obligations of the Buyer to consummate the transactions contemplated hereby shall be subject to the fulfillment (or waiver by the Buyer) on or prior to the Closing Date of the following additional conditions, which the Seller agrees to use reasonable good faith efforts to cause to be fulfilled:

(a) Representations and Warranties. The representations and warranties of the Sellers contained in this Agreement shall be true and correct (without giving effect to any limitation on any representation or warranty indicated by the words “Material Adverse Effect,” “in all material respects,” “in any material respect,” “material” or “materially”) as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date, except where the failure of any such representations and warranties to be so true and correct individually or in the aggregate, would not reasonably be expected to result in (i) an adverse impact on the CLD Companies and the Acquired Operations taken as a whole in excess of €3,500,000 in the aggregate (calculated without giving effect to any Tax effect), or (ii) a decrease in the CLD Companies’ and/or the Acquired Operations’ consolidated historical or projected EBITDA in excess of €450,000 (such circumstance being a “Repetition Default “), it being understood that only those matters described in Section 5.14(a) shall limit the representations and warranties of the Sellers made herein for purposes of determining whether the representations and warranties of the Sellers are true and accurate as at the Closing.

(b) Performance of Covenants. Each Seller shall have duly performed and complied in all material respects with all agreements and conditions required by this Agreement and each of the Ancillary Agreements to be performed or complied by it prior to or on the Closing Date.

(c) Satisfaction of Conditions under the Share Purchase Agreement. The satisfaction or waiver by the Buyer of all conditions to the Buyer’s obligations under the Share Purchase Agreement, it being understood that the closings of the transactions contemplated by the Share Purchase Agreement and this Agreement shall occur contemporaneously.

(d) No Material Adverse Change. Since December 31, 2005, there shall not have occurred a Material Adverse Change.

(e) Ancillary Agreements. The Sellers or one of its Affiliates, as the case may be, shall have entered into each of the following agreements with the Buyer (collectively, the “Ancillary Agreements”):

(i) a supply agreement with respect to the IPH product line, in the form attached hereto as Exhibit A (the “IPH Supply Agreement”);

(ii) a letter agreement with respect to “Jensen” labeled products, in the form attached hereto as Exhibit B;

(iii) a transitional services agreement with respect to the IPH Product Line in the form attached hereto as Exhibit C;

(iv) a transitional services agreement with respect to the Fort Mill, South Carolina, operations in the form attached hereto as Exhibit D; and

(v) a lease agreement, in the form attached hereto as Exhibit E with respect to the Louisville Facility (the “Louisville Lease”).

(f) FIRPTA Certificate. The Sellers shall have furnished the Buyer with certificates complying with the requirements of U.S. Treasury Regulations 1.1445-(2)(b) to the effect that no Seller (other than LSG) is a foreign Person.

(g) Termination of Tax Sharing Agreements. The Sellers shall have terminated all Tax Sharing Agreements to which any Acquired Company is a party, and no Acquired Company shall have any further obligation or rights thereunder from and after the Closing Date.

(h) Transfer Instruments. All other instruments of transfer, including, without limitation, deeds, bills of sale, and lease assignments duly executed by the Sellers as are necessary or appropriate to vest in the Buyer good and valid fee or leasehold title as applicable to the Acquired Assets shall have been executed and delivered to the Buyer.

(i) Termination of Certain Agreements. The Sellers shall have terminated the agreements set forth on Schedule 6.2(i).

(j) Consents. The Sellers shall have obtained and delivered to the Buyer, consents, in form reasonably satisfactory to the Buyer, to the transactions contemplated hereby from the Persons whose Consent is required for the transfer of assignment to the Buyer of any of the Acquired Assets under each of the agreements identified in Schedule 6.2(j).

(k) Release of Security Interests. The Sellers shall have prepared or caused to be prepared and shall file or cause to be filed documents in form reasonably satisfactory to the Buyer releasing all Liens (other than Permitted Liens) on the Acquired Assets, Acquired Companies and the Owned Intellectual Property, including but not limited to Liens encumbering the IPH Product Line, and shall have delivered to the Buyer evidence of the release of such Liens.

(l) The Sellers shall have obtained and delivered to the Buyer amendments, substantially in the form set forth on Exhibit F, to each of the following letter agreements concerning the Leased Real Property in Fort Mill, South Carolina: (i) Letter Agreement, dated as of July 14, 2005, by and

between Jensen USA, Inc. (Ipso Division) and AKAB of America, Inc., and (ii) Letter Agreement, dated as of July 14, 2005, by and between Jensen USA, Inc. (Ipso Division) and Jensen USA, Inc. (HDLD Division).

(m) Closing Certificate and Evidence. Each Seller shall have delivered to the Buyer (i) a certificate, dated the Closing Date and signed by a duly authorized officer, to the effect that the conditions set forth in Sections 6.2(a), 6.2(b), 6.2(c) and 6.2(d) have been satisfied and (ii) evidence reasonably satisfactory to the Buyer that the conditions set forth in Sections 6.2(g), 6.2(i), 6.2(j), 6.2(k) and 6.2(l) have been satisfied.

6.3 Conditions to Obligations of the Sellers. The obligation of the Sellers to consummate the transactions contemplated hereby shall be subject to the fulfillment (or waiver by LSG), on or prior to the Closing Date, of the following additional conditions, which the Buyer agrees to use reasonable good faith efforts to cause to be fulfilled:

(a) Representations, Performance, etc. Each of the representations and warranties of the Buyer contained in this Agreement shall be true and correct in all material respects as of the date hereof and as of the Closing Date as if made on and as of the Closing Date. The Buyer shall have duly performed and complied in all material respects with all agreements and conditions required by this Agreement and each of the Ancillary Agreements to be performed or complied by it prior to or on the Closing Date.

(b) Closing Certificate. The Buyer shall have delivered to LSG a certificate, dated the Closing Date and signed by a duly authorized officer, to the effect that the conditions set forth in Sections 6.3(a) have been satisfied.

ARTICLE VII

EMPLOYMENT MATTERS

7.1 Employment of Sellers’ Employees.

(a) The Sellers will use all reasonable efforts to cause the active Employees to make available their employment services to the Buyer. Except as otherwise set forth in Section 5.5, for a period of two years from the Closing Date, the Sellers will not, and will not permit any of their Affiliates to, solicit, offer to employ or retain the services of or otherwise interfere with the relationship of the Buyer with any Person employed by or otherwise engaged to perform services for the Buyer in connection with the operation of the Acquired Operations.

(b) Except as set forth on Schedule 7.1(b), effective as of the Closing Date, the Buyer shall offer employment to or, in the case of the Acquired Companies, shall continue to employ, each active Employee at the same position and at the same base salary, annual bonus opportunity or sales commission opportunity (if applicable) as in effect immediately prior to the Closing Date, at a level of benefits comparable to that provided to similarly situated employees of the Buyer and, for one year after the Closing, severance that is no less favorable than that provided by the Sellers or the Acquired Companies to the Employee as of the date hereof. Those Employees who accept such offers of employment and commence employment effective as of the Closing Date shall be referred to herein as the “Transferred Employees.”

(c) Effective as of the Closing Date, the Buyer shall comply in all material respects with the terms of the collective bargaining agreement between Cissell and District Lodge No. 27, International Association or Machinists and Aerospace Workers, A.F.L.-C.I.O. Local Lodge 681.

7.2 Benefit Plans. From and after the Closing, the Buyer or an Affiliate of the Buyer designated by the Buyer shall assume sponsorship of each Benefit Plan sponsored by Cissell and the severance and accrued vacation pay obligations of Jensen relating to the Acquired Operations as set forth on Disclosure Schedule 3.15(a). Subject to Section 10.2(a), the Buyer shall assume liabilities with respect to each Benefit Plan sponsored by Cissell. Except for severance pay and accrued vacation time, the Buyer shall not be responsible for or assume any liability under any Benefit Plan not sponsored by Cissell.

7.3 Workers’ Compensation. From and after the Closing Date, the Sellers shall, jointly and severally, remain solely responsible for any and all Liabilities to or in respect of any Employee relating to or arising in connection with any and all claims for workers’ compensation benefits arising in connection with any occupational injury or disease occurring or existing on or prior to the Closing Date, including all incurred but not reported claims and/or occurrences. Notwithstanding the foregoing, if the Sellers are liable for any such occupational injury or disease pursuant to this Section 7.3, but the Sellers are not insured for such occupational injury or disease and the Buyer or an Affiliate of the Buyer is insured for such occupational injury or disease, the parties agree that in that event the claim(s) shall be presented to the Buyer’s (or, if applicable, to an Affiliate of the Buyer’s) workers’ compensation carrier for coverage consistent with the terms of the Buyer’s (or its Affiliate’s) policy.

7.4 Employment Taxes.

(a) The Sellers and the Buyer will (i) treat the Buyer and each Affiliate thereof, as applicable, as a “successor employer” and each Seller (as applicable) as a “predecessor,” within the meaning of sections 3121(a)(1) and 3306(b)(1) of the Code, with respect to Transferred Employees who are employed by the Buyer or such Affiliates for purposes of Taxes imposed under the United States Federal Unemployment Tax Act (“FUTA”) or the United States Federal Insurance Contributions Act (“FICA”) and (ii) cooperate with each other to avoid, to the extent possible, the filing of more than one IRS Form W-2 with respect to each such Transferred Employee for the calendar year within which the Closing Date occurs.

(b) At the request of the Buyer with respect to any particular applicable Tax law relating to employment, unemployment insurance, social security, disability, workers’ compensation, payroll, health care or other similar Tax other than Taxes imposed under FICA and FUTA, Sellers will (i) treat the Buyer and each Affiliate thereof, as applicable, as a successor employer and each Seller, as applicable, as a predecessor employer, within the meaning of the relevant provisions of such Tax law, with respect to Transferred Employees who are employed by the Buyer (or, if applicable, any Affiliate thereof) and (ii) cooperate with each other to avoid, to the extent possible, the filing of more than one individual information reporting form pursuant to each such Tax law with respect to each such Transferred Employee for the calendar year within which the Closing Date occurs.

ARTICLE VIII

TERMINATION

8.1 Termination. This Agreement may be terminated at any time prior to the Closing Date:

(a) By the written agreement of the Buyer and the Seller;

(b) by any party hereto by providing 15 days prior written notice to the other parties hereto if:

(i) the Closing shall not have been consummated on or before 90 days from the date hereof (the “End Date”), provided that the right to terminate this Agreement pursuant to this Section 8.1 shall not be available to any party whose breach of any provision of this Agreement results in the failure of the Closing to be consummated by such time;

(ii) (A) there shall be any Applicable Law that makes consummation of the Closing illegal or otherwise prohibited or (B) any judgment, injunction, order or decree of any Governmental Authority having competent jurisdiction enjoining the Buyer or the Seller from consummating the Closing is entered and such judgment, injunction or order shall have become final and nonappealable.

(c) automatically, without further action by any party hereto upon the termination of the Share Purchase Agreement in accordance with the terms thereof;

(d) by the Buyer by providing 15 days prior written notice to LSG, if a breach of any representation or warranty or failure to perform any covenant or agreement on the part of any Seller set forth in this Agreement shall have occurred that would cause any condition set forth in Section 6.2 not to be satisfied, and such condition is incapable of being satisfied by the End Date, unless such failure shall be due to the failure of the Buyer to perform or comply with any of the covenants, agreements or conditions hereof to be performed or complied with by it prior to the Closing;

(e) by LSG by providing 15 days prior written notice to the other parties hereto, if a breach of any representation or warranty or failure to perform any covenant or agreement on the part of the Buyer set forth in this Agreement shall have occurred that would cause the condition set forth in Section 6.3 not to be satisfied and such condition is incapable of being satisfied by the End Date, unless such failure shall be due to the failure of the Seller to perform or comply with any of the covenants, agreements or conditions hereof to be performed or complied with by it prior to the Closing; or

(f) by the Buyer pursuant to Section 5.10(c).

8.2 Effect of Termination. If this Agreement is terminated pursuant to Section 8.1, this Agreement shall become void and of no effect without liability of any party (or any of its directors, officers, employees, stockholders, Affiliates, agents, representatives or advisors) to the other party hereto, provided that, if such termination shall result from the willful (a) failure of either party to fulfill a condition to the performance of the obligations of the other party or (b) failure of either party to perform a covenant hereof, such party shall be fully liable for any and all liabilities and damages incurred or suffered by the other party as a result of such failure. The provisions of this Section 8.2 and Sections 5.7, 5.11 and 11.2, 12.1, 12.2, 12.3, 12.7, 12.8 and 12.12 shall survive any termination hereof.

ARTICLE IX

TAX MATTERS

9.1 Indemnification.

(a) The Sellers shall be responsible for and jointly and severally shall defend, indemnify and hold harmless the Buyer and its Affiliates and each of their respective officers, directors, employees, agents, advisers and representatives (collectively, the “Buyer Indemnitees”) from and against, and shall pay, all Indemnified Taxes of, or with respect to, or payable by, any Acquired Company that are either (i) attributable to any Pre-Closing Period, (ii) Taxes of a Person other than an Acquired Company, if such Acquired Company is liable for the payment of such Taxes, as a result of such Acquired Company’s having been affiliated with such Person prior to the Closing (other than Taxes of any Seller that are Assumed Liabilities), (iii) Taxes arising by virtue of any Tax Sharing Agreement entered into on or prior to the Closing that is not cancelled pursuant to Section 6.2(f) of this Agreement or (iv) attributable to the transfer of the Acquired Stock.

(b) The Sellers jointly and severally shall defend, indemnify and hold harmless the Buyer Indemnitees from and against, and pay or reimburse the Buyer Indemnitees for, any and all Taxes resulting from, arising out of or relating to:

(i) any inaccuracy in or breach of any representation or warranty set forth in Section 3.17 of this Agreement (it being understood that such representations and warranties shall have the survival period provided for in Section 10.1(v) of this Agreement);

(ii) any liability for Taxes that is an Excluded Liability; and

(iii) the Pre-Closing Restructuring as defined in the Share Purchase Agreement.

(c) Buyer shall defend, indemnify and hold harmless the Seller Indemnitees from and against, and pay or reimburse the Sellers, and their respective officers, directors, employees, agents, advisers and representatives (collectively, the “Seller Indemnitees”) for, any and all Taxes paid by the Seller Indemnitees that are Assumed Liabilities.

9.2 Tax Returns, Elections, etc.

(a) The Sellers shall have the exclusive authority and obligation on behalf of the Acquired Companies to prepare, execute and timely file, or cause to be prepared, executed and timely filed, all Tax Returns that are due on or before the Closing Date or that relate to Income Taxes for any period that ends on or prior to the Closing Date. The Sellers shall have the exclusive authority and obligation to prepare, execute and timely file, or cause to be prepared, executed and timely filed, all Tax Returns of the Sellers that relate to Assumed Liabilities that are Taxes for any period that ends on or prior to the Closing Date. Sellers shall file, or cause to be filed, any Tax

Returns described in this Section 9.2(a) in a manner consistent with the prior practices and positions of the relevant Persons unless such treatment is no longer permitted by Applicable Law. The Sellers will not amend, and will not cause any Acquired Company to amend, any Tax Returns in respect of any of the Acquired Assets or Acquired Companies after the date hereof without Buyer’s written consent, which consent shall not be unreasonably withheld. With respect to any Tax Return which includes a Pre-Closing Period for which the Buyer may be required to pay Assumed Liabilities that are Taxes, the Sellers shall provide Buyer with draft copies of such Tax Return and an opportunity to review and comment on such Tax Return at least 30 days prior to the date for filing such Tax Return. The Sellers shall in good faith take into account such comments as are reasonably made by the Buyer in their preparation of such Tax Returns.

(b) Except as provided in Section 9.2(a), the Buyer shall have the exclusive authority and obligation to prepare and timely file, or cause to be prepared and timely filed, all Tax Returns of or relating to the Acquired Companies or Acquired Assets required to be filed after the Closing Date. Any such Tax Return prepared by the Buyer with respect to a Pre-Closing Period shall be prepared by treating items on such Tax Return in a manner consistent with the prior practices and positions of the relevant Person(s) unless such treatment is no longer permitted by applicable law. The Buyer will not amend, and will not cause any Acquired Company to amend, any such Tax Return with respect to a Pre-Closing Period without the Sellers’ written consent, which consent shall not be unreasonably withheld. With respect to any such Tax Return which includes a Pre-Closing Period for which the Sellers may be required to indemnify the Buyer under Section 9.1, the Buyer shall provide the Sellers with draft copies of such Tax Returns and an opportunity to review and comment on such Tax Returns at least 30 days prior to the date for filing such Tax Returns. The Buyer shall in good faith take into account such comments as are reasonably made by the Sellers in its preparation of such Tax Returns.

9.3 Tax Audits, Assistance and Cooperation.

(a) The Sellers or Buyer, as the case may be, shall notify the other party within 20 days upon receipt by such first party or any of its Affiliates of written notice of any pending or threatened federal, state, local or foreign Tax audits, examinations, notices of deficiency or other adjustments, assessments or redeterminations (“Tax Matters”) relating to Taxes for which such other party or its Affiliates may be responsible under Section 9.1.

(b) The Sellers shall have the sole right to control, contest, resolve and defend against any Tax Matters relating to Taxes of any Acquired Company for which the Sellers are obligated to indemnify Buyer under Section 9.1 and against any Tax Matters relating to Assumed Liabilities that are Taxes to the extent such Assumed Liabilities relate to any Pre-Closing Period, and to employ counsel of their choice at their own expense; provided, however, that (i) the Sellers shall keep Buyer informed with respect to the commencement, status and nature of any such Tax Matter, notify Buyer of significant developments with respect to such Tax Matter and consult with Buyer with respect to any issue that could reasonably be expected to have a material cost to Buyer or any Acquired Company, and (ii) neither the Sellers nor any of their respective Affiliates shall enter into any settlement of, or otherwise compromise, any such Tax Matter to the extent that any such settlement or compromise could reasonably be expected to have a material cost to Buyer or any Acquired Company unless the Sellers jointly and severally indemnify and hold harmless Buyer Indemnitees from and against any such cost.

(c) Buyer shall have the sole right to control all Tax Matters described in this Section 9.3 not controlled by the Sellers pursuant to Section 9.3(b).

