<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
{X} QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
FOR THE PERIOD ENDED SEPTEMBER 27, 1996
OR
{ } 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 1-11907
COINMACH LAUNDRY CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 11-3258015
(STATE OR OTHER JURISDICTION OF (I. R. S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
55 LUMBER ROAD, ROSLYN, NEW YORK 11576
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (516) 484-2300
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 X NO .
---- ----
AS OF THE CLOSE OF BUSINESS ON NOVEMBER 8, 1996, COINMACH LAUNDRY CORPORATION
HAD OUTSTANDING 10,004,278 SHARES OF CLASS A COMMON STOCK, PAR VALUE $.01 PER
SHARE (THE "COMMON STOCK") AND 480,648 SHARES OF NON-VOTING CLASS B COMMON
STOCK, PAR VALUE $.01 PER SHARE (THE "NON-VOTING COMMON STOCK").
<PAGE>
COINMACH LAUNDRY CORPORATION AND SUBSIDIARIES
INDEX
PART I.
Financial Information Page No.
--------------------- --------
Item 1. Financial Statements
Condensed Consolidated Balance Sheets --
September 27, 1996 (Unaudited) and March 29, 1996 3
Condensed Consolidated Statements of Operations --
Three Months and Six Months Ended September 27,
1996 (Unaudited) and September 29, 1995 4
Condensed Consolidated Statements of Cash Flows --
Six Months Ended September 27, 1996 (Unaudited)
and September 29, 1995 5
Notes to Condensed Consolidated Financial
Statements (Unaudited) 6-9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-13
PART II.
Other Information 14
-----------------
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders.
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signature Page 15
--------------
-2-
<PAGE>
COINMACH LAUNDRY CORPORATION AND SUBSIDIARIES
---------------------------------------------
PART 1. FINANCIAL INFORMATION
---------------------
ITEM 1. FINANCIAL STATEMENTS
------- --------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
(dollars in thousands)
<TABLE>
<CAPTION>
September 27, March 29,
1996 1996
-------------- ----------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 32,529 $ 19,858
Receivables, net 5,821 5,758
Inventories 5,492 4,443
Prepaid expenses 2,638 2,641
Advance rental payments 22,528 20,320
Property and equipment, less accumulated depreciation
of $30,124 and $19,509 93,819 82,699
Contract rights, less accumulated amortization
of $13,329 and $8,925 63,217 59,745
Goodwill, less accumulated amortization
of $3,554 and $2,386 43,173 44,071
Other assets, principally debt issuance costs 11,059 9,613
-------- --------
Total assets $280,276 $249,148
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT):
Accounts payable $ 5,548 $ 6,085
Accrued commissions 7,982 7,380
Accrued interest 8,741 7,745
Other accrued expenses 8,295 7,557
Deferred income taxes 17,174 18,924
11-3/4% Senior Notes 196,655 196,655
12-3/4% Senior Notes 5,000 5,000
Other long-term debt 2,254 1,110
Shareholders' equity (deficit):
Common stock and capital in excess
of par value 51,273 17,903
Notes receivable from management (439) (492)
Accumulated deficit (22,207) (18,719)
-------- --------
Total shareholders' equity (deficit) 28,627 (1,308)
-------- --------
Total liabilities and shareholders' equity (deficit) $280,276 $249,148
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-3-
<PAGE>
COINMACH LAUNDRY CORPORATION AND SUBSIDIARIES
---------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
-----------------------------------------------
(UNAUDITED)
-----------
(dollars in thousands)
----------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------------ ------------------------------
September 27, September 29, September 27, September 29,
1996 1995 1996 1995
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
GROSS REVENUES $46,506 $43,192 $94,446 $89,719
COSTS AND EXPENSES:
Laundry operating expenses 31,016 30,151 63,596 62,905
General and administrative expenses 1,082 1,233 2,123 2,351
Depreciation and amortization 10,382 9,272 20,192 18,423
Stock-based compensation charge 1,460 - 1,460 -
Restructuring expenses - 2,200 - 2,200
------- ------- ------- -------
43,940 42,856 87,371 85,879
------- ------- ------- -------
OPERATING INCOME 2,566 336 7,075 3,840
INTEREST EXPENSE 6001 6,036 12,142 11,818
------- ------- ------- -------