(d) After the Closing Date, each of the Sellers and Buyer shall (and shall cause their respective Affiliates, including each of the Acquired Companies, to):

(i) assist the other party in preparing any Tax Returns which such other party is responsible for preparing and/or filing in accordance with Section 9.2;

(ii) maintain and make available to the other party, on such other party’s reasonable request, copies of any and all information, books and records necessary to prepare and/or file any Tax Return or to respond to audits by any Governmental Authority, for the full period of the applicable statute of limitations, including any extensions thereof, with respect to the relevant Taxes. After the applicable period, the Sellers or Buyer may dispose of such information, books and records provided that prior to such disposition, the Sellers or Buyer shall give the other party the opportunity to take possession of such information, books and records;

(iii) upon reasonable notice and without undue interruption to the business of such party or the Acquired Companies, as the case may be, provide access during normal business hours to the books and records of such party or the Acquired Companies relating to the Taxes of or relating to the Acquired Companies or Acquired Assets prior to the Closing Date;

(iv) promptly furnish the other party with copies of all correspondence received from any Governmental Authority in connection with any Tax Matter relating to the Acquire Companies or Acquired Assets or information request with respect to any taxable period for which the other party may have a liability under Section 9.1; and

(v) timely provide to the other party powers of attorney or similar authorizations reasonably necessary to carry out the purposes of this Section 9.3.

9.4 Disputes. If the parties disagree as to the calculation of any amount relating to Taxes governed by Section 9.1 or preparation of Tax Returns under Section 9.2, the parties shall promptly consult with each other and endeavor in good faith, for a period of 30 days, to resolve any such disagreements (each disagreement not so resolved, a “Tax Dispute”). Thereafter, either party may submit the resolution of any Tax Disputes to the New York office of Deloitte & Touche LLP or, if Deloitte & Touche LLP is conflicted out, to the New York office of KPMG LLP, to resolve the dispute. The Accounting Arbitrator shall only be authorized as directed by the parties on any one issue to either (i) decide in favor of and choose the position of either of the parties or (ii) decide upon a compromise position within the range of positions presented by the parties to the Accounting Arbitrator. The Accounting Arbitrator shall base its decision solely upon the presentations of the parties to the Accounting Arbitrator at a hearing held before the Accounting Arbitrator and upon any materials made available by either party and not upon independent review. The Accounting Arbitrator shall be instructed to resolve the Tax Disputes and such resolution shall be (i) set forth in writing and signed by the Accounting Arbitrator, (ii) delivered to Buyer and the Sellers as soon as practicable after the Tax Disputes are submitted to the Accounting Arbitrator but not later than the 30th day after the Accounting Arbitrator is instructed to resolve the Tax Disputes, (iii) made in

accordance with this Agreement, and (iv) final, binding and conclusive on the parties on the date of delivery of such resolution. Any expenses relating to the engagement of the Accounting Arbitrator shall be shared equally by the parties.

9.5 Refunds and Tax Credits. Subject to the provisions of Section 9.6, (a) the Sellers shall be entitled to retain, or the Sellers shall be entitled to receive immediate payment from the relevant Acquired Company or Buyer of, any refund or credit with respect to Taxes, plus any interest received with respect thereto (net of any Tax cost arising out of such receipt) from the applicable Governmental Authorities, relating to any Acquired Company that are described as being the responsibility of the Sellers in Section 9.1(a), and (b) Buyer, or any Acquired Company, shall be entitled to retain, or shall be entitled to receive immediate payment from the Sellers of, any other refund or credit with respect to Taxes, plus any interest received with respect thereto (net of any Tax cost arising out of such receipt) from the applicable Governmental Authorities, relating to any Acquired Company or Acquired Assets.

Buyer and the Sellers shall cooperate, and shall cause their respective Affiliates to cooperate, with respect to claiming any refund or credit with respect to Taxes referred to in this Section 9.5. Such cooperation shall include providing all relevant information available to the Sellers or Buyer, as the case may be, with respect to any such claim; filing and diligently pursuing such claim (including by litigation, if appropriate); paying over to the Sellers or Buyer, as the case may be, and in accordance with this provision, any amount received by Buyer (or any Acquired Company) or the Sellers (or any subsidiary or Affiliates thereof), as the case may be, with respect to such claim; and, in the case of the party filing such a claim, consulting with the other party prior to agreeing to any disposition of such claim, provided that the foregoing shall be done in a manner so as not to interfere unreasonably with the conduct of the business of the parties. The party that is to enjoy the economic benefit of a refund under this Section 9.5 shall bear the reasonable out-of-pocket expenses of the other party incurred in seeking such refund. Any dispute regarding a party’s entitlement to a payment in respect of a refund shall be resolved pursuant to the Tax Dispute resolution mechanism in Section 9.4.

9.6 Carrybacks. To the extent permitted by law, Buyer shall cause each Acquired Company to elect to relinquish any carryback of net operating losses, net capital losses, unused tax credits and other deductible or creditable tax attributes arising in a period beginning after the Closing Date to a consolidated, combined or unitary Tax Return for any Pre-Closing Period. In cases where an Acquired Company is not permitted by law to relinquish the carryback, any net Tax benefit actually realized by the Sellers (as reasonably determined by the Sellers as set forth in reasonably detailed calculations to be provided by the Sellers to Buyer) shall be remitted by the Sellers to Buyer at the time such Tax benefit is realized.

ARTICLE X

SURVIVAL; INDEMNIFICATION; CERTAIN REMEDIES

10.1 Survival. All claims for indemnification under Section 10.2(a) or Section 10.3(a) with respect to the representations and warranties contained herein must be asserted on or prior to the date that is 30 days after the termination of the respective survival periods set forth in this Section 10.1. The representations and warranties contained in this Agreement shall survive the execution and delivery of this Agreement, any examination by or on behalf of the parties hereto and the completion of the transactions contemplated herein, but only to the extent specified below:

(i) except as set forth in clauses (ii) through (v) below, the representations and warranties contained in Article III and Article IV shall survive for a period of 18 months following the Closing Date;

(ii) the representations and warranties of the Sellers contained in Sections 3.4(b) (“Acquired Companies”) and 3.10(a) (“Assets”) shall survive for the applicable statute of limitations;

(iii) the representations and warranties of the Sellers contained in Sections 3.15 and 3.16 (“Employee Labor Matters” and “Employee Benefit Plans and Related Matters; ERISA”) shall survive for a period of 18 months following the Closing Date, provided that such representations and warranties shall survive for the applicable statute of limitations with respect to any matter that is the subject of ERISA or the Code;

(iv) the representations and warranties of the Sellers contained in Section 3.14 (“Environmental Matters”) shall survive for a period of 5 years following the Closing Date; and

(v) the representations and warranties of the Seller contained in Section 3.17 shall survive as to any Tax covered by such representations and warranties for 60 days following the expiration of the applicable statute of limitations.

10.2 Indemnification by Seller. The Sellers jointly and severally shall defend, indemnify and hold harmless the Buyer Indemnitees from and against, and pay or reimburse the Buyer Indemnitees for, any and all Losses suffered by the Buyer Indemnitees (other than Losses in respect of Taxes, which shall be governed by Article IX of this Agreement):

(a) which would have not been suffered by them if every representation or warranty when made or deemed made by any Seller, as such representation or warranty is updated as at Closing pursuant to Section 5.14(b) and qualified and limited pursuant to Section 5.14(c) of this Agreement, had been true and accurate;

(b) resulting or arising from any Liability of the Acquired Operations or the Acquired Companies having a cause or origin prior to December 31, 2005, which has not been provided or accounted for in the CLD Company Annual Accounts 2005, but should have been provided or accounted for therein in accordance with (i) Belgian GAAP or IFRS accounting principles for Belgian Sellers and (ii) U.S. GAAP for U.S. Sellers;

(c) which would have not been suffered by them if all obligations of any Seller to perform any covenant or agreement hereunder had been fulfilled;

(d) resulting from, arising out of, or relating to any Louisville Environmental Loss;

(e) resulting from, arising out of, or relating to any Excluded Liability;

(f) resulting from, arising out of, or relating to any Excluded Assets; and

(g) resulting from, arising out of, or relating to the Net Loss Liability.

10.3 Indemnification by Buyer. The Buyer shall defend, indemnify and hold harmless the Seller Indemnitees from and against, and pay or reimburse the Seller Indemnitees for, any and all Losses (other than Losses in respect of Taxes, which shall be governed by Article IX of this Agreement):

(a) which would have not been suffered by them if every representation or warranty when made or deemed made by the Buyer as such representation or warranty is updated at Closing Date pursuant to Section 6.3(a) had been true and accurate in all material respects;

(b) which would not have been suffered by them if all obligations of the Buyer to perform any covenant or agreement hereunder had been fulfilled; and

10.4 Certain Limitations and Computations.

(a) With respect to indemnification by the Sellers pursuant to Section 10.2(a), Sellers shall not be required to indemnify the Buyer Indemnitees:

(i) for any single claim which results in Losses of 0.5% or less of the Aggregate Purchase Price, provided, that in the event a single claim results in Losses that exceed 0.5% of the Aggregate Purchase Price, the Sellers shall be liable for the total amount of such claim; or

(ii) for any claim unless the aggregate amount of all claims (disregarding Section 10.4(a)(i) hereof) result in Losses that exceed 1% of the Aggregate Purchase Price (the “Deductible”), in which event the Sellers shall be responsible only for aggregate Losses in excess of the Deductible.

(b) With respect to indemnification by the Buyer pursuant to Section 10.3(a), the Buyer shall not be required to indemnify the Seller Indemnitees:

(i) for any single claim which results in Losses of 0.5% or less of the Aggregate Purchase Price, provided, that in the event a single claim results in Losses that exceed 0.5% of the Aggregate Purchase Price, the Buyer shall be liable for the total amount of such claim; or

(ii) for any claim unless the aggregate amount of all claims (disregarding Section 10.4(b)(i) hereof) result in Losses that exceed the Deductible, in which event the Buyer shall be responsible only for aggregate Losses in excess of the Deductible.

(c) The computations made pursuant to Section 10.4(a) and Section 10.4(b) shall be measured on an aggregate basis with the Share Purchase Agreement, thus taking into account any claims made under the Share Purchase Agreement, it being understood that claims made in respect of (x) any matter described in Sections 10.2(c) through 10.2(g), (y) any matter described in Article IX or (z) any matter described in Clauses 10.2.1, 11.1.1(b) and 11.1.2 of the Share Purchase Agreement, shall not be aggregated with other claims against the Sellers for the purpose of Section 10.4(f) hereof.

(d) With respect to any indemnification claim made pursuant to Section 10.2(a), the Buyer must bring such claim in accordance with the time periods set forth in Section 10.1. The representations and warranties which are the subject of such claim will survive solely for the purposes of such claim until such claim is finally resolved.

(e) For the avoidance of doubt the aggregate liability of Sellers under this Agreement and the Share Purchase Agreement shall not exceed the Aggregate Purchase Price.

(f) The aggregate liability of the Sellers or the Buyer, as applicable, with respect to Losses that are the subject matter of Section 10.2(a) or 10.3(a) hereof shall not exceed 15% of the Aggregate Purchase Price.

(g) Notwithstanding anything to the contrary herein, the rights and remedies of any party in respect of any inaccuracy or breach of any representation, warranty, covenant or agreement shall in no way be limited by the fact that the act, omission, occurrence or other state of facts or circumstances upon which any claim of any such inaccuracy or breach is based may also be the subject matter of any other representation, warranty, covenant or agreement as to which there is no inaccuracy or breach. Except as explicitly provided in this Agreement, the representations and warranties of any Seller shall not be affected by (i) any information that the Buyer and/or its lawyers, auditors or other advisors obtained in the course of conducting their audits and due diligence investigations or (ii) any other information known to the Buyer, with the exception of information of which the Buyer was required to notify Sellers, but did not notify the Sellers in accordance with Section 5.10(b).

(h) Except as provided in Section 12.8, the indemnity provided for in Article IX and Article X shall be the sole and exclusive remedy of Buyer Indemnitees or Seller Indemnitees, as the case may be, after the Closing for any inaccuracy of any representation or warranty of the Sellers or the Buyer, respectively, herein or any other breach of this Agreement.

(i) As of the Closing Date, each Seller hereby agrees to waive any rights, remedies or claims which it may have in respect of any inaccuracy or omission in any information or advice supplied or given by LSG or its Subsidiaries in connection with assisting such Seller in the making of any representation or warranties contained in Article III or the preparation of any Schedule attached hereto.

(j) Each party hereto shall use its best efforts to limit the extent of any Losses which might give rise to a claim under this Agreement against any other party hereto.

(k) None of the limitations contained in this Section 10.4 will apply to any claim which arises or is exacerbated as a result of fraud or intentional misconduct by any Seller or any of their respective Affiliates.

(l) If the same action, fact or event can lead to indemnification under more than one clause of Section 10.2 or Section 10.3 hereof, the Buyer Indemnitees or Seller Indemnitees, as the case may be, may bring a claim under more than one clause but shall only be indemnified once.

10.5 Other Limitations. With respect to claims made by the Buyer pursuant to Section 10.2(a) and 10.2(b), the Sellers shall not be liable under this Article X:

(i) if and to the extent the matter giving rise to the claim arises as a result of a written request or the written consent of the Buyer;

(ii) if and to the extent the claim would not have arisen but for a change in legislation or regulation after the Closing Date;

(iii) if and to the extent the claim arises solely as a result of any non-mandatory change by the Buyer after the Closing Date in the accounting or valuation principles applied by any Acquired Company; or

(iv) in respect of any Liability which is contingent unless and until such contingent liability has become an actual liability and is due and payable, provided, however, that this sub-clause (iv) shall not have the effect of preventing the Buyer from validly making a claim in respect of a contingent liability within the applicable time limit, even though it has not become an actual liability.

10.6 Payment Adjustments, etc.

(a) Insurance Proceeds and Other Recoveries from Third Parties. Any indemnity payment made by any Seller to the Buyer Indemnitees, on the one hand, or by the Buyer to Seller Indemnitees, on the other hand, in respect of any Loss shall be reduced by the net amount of any indemnification or other recovery actually received by the party entitled to indemnification under this Agreement (the “Indemnified Party”) in respect of such claim. The net amount of such indemnification or other recovery shall be equal to the amount received by the Indemnified Party less any reasonable costs and expenses incurred by the Indemnified Party in respect of such indemnification claims or other recovery. If the Indemnified Party receives any amounts under applicable insurance policies, or from any other Person alleged to be responsible for any Losses, subsequent to an indemnification payment by the party requested or required to provide indemnification (the “Indemnifying Party”), then such Indemnified Party shall promptly pay the Indemnifying Party the difference between the payment made by such Indemnifying Party in connection with providing such indemnification payment and the amount that the Indemnified Party would have received if the amount of such recovery had been taken into account in determining the amount due by the Indemnifying Party in accordance with this Section 10.6(a). For the avoidance of doubt, no Indemnified Party or any of its Affiliates shall be required to seek recovery under its insurance policies prior to or in connection with making a claim against the Indemnifying Party.

(b) Tax Gross Up. If any tax authority imposes a Tax on the amount payable to any Indemnified Party under Article IX or Article X, then the amount so payable to such Indemnified Party shall be grossed up for purposes of ensuring that after the payment of such Tax, there will be left a sum equal to the amount which would otherwise be payable under this Agreement.

(c) Provisions in the Account. The Sellers shall not be liable under this Article X in respect of any claim if to the extent that the matter giving rise to the claim is recorded as a liability in the CLD Pro Forma Annual Accounts 2005 or the CLD Company Annual Accounts 2005.

(d) Excess Provisions and Overstatements of Liabilities. To the extent the amount of any provision made in the CLD Pro Forma Annual Accounts 2005, in respect of warranties, allowances for bad debts, pensions, employee health, workers’ compensation and slow-moving and obsolete inventory, is found to be in excess of, or unnecessary in respect of, the matter for which such provision was made, the amount of such excess or unnecessary provision shall be credited against any amount due by the Sellers under this Article X for matters of the type for which such provision was made.

(e) Adjustment to Purchase Price. The parties agree that any indemnification payments made pursuant to this Agreement shall be treated for tax purposes as an adjustment to the Aggregate Purchase Price.

(f) Tax Savings. The amount of any payment under this Agreement shall be (i) reduced to take into account any net Tax benefit realized by the recipient and its Affiliates (together, the “Tax Group”) arising from the incurrence or payment by such Tax Group of any amount in respect of which such payment under this Agreement is made and (ii) increased to take into account any net Tax cost incurred by the Tax Group as a result of the receipt or accrual of payments hereunder (grossed-up for such increase), in each case determined by treating the Tax Group as recognizing all other items of income, gain, loss, deduction or credit before recognizing any item arising from the receipt or accrual of any payment hereunder. In determining the amount of any such net Tax benefit or net Tax cost, the Tax Group shall be deemed to be subject to (A) U.S. federal income Taxes at the maximum statutory rate then in effect and (B) U.S. state and local income Taxes at an assumed rate of five percent (which rate shall be tax effected at such maximum statutory U.S. federal Income Tax rate); provided that if LSG is the indemnitee, the foregoing principles shall be applied, mutatis mutandis, by reference to applicable Belgian rates. Except as otherwise provided in this Agreement or unless the parties otherwise agree to a method for determining the present value of any such anticipated Tax benefit or Tax cost, any payment under this Agreement shall initially be made without regard to this Section 10.6(f) and shall be increased or reduced to reflect any such net Tax cost (including gross up) or net Tax benefit only after the Tax Group has actually realized such net Tax cost or net Tax benefit.

10.7 Direct Claims.

(a) If an Indemnified Party becomes aware of any action, fact or event that may give rise to a claim against the Indemnifying Party under Article IX or Article X, the Indemnified Party shall give notice to the Indemnifying Party within 30 days of becoming aware of such action, fact or event and within the survival periods set forth in Section 10.1. Such notice shall set forth the legal and factual basis of the claim, including such details as are available concerning the action, fact or event in respect of which the claim is made, together with a first estimate of the amount of Losses that are the subject of the claim. A copy of the material documents establishing the claim shall, to the extent available, be enclosed in the notice. Failure of the Indemnified Party to notify the Indemnifying Party of a claim in the manner set forth in this section shall not relieve the Indemnifying Party of any liability it may have in respect of such claim, except to the extent the Indemnifying Party has suffered a prejudice as a consequence of such failure.

(b) The Indemnifying Party shall be deemed to have accepted any claim made by the Indemnified Party in accordance with this section and shall be liable to indemnify the Indemnified Party for the amount of Losses requested in such claim (subject to the limitations set forth in Article X) unless the Indemnifying Party objects to the claim by written notice to the Indemnified Party within 30 days following the Indemnified Party’s notice. If the Indemnifying Party and the Indemnified Party are unable to reach an agreement on the amount of Losses to be indemnified within 15 days following notification of the Indemnifying Party’s objection, the matter shall be decided by an arbitration panel in accordance with Section 12.8.

(c) The Indemnified Party shall permit the Indemnifying Party and its advisors to investigate the actions, facts or events giving rise to claims made by the Indemnified Party, provided

that no such investigation shall interfere with the business of the Indemnified Party. Subject to payment by the Indemnifying Party for reasonable costs and expenses, the Indemnified Party shall provide to the Indemnifying Party and its advisors (i) access, upon reasonable advance notice and during normal business hours, to the Indemnified Party’s business premises and employees, to the degree such access is related to the claim in question, and (ii) the right to examine and copy all such contracts, books and records, and other documents and data as the Indemnifying Party and its advisors may reasonably request. The Indemnifying Party shall agree, in such form as the Indemnified Party may reasonably request, to keep all such information confidential and to use it only for the purpose of investigating and defending the claim in question.

(d) If the Indemnifying Party has accepted or is deemed to have accepted, pursuant to Section 10.7(b), the amount of Losses claimed by the Indemnified Party, or if the Indemnifying Party and the Indemnified Party have agreed on another amount, the Indemnifying Party shall pay such amount to the Indemnified Party within 15 days of such acceptance or agreement. If the matter giving rise to the claim has been decided by arbitration, the Indemnifying Party shall pay any amount due to the Indemnified Party, including any interest, within 15 days of the final decision ordering the Indemnifying Party to make such payment (or on any other date as may be decided by the arbitration panel, provided that such date is within 15 days of the final decision). Payment shall be made in accordance with the Indemnified Party’s instructions.

10.8 Third Party Claim Procedures.

(a) If the claim notified by the Indemnified Party to the Indemnifying Party in accordance with Section 10.7(a) arises as a result of or in connection with a claim by or a liability to a third party (a “Third Party Claim”) then the following procedures shall apply:

(i) The Indemnified Party shall provide the Indemnifying Party with copies of all documents and correspondence from the third party, and all other correspondence and documents relating to the Third Party Claim, as the Indemnifying Party may reasonably request, within 15 days following the receipt by the Indemnified Party of such documents and correspondence, subject to the Indemnifying Party agreeing to keep all such information and documents confidential and to use them only for the purpose of investigating and defending the Third Party Claim.

(ii) Within 30 days of receiving documents and correspondence from the Indemnified Party, the Indemnifying Party shall notify the Indemnified Party: (x) whether it disputes the Indemnified Party’s right to indemnification with respect to the Third Party Claim and (y) if it does not dispute such right to indemnification, whether or not it desires to defend the Indemnified Party against such Third Party Claim. Notwithstanding the above notice periods, the Indemnified Party is allowed to take any reasonable provisional measures, subject to informing the Indemnifying Party promptly thereof.

(iii) If, within the 30 days provided for in Section 10.8(a)(ii), the Indemnifying Party notifies the Indemnified Party that it does not dispute the Indemnified Party’s right of indemnification and desires to defend the Indemnified Party against such Third Party Claim, the Indemnifying Party shall have the right to assume and control the defense of the Third Party Claim by appropriate proceedings with counsel reasonably acceptable to the Indemnified Party, at the Indemnifying Party’s sole cost and expense. The Indemnified Party shall provide to the Indemnifying Party and its representatives such assistance and access as is required by Section 10.7(c). The Indemnified Party may participate in, but not control, any such defense or settlement at

its sole cost and expense. In any case, the Indemnifying Party shall consult with the Indemnified Party in relation to the conduct of any proceedings arising out of the Third Party Claim, provided that all decisions in relation to such proceedings shall be made by the Indemnifying Party, always taking into account the corporate interest of the Indemnified Party.

(iv) If the Indemnifying Party: (w) disputes the Indemnified Party’s right to indemnification with respect to a Third Party Claim; or (x) does not dispute such right to indemnification but prefers not to assume the defense of such Third Party Claim; or (y) does not dispute such right to indemnification and, notwithstanding having indicated that it desires to defend the Indemnified Party against such Third Party Claim, fails to timely assume and prosecute the defense of such Third Party Claim; or (z) does not react in due time to the Indemnified Party’s notification in accordance with Section 10.8(a)(ii), then the Indemnified Party may assume and control the defense of such Third Party Claim at its own cost (without prejudice to its rights under Article IX and Article X). In that case, the Indemnifying Party may participate in, but not control, any such defense or settlement at its sole cost and expense, and the Indemnified Party shall consult with the Indemnifying Party in relation to the conduct of any proceedings arising out of the Third Party Claim, and ensure that the Indemnifying Party’s interests shall be taken into account in so far as such interests are reasonable and made in the Indemnified Party’s corporate interest, provided that all decisions in relation to such proceedings shall be made by the Indemnified Party. Notwithstanding the foregoing, in the event that the Indemnified Party shall in good faith determine that the conduct of the defense of any Third Party Claim subject to indemnification hereunder or any proposed settlement of any such claim by the Indemnifying Party might be expected to affect adversely the Indemnified Party’s Tax position or (in the case of an Indemnified Party that is a Buyer Indemnitee) the ability of the Buyer or an Acquired Company to conduct its business, or that the Indemnified Party may have available to it one or more defenses or counterclaims that are inconsistent with one or more of those that may be available to the Indemnifying Party in respect of such Third Party Claim, the Indemnified Party shall have the right at all times to take over and assume control over the defense, settlement, negotiations or Litigation relating to any such Third Party Claim at the sole cost of the Indemnifying Party, provided that if the Indemnified Party does so take over and assume control, the Indemnified Party shall not settle such Third Party Claim without the written consent of the Indemnifying Party, such consent not to be unreasonably withheld.

(v) The party responsible for the defense of any Third Party Claim shall, to the extent reasonably requested by the other party, inform the other party of the status of such Third Party Claim, including, without limitation, all proposed settlement negotiations and whether or not such party is willing to accept a proposed settlement offer. Neither party shall enter into any settlement that provides for injunctive or other nonmonetary relief affecting the Indemnified Party or that does not include as an unconditional term thereof the giving by each claimant or plaintiff to such Indemnified Party of an irrevocable release from all liability with respect to such Third Party Claim. If the Indemnified Party does not consent to any settlement offer, the Indemnified Party may continue to contest or defend the Third Party Claim; in such a case, the maximum liability of the Indemnifying Party with respect to such Third Party Claim shall not exceed the full amount of the highest settlement offer (without prejudice to the limitations set forth in Article X). If the Indemnifying Party does not consent to any settlement offer, the Indemnifying Party may continue to contest or defend the Third Party Claim; in such a case, the Indemnifying Party shall be liable for the full amount of the Losses sustained by the Indemnified Party as a result of the Third Party Claim, subject to the limitations set forth in Article X.

(b) To the extent of any inconsistency between this Section 10.8 and Article IX, Article IX shall control with respect to Tax Matters.

10.9 Limitation on Damages. Notwithstanding anything to the contrary herein, no party to this Agreement (or any of its Affiliates) shall, in any event, be liable or otherwise responsible to any other party (or any of its Affiliates) for any unforeseeable or punitive damages of such other party (or any of its Affiliates) arising out of or relating to this Agreement or the performance or breach hereof, other than any such damages arising in connection with a Third Party Claim.

10.10 Effect of Waiver of Condition. Except as expressly provided in this Agreement, the rights and remedies of the Sellers or the Buyer, as the case may be, under this Agreement (including the right to indemnification pursuant to this Article X) shall not be affected by (i) the waiver by such party of any condition to closing set forth in Article VI based on the fulfillment of the obligation of the other party or (ii) the waiver of a condition to closing set forth in Article VI.

10.11 Third Party Beneficiaries.

(a) Any Person to whom the Buyer would transfer any or all of the Acquired Assets or Acquired Operations or assign all or part of its rights and obligations under this Agreement in accordance with Section 12.10 is hereby constituted a third party beneficiary for the purposes of Article IX and Article X.

(b) For the avoidance of doubt, the Acquired Companies are hereby constituted third party beneficiaries for the purposes of Article IX and Article X.

ARTICLE XI

DEFINITIONS

11.1 Certain Terms. The following terms have the respective meanings given to them below:

“Acquired Assets” shall have the meaning set forth in Section 1.2.

“Acquired Companies” shall mean Laundromats LLC, Cissell Distribution and Global Fox.

“Acquired Operations” shall have the meaning set forth in the Recitals.

“Acquired Stock” shall have the meaning set forth in the Recitals.

“Affiliate” of a Person means a Person that directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the first Person, including a Subsidiary of the first Person, a Person of which the first Person is a Subsidiary, or another Subsidiary of a Person of which the first Person is also a Subsidiary. “Control” (including the terms “controlling”, “controlled by” and “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

“Aggregate Purchase Price” shall mean the sum of the Purchase Price and the Final Purchase Price (as such term is defined in the Share Purchase Agreement).

“Agreement” shall have the meaning set forth in the Preamble.

“Ancillary Agreements” shall have the meaning set forth in Section 6.2(e).

“Annual Accounts” means LSG’s consolidated audited annual accounts for the business year ending on December 31, 2005.

“Applicable Law” means, with respect to each Person, all applicable provisions of all (i) constitutions, treaties, statutes, laws (including, but not limited to, the common law), rules, regulations, ordinances, codes and orders of any Governmental Authority and (ii) orders, decisions, injunctions, judgments, awards and decrees or consents of and agreements with any Governmental Authority.

“Assumed Liabilities” shall have the meaning set forth in Section 1.4.

“Benefit Plan” means any “employee benefit plan” within the meaning of Section 3(3) of ERISA, and each bonus, incentive or deferred compensation, severance, termination, retention, change of control, stock or other equity-based, performance or other employee or retiree benefit or compensation plan, program, arrangement, agreement, practice, policy or understanding (including any employment agreement), whether written or unwritten, sponsored or maintained by any Seller, any Acquired Company or any of their respective Affiliates in which any Employee is a participant.

“Belgian Shares” means all outstanding shares in IPSO Belgium which are being sold under the Share Purchase Agreement.

“Business Day” means a day, other than a Saturday or Sunday, on which banking institutions in The City of New York are required to be open.

“Buyer” shall have the meaning set forth in the Preamble.

“Buyer Indemnitees” shall have the meaning set forth in Section 9.1(a).

“Cash” shall mean cash on hand and on deposit in the Sellers’ various bank accounts plus marketable securities with maturities of 90 days or less from the Closing Date plus deposits in transit at the Closing Date less outstanding checks at the Closing Date.

“Cissell” shall have the meaning set forth in the Preamble.

“Cissell Distribution” shall have the meaning set forth in the Recitals.

“Cissell Stock” shall have the meaning set forth in the Recitals.

“CLD Companies” means IPSO Belgium, IPSO Rent NV, a limited liability company organized and existing under the laws of Belgium, IPSO Rent Deutschland GmbH, a limited liability company organized and existing under the laws of Germany and IPSO Norge, a limited liability company organized and existing under the laws of Norway.

“CLD Company Annual Accounts 2005” shall have the meaning set forth in the Share Purchase Agreement.

“CLD Pro Forma Annual Accounts 2005” means the pro forma financial statements for the business year ended on December 31, 2005, of LSG’s commercial laundry division as acquired by the Buyer under this Agreement and the Share Purchase Agreement, established inter alia on the basis of the CLD Company Annual Accounts 2005 (as far as the CLD Companies are concerned), prepared on the basis of IFRS accounting principles applied on a basis consistent with the methodology used in preparing the IFRS Restatement and reflecting all applicable eliminations of inter-company activity and balances.

“Closing” shall have the meaning set forth in Section 2.1.

“Closing Date” shall have the meaning set forth in Section 2.1.

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

“Consent” means any consent, approval, authorization, waiver, permit, grant, franchise, concession, agreement, license, exemption or order of, registration, certificate, declaration or filing with, or report or notice to, any Person, including but not limited to any Governmental Authority.

“Contract” means any written or oral contract or any other legally binding agreement, license, lease, commitment or undertaking.

“Deductible” shall have the meaning set forth in Section 10.4(a).

“Disclosure Schedules” means those Schedules to the Agreement referenced in Article III.

“Employee” means any Person employed or formerly employed in the Acquired Operations other than the IPH Product Line by any Seller or Acquired Company.

“End Date” shall have the meaning set forth in Section 8.1(b)(i).

“Environmental Law” means any foreign, federal, state or local law, treaty, statute, rule, regulation, order, ordinance, decree, injunction, judgment, governmental restriction or any other requirement of law (including common law) regulating or relating to the protection of human health, safety, natural resources or the environment, including, without limitation, laws relating to contamination and the use, generation, management, handling, transport, treatment, disposal, storage, Release or threatened Release of Hazardous Substances.

“Environmental Permit” means any permit, license, authorization or consent required pursuant to applicable Environmental Laws.

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

“Excluded Assets” shall have the meaning set forth in Section 1.3.

“Excluded Liabilities” shall have the meaning set forth in Section 1.5.

“FICA” shall have the meaning set forth in Section 7.4(a).

“Final Purchase Price” shall have the meaning set forth in the Share Purchase Agreement.

“FUTA” shall have the meaning set forth in Section 7.4(a).

“Global Fox” shall have the meaning set forth in the Recitals.

“Global Fox Stock” has the meaning set forth in the Recitals.

“Governmental Approval” means any Consent of, with or to any Governmental Authority.

“Governmental Authority” means any nation or government, any state or other political subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including, but not limited to, any government authority, agency, department, board, commission or instrumentality of the United States, any State of the United States, or any political subdivision thereof, and any tribunal or arbitrator(s) of competent jurisdiction, and any self-regulatory organization.

“Hazardous Substances” means any substance or material that: (i) is or contains asbestos, urea formaldehyde insulation, polychlorinated biphenyls, petroleum or petroleum products, radon gas, microbiological contamination or related materials, (ii) requires investigation or remedial action pursuant to any Environmental Law, or is defined, listed or identified as a “hazardous waste,” “hazardous substance,” “toxic substance” or words of similar import thereunder, or (iii) is regulated under any Environmental Law.

“IFRS” means the International Financial Reporting Standards.

“IFRS Restatement” means the IFRS restatement, in June 2005, by the Seller of its consolidated annual accounts for the business year ended on December 31, 2004, which annual accounts had originally been prepared in accordance with Belgian GAAP.

“Income Taxes” shall mean all Taxes on or measured by net income, profits, receipts or earnings.

“Indebtedness” means, with respect to any Person, without duplication (1) all obligations of such Person for borrowed money or for the deferred purchase price of property or services (exclusive of deferred purchase price arrangements in the nature of open or other accounts payable owed to suppliers on normal terms in connection with the purchase of goods and services in the ordinary course of business) and all obligations of such Person evidenced by bonds, debentures, notes, letters of credit, overdrafts or other similar instruments; (2) all capitalized lease obligations of such Person; (3) net liabilities of such Person under all hedging obligations, interest rate protection agreements or swap arrangements; (4) factoring arrangements; (5) whether or not so included as liabilities in accordance with Belgian GAAP, US GAAP or IFRS, all indebtedness of the types referred to in clauses (1) through (4) above (excluding prepaid interest thereon) secured by an encumbrance on property owned or being purchased by such Person (including indebtedness arising under conditional sale or other title retention agreements), other than operating leases, whether or not such indebtedness shall have been assumed by such Person or is limited in recourse; (6) all asset financing obligations of such Person and (7) any guarantee of the obligations of another Person and (8) any interest on and any premiums, prepayment or termination fees, expenses or breakage costs due upon prepayment of, in each case, any of the foregoing; provided that the items listed on Schedule 11.1(a) shall not constitute “Indebtedness”.

“Indemnified Taxes” shall mean each of (i) all Taxes of any Acquired Company relating to Income Taxes and (ii) Taxes of a Person other than an Acquired Company if an Acquired Company is liable for the payment of such Taxes.

“Indemnified Party” shall have the meaning set forth in Section 10.6(a).

“Indemnifying Party” shall have the meaning set forth in Section 10.6(a).

“Information Technology” shall have the meaning set forth in Section 3.21.

“Intellectual Property” means all trademarks, service marks, logos, trade names, product names, trade dress, and all goodwill associated with the foregoing, domain names, copyrights, manufacturing, engineering and technical drawings, technical specifications, Software, Internet Web sites, mask works and other semiconductor chip rights, and similar rights, and registrations and applications to register or renew the registration of any of the foregoing, patents and patent applications, Trade Secrets, and all similar intellectual property rights.

“Inventory” shall have the meaning set forth in Section 3.20.

“IPH Assets” shall have the meaning set forth in Section 5.13.

“IPH Product Line” shall have the meaning set forth in Section 1.2(h).

“IPH Supply Agreement” shall have the meaning set forth in Section 6.2(e)(i).

“IPSO Belgium” shall have the meaning set forth in Section 1.5(b).

“IRS” means the Internal Revenue Service.

“JAMS” shall have the meaning set forth in Section 12.8.

“Jensen” shall have the meaning set forth in the Preamble.

“Laundromats LLC” shall have the meaning set forth in the Recitals.

“Laundromats Membership Interests” shall have the meaning set forth in Section 3.4(a).

“Leased Real Property” means all real property and interests in real property subject to Leases by the Acquired Companies and, to the extent relating primarily to the Acquired Operations, the Sellers.

“Leases” means all leases, subleases, licenses and occupancy agreements pursuant to which the Acquired Companies or any of the Sellers is the lessee, sublessee, licensee or occupant other than Real Property leases, subleases, licenses and occupancy agreements included in the Excluded Assets.

“Liabilities” means any and all debts, liabilities and obligations of any kind, whether accrued or fixed, known or unknown, absolute or contingent, matured or unmatured or determined or determinable.

“Lien” means all debts, claims, security interests, liens, mortgages, encumbrances, pledges, assessments, adverse claims, impairments of title, restrictions and charges of every nature.

“Litigation” means any action, cause of action, claim, cease and desist letter, demand, suit, proceeding, citation, summons, subpoena or investigation of any nature, civil, criminal, regulatory or otherwise, in law or in equity.

“Losses” means any and all claims, liabilities, obligations, losses (including the loss of any Tax asset), fines, costs, royalties, proceedings, deficiencies or damages (whether absolute, accrued, conditional or otherwise, and whether or not resulting from Third Party Claims), including out-of-pocket expenses and reasonable attorneys’ and accountants’ fees incurred in the investigation or defense of any of the same or in asserting any of their respective rights hereunder.