LOSS BEFORE INCOME TAXES (3,435) (5,700) (5,067) (7,978)
------- ------- ------- -------
PROVISION (BENEFIT) FOR INCOME TAXES:
Currently payable 100 309 105 420
Deferred (1,300) (1,793) (1,750) (2,282)
------- ------- ------- -------
(1,200) (1,484) (1,600) (1,862)
------- ------- ------- -------
$(2,235) $(4,216) $(3,467) $(6,116)
======= ======= ======= =======
NET LOSS PER
COMMON AND COMMON
EQUIVALENT SHARES $(.23) $(.68) $(.43) $(.99)
======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements
-4-
<PAGE>
COINMACH LAUNDRY CORPORATION AND SUBSIDIARIES
---------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
(UNAUDITED)
-----------
(dollars in thousands)
<TABLE>
<CAPTION>
Six Months Ended
----------------------------------
September 27, September 29,
1996 1995
------------------ --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (3,467) $ (6,116)
Adjustment to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 20,192 18,423
Deferred income taxes (1,750) (2,000)
Stock-based compensation charge 1,460 -
Amortization of debt discount and debt issuance 261 735
Increase in other assets (1,216) (1,054)
Increase in receivables, net (63) (197)
(Increase) decrease in inventories and prepayments (1,177) 930
Decrease in accounts payable (537) ( 610)
Increase (decrease) in accrued interest 996 (25)
Increase in accrued expenses 688 1,980
-------- --------
Net cash provided by operating activities 15,387 12,066
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (12,555) (9,545)
Advance rental payment to location owners (4,872) (3,569)
Additions to net assets from acquired businesses (17,623) (11,925)
-------- --------
Net cash used for investing activities (35,050) (25,039)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt Transactions:
Net (repayment) borrowings of bank and other borrowings (136) 6,126
Deferred debt issuance costs (90) -
Principal payments on capitalized lease obligations (229) (143)
Equity transactions:
Proceeds from issuance of common stock 52,017 -
Redemption of preferred stock (19,207) -
Dividend paid-preferred stock (21) -
Loans to shareholders - (154)
Sale of common stock - 6,681
-------- --------
Net cash provided by financing activities 32,334 12,510
-------- --------
Net increase (decrease) in cash and cash equivalents 12,671 (463)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 19,858 10,774
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 32,529 $ 10,311
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Interest paid $ 11,131 $8,478
======== ========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
-5-
<PAGE>
COINMACH LAUNDRY CORPORATION AND SUBSIDIARIES
---------------------------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. DESCRIPTION OF BUSINESS
Coinmach Laundry Corporation, a Delaware corporation ("Coinmach
Laundry"), through its wholly-owned subsidiaries (collectively, the
"Company"), is a leading supplier of coin-operated laundry equipment
services for multi-family housing units. The Company owns and operates
approximately 247,000 coin-operated washers and dryers on routes in over
26,000 locations in 28 states and the District of Columbia. Such routes
are located throughout the Northeast, Mid-Atlantic, Southeast, South-
Central and Midwest regions of the United States. The Company, through
its wholly-owned subsidiary, Super Laundry Equipment Corp., is also a
construction and laundromat equipment distribution company.
2. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
the Company have been prepared in conformity with generally accepted
accounting principles ("GAAP") for interim financial reporting and
pursuant to the rules and regulations of the Securities and Exchange
Commission. Accordingly, such financial statements do not include all of
the information and footnotes required by GAAP for complete financial
statements. GAAP requires the Company's management to make estimates and
assumptions that affect the amounts reported therein. Actual results
could vary from such estimates. In addition, certain reclassifications
have been made to prior period financial statements to conform with the
1996 presentations. The interim results presented herein are not
necessarily indicative of the results to be expected for the entire year.