“Louisville Environmental Losses” means all Losses, whether direct or indirect, known or unknown, actual, current or potential, past, present or future, arising under or pursuant to any Environmental Law in connection with the Louisville Facility, including, without limitation, with respect to environmental conditions existing, or Releases of Hazardous Substances occurring, on or prior to the Closing Date on, under, above, about or emanating from the Louisville Facility and any failure to comply with any Environmental Law in connection with operations conducted at the Louisville Facility on or prior to the Closing Date. “Louisville Environmental Losses” shall include any Losses related to the presence of trichloroethylene or other Hazardous Substances at, on, under, above or emanating from the Louisville Facility.

“Louisville Facility” means the facility, property and assets that are or that have been present at the facility located at 831 South First Street, Louisville, Kentucky.

“Louisville Lease” shall have the meaning set forth in Section 6.2(e)(v).

“LSG” shall have the meaning set forth in the Preamble.

“LSG North America” shall have the meaning set forth in the Preamble.

“Material Adverse Change” means any material adverse changes, facts or circumstances (including but not limited to national and/or international developments in financial, political and/or economic circumstances) in respect of the CLD Companies and/or the Acquired Operations, whether or not known by the Buyer on the date of this Agreement (other than as set out on Schedule 5.1(b)) and that, on a cumulative basis, are or can reasonably be expected to result in (i) an adverse impact on the CLD Companies and the Acquired Operations taken as a whole in excess of €3,500,000 (Three Million Five Hundred Thousand Euro) in the aggregate (calculated without giving effect to any Tax effect) or (ii) a decrease in the CLD Companies’ and/or the Acquired Operations’ consolidated historical or projected EBITDA in excess of €450,000 (Four Hundred and Fifty Thousand Euro), with the exception of any change, fact or circumstance or effect resulting from (A) an industry wide change, fact or circumstance that does not disproportionately affect the CLD Companies’ or the Acquired Operations’ business, (B) an act of terrorism not specifically directed at the CLD Companies or the Acquired Operations or (C) a discontinuation by the U.K. distributor

JLA, a limited company under English law, with offices at Meadowcroft Lane, Halifax Road, Riponden, West Yorkshire HX6 4AJ, United Kingdom, and company number 01094178 (“JLA”) of its commercial relationship with Ipso Belgium in which respect the Buyer acknowledges that it is aware of the fact that JLA has expressed reservations with respect to its willingness to continue said commercial relationship in view of the prospective acquisition of the CLD Companies by the Buyer as contemplated by the Share Purchase Agreement.

“Material Contracts” shall have the meaning set forth in Section 3.11.

“Net Loss Liability” means, all Liabilities, arising under that certain agreement, dated as of October 23, 2001, by and among Global Fox and Triumphe Leasing Network, Inc.

“Organizational Documents” means, with respect to any Person, the articles of incorporation, certificate of incorporation, charter, bylaws, articles of formation, regulations, operating agreement, certificates of limited partnership, partnership agreement, and all other similar documents, instruments or certificates executed, adopted, or filed in connection with the creation, formation, or organization of such Person, including any amendments thereto.

“Owned Intellectual Property” means (i) all Intellectual Property owned by any Acquired Company and (ii) all Intellectual Property owned by any Seller relating to the Acquired Operations.

“Owned Real Property” means all real property and interests in real property owned in fee simple by the Acquired Companies and, to the extent relating primarily to the Acquired Operations, the Sellers, and in each case all improvements, fixtures, easements, licenses, rights and appurtenances related to the foregoing, excluding the real property set forth in Section 1.3(d).

“PBGC” shall have the meaning set forth in Section 3.16(b).

“Permitted Intercompany Indebtedness” shall have the meaning set forth in Section 1.8.

“Permitted Liens” means (i) statutory liens for Taxes not yet due, (ii) statutory liens of warehousemen, mechanics and materialmen incurred in the ordinary course of business for sums not yet due and (iii) liens incurred in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security or to secure the performance of statutory obligations.

“Person” means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a Governmental Authority.

“Plan” shall have the meaning set forth in Section 3.16(g).

“Pre-Closing Period” means any Tax period or portion thereof ending on or before the Closing Date. For these purposes, real and personal property Taxes shall be apportioned with respect to any Straddle Period on a per diem basis and all other Taxes shall be apportioned with respect to any Straddle Period on the basis of an interim closing of the books at the end of the Closing Date.

“Purchase Price” shall have the meaning set forth in Section 1.6.

“Real Property” shall have the meaning set forth in Section 3.13(a).

“Records” shall have the meaning set forth in Section 5.8.

“Release” means any releasing, disposing, discharging, injecting, spilling, leaking, leaching, pumping, dumping, emitting, escaping, emptying, seeping, dispersal, migration, transporting, placing and the like, including without limitation, the moving of any materials through, into or upon, any land, soil, surface water, groundwater or air, or otherwise entering into the indoor or outdoor environment.

“Repetition Default” shall have the meaning set forth in Section 6.2(a).

“Second Phase Due Diligence” shall have the meaning set forth in Section 5.1.

“Seller Indemnitees” shall have the meaning set forth in Section 9.1(c).

“Sellers’ Knowledge” or “Knowledge of Sellers” or similar phrases means the actual Knowledge of those persons set forth on Schedule 11.1(b).

“Sellers” shall have the meaning set forth in the Preamble.

“Share Purchase Agreement” shall have the meaning set forth in Section 1.5(h).

“Software” means all computer software, including but not limited to, application software, system software and firmware, including all source code and object code versions thereof, in any and all forms and media, and all related documentation.

“Straddle Period” means any taxable year or period beginning on, or before and ending after the Closing Date.

“Subsidiary” means, with respect to any Person, any entity of which securities or other ownership interests (i) having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions or (ii) representing at least 50% of such securities or ownership interests are at the time directly or indirectly owned by such Person.

“Tax” means (i) all federal, state, provincial, local or foreign taxes, charges, fees, imposts, levies or other assessments, including, without limitation, all net income, gross receipts, capital sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp duty, stamp duty reserve, stamp duty land, occupation, property, abandoned property and estimated taxes, customs duties, fees, assessments and charges of any kind whatsoever, and (ii) all interest, penalties, fines, additions to tax or additional amounts imposed by any taxing authority in connection with any item described in clause (i).

“Tax Dispute” shall have the meaning set forth in Section 9.4.

“Tax Group” shall have the meaning set forth in Section 10.6(f).

“Tax Matters” shall have the meaning set forth in Section 9.3(a).

“Tax Return” means any return, report, declaration, form, claim for refund or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

“Tax Sharing Agreement” shall have the meaning set forth in Section 3.17(c).

“Third Party Claim” shall have the meaning set forth in Section 10.8(a).

“Trade Secrets” means all inventions, processes, designs, formulae, trade secrets, know-how, ideas, research and development, data, databases and confidential information.

“Transferred Employees” shall have the meaning set forth in Section 7.1(b).

“Unassigned Asset” shall have the meaning set forth in Section 1.9(a).

“U.S. GAAP” means United States Generally Accepted Accounting Principles.

“WARN Act” shall have the meaning set forth in Section 3.16(j).

11.2 Construction. Unless specified otherwise, in this Agreement the obligations of any party consisting of more than one person are joint and several. The words “hereof”, “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The captions herein are included for convenience of reference only and shall be ignored in this construction or interpretation hereof. References to Articles, Sections, Exhibits and Schedules are to Articles, Sections, Exhibits and Schedules of this Agreement unless otherwise specified. All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalized terms used in any Exhibit or Schedule but not otherwise defined therein, shall have the meaning as defined in this Agreement. Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular. Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation,” whether or not they are in fact following by those words or words of like import. “Writing”, “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. References to any agreement or contract are to that agreement or contract as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof. References to any Person include the successors and permitted assigns of that Person. References from or through any date mean, unless otherwise specified, from and including or through and including, respectively. Any reference to “days” means calendar days unless Business Days are expressly specified. If any action under this Agreement is required to be done or taken on a day that is not a Business Day, then such action shall not be required to be done or taken on such day but on the first succeeding Business Day thereafter.

ARTICLE XII

MISCELLANEOUS

12.1 Expenses. The Seller, on the one hand, and the Buyer, on the other hand, shall bear their respective expenses, costs and fees (including fees of their respective attorneys, accountants and other advisors) in connection with the transactions contemplated hereby, including the preparation, execution and delivery of this Agreement and compliance herewith, whether or not the transactions contemplated hereby shall be consummated.

12.2 Severability. If any provision of this Agreement, including any phrase, sentence, clause, section or subsection is inoperative or unenforceable for any reason, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative, or unenforceable to any extent whatsoever.

12.3 Notices. All notices, requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if (a) delivered personally, (b) mailed by first-class, registered or certified mail, return receipt requested, postage prepaid, or (c) sent by next-day or overnight mail or delivery or (d) sent by telecopy or telegram.

(i) if to the Buyer, to

Alliance Laundry Systems LLC

P.O. Box 990

Ripon, Wisconsin 54971

Attention: Scott L. Spiller

Facsimile: (920) 748-4334

with a copy to:

Debevoise & Plimpton LLP

919 Third Avenue

New York, New York 10022

Attention: Margaret Andrews Davenport

Facsimile: (212) 909-6836

(ii) if to the Sellers, to

Laundry Systems Group NV

‘t Hofveld 6F2

B-1702 Groot-Bijgaarden, Belgium

Attention: Erik Vanderhaegan

Facsimile: 011 32 2 482 3390

with copies to:

Katten Muchin Rosenman LLP

401 South Tryon Street

Suite 2600

Charlotte, North Carolina 28202

Attention: A. Victor Wray

Facsimile: (704) 444-2050

and

Stibbe

Rue Henri Wafelaertsstraat 47-51

B-1060 Brussels, Belgium

Attention: Jan Peeters

Facsimile: 011 32 2 533 5212

or, in each case, at such other address as may be specified in writing to the other parties hereto.

All such notices, requests, demands, waivers and other communications shall be deemed to have been received (w) if by personal delivery on the day after such delivery, (x) if by certified or registered mail, on the seventh business day after the mailing thereof, (y) if by next-day or overnight mail or delivery, on the day delivered, (z) if by telecopy or telegram, on the next day following the day on which such telecopy or telegram was sent, provided that a copy is also sent by certified or registered mail.

12.4 Headings. The headings contained in this Agreement are for purposes of convenience only and shall not affect the meaning or interpretation of this Agreement.

12.5 Entire Agreement. This Agreement (including the Schedules hereto) and the Ancillary Agreements (when executed and delivered) and Exhibits constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof.

12.6 Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original and all of which shall together constitute one and the same instrument.

12.7 Governing Law; Specific Performance. This Agreement shall be governed in all respects, including as to validity, interpretation and effect, by the internal laws of the State of New York, without giving effect to the conflict of law rules thereof. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof, this being in addition to any other remedy which they are entitled to at law or in equity.

12.8 Arbitration. Any dispute, claim or controversy arising out of or relating to this Agreement or any Ancillary Agreement will be settled through binding arbitration. Either party may commence the arbitration process called for in this Agreement by filing a written demand for arbitration with the Judicial Arbitration and Mediation Services (“JAMS”), or its successor, for arbitration pursuant to the Federal Arbitration Act, 9 U.S.C. Sec. 1 et seq., with a copy to the other party. The arbitration will be conducted in New York, New York, in accordance with the provisions of JAMS’s Comprehensive Arbitration Rules and Procedures in effect at the time of filing of the demand for arbitration. The parties will cooperate with JAMS and with one another in selecting a panel of three arbitrators, and in scheduling the arbitration proceedings. The parties will share equally the costs unless otherwise determined by the arbitrators. The proceedings and award shall be in the English language. Judgment upon any award may be entered in any court of competent jurisdiction.

12.9 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and permitted assigns.

12.10 Assignment. This Agreement and the rights and obligations hereunder shall not be assignable or transferable by the Buyer or the Sellers (other than by operation of Law in connection with a merger, a sale of substantially all the assets, or a liquidation of the Buyer or Sellers) without the prior written consent of the other party hereto (which consent shall not be unreasonably withheld); provided, however, that the Buyer may upon notice to the Sellers assign its right to purchase all or any portion of the Acquired Stock or the Acquired Assets hereunder specified in such notice and may delegate its duties with respect to all or any portion of the Assumed Liabilities hereunder specified in said notice to one or more Affiliates of the Buyer without the prior written consent of the Sellers and, following the Closing Date, may freely dispose of the Acquired Stock or the Acquired Assets; provided further, however, that no assignment shall limit or affect the assignor’s obligations hereunder. Subject to the foregoing sentence, this Agreement will be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns.

12.11 No Third Party Beneficiaries. Except as provided in Article X with respect to indemnification of Indemnified Parties hereunder, nothing in this Agreement shall confer any rights upon any person or entity other than the parties hereto and their respective heirs, successors and permitted assigns.

12.12 Amendment; Waivers, etc. No amendment, modification or discharge of this Agreement, and no waiver hereunder, shall be valid or binding unless set forth in writing and duly executed by the party against whom enforcement of the amendment, modification, discharge or waiver is sought. Any such waiver shall constitute a waiver only with respect to the specific matter described in such writing and shall in no way impair the rights of the party granting such waiver in any other respect or at any other time. Neither the waiver by any of the parties hereto of a breach of or a default under any of the provisions of this Agreement, nor the failure by any of the parties, on one or more occasions, to enforce any of the provisions of this Agreement or to exercise any right or privilege hereunder, shall be construed as a waiver of any other breach or default of a similar nature, or as a waiver of any of such provisions, rights or privileges hereunder. The rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies that any party may otherwise have at law or in equity. The rights and remedies of any party based upon, arising out of or otherwise in respect of any inaccuracy or breach of any representation, warranty, covenant or agreement or failure to fulfill any condition shall in no way be limited by the fact that the act, omission, occurrence or other state of facts upon which any claim of any such inaccuracy or breach is based may also be the subject matter of any other representation, warranty, covenant or agreement as to which there is no inaccuracy or breach.

12.13 Schedules. If there is any inconsistency between the statements in this Agreement and the Schedules attached hereto, including for the avoidance of doubt the Disclosure Schedules, (other than an exception expressly set forth in the applicable Schedule with respect to a specifically identified representation or warranty), the statements in this Agreement will control. The statements in the Schedules relate only to the provisions in the Section of this Agreement to which they expressly relate and not to any other provision in this Agreement, except to the extent the relevance to such other representation and warranty is reasonably apparent on the face of the Schedules.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed by their respective officers thereunto duly authorized as of the date first written above.


Alliance Laundry Systems LLC

By:		/s/ Thomas F. L’Esperance
Name:		Thomas F. L’Esperance
Title:		Chief Executive Officer and
		President

Laundry Systems Group NV

By:		/s/ Jesper Munch Jensen
Name:		Jesper Munch Jensen
Title:		Chief Executive Officer

Laundry Systems Group NV

By:		/s/ Erik Vanderhaegen
Name:		Erik Vanderhaegen
Title:		Chief Financial Officer

Cissell Manufacturing Company

By:		/s/ Phyllis Decker
Name:		Phyllis Decker
Title:		President

Jensen USA Inc.

By:		/s/ Jens Voldbaek
Name:		Jens Voldbaek
Title:		President

LSG North America, Inc.

By:		/s/ Erik Vanderhaegen
Name:		Erik Vanderhaegen
Title:		President

EX-10.6 7 dex106.htm AMENDMENT NO. 1 TO THE PURCHASE AGREEMENT, DATED AS OF JULY 13, 2006 Amendment No. 1 to the Purchase Agreement, dated as of July 13, 2006

Exhibit 10.6

AMENDMENT NO. 1 TO THE PURCHASE AGREEMENT

THIS AMENDMENT NO. 1 TO THE PURCHASE AGREEMENT (this “Amendment”) is made as of the 13th day of July, 2006, by and among Alliance Laundry Systems LLC, a Delaware corporation, Laundry Systems Group NV, a limited liability company organized and existing under the laws of Belgium, Cissell Manufacturing Company, a Rhode Island corporation, Jensen USA Inc., a North Carolina corporation, and LSG North America, Inc., a North Carolina corporation. Capitalized terms used but not defined herein shall have the meanings given to such terms in the Purchase Agreement.

WHEREAS, the Buyer and the Sellers are parties to that certain Purchase Agreement, dated as of May 23, 2006.

WHEREAS, the Buyer and the Sellers are authorized, pursuant to the terms of Section 12.12 of the Purchase Agreement, to amend the terms of the Purchase Agreement.

WHEREAS, the Buyer and the Sellers desire to make certain amendments to the terms of the Purchase Agreement.

NOW, THEREFORE, in consideration of the terms and provisions contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Buyer and the Sellers hereto agree as follows:

1.	Allocation of the Purchase Price. Section 1.7 of the Purchase Agreement shall be deleted from the Purchase Agreement and the following shall be substituted in replacement thereof:

Allocation of the Purchase Price. No later than 120 days following the Closing Date, the Buyer and LSG shall mutually agree upon an allocation, in accordance with Applicable Law, of the Purchase Price and other relevant items among the Acquired Assets and the Acquired Stock. For these purposes, the assets of Laundromats LLC (and not the Laundromats Membership Interests) shall be considered Acquired Assets. To the extent permitted by Applicable Law, the Buyer and the Sellers shall use the agreed-upon allocation for all Tax reporting purposes.

2.	Accounts Receivables. A new Section 5.15 shall be added to the Purchase Agreement to read as follows:

Section 5.15 Post-Closing Accounts Receivables. From and after the Closing Date, the Sellers shall remit to the Buyer all payments received by any Seller in respect of accounts receivables, trade receivables and equipment note receivables, or, indebtedness owed to, the Acquired Operations within two Business Days of such Seller’s receipt thereof. Such amounts shall be transferred to the Buyer in immediately available funds to the account designated on Annex I hereto.

3.	Aggregate Purchase Price. The definition of “Aggregate Purchase Price” included within Section 11.1 of the Purchase Agreement shall be deleted from the Purchase Agreement and the following shall be substituted in replacement thereof:

“Aggregate Purchase Price” shall mean the sum of (i) the Purchase Price, (ii) the Final Purchase Price (as such term is defined in the Share Purchase Agreement) and (iii) the IPSO Debt (as such term is defined in the Share Purchase Agreement).

Effect of Amendment. This Amendment shall be effective as of the date hereof. Except to the extent modified herein, all of the terms and conditions of the Purchase Agreement, as heretofore in effect, shall remain in full force and effect, and, as modified hereby, all of the terms and conditions of the Purchase Agreement are hereby ratified and confirmed in all respects. All references to the “Purchase Agreement” in any future correspondence or notice shall be deemed to refer to the Purchase Agreement as modified by this Amendment.

Counterparts. This Amendment may be executed in any number of counterparts, each of which shall be deemed an original and all of which shall together constitute one and the same instrument. Delivery of an executed counterpart of a signature page of this Amendment by facsimile shall be effective as delivery of a manually executed counterpart of this Amendment.

6.	Applicable Law. This Amendment shall be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to the conflict of law rules thereof.

[Remainder of this page left intentionally blank.]

IN WITNESS WHEREOF, the undersigned has executed and delivered this Amendment No. 1 to the Purchase Agreement as of the date first above written.


ALLIANCE LAUNDRY SYSTEMS LLC

By:		/s/ Thomas F. L’Esperance
Name:		Thomas F. L’Esperance
Title:		President and Chief Executive Officer

LAUNDRY SYSTEMS GROUP NV

By:		/s/ Jesper Munch Jensen
Name:		Jesper Munch Jensen
Title:		Chief Executive Officer

LAUNDRY SYSTEMS GROUP NV

By:		/s/ Erik Vanderhaegen
Name:		Erik Vanderhaegen
Title:		Chief Financial Officer

CISSELL MANUFACTURING COMPANY

By:		/s/ Jens Voldbaek
Name:		Jens Voldbaek
Title:		Vice President

JENSEN USA INC.

By:		/s/ Jens Voldbaek
Name:		Jens Voldbaek
Title:		President

LSG NORTH AMERICA, INC.

By:		/s/ Erik Vanderhaegen
Name:		Erik Vanderhaegen
Title:		President

Annex I

Bank Account Information

Alliance Laundry Systems LLC

c/o Bank of America

91117 Collections Center Drive

Chicago, IL 60693

ABA No: 026009593

Account: 8188603612

SWIFT: BOFAUS3N

EX-10.7 8 dex107.htm SUPPLY AGREEMENT, DATED JULY 14, 2006 Supply Agreement, dated July 14, 2006

Exhibit 10.7

SUPPLY AGREEMENT

BY AND BETWEEN

JENSEN USA INC.

AND

ALLIANCE LAUNDRY SYSTEMS LLC

Dated as of July 14, 2006

TABLE OF CONTENTS


SECTION		PAGE
1.	SALE AND PURCHASE.	2
2.	TERM OF AGREEMENT	2
3.	SCHEDULING	3
4.	PRICE.	3
5.	QUALITY REPORTS	3
6.	QUALITY	4
7.	AGENCY APPROVAL	4
8.	SPECIFICATION CHANGES	4
9.	TRADEMARKS AND TRADE NAMES	5
10.	PATENT INFRINGEMENT.	6
11.	TERMINATION	6
12.	TOOLS AND DEDICATED EQUIPMENT	7
13.	PRODUCTION DELAYS.	7
14.	PERMITS; INSURANCE.	8
15.	ORDERS AND DELIVERIES	9
16.	SHIPMENTS	9
17.	PAYMENT	9
18.	WAREHOUSING	9
19.	COMPONENT INVENTORY	10
20.	SERVICE	10
21.	CUSTOMER WARRANTY	10
22.	EPIDEMIC WARRANTY.	11
23.	PRODUCT LIABILITY	12
24.	PRODUCT RECALL	14
25.	GOOD FAITH COOPERATION	14
26.	NOTICES	14
27.	ARBITRATION, GOVERNING LAW, CONSENT TO JURISDICTION AND VENUE.	16
28.	ASSIGNMENT	16
29.	INDEPENDENT CONTRACTOR	16
30.	MODIFICATION; NONWAIVER	17
31.	SEVERABILITY	17
32.	CAPTIONS	17
33.	ENTIRE AGREEMENT	17

Appendix A (Products)

Appendix B (Prices)

Appendix C (Contact List)

A G R E E M E N T

This supply agreement (the “Agreement”) is made as of July 14, 2006, by and between ALLIANCE LAUNDRY SYSTEMS LLC, a limited liability company incorporated in Delaware, having offices located at Shepard Street, Ripon, Wisconsin 54971, U.S.A. (hereinafter called “Alliance”) and Jensen USA, Inc., a North Carolina corporation, having offices located at 99 Aberdeen Loop Road, Panama City, Florida 32405 (hereinafter called the “Supplier”). Capitalized terms used herein and not otherwise defined herein shall have the same meaning ascribed to them in the Purchase Agreement (as defined below).

Whereas, pursuant to that certain Share Purchase Agreement (the “Share Purchase Agreement”), dated as of May 23, 2006, by and between Alliance and Laundry Systems Group NV (“LSG”), Alliance has agreed to purchase and LSG has agreed to sell to Alliance all of the outstanding shares of capital stock of LSG’s subsidiary, IPSO-LSG NV (“IPSO-LSG”);

Whereas, pursuant to that certain Purchase Agreement, dated as of May 23, 2006, by and among Alliance, LSG, Cissell Manufacturing Company (“Cissell”) and LSG North America, Inc. (“LSG North America,” and together with the Supplier, LSG and Cissell, the “Sellers”), as amended by Amendment No. 1 to the Purchase Agreement, dated as of July 13, 2006, by and among Alliance and the Sellers (the “Purchase Agreement”), the Sellers have agreed to sell to Alliance, and Alliance has agreed to purchase from the Sellers, certain of the assets and properties of the Supplier’s IPH product line, which includes without limitation rigid mount medium-speed and high-speed washer-extractors, in Panama City, Florida (the “IPH Product Line”) and other service and production parts manufactured in Panama City, Florida, for Ipso-LSG (the “Ipso Belgium Parts”);

Whereas, the Purchase Agreement does not provide for the sale of the manufacturing facility that produces the IPH Product Line and Ipso Belgium Parts;

Whereas, simultaneously with the execution of this Agreement, the parties are entering into an Transition Services Agreement (“Transition Services Agreement”), dated the date hereof, whereby the Supplier will provide Alliance with access to its Panama City, Florida, facility and certain services in order to enable Alliance to conduct the business relating to the IPH Product Line;

Whereas, the execution and delivery of this Agreement by the Supplier and Alliance are conditions precedent to the Purchase Agreement; and

Whereas, it is the intent and desire of each party that the parties will use reasonable best efforts to perform their obligations under this Agreement and the Transition Services Agreement without interfering with the Service Provider’s performance of its obligations hereunder.

In consideration of the mutual covenants and promises hereinafter made, and for other good and valuable consideration acknowledged by each party to be satisfactory and adequate, the parties hereby consent and agree to the following Supply Agreement (the “Agreement”), which shall become effective as of the Closing Date under the Purchase Agreement (the “Effective Date”).

SALE AND PURCHASE.

a. From and after the Effective Date, the Supplier will manufacture and sell to Alliance, and Alliance will purchase from the Supplier for resale, the IPH Product Line products (the “IPH Products”) listed on Appendix A1 and service parts thereto (the “Service Parts”) and the Ipso Belgium Parts listed on Appendix A2 (together with the IPH Products and the Service Parts, the “Products”) in accordance with the terms of this Agreement. All Products shall be manufactured by the Supplier. For the avoidance of doubt, all individuals engaged in the manufacture and sale of Products are employees of LSG and the Supplier, or their respective affiliates, and LSG and the Supplier are and shall remain responsible for all liabilities arising from or relating to such employees.

b. During the term this Agreement, in addition to producing Products for Alliance, the Supplier shall have the right to produce IPH Products affixed with its trademark or brand name for its own account, and affiliates of LSG shall have the right to purchase IPH Products from Supplier affixed with a trademark or brand name of the Supplier or of other LSG affiliates at the same price Alliance pays the Supplier, provided that such IPH Products are not offered for sale within the stand-alone commercial laundry, dry cleaning, laundromats, and multi-housing market segments or into on-premise laundry installations that do not have washing equipment of at least 100 kg through put, per hour, capability installed in the laundry facility.

2. TERM OF AGREEMENT. Unless earlier terminated in accordance with the provisions of this Agreement, the term of this Agreement shall expire twelve (12) months from the Effective Date. Alliance may choose to terminate this Agreement at any time with 90 days’ written notice to the Supplier, it being understood that Alliance may choose to terminate this Agreement

solely with respect to either (i) the IPH Products and Service Parts or (ii) the Ipso Belgium Parts and that partial termination of this Agreement (i.e. termination with respect to either IPH Products and Service Parts or Ipso Belgium Parts) shall not effect Supplier’s obligations to manufacture and sell to Alliance those machines or parts that Alliance orders in accordance with the terms of this Agreement. The expiration or termination of this Agreement shall not relieve either party of any obligations accrued hereunder, or which extend beyond the term hereof, including, but not limited to payments and credits accrued hereunder; product liability, trademark and patent indemnifications; parts availability as provided in Section 20(a); epidemic failure obligations and confidentiality obligations, insurance obligations and the requirements to sell and purchase Products pursuant to a firm purchase order delivered prior to the expiration of the Agreement.

3. SCHEDULING. On the first business day of each calendar week, Alliance shall provide to the Supplier a thirteen (13) week non-binding forecast of Alliance’s demand for the Products, provided that the first four (4) weeks of each such forecast shall constitute a “firm production order period” and, subject to Section 13, the Supplier shall fulfill all orders during such firm production order period. In the event that during the firm production order period Alliance requires additional Products, the Supplier shall use its best efforts to accommodate Alliance and, provided further, that Alliance shall purchase a minimum of 40 IPH Product Line machines per month and Supplier shall not be required to produce more than 65 IPH Product Line machines per month.

PRICE.

a. The prices for IPH Products shall be as set forth on Appendix B1.

b. The prices for Service Parts shall be as set forth on Appendix B2.

c. The prices for Ipso Belgium Parts shall be as set forth on Appendix B3.

d. All prices for Products sold to Alliance shall be net prices in U.S. Dollars. All Products are ex works the JENSEN factory in Panama City, Florida.

5. QUALITY REPORTS. The Supplier will provide Alliance with weekly quality summaries regarding the manufacture of the Products, which summaries will include end of line yield and audit yield for units produced. Such summaries shall also identify manufacturing defects and corrective action taken. Alliance shall determine the detail of the information and format for such quality reports.

6. QUALITY. The engineering, manufacturing, design, performance and appearance specifications for each Product will be the same as for those products the Supplier produced prior to this Agreement, except as agreed by Alliance; provided, however, that any nameplates or other identifying escutcheons, including shipping carton identifications, as well as any and all visible parts, labels, wiring diagrams, instructions, serial plates and parts and service manuals will bear the trademarks or brand names designated by Alliance and no other trademarks or brand names, except for the brand name “Jensen” on IPH Product Line products manufactured for Supplier’s own account or any trademark or brand name of an affiliate of LSG on IPH Product Line products manufactured by Supplier for any such affiliate, as permitted by Section 1 of this Agreement. Alliance will provide the personnel, at Alliance’s expense, to develop materials, name plates, etc. for any Alliance brands other than IPSO. The Supplier will supply the necessary electronic files for name plates and other branded materials. The Supplier will extend the same quality and reliability control techniques to the Products manufactured for Alliance that the Supplier employed with respect to the Products manufactured prior to this Agreement. The Supplier shall not deliver to Alliance any Products that are known by the Supplier not to meet the applicable quality specifications.

7. AGENCY APPROVAL. All Products delivered by the Supplier must conform with European standards Directives (CE Marking) or be approved by the American Gas Association, the Canadian Standards Association or the Canadian Gas Association, as appropriate, prior to delivery to Alliance. The costs of obtaining such approval shall be borne by Alliance.

8. SPECIFICATION CHANGES. Alliance may from time to time request that the Supplier implement minor changes to the Products in order to improve their quality. The Supplier will consider such requests in good faith. With respect to requested minor changes to the Products that are de minimis or inconsequential, the Supplier shall accommodate such changes free of charge to Alliance. If, in the reasonable opinion of the Supplier, the requested changes to the Products would be significant, then the Supplier shall consider the non-recurring and recurring costs of making such changes, and shall inform Alliance of its decision of whether it will accommodate the request. In the event that the Supplier agrees to undertake any significant changes or developments to the Products, the parties shall negotiate in good faith to agree upon the costs of such undertaking,

which costs shall be borne by Alliance. All specification change notices shall be made to those persons designated in Appendix C, as may be amended with notice to the other party. In the event a significant change is undertaken by Supplier, Supplier shall not be responsible for additional warranty expenses incurred as a result of the changes, however, Supplier shall use customary diligence and care in implementing the change.

The Supplier shall not make any change to the Product specifications or component parts unless it obtains the prior written approval of Alliance and such change improves the quality of such Product. The Supplier will provide Alliance with sixty (60) days’ advance written notice of any change to Product specifications or component parts which requires any regulatory agency re-listing, results in a change in Product appearance, or which may significantly affect the quality, operation, performance, marketability or serviceability of the Products or interchangeability of parts. The Supplier will notify Alliance of any cost adjustments resulting from changes made pursuant to this Section 8, which cost adjustments will require Alliance’s approval.

9. TRADEMARKS AND TRADE NAMES. Alliance warrants that it has the right to use the trademarks and trade names that will be physically associated with the Products. The Supplier acknowledges that the Alliance trademarks and trade names are the sole property of Alliance and that the Supplier will acquire no rights to such trademarks and trade names. The Supplier will not, in its advertisements, promotional pieces or in communications to third parties, make reference to its manufacturing of the Products for Alliance. Alliance expressly reserves all right, title and interest in and to its trade names and trademarks, and the Supplier acknowledges such right, title and interest. The Supplier will acquire no rights to Alliance trademarks and trade names. Neither party in its advertising or promotional efforts shall make reference to the Supplier as the manufacturer of the Products. Alliance shall defend any suit or proceeding and indemnify and hold the Supplier harmless against any and all claims, demands, costs or losses (including attorneys’ fees and expenses) arising from any suit or proceeding brought against the Supplier to the extent based on a claim of trademark or trade name infringement for any of the Products sold to Alliance hereunder bearing the Alliance trademarks or trade names. The Supplier shall have no right to defend any such suit or proceeding and Alliance will not be responsible for any settlement of such suit or proceeding made without its written consent, which consent shall not be unreasonably withheld. The Supplier shall notify Alliance promptly in writing and give Alliance authority, information and assistance (at Alliance’s expense) for the defense of any such suit or proceeding, provided, however, that the

failure to promptly notify Alliance shall not relieve Alliance of its indemnification obligation under this Agreement except to the extent that such failure results in a lack of actual notice to Alliance and Alliance is materially prejudiced as a result of such failure to give notice.

10.

PATENT INFRINGEMENT.

a. The Supplier represents and warrants that, as of the Effective Date, and, to the Knowledge of the Sellers, no Product or any part thereof furnished by the Supplier hereunder infringes in any way any patent granted by the United States or other jurisdiction. The Supplier shall defend, indemnify and hold harmless the Buyer Indemnitees against any and all claims, demands, costs or losses (including attorneys’ fees and expenses) arising from any suit or proceeding brought against Alliance resulting from, arising out of or relating to the failure of this representation and warranty to be true and correct as of the Effective Date. Alliance will notify the Supplier promptly in writing if it receives notice of any claim, demand, suit or proceeding and give the Supplier authority, information and assistance (at the Supplier’s expense) for the defense of said claim, demand, suit or proceeding, provided, however, that the failure to promptly notify the Supplier shall not relieve the Supplier of its indemnification obligation under this Agreement except to the extent that such failure results in a lack of actual notice to the Supplier and the Supplier is materially prejudiced as a result of such failure to give notice.

b. In case the Products or their parts are held to constitute infringement and their use enjoined, in addition to paying any costs, losses and damages (including attorneys’ fees and expenses) of Alliance, the Supplier will, at its option and at its expense:

i. procure for Alliance the rights to continue selling the Products or parts; or

ii. replace them with non-infringing Products or parts; or

iii. modify them so that they become non-infringing; or

iv. remove them and refund the purchase price and the transportation and installation costs thereof.

11. TERMINATION. In case of any breach of a material obligation under this Agreement by a party hereto, the other party shall give written notice to the breaching party

specifying such breach. The breaching party shall have sixty (60) days from the date of the notice to remedy the breach; provided however, that, if upon the expiration of such 60-day period, the breaching party has not remedied the breach but is continuing in good faith to do so, then such 60-day period shall be automatically extended for an additional 60-day period provided that the period during which the breaching party may remedy the breach shall not be more than one-hundred-twenty (120) days. In the event the breaching party fails to remedy the breach within the applicable period, the notifying party shall have the right to terminate this Agreement by providing sixty (60) days’ written notice. Termination of this Agreement by either party in accordance with this Section 11 will be without prejudice to damages. Notwithstanding the foregoing provisions of this Section 11, Alliance may terminate this Agreement at any time, with or without cause, by providing 90 days’ written notice to the Supplier.

12. TOOLS AND DEDICATED EQUIPMENT. Upon the consummation of the transactions contemplated by the Purchase Agreement, Alliance shall own the tooling and fixtures and dedicated equipment required to produce the Products (the “Tools”) and shall provide the Supplier with access to such Tools in order that the Supplier may fulfill its obligations under this Agreement. The Supplier will provide maintenance and repair of the Tools at its own expense provided that such maintenance and repair does not incur costs in excess of Two Thousand Dollars (US$2,000.00) per repair. All tool repairs incurring costs in excess of Two Thousand Dollars (US$2,000.00) per repair will be done by the Supplier at Alliance’s expense with the prior written approval of Alliance.

13.

PRODUCTION DELAYS.

a. To the extent the Supplier’s production of Products is delayed or reduced by reason of a reduction in or re-allocation of the Supplier’s labor force, and the amount of Products produced as a result of such reduction or re-allocation is less than the amount required by Alliance’s order, then, during the period of such delay or reduction, the Supplier will allocate its labor force to the manufacture of Products so that the percentage of labor hours allocated is equal to the percentage of labor hours allocated to the manufacture of Products during the three (3) calendar-month period immediately prior to the date hereof, as a portion of all labor hours at the Supplier’s Panama City facility during such three-month period. For the avoidance of doubt, such delays or reductions in the production of Products for Alliance shall not result from the production of Products for Supplier’s own account or for other LSG affiliates, as permitted by Section 1 of this Agreement.

b. The Supplier’s obligation to deliver Products to Alliance will be suspended if the failure to or delay in delivery is caused by labor problems, or other causes that are beyond the Supplier’s reasonable control. In no event will a failure to or delay in delivery constitute a breach of this Agreement if the Supplier exercised its best efforts to correct such situation, provided that a failure to or delay in delivery will not be excused by reason of the Supplier’s performance of its obligations under the Transition Services Agreement.

c. Neither party shall be liable for any failure, inability or delay in performing its obligations hereunder if such failure, inability or delay is due to: an act of God, war, riot, rebellion or an act of terror; a government law, order or regulation; an explosion, casualty or accident resulting in the closure of the JENSEN factory in Panama City, Florida; or another cause that is beyond the reasonable control of such obligor. The parties agree to use reasonable best efforts to cure such cause and resume performance, including by substituting material sources or utilizing overtime or additional workers. In the event that any delay persists as a result of the causes set forth in this Section 13(c), or if in the reasonable opinion of Alliance, such delay may persist for more than sixty (60) days, Alliance may cancel any production order without penalty.

14.

PERMITS; INSURANCE.

a. The Supplier shall obtain and maintain all material permits, licenses and other approvals necessary or appropriate to perform its obligations hereunder and shall at all times comply with the terms and conditions of such permits, licenses and approvals. The Supplier shall comply at all times with all applicable laws in the performance of its obligations hereunder.

b. The Products sold hereunder shall (i) comply with all specifications and (ii) be free from defects in material and workmanship.

c. At all times during the term of this Agreement, the Supplier shall procure and maintain, with insurers reasonably acceptable to Buyer, the following types of insurance coverage:

i. product liability insurance naming Alliance and its subsidiaries and affiliates as additional insureds, and providing coverage of not less than One Million Dollars

(US$1,000,000.00) for each occurrence, Two Million Dollars (US$2,000,000.00) aggregate, with a Four Million Dollar (US$4,000,000.00) umbrella, therefore in effect providing Six Million Dollars (US$6,000,000.00) of comprehensive insurance coverage for all occurrences (not to exceed Five Million Dollars (US$5,000,000.00) for a single occurrence); and

ii. workers’ compensation, automobile and general liability insurance coverage for persons engaged in the manufacture or sale of Products, none of whom, for the avoidance of any doubt, are employees of Alliance.

As of the Effective Date, the Supplier shall furnish to Alliance certificates of insurance satisfying the requirements of the Section 14(c).

15. ORDERS AND DELIVERIES. To place an order, Alliance shall deliver a written purchase order identifying the quantity of each Product required and the requested delivery date. Deliveries of all Products will be ex works the JENSEN factory in Panama City, Florida. Title to all Products and the risk of loss thereof will pass to Alliance upon the Products leaving the factory. The Supplier will furnish to Alliance information and documents concerning deliveries made and to be made by the Supplier as Alliance may periodically request in writing.

16. SHIPMENTS. Shipping documents shall show Alliance as the shipper as specified by Alliance. Shipments will be made by the safest, most expedient and least expensive carrier, or as specified by Alliance.

17. PAYMENT. All Products manufactured under Alliance purchase orders will be invoiced as shipped. Alliance shall pay the amount stated in the invoice within thirty (30) days after receipt of the invoice; provided, however, that the Supplier retain the right to adjust payment terms in the event that Alliance fails to maintain its timeliness of payment in all material respects; provided further that in the event that Alliance objects to all or a portion of the invoice, Alliance shall, on or before the date payment of the invoice is due, (i) pay the undisputed portion of the invoice and (ii) provide an itemized statement of its objections setting forth in reasonable detail the basis for its objections. If Alliance does not object prior to the date payment of any invoice is due, Alliance shall be obligated to pay the full amount of such invoices but Alliance may subsequently object to such invoice and, if such objection proves to be correct, receive a refund of the disputed amount; provided, however, that Alliance may not object to any invoice more than twelve (12) months after the date on which such invoice was received.

18. WAREHOUSING. Unless Alliance requests shipment, the Supplier agrees to warehouse the Products at no cost to Alliance, provided that no more than two (2) weeks of Products scheduled for delivery require warehousing.

19. COMPONENT INVENTORY. At the end of the term of this Agreement, Supplier will deliver to Alliance its unique component part inventory free of charge, provided that the freight costs relating to such delivery shall be borne by Alliance.

20. SERVICE. The service policy outlining service procedures between the Supplier’s and Alliance’s service departments with respect to the Service Parts shall be as follows, unless otherwise agreed by the parties:

a. Service Parts Availability –

i. Alliance shall be responsible for monitoring its service department in order to determine that it has sufficient Service Parts and to order Service Parts as needed.

b. Service Parts Ordering –

i. Alliance shall place orders for Service Parts on its uniform purchase order form specifying the Alliance part numbers with reference to the Supplier’s parts numbers. These orders will be invoiced using the Supplier’s part numbers only.

ii. Alliance will furnish the Supplier with a cross-reference list of Alliance part numbers to the Supplier’s part numbers, indicating those parts that Alliance expects to purchase from the Supplier.

iii. Orders for Service Parts must be received by the Supplier at least fifteen (15) days prior to the requested shipping dates.

iv. If Alliance and the Supplier agree that an emergency situation exists, the Supplier will expedite orders and will attempt to ship within seventy-two (72) hours on all stocked Service Parts and within ten (10) days on non-stock Service Parts.

c. Service Parts Shipments –

i. Service Parts will be shipped directly to Alliance controlled stocking locations. No direct shipments will be made to Alliance vendees, unless directed in writing by Alliance.

ii. Prior to initial production, the Supplier shall suggest Service Parts requirements and shall, upon the prior request of Alliance, ship a stocking order of Service Parts.

iii. Service Parts will be packaged according to the Supplier’s bulk packaging standards.

d. Technical Information and Publications –

i. Unless instructed otherwise by Alliance, the Supplier will supply the installation manual with each type of Product sold to Alliance. At the request of Alliance, the Supplier will review the installation manual created by the Supplier prior to use to insure that the information contained therein is complete, correct and current.

ii. The Supplier shall provide Alliance with copies of all engineering and other bulletins relating to the Products on an ongoing basis.

e. Consumer Relations –

i. Alliance is responsible for maintaining a network of service agents and Service Parts stocks in order to provide service for the Products manufactured by the Supplier for Alliance.

ii. Alliance is responsible for all direct contact with consumers, including warranty service and gathering of production information.

iii. The parties will each designate a Service Manager to coordinate with the other party with respect to customer service.

21. CUSTOMER WARRANTY. Alliance will assume full responsibility for the promotion and sale of all Products by Alliance to its distributors and dealers and will defend, indemnify and hold the Supplier harmless from any and all claims arising out of or occasioned by (a) the negligent conduct of Alliance, (b) the use of Alliance’s trademarks or product descriptions or (c) any representations of any kind by Alliance regarding the Products.

22.

EPIDEMIC WARRANTY.

a. The Supplier gives Alliance the following epidemic warranty in the event of epidemic failure:

i. An epidemic failure shall be defined as the failure of a specific part or Product manufactured by the Supplier, or adjustments to a specific part or Product manufactured by the Supplier, as a result of a manufacturing or design defect, which failure shall affect more than twenty percent (20%) of the total number of Products sold to Alliance during the term of this Agreement. Failure rates will be based upon actual warranty service tickets collected by Alliance.

ii. In the event of an epidemic failure and notification of such failure to the Supplier, Alliance and the Supplier shall negotiate in good faith to mutually agree to an appropriate solution for, and the reasonable costs associated with, correcting the failures, and the Supplier will be responsible to Alliance for the cost of replacement parts, labor and related transportation and other costs necessary to correct the failures which are part of the specified epidemic failure.

b. In addition, the Supplier shall repair or replace any replacement part that does not conform to specifications or that fails within one-hundred-twenty (120) days from the date of shipment to Alliance, without any cost to Alliance for the part. Alliance shall be responsible for freight charges arising out of any repair or replacement.

c. In administering the foregoing warranties, the parties shall use the following warranty procedure:

i. The Supplier will provide written instructions to Alliance for correcting failures. Instructions will list the materials necessary to correct the failure by part number and description.

ii. Failure rates will be based upon actual warranty service tickets collected by Alliance.

iii. Alliance will use an early warning system or other means at its disposal to advise the Supplier as far in advance as reasonably possible of any defect that may be approaching an epidemic level.

iv. The Supplier reserves the right to verify the correctness of all information provided by Alliance to the Supplier. Alliance agrees to cooperate with the Supplier in verifying the correctness of its information.

v. If the installation date of any Product cannot be definitively determined, it shall be presumed to be forty-five (45) days from the date of sale by Alliance.

vi. Subject to Section 14, the Supplier does not give any other warranty, express or implied, to Alliance other than the aforesaid epidemic warranty.

23. PRODUCT LIABILITY. The Supplier shall indemnify and hold Alliance harmless from all injury, loss or damages to any third party suffered or claimed to have arisen out of or in connection with any defect in the design or manufacture or assembly by the Supplier of the Product; provided, however, that Alliance will immediately notify the Supplier of any such claim or the filing of any such action. The Supplier will have the duty and exclusive right to defend or control the defense of such action or to handle such claim. During any period prior to the Supplier assuming the defense, Alliance will use reasonable efforts to protect the legal rights of the Supplier in all material respects. This indemnification provision shall not apply to claims for less than Five Hundred Dollars (US$500.00). The Supplier shall have no liability for any claims settled by Alliance without the Supplier’s consent, which consent shall not be unreasonably withheld.

Alliance indemnifies and holds the Supplier harmless from all injury, loss or damage to any third party suffered or claimed to have arisen out of Alliance’s negligent installation, repair or alteration of Products. Neither the Supplier nor Alliance is liable for any injury, loss or damage to any third party suffered or claimed to have arisen out of the negligent installation, repair or alteration of Products by Alliance’s distributors, dealers, service providers or agents. Alliance will notify the Supplier and afford the Supplier the opportunity to appear and defend in the event that any party to such litigation alleges injuries or damages that would result in the Supplier being obligated under this Section 23. The Supplier shall have no liability for any claims of the type described in this paragraph that are settled without its consent, which consent shall not be unreasonably withheld.

In the event of any claim by any third party under this Section 23, Alliance shall use its best efforts to preserve evidence related to such claims, including, but not limited to allegedly defective parts. Both parties disclaim responsibility for the actions of their independent distributors and dealers. Both parties agree to work together in good faith and use their best efforts to resolve any litigations brought against either or both parties due to a claimed accident, loss or injury involving the Products.

24. PRODUCT RECALL. In the event that any Products are found by the Supplier, Alliance or any governmental agency or court having jurisdiction, to contain a defect or not to be in compliance with any standard or requirement so as to require or make advisable that such Products be recalled by law, regulation or order, the Supplier shall undertake all obligations imposed by such laws, regulations or orders, and shall file all necessary papers, corrective action programs, and other related documents; provided that Alliance shall cooperate with and assist the Supplier in any such filing and corrective action, and provided that nothing contained in this Section 24 shall preclude Alliance from taking such action as may be required of it under any such law, regulation or order. The Supplier shall perform all necessary repairs or modifications at its sole expense except to the extent that the Supplier and Alliance shall agree to the performance of such repairs by the Supplier upon mutually acceptable terms. Each party shall consult the other prior to making any statements to the public or a governmental agency concerning issues relating to potential safety hazards relating to the Products, except where such consultation would prevent timely notification required to be given under any such law or regulation.

25. GOOD FAITH COOPERATION. The parties will use good faith efforts to cooperate with each other in all matters relating to the purchase and sale of the Products and all matters under this Agreement and the Transition Services Agreement. Such cooperation shall include exchanging information and using reasonable best efforts to comply with the terms of this Agreement during the term of the Transition Services Agreement. The Supplier agrees to promptly notify Alliance in the event that the Supplier anticipates that the performance of its obligations under the Transition Services Agreement may interfere with its performance under this Agreement.

26. NOTICES. Subject to Section 8, which governs specification change notices, all notices, requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if (a) delivered personally, (b) sent by certified or registered mail with postage prepaid, (c) sent by next-day or overnight mail or delivery or (d) sent by telecopy or telegram, as follows:

If to the Supplier to:

Jensen USA Inc.

Attn: Jens Voldbaek

99 Aberdeen Loop

Panama City, Florida 32405

Fax: (850) 271-5901

If to Alliance to:

Alliance Laundry Systems LLC

Attn: CEO and President

Shepard Street

P.O. Box 990

Ripon, Wisconsin 54971-0990

Fax: (920) 748-4334

With a copy to:

(which shall not constitute notice to Alliance)

Alliance Laundry Systems LLC

Attn: Chief Legal Officer

Shepard Street

P.O. Box 990

Ripon, Wisconsin 54971-0990

Fax: (920) 748-4334

or to such other address or facsimile number or to such other person as any party hereto shall have last designated by notice to the other party. All such notices, requests, demands, waivers and other communications shall be deemed to have been received (w) if by personal delivery on the day after such delivery, (x) if by certified or registered mail, on the seventh business day after the mailing thereof, (y) if by next-day or overnight mail or delivery, on the day delivered, or (z) if by telecopy or telegram, on the next day following the day on which such telecopy or telegram was sent, provided that a copy is also sent by certified or registered mail.

27. ARBITRATION, GOVERNING LAW, CONSENT TO JURISDICTION AND VENUE.

a. Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled by arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules, and judgment on the award rendered by a panel of three (3) arbitrators may be entered in any court having jurisdiction thereof. The parties agree that all except Sections “0-4 Interim Award” and the first sentence of “0-5 Constitution of the Panel” of the 2001 AAA Optional Rules for Emergency Measures of Protection shall apply to the proceedings. The parties have selected arbitration by a panel of three (3) arbitrators as the method for resolving disputes herein as part of the mutual consideration for this Agreement.

b. The parties agree that the Agreement shall be governed by the laws of the State of New York and that any legal or equitable action or claims, debts, or obligations arising out of, or to enforce the terms of, this Agreement shall be brought in the United States District Court for the Southern District of New York. The parties further agree and consent that this court is the sole and proper venue for any claim or action arising out of or to enforce this Agreement, and that this court shall be the sole and exclusive venue for the exercise of in personam and subject matter jurisdiction over the parties. The provisions of this subparagraph (b) regarding choice of forum and venue do not supersede or conflict with the provisions of subparagraph (a) but are intended to provide a means of enforcing the provisions of subparagraph (a).

28. ASSIGNMENT. Neither this Agreement, nor any of the rights or interest of Alliance and the Supplier hereunder may be assigned, transferred or conveyed by operation of law or otherwise without the prior written consent of the other party (which consent will not be unreasonably withheld), except that Alliance may assign this agreement to any of its parent, subsidiary or affiliate without the prior written consent of the Supplier, in which case the party so assigning shall remain obligated and liable to the other party for the full and complete performance of this Agreement by its assignee. Any assignment or purported assignment in violation of this provision shall be null and void. This Agreement or any rights of Alliance and the Supplier hereunder shall not inure to the benefit of any trustee in bankruptcy, receiver, creditor, trustee or successor of the business of Alliance or the Supplier or of the property of either, whether by operation of law or otherwise.

29. INDEPENDENT CONTRACTOR. It is expressly agreed that the Supplier is an independent contractor and has no authority to act for or on behalf of Alliance or Alliance’s affiliates

or to bind Alliance or its affiliates to any contract or in any other manner commit Alliance or its affiliates or make warranties for Alliance or its affiliates in any way without the prior express written approval of Alliance, except as may be otherwise provided herein. Further, nothing contained herein shall constitute an agency, a partnership or a joint venture between the parties hereto.

30. MODIFICATION; NONWAIVER. Neither this Agreement nor any part hereof may be changed, altered or amended orally. Subject to the provisions of Section 8, any modification or amendment must be by written instrument signed by the parties. Failure by any party to exercise promptly any right granted herein or to require strict performance of any obligation imposed hereunder shall not be deemed a waiver of such right.

31. SEVERABILITY. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the term hereof, such provision shall be fully severable and this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision never comprised a part hereof; and the remaining provisions hereof shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom. Furthermore, in lieu of such illegal, invalid or unenforceable provision, there shall be added automatically as part of this Agreement, a provision as similar in its terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.

32. CAPTIONS. The captions in this Agreement are for convenience of reference only and shall not limit or otherwise affect any of the terms or provisions hereof.

33. ENTIRE AGREEMENT. All agreements between Alliance and the Supplier for the sale of the Products by the Supplier to Alliance shall include and be governed exclusively by the terms and conditions set forth in this Agreement, except as the parties may otherwise agree in writing duly executed by their respected duly authorized representative which expressly references this Agreement. In case of any conflict between this Agreement and any purchase order, acceptance, correspondence, memorandum or document for or relating to the Products exchanged by Alliance and the Supplier during the term of this Agreement which is not executed by duly authorized representatives of both parties, this Agreement shall govern and prevail. Any printed terms and conditions of any such documents shall, in any event, be deemed deleted and shall not be binding upon the parties.

This Agreement, the Purchase Agreement and the Ancillary Agreements (as defined in the Purchase Agreement) contain the entire and only agreement between the parties respecting the manufacture of Products and sale thereof by the Supplier to Alliance and the purchase by Alliance from the Supplier of such Products. All prior agreements and collateral representations, promises or conditions, whether oral or written, in connection with such subject matter are superseded by this Agreement. Any representation, promise or condition not incorporated herein shall not be binding upon any party hereto. If any or all of the terms and conditions of this Agreement conflict with the terms and conditions of the Purchase Agreement, the terms and conditions of the Purchase Agreement shall supersede and otherwise be controlling.

IN WITNESS WHEREOF, the parties have executed this Agreement in duplicate as of the date first written above.


JENSEN USA INC.		ALLIANCE LAUNDRY SYSTEMS LLC

By:	/s/ Jens Voldbaek	By:	/s/ Bruce P. Rounds
Name:	Jens Voldbaek	Name:	Bruce P. Rounds
Title:	President	Title:	Vice President and Chief Financial Officer

Appendix A1

IPH Products

IPH – M Series

IPH – 40M

IPH – 60M

IPH – 80M

IPH – 100M

IPH – 140M

IPH – H Series

IPH – 40H

IPH – 60H

IPH – 80H

IPH – 100H

IPH – 125H

IPH – 140H

IPH – 175H

A-1

Appendix A2

Ipso Belgium Parts


Item N°		Item Description

253/00074/028		DEURKRUK KOMPL.USA HF455/575

253/00158/00		DEUR GEASSEMBLEERD HF575 ROND

253/00158/028		DEUR DOOR HANDLE SLDPRT HF575

253/00158/1032		BM SCREW DOOR BUMPER

253/00158/1047		DEUR BOLT/PAN HD/PHLD/SS/10-24

253/00158/1236		BM NUT FOR BOLT 253/00158/180

253/00158/1244		DEUR LATCH/ 8-240-R R.H.MOD.2

253/00158/131		DEUR DOOR

253/00158/135		DEUR GASKET DOOR HF455-575

253/00158/139		DEUR GLAS DOOR HF/WW455-575

253/00158/140		DEUR RUBBER GLAS VOORAAN

253/00158/1546		RUB. BUMPER DOOR

253/00158/175		DEUR HINGE BLOCK HF455-900

253/00158/176		BUSHING HINGE DOOR BRONZE

253/00158/177		DEUR WASHER HINGE HF455-900

253/00158/178		DEUR BOLT/.5X1.25 SHOULDER

253/00158/1784		BOLT,SHDR,SS,3/8-16X1/2X1-1/4

253/00158/1785		DEUR BOLT/.313X2.50 SHOULDER

253/00158/1786		DEUR SPRING/DOOR HANDLE TORSIO

253/00158/180		DEUR BOLT/.313X1.50 SHOULDER

253/00158/181		DEUR BUSHING/DOOR HANDLE

253/00158/182		DEUR BOLT/.313X2.50 SHOULDER

253/00158/185		DEUR CATCH/DOOR LOCK/CASTING

253/00158/192		DEUR DOOR HANDLE/SPRING BUSHIN

253/00158/271		DEUR SLIDE/DOOR LOCK SWITCH

253/00158/276		DEUR SPRING/SS/.250DX.75,4.1LB

253/00158/278		DEUR SWITCH/DOOR LOCK MICRO/2

253/00158/430		DEUR BOLT/SHDR/SS/10-24X1/4X1

253/00158/431		DEUR SPRING/SS/.546ODX.75/4.1

253/00158/470		BM HINGE DOOR HANDLE

253/00158/558		DEUR NUT DEURKRUK USA ONDERSTE

253/00158/560		DEUR NUT VOOR DEURKRUK

253/00158/561		DEUR SCREW HF575-900

253/00158/562		DEUR CAP NUT HF455-900

253/00158/567		DEUR BOLT/HEX/HD/SS/1/4-20X.62

253/00158/569		DEUR NUT DEURKRUK USA BOVENSTE

253/00158/571		DEUR WASHER/LOCK/EXT STAR/SS/1

253/00158/578		DEUR NUT/FIBER LOCK/SS/4-40

253/00158/607		DEUR RETAINER/DOOR GASKET

253/00158/608		SCHARNIERPL DEUR ROND/8K HF575

253/00158/612		DEUR BOLT/FLT HD/PHLP/1/4-20X3

253/00158/614		DEUR BOLT/FLT HD/PHLP/SS/4-40X

253/00158/684		DEUR PLATE/DOOR LOCK/IPH

253/00158/686		DEUR BRACKET/SOLENOID/DOORLOCK

253/00158/687		DEUR COVER/SPRING/DOOR LOCK/I

253/00158/688		DEUR COVER/DOOR LOCK/IPH

253/00158/694		DEUR DECAL/DOOR RELEASE

A-2


253/00158/80503		BM WASHER DOOR BUMPER

253/00159/1036		SLOT GEASSEMBLEERD HF455/730

253/00166/00		SCHARNIER KOMPL HF455/575 ROND

253/00169/00		SCHARNIER KOMPL HF455/575 8K.

253/00170/00		DEUR ONDERDELEN ASSY 575 8K/RH

253/00171/00		SCHARN. ONDERDELEN ASSY 575 RH

253/00172/00		DEUR RUB GLAS VOORAAN VERD.575

253/00515/028		KP DEURK. HF/WW730-900

253/00515/1679		DEUR DOOR HANDLE SLDPRT HF730

253/00515/710		KP DEUR HF730 ROND

253/00515/749		DEUR ONDIEP GLAS HF/WW730-900

253/00515/750		RUB. GLAS VOORAAN HF/WW730-900

253/00515/752		SCHARNIERPL DEUR ROND HF730

253/00515/753		DEUR GASKET DOOR HF730-900

253/00516/00		SCHARNIER KOMPLEET HF730 ROND

253/00517/00		DEUR GEASSEMBLEERD HF730 ROND

253/00518/00		DEURKRUK KOMPLEET HF455->900

253/00519/00		SCHARNIER ONDERDELEN 730 8KANT

253/00520/00		DEUR ONDERDELEN SET HF730 8K

A-3

Appendix B1

IPH Product Prices

Supplier’s published list price less forty percent (40%) less five percent (5%) less fifteen percent (15%).

A-4

Appendix B2

IPH Service Parts Prices

Supplier’s published list price less forty percent (40%) less five percent (5%) less fifteen percent (15%).

A-5

Appendix B3

Ipso Belgium Parts Prices


Item N°	Item Description	Price (US$, per piece)
253/00074/028	DEURKRUK KOMPL.USA HF455/575	69.65
253/00158/00	DEUR GEASSEMBLEERD HF575 ROND	87.32
253/00158/028	DEUR DOOR HANDLE SLDPRT HF575	10.66
253/00158/1032	BM SCREW DOOR BUMPER	0.14
253/00158/1047	DEUR BOLT/PAN HD/PHLD/SS/10-24	0.52
253/00158/1236	BM NUT FOR BOLT 253/00158/180	0.07
253/00158/1244	DEUR LATCH/ 8-240-R R.H.MOD.2	18.61
253/00158/131	DEUR DOOR	88.70
253/00158/135	DEUR GASKET DOOR HF455-575	11.00
253/00158/139	DEUR GLAS DOOR HF/WW455-575	7.21
253/00158/140	DEUR RUBBER GLAS VOORAAN	2.25
253/00158/1546	RUB. BUMPER DOOR	1.75
253/00158/175	DEUR HINGE BLOCK HF455-900	6.87
253/00158/176	BUSHING HINGE DOOR BRONZE	0.71
253/00158/177	DEUR WASHER HINGE HF455-900	0.13
253/00158/178	DEUR BOLT/.5X1.25 SHOULDER	2.88
253/00158/1784	BOLT,SHDR,SS,3/8-16X1/2X1-1/4	2.54
253/00158/1785	DEUR BOLT/.313X2.50 SHOULDER	2.40
253/00158/1786	DEUR SPRING/DOOR HANDLE TORSIO	1.37
253/00158/180	DEUR BOLT/.313X1.50 SHOULDER	1.24
253/00158/181	DEUR BUSHING/DOOR HANDLE	0.82
253/00158/182	DEUR BOLT/.313X2.50 SHOULDER	2.40
253/00158/185	DEUR CATCH/DOOR LOCK/CASTING	6.32
253/00158/192	DEUR DOOR HANDLE/SPRING BUSHIN	0.67
253/00158/271	DEUR SLIDE/DOOR LOCK SWITCH	2.13
253/00158/276	DEUR SPRING/SS/.250DX.75,4.1LB	0.89
253/00158/278	DEUR SWITCH/DOOR LOCK MICRO/2	1.44
253/00158/430	DEUR BOLT/SHDR/SS/10-24X1/4X1	0.76
253/00158/431	DEUR SPRING/SS/.546ODX.75/4.1	0.48
253/00158/470	BM HINGE DOOR HANDLE	36.19
253/00158/558	DEUR NUT DEURKRUK USA ONDERSTE	0.15
253/00158/560	DEUR NUT VOOR DEURKRUK	0.03
253/00158/561	DEUR SCREW HF575-900	0.14
253/00158/562	DEUR CAP NUT HF455-900	0.19
253/00158/567	DEUR BOLT/HEX/HD/SS/1/4-20X.62	0.05
253/00158/569	DEUR NUT DEURKRUK USA BOVENSTE	0.02
253/00158/571	DEUR WASHER/LOCK/EXT STAR/SS/1	0.01
253/00158/578	DEUR NUT/FIBER LOCK/SS/4-40	0.03
253/00158/607	DEUR RETAINER/DOOR GASKET	23.36
253/00158/608	SCHARNIERPL DEUR ROND/8K HF575	30.44
253/00158/612	DEUR BOLT/FLT HD/PHLP/1/4-20X3	0.08

A-6


253/00158/614	DEUR BOLT/FLT HD/PHLP/SS/4-40X	0.02
253/00158/684	DEUR PLATE/DOOR LOCK/IPH	39.99
253/00158/686	DEUR BRACKET/SOLENOID/DOORLOCK	7.41
253/00158/687	DEUR COVER/SPRING/DOOR LOCK/I	2.25
253/00158/688	DEUR COVER/DOOR LOCK/IPH	35.06
253/00158/694	DEUR DECAL/DOOR RELEASE	0.67
253/00158/80503	BM WASHER DOOR BUMPER	0.14
253/00159/1036	SLOT GEASSEMBLEERD HF455/730	166.21
253/00166/00	SCHARNIER KOMPL HF455/575 ROND	49.09
253/00169/00	SCHARNIER KOMPL HF455/575 8K.	45.11
253/00170/00	DEUR ONDERDELEN ASSY 575 8K/RH	32.79
253/00171/00	SCHARN. ONDERDELEN ASSY 575 RH	1.79
253/00172/00	DEUR RUB GLAS VOORAAN VERD.575	0.00
253/00515/028	KP DEURK. HF/WW730-900	10.66
253/00515/1679	DEUR DOOR HANDLE SLDPRT HF730	10.50
253/00515/710	KP DEUR HF730 ROND	167.02
253/00515/749	DEUR ONDIEP GLAS HF/WW730-900	9.96
253/00515/750	RUB. GLAS VOORAAN HF/WW730-900	2.13
253/00515/752	SCHARNIERPL DEUR ROND HF730	31.21
253/00515/753	DEUR GASKET DOOR HF730-900	13.42
253/00516/00	SCHARNIER KOMPLEET HF730 ROND	62.99
253/00517/00	DEUR GEASSEMBLEERD HF730 ROND	250.53
253/00518/00	DEURKRUK KOMPLEET HF455->900	56.05
253/00519/00	SCHARNIER ONDERDELEN 730 8KANT	59.00
253/00520/00	DEUR ONDERDELEN SET HF730 8K	80.15

A-7

Appendix C

Contact List

Helmut Harfmann

Manufacturing Manager

IPSO USA

99 Aberdeen Loop Road

Panama City, Florida 32405

Telephone: (850) 271-5959

hharfmann@ipsopc.com

A-8

EX-10.8 9 dex108.htm FIRST AMENDMENT, DATED AS OF JULY 14, 2006 First Amendment, dated as of July 14, 2006

Exhibit 10.8

FIRST AMENDMENT dated as of July 14, 2006 (the “First Amendment”), to the Credit Agreement dated as of January 27, 2005 (the “Credit Agreement”), among ALLIANCE LAUNDRY HOLDINGS LLC, a Delaware limited liability company (“Holdings”), ALLIANCE LAUNDRY SYSTEMS LLC, a Delaware limited liability company (“Alliance Laundry”), ALH FINANCE LLC, a Delaware limited liability company (“ALH Finance”), the several banks and other financial institutions or entities from time to time parties thereto (the “Lenders”), LEHMAN BROTHERS INC., as sole advisor, sole lead arranger and sole bookrunner (in such capacity, the “Arranger”), THE BANK OF NOVA SCOTIA, as syndication agent, LASALLE BANK NATIONAL ASSOCIATION and ROYAL BANK OF CANADA, as co-documentation agents, and LEHMAN COMMERCIAL PAPER INC., as administrative agent (in such capacity, the “Administrative Agent”). All capitalized terms used herein that are defined in the Credit Agreement and that are not otherwise defined herein shall have the respective meanings ascribed thereto in the Credit Agreement.

W I T N E S S E T H:

WHEREAS, the Borrower has requested that the Lenders agree to amend the Credit Agreement to, among other things, (a) add $60,000,000 of term loans (the “Additional Term Loans”) to the Term Loan Facility and (b) increase the Revolving Credit Commitments by $5,000,000;

WHEREAS, the Borrower intends to use the proceeds of the Additional Term Loans to (a) finance a portion of its acquisition (the “CLD Acquisition”) of the commercial laundry business division of Laundry Systems Group NV (the “CLD Seller”) pursuant to (i) the Share Purchase Agreement dated as of May 23, 2006, between the Borrower and the CLD Seller (the “Belgian CLD Purchase Agreement”) and (ii) the Purchase Agreement dated as of May 23, 2006, between the Borrower, the CLD Seller and the other sellers named therein (the “U.S. CLD Purchase Agreement”; together with the Belgian CLD Purchase Agreement, the “CLD Purchase Agreements”) and (b) pay related fees and expenses in connection therewith (collectively, the “Transactions”);

WHEREAS, the (a) Additional Term Lenders (as defined herein) are severally willing to provide the Additional Term Loans and (b) certain of the Revolving Credit Lenders are severally willing to increase their Revolving Credit Commitments, in each case on, and subject to, the terms and conditions set forth herein; and

WHEREAS, the Lenders have agreed to amend the Credit Agreement solely on the terms and conditions set forth in this First Amendment.

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties agree as follows:

SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT

1.1. Amendment to Table of Contents. The Table of Contents to the Credit Agreement is hereby amended by adding Schedule 1.1 hereto as a schedule thereto.

1.2. Amendments to Section 1.1 (Defined Terms). (a) Section 1.1 of the Credit Agreement is hereby amended by adding the following new definitions in appropriate alphabetical order:

“Additional Term Commitment”: as to each Additional Term Lender, the amount set forth under such Lender’s name on the signature page delivered by such Lender or, as the case may be, in the Assignment and Acceptance pursuant to which such Lender became a party hereto. The original aggregate amount of the Additional Term Commitments is $60,000,000.

“Additional Term Lender”: each Lender which has an Additional Term Commitment or which is the holder of an Additional Term Loan.

“Additional Term Loan”: as defined in Section 2.1.

“Belgian CLD Purchase Agreement”: the Share Purchase Agreement dated as of May 23, 2006, between the Borrower and the CLD Seller.

“CLD Acquisition”: the acquisition of the commercial laundry business division of the CLD Seller pursuant to the CLD Purchase Agreements.

“CLD Purchase Agreements”: the Belgian CLD Purchase Agreement and the U.S. CLD Purchase Agreement.

“CLD Seller”: Laundry Systems Group NV, a limited liability company organized under the laws of Belgium.

“Existing Term Commitment”: as to each Existing Term Lender, the amount set forth under the heading “Existing Term Commitment” opposite such Lender’s name on Schedule 1 to the Lender Addendum delivered by such Lender or, as the case may be, in the Assignment and Acceptance pursuant to which such Lender became a party hereto. The original aggregate amount of the Existing Term Commitments is $200,000,000.

“Existing Term Lender”: each Lender which has an Existing Term Commitment or which is the holder of an Existing Term Loan.

“Existing Term Loan”: as defined in Section 2.1.

“First Amendment”: the First Amendment dated as of July 14, 2006, to the Credit Agreement.

“First Amendment Effective Date”: the date upon which all conditions precedent specified in Section 4 of the First Amendment shall have been satisfied or waived.

“U.S. CLD Purchase Agreement”: the Purchase Agreement dated as of May 23, 2006, between the Borrower, the CLD Seller and the other sellers named therein.

(b) Section 1.1 of the Credit Agreement is hereby further amended by deleting the defined terms “Consolidated Total Debt”, “Term Loan Commitment”, “Term Loan Lender” and “Revolving Credit Commitment” and substituting in lieu thereof the following new definitions in appropriate alphabetical order:

“Consolidated Total Debt”: at any date, (a) the aggregate principal amount of all Funded Debt of the Borrower and its Subsidiaries at such date, determined on a consolidated basis in accordance with GAAP minus (b) the lesser of (i) $3,000,000 and (ii) the aggregate amount of unrestricted cash and Cash Equivalents held by Foreign Subsidiaries at such date.

“Term Loan Commitment”: each Existing Term Commitment and each Additional Term Commitment.

“Term Loan Lender”: each Existing Term Lender and each Additional Term Lender.

“Revolving Credit Commitment”: as to any Lender, the obligation of such Lender, if any, to make Revolving Credit Loans and participate in Swing Line Loans and Letters of Credit (or

guarantees by the Administrative Agent in respect of Letters of Credit issued by Issuing Lenders which are not Lenders), in an aggregate principal and/or face amount not to exceed the amount set forth under the heading “Revolving Credit Commitment” opposite such Lender’s name on Schedule 1.1 or, as the case may be, in the Assignment and Acceptance pursuant to which such Lender became a party hereto, as the same may be changed from time to time pursuant to the terms hereof. The original amount of the Total Revolving Credit Commitments is $55,000,000.

(1) in the definition of “Adjusted EBITDA”, inserting the following new clauses (xii) and (xiii) to the end of clause (b) thereof: “(xii) restructuring charges related to the closure, restructuring and consolidation of certain facilities located in the United States acquired in connection with the CLD Acquisition in an aggregate amount not to exceed $10,000,000 and (xiii) payments made and fees paid from time to time in connection with the CLD Acquisition under executive management closing and post-closing bonus agreements in an aggregate amount not to exceed $600,000”;

(2) in the definition of “Asset Sale”, inserting the word “(l)” after the words “(e), (f), (g)” in the first parenthetical thereof; and

(3) in the definition of “Transaction Costs”, adding the words “and the CLD Purchase Agreements” immediately after the words “amending the Existing Receivables Facilities”.

1.3. Amendment to Section 2.1 (Term Loan Commitment). Section 2.1 of the Credit Agreement is hereby amended and restated in its entirety as follows:

“2.1 Term Loan Commitments. Each Existing Term Lender made a term loan (each, an “Existing Term Loan”) to the Borrower on the Effective Date in an amount equal to the amount of the Existing Term Commitment of such Lender. Subject to the terms and conditions hereof, each Additional Term Lender severally agrees to make a term loan (each, an “Additional Term Loan”; together with the Existing Term Loans, the “Term Loans”) to the Borrower on the First Amendment Effective Date in an amount equal to the amount of the Additional Term Commitment of such Lender. The Term Loans may from time to time be Eurodollar Loans or Base Rate Loans, as determined by the Borrower and notified to the Administrative Agent in accordance with Sections 2.2 and 2.13.”

1.4. Amendment to Section 2.2 (Procedure for Term Loan Borrowing). Section 2.2 of the Credit Agreement is hereby amended by (a) adding the expression “(a)” immediately before the first sentence thereof and adding the following new clause (b) thereto:

“(b) The Borrower shall give the Administrative Agent irrevocable notice (which notice must be received by the Administrative Agent prior to 1:00 P.M., New York City time, one Business Day prior to the anticipated First Amendment Effective Date) requesting that the Additional Term Lenders make the Additional Term Loans on the First Amendment Effective Date. The Additional Term Loans made on the First Amendment Effective Date shall initially be Eurodollar Loans having the same rate of interest and maturity date as the Existing Term Loans. Upon receipt of such notice the Administrative Agent shall promptly notify each Additional Term Lender thereof. Not later than 12:00 Noon, New York City time, on the First Amendment Effective Date each Additional Term Lender shall make available to the Administrative Agent at the Funding Office an amount in immediately available funds equal to the Additional Term Loan to be made by such Lender. The Administrative Agent shall transfer to the account of the Borrower specified by the Borrower the aggregate of the amounts made available to the Administrative Agent by the Additional Term Lenders in immediately available funds.”

1.5. Amendment to Section 2.3 (Repayment of Term Loans). Section 2.3 of the Credit Agreement is hereby amended and restated in its entirety as follows:

“2.3 Repayment of Term Loans. The Term Loan of each Term Loan Lender shall mature in 22 consecutive quarterly installments, commencing on September 30, 2006, each of which shall be in an amount equal to such Lender’s Term Loan Percentage multiplied by the amount set forth below opposite such installment:


Installment		Amount
September 30, 2006		$587,500
December 31, 2006		$587,500
March 31, 2007		$587,500
June 30, 2007		$587,500
September 30, 2007		$587,500
December 31, 2007		$587,500
March 31, 2008		$587,500
June 30, 2008		$587,500
September 30, 2008		$587,500
December 31, 2008		$587,500
March 31, 2009		$587,500
June 30, 2009		$587,500
September 30, 2009		$587,500
December 31, 2009		$587,500
March 31, 2010		$587,500
June 30, 2010		$587,500
September 30, 2010		$587,500
December 31, 2010		$587,500
March 31, 2011		$587,500
June 30, 2011		$587,500
September 30, 2011		$587,500
December 31, 2011		$587,500
Term Loan Maturity Date		$222,075,000, or such lesser amount of the Term Loans then outstanding”

1.6. Amendment to Section 4.16 (Use of Proceeds). Section 4.16 of the Credit Agreement is hereby amended by deleting the first sentence thereof in its entirety and inserting in lieu thereof the following: “The proceeds of the Existing Term Loans were used to finance a portion of the Purchase and to pay related fees and expenses. The proceeds of the Additional Term Loans shall be used to finance a portion of the CLD Acquisition and to pay related fees and expenses.”

1.7. Amendments to Section 6.10 (Additional Collateral, etc.). Section 6.10(d) is hereby amended by adding the parenthetical “(other than an Excluded Subsidiary)” after the words “Holdings, the Borrower or any of their respective Subsidiaries” each time such words appear therein.

1.8. Amendments to Section 7.1 (Financial Condition Covenants). Section 7.1 of the Credit Agreement is hereby amended by:

(a) adding the following words to the end of clause (a) thereof: “; provided, that for the purposes of determining the Consolidated Leverage Ratio for the fiscal quarters of the Borrower ending September 30, 2006, December 31, 2006 and March 31, 2007, Adjusted EBITDA for the relevant period shall be deemed to

equal Adjusted EBITDA for such fiscal quarter with respect to the Borrower and its Subsidiaries (other than subsidiaries and assets acquired in connection with the CLD Acquisition) plus $8,400,000, $5,600,000 and $2,800,000, respectively, which amounts shall be deemed to constitute the Adjusted EBITDA of such subsidiaries and assets acquired in connection with the CLD Acquisition”; and

(b) amending and restating the proviso in clause (b) thereof in its entirety as follows: “provided, that for the purposes of determining the Consolidated Interest Coverage Ratio for the fiscal quarters of the Borrower ending September 30, 2006, December 31, 2006 and March 31, 2007, Adjusted EBITDA for the relevant period shall be deemed to equal Adjusted EBITDA for such fiscal quarter with respect to the Borrower and its Subsidiaries (other than subsidiaries and assets acquired in connection with the CLD Acquisition) plus $8,400,000, $5,600,000 and $2,800,000, respectively, which amounts shall be deemed to constitute the Adjusted EBITDA of such subsidiaries and assets acquired in connection with the CLD Acquisition”.

1.9. Amendments to Section 7.2 (Limitation on Indebtedness). Section 7.2 of the Credit Agreement is hereby amended by:

(a) deleting the words “[Intentionally Omitted]” from clause (g) thereof and inserting in lieu thereof the following: “Indebtedness in respect of Capital Lease Obligations incurred in connection with the CLD Acquisition in an aggregate principal amount not to exceed $1,500,000”; and

(b) deleting the word “$2,500,000” from clause (o) thereof and inserting in lieu thereof the word “$5,000,000”.

1.10. Amendment to Section 7.3 (Limitation on Liens). Section 7.3 of the Credit Agreement is hereby amended by deleting the word “$2,500,000” from clause (s) thereof and inserting in lieu thereof the word “$5,000,000”.

1.11. Amendment to Section 7.5 (Limitation on Disposition of Property). Section 7.5 of the Credit Agreement is hereby amended by deleting the words “[Intentionally Omitted]” from clause (l) thereof and inserting in lieu thereof the words “Dispositions related to the closure, restructuring and consolidation of certain facilities located in the United States acquired in connection with the CLD Acquisition in an aggregate amount not to exceed $5,000,000”.

1.12. Amendment to Section 7.7 (Limitation on Capital Expenditures). Section 7.7 of the Credit Agreement is hereby amended by amending and restating the table set forth therein in its entirety as follows:


“Fiscal Year	Amount
2005	$	10,000,000
2006	$	10,000,000
2007	$	13,000,000
2008	$	13,000,000
2009	$	13,000,000
2010	$	13,000,000
2011	$	13,000,000
2012	$	13,000,000”

1.13. Amendment to Section 7.8 (Limitation on Investments). Section 7.8 of the Credit Agreement is hereby amended by deleting the words “[Intentionally Omitted]” from clause (m) thereof and inserting in lieu thereof the following: “the CLD Acquisition”.

SECTION 2. WAIVER

The Existing Term Lenders hereby waive the obligation of the Borrower to make any payment otherwise required to made pursuant to Section 2.12(c) of the Credit Agreement for the 2006 fiscal year of the Borrower and hereby waive any Default or Event of Default arising as a result of the failure to make such payment; provided that, the foregoing waiver shall apply only with respect to payments required to be made during the 2006 fiscal year of the Borrower and not to any such payments required to be made during any subsequent fiscal year of the Borrower.

SECTION 3. JOINDER

From and after the First Amendment Effective Date, each Additional Term Lender executing and delivering a signature page to this First Amendment shall become a party to the Credit Agreement and shall have the rights and obligations of a Lender thereunder and under the other Loan Documents and shall be bound by the provisions thereof, and shall be deemed to have waived any payment obligation of the Borrower under Section 2.12(c) of the Credit Agreement for the 2006 fiscal year of the Borrower or any Default or Event of Default arising as a result of the failure to make such payment upon the terms set forth in Section 2 above.

SECTION 4. CONDITIONS PRECEDENT

This Amendment shall become effective upon the date of satisfaction of the following conditions precedent (such date, the “First Amendment Effective Date”):

4.1. Amendment. The Administrative Agent shall have received counterparts of this Amendment duly executed as of the date hereof by Holdings, the Borrower, the Required Lenders (as defined in the Credit Agreement prior to giving effect to this Amendment) and each Additional Term Lender.

4.2. Acknowledgment and Consent. The Administrative Agent shall have received an Acknowledgment and Consent, substantially in the form of Exhibit A hereto, duly executed and delivered by each Loan Party party to the Guarantee and Collateral Agreement.

4.3. Fees. The Lenders, the Administrative Agent and the Arranger shall have received all fees required to be, and all expenses for which invoices have been presented, on or before the First Amendment Effective Date. All such amounts will be paid with proceeds of Loans made on the First Amendment Effective Date and will be reflected in the funding instructions given by the Borrower to the Administrative Agent on or before the First Amendment Effective Date.

4.4. Legal Opinions. The Administrative Agent shall have received the following executed legal opinions:

(a) the legal opinion of Debevoise & Plimpton LLP, counsel to Holdings, the Borrower and its Subsidiaries, reasonably satisfactory in form and substance to the Administrative Agent; and

(b) the legal opinion of Richards, Layton & Finger, Delaware counsel to Holdings, the Borrower and its Subsidiaries, reasonably satisfactory in form and substance to the Administrative Agent.

4.5. Closing Certificates. The Administrative shall have received closing certificates (including all attachments thereto) of the Loan Parties substantially in the form of Exhibit C to the Credit Agreement.

4.6. PATRIOT Act. Each Lender shall have received all documentation and other information required by bank regulatory authorities under applicable “know-your-customer” and anti-money laundering rules and regulations, including, without limitation, the United States PATRIOT Act, to the extent reasonably requested through the Administrative Agent within a reasonable period of time prior to the First Amendment Effective Date.

SECTION 5. REPRESENTATIONS AND WARRANTIES.

To induce the Administrative Agent, the Lenders and the Additional Term Loan Lenders to enter into this First Amendment, each of Holdings and the Borrower hereby jointly and severally represents and warrants to the Administrative Agent, the Lenders and the Additional Term Loan Lenders that (before and after giving effect to this First Amendment):

5.1. Each Loan Party has the power and authority, and the legal right, to make and deliver this First Amendment and the Acknowledgment and Consent (collectively, the “Amendment Documents”) to which it is a party, to perform its obligations under the Credit Agreement, as amended hereby (the “Amended Credit Agreement”) and, in the case of the Borrower, to borrow under the Amended Credit Agreement. Each Loan Party has taken all necessary corporate action to authorize the execution, delivery and performance of the Amendment Documents to which it is a party, the performance of the Amended Credit Agreement and, in the case of the Borrower, to authorize the borrowings on the terms and conditions of the Amended Credit Agreement. No consent or authorization of, filing with, notice to or other act by or in respect of, any Governmental Authority or any other Person is required in connection with the execution and delivery of the Amendment Documents, the borrowings under the Amended Credit Agreement, and the performance, validity or enforceability of the Amendment Documents or the Amended Credit Agreement, except (i) the filings referred to in Section 4.19 of the Credit Agreement and (ii) consents, authorizations, filings and notices required after the First Amendment Effective Date in the ordinary course of business which have been obtained or made and are in full force and effect. Each Amendment Document has been duly executed and delivered on behalf of each Loan Party party thereto. Each Amendment Document and the Amended Credit Agreement constitutes a legal, valid and binding obligation of each Loan Party party thereto, enforceable against each such Loan Party in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).

5.2. The execution, delivery and performance of the Amendment Documents, the performance of the Amended Credit Agreement, the issuance of Letters of Credit, the borrowings under the Amended Credit Agreement and the use of the proceeds thereof will not violate any Requirement of Law or any Contractual Obligation of Holdings, the Borrower or any of their respective Subsidiaries and will not result in, or require, the creation or imposition of any Lien on any of their respective properties or revenues pursuant to any Requirement of Law or any such Contractual Obligation (other than the Liens created by the Security Documents).

5.3. Each of the representations and warranties made by any Loan Party herein or in or pursuant to the Loan Documents is true and correct in all material respects on and as of the First Amendment Effective Date as if made on and as of such date, except to the extent such representation and warranty specifically refers to an earlier date, in which case such representation and warranty shall be true and correct in all material respects on and as of such earlier date.

5.4. No Default or Event of Default shall have occurred and be continuing after giving effect to this First Amendment or will result from the consummation of the Transactions.

SECTION 6. MISCELLANEOUS.

6.1. Counterparts. This First Amendment may be executed by the parties hereto in any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of an executed counterpart of a signature page of this First Amendment by facsimile or other electronic transmission shall be effective as delivery of a manually executed counterpart of this First Amendment.

6.2. Fees and Expenses. The Borrower agrees to pay or reimburse the Administrative Agent for all of its reasonable out-of-pocket costs and expenses in connection with the negotiation, preparation, execution and delivery of this First Amendment, including, without limitation, the fees and expenses of Simpson Thacher & Bartlett LLP.

6.3. Continuing Effect. Except as expressly amended hereby, the Credit Agreement and the other Loan Documents shall continue to be and shall remain in full force and effect in accordance with their terms. This First Amendment shall not constitute an amendment or waiver of any provision of the Credit Agreement or the other Loan Documents not expressly referred to herein and shall not be construed as an amendment, waiver or consent to any action on the part of the Borrower that would require an amendment, waiver or consent of the Administrative Agent, the Lenders or the Additional Term Lenders except as expressly stated herein. Any reference to the “Credit Agreement” in the Loan Documents or any related documents shall be deemed to be a reference to the Credit Agreement as amended by this First Amendment.

6.4. GOVERNING LAW. THIS FIRST AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

6.5. Miscellaneous. On and after the First Amendment Effective Date, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein”, or words of like import referring to the Credit Agreement, and each reference in the other Loan Documents to the “Credit Agreement”, “thereunder”, “thereof”, or words of like import referring to the Credit Agreement shall mean and be a reference to the Amended Credit Agreement.

IN WITNESS WHEREOF, the parties have caused this First Amendment to be executed and delivered by their respective duly authorized officers as of the day and year first above written.


ALLIANCE LAUNDRY HOLDINGS LLC

By:		/s/ Bruce P. Rounds
Name:		Bruce P. Rounds
Title:		VP-Chief Financial Officer

ALLIANCE LAUNDRY SYSTEMS LLC

By:		/s/ Bruce P. Rounds
Name:		Bruce P. Rounds
Title:		VP-Chief Financial Officer

First Amendment


LEHMAN COMMERCIAL PAPER INC.,
as Administrative Agent and Lender

By:		/s/ Diane Albanese
Name:		Diane Albanese
Title:		Authorized Signatory

First Amendment


				,
as a Lender

By:
Name:
Title:

First Amendment


_______________________________________,
as an Additional Term Lender

By:
Name:
Title:

Additional Term Loans: $

First Amendment

Schedule 1.1

Revolving Credit Commitments


Lender	Revolving Credit Commitment
Lehman Commercial Paper Inc.






Total	$	55,000,000

EXHIBIT A

ACKNOWLEDGMENT AND CONSENT

Reference is hereby made to the First Amendment dated as of July 14, 2006 (the “First Amendment”), to the Credit Agreement dated as of January 27, 2005 (the “Credit Agreement”), among ALLIANCE LAUNDRY HOLDINGS LLC, a Delaware limited liability company (“Holdings”), ALLIANCE LAUNDRY SYSTEMS LLC, a Delaware limited liability company (“Alliance Laundry”), ALH FINANCE LLC, a Delaware limited liability company (“ALH Finance”), the several banks and other financial institutions or entities from time to time parties thereto (the “Lenders”), LEHMAN BROTHERS INC., as sole advisor, sole lead arranger and sole bookrunner (in such capacity, the “Arranger”), THE BANK OF NOVA SCOTIA, as syndication agent, LASALLE BANK NATIONAL ASSOCIATION and ROYAL BANK OF CANADA, as co-documentation agents, and LEHMAN COMMERCIAL PAPER INC., as administrative agent (in such capacity, the “Administrative Agent”). All capitalized terms used herein that are defined in the Credit Agreement and that are not otherwise defined herein shall have the respective meanings ascribed thereto in the Credit Agreement. Each of the undersigned parties to the Guarantee and Collateral Agreement and/or any Security Document, in each case as amended, supplemented or otherwise modified from time to time, hereby (a) consents to the First Amendment and the transactions contemplated thereby and (b) acknowledges and agrees that the guarantees and grants of security interests contained in the Guarantee and Collateral Agreement and the Security Documents are, and shall remain, in full force and effect after giving effect to the First Amendment.


ALLIANCE LAUNDRY HOLDINGS LLC

By:		/s/ Bruce P. Rounds
Name:		Bruce P. Rounds
Title:		VP-Chief Financial Officer

ALLIANCE LAUNDRY SYSTEMS LLC

By:		/s/ Bruce P. Rounds
Name:		Bruce P. Rounds
Title:		VP-Chief Financial Officer

ALLIANCE LAUNDRY CORPORATION

By:		/s/ Bruce P. Rounds
Name:		Bruce P. Rounds
Title:		VP-Chief Financial Officer

Acknwoledgment and Consent to First Amendment

EX-31.1 10 dex311.htm SECTION 302 CEO CERTIFICATION Section 302 CEO Certification

Exhibit 31.1

CERTIFICATIONS

I, Thomas F. L’Esperance, Chief Executive Officer and President of Alliance Laundry Systems LLC, Alliance Laundry Corporation and Alliance Laundry Holdings LLC, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Alliance Laundry Systems LLC, Alliance Laundry Corporation and Alliance Laundry Holdings LLC;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrants’ other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant, and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) [Reserved];

c) Evaluated the effectiveness of the registrants’ disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrants’ internal control over financial reporting that occurred during the registrants’ most recent fiscal quarter (the registrants’ fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants’ internal control over financial reporting; and

5.	The registrants’ other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants’ auditors and the audit committee of registrants’ board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants’ ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants’ internal control over financial reporting.


Signature	Title	Date
/s/ THOMAS F. L’ESPERANCE	CEO and President	8-10-06
Thomas F. L’Esperance

EX-31.2 11 dex312.htm SECTION 302 CFO CERTIFICATION Section 302 CFO Certification

Exhibit 31.2

CERTIFICATIONS

I, Bruce P. Rounds, Vice President, Chief Financial Officer of Alliance Laundry Systems LLC, Alliance Laundry Corporation and Alliance Laundry Holdings LLC, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Alliance Laundry Systems LLC, Alliance Laundry Corporation and Alliance Laundry Holdings LLC;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrants’ other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant, and have:

b) [Reserved];

5.	The registrants’ other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants’ auditors and the audit committee of registrants’ board of directors (or persons performing the equivalent functions):

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants’ internal control over financial reporting.


Signature	Title	Date
/s/ BRUCE P. ROUNDS	Vice President, Chief Financial Officer	8-10-06
Bruce P. Rounds

EX-32.1 12 dex321.htm SECTION 906 CEO CERTIFICATION Section 906 CEO Certification

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Alliance Laundry Systems LLC, Alliance Laundry Corporation and Alliance Laundry Holdings LLC (the “Companies”) on Form 10-Q for the period ended June 30, 2006 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas F. L’Esperance, Chief Executive Officer and President of the Companies, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Companies.

/s/ THOMAS F. L’ESPERANCE

Chief Executive Officer and President

August 10, 2006

EX-32.2 13 dex322.htm SECTION 906 CFO CERTIFICATION Section 906 CFO Certification

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Alliance Laundry Systems LLC, Alliance Laundry Corporation and Alliance Laundry Holdings LLC (the “Companies”) on Form 10-Q for the period ended June 30, 2006 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Bruce P. Rounds, Vice President, and Chief Financial Officer of the Companies, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Companies.

/s/ BRUCE P. ROUNDS

Vice President and

Chief Financial Officer

August 10, 2006

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