In the opinion of management of the Company, these unaudited condensed
consolidated financial statements contain all adjustments of a normal
recurring nature necessary for a fair presentation of the financial
statements for the interim periods presented.
These unaudited condensed consolidated financial statements should be
read in conjunction with the audited combined and consolidated financial
statements included in Coinmach Laundry's registration statement (the
"Registration Statement") on Form S-1 (No. 333-03587), including the
Prospectus contained therein, dated July 17, 1996. See Note 6.a. "Equity
Restructuring-Initial Public Offering".
3. ACCOUNTING PRONOUNCEMENTS
Effective March 30, 1996, the Company adopted Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed Of" ("FAS 121"),
which requires impairment losses to be recorded on long-lived assets used
in operations when indicators of impairment are present and the
undiscounted cash flows estimated to be generated by those assets are
less than the assets' carrying amount. FAS 121 also addresses the
accounting for long-lived assets that are expected to be disposed of.
The effect of adoption did not have a material impact on the Company's
results of operations or financial condition for the three months and six
months ended September 27, 1996.
In October 1995, the Financial Accounting Standards Board issued
Statement No.123, "Accounting for Stock-Based Compensation" ("FAS 123").
FAS 123 establishes financial accounting and reporting standards for
stock-based employee compensation plans. FAS 123 is effective for
transactions entered into in fiscal years beginning after December 15,
1995. The Company has accounted for stock-based compensation awards
pursuant to the provisions of Accounting Principles Board Opinion No. 25,
as permitted by FAS 123, but will provide the necessary disclosure
information in the Company's annual report on Form 10-K for the fiscal
year ended March 28, 1997.
-6-
<PAGE>
COINMACH LAUNDRY CORPORATION AND SUBSIDIARIES
---------------------------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
4. LOSS PER COMMON AND COMMON EQUIVALENT SHARE
Loss per common and common equivalent share is computed by dividing net
loss applicable to common stock by the weighted average number of shares
of common stock and common stock equivalents outstanding during each
period. Weighted average shares outstanding were 9,742,573 and
7,980,134, respectively, for the three month and six month periods ended
September 27, 1996 and 6,193,830 for each of the three month and six
month periods ended September 29, 1995.
All common share data presented in this report on Form 10-Q has been
restated to reflect a reclassification of the Company's capital stock and
an approximate 23-to-1 stock split, in each case, which were effected in
connection with the Offering (as defined below). See Note 6.b. - "Equity
Restructuring - Reclassification and Stock Split".
5. LONG-TERM DEBT
Coinmach Corporation, a wholly-owned subsidiary of the Company, has long-
term debt, consisting of (a) approximately $196.7 million of 11 3/4%
Senior Notes due 2005, (b) $5.0 million of 12 3/4% Senior Notes due 2001
(collectively, the "Senior Notes") and (c) an availability of up to $35.0
million under a revolving credit facility which, among other items,
imposes restrictions on the Company's ability to incur debt, make
acquisitions and certain restricted payments, create liens, sell assets
or enter into transactions with affiliates. The revolving credit facility
contains covenants and agreements that are generally more restrictive
than the indentures governing the Senior Notes. Also, the Senior Notes
and the revolving credit facility presently limit Coinmach Corporation's
ability to pay dividends. At September 27, 1996, there were no amounts
outstanding under the Company's revolving credit facility.
6. EQUITY RESTRUCTURING
a. Initial Public Offering
On July 23, 1996, Coinmach Laundry completed its initial public offering
(the "Offering") of 4,120,000 shares of its Common Stock at an initial
public offering price of $14.00 per share. Coinmach Laundry's
Registration Statement for 4,000,000 shares of Common Stock was filed
with the Securities and Exchange Commission on May 13, 1996 and
subsequently declared effective on July 17, 1996. On July 18, 1996,
Coinmach Laundry filed an additional registration statement on Form S-1
(No. 333-08331) with respect to the registration of an additional 120,000
shares of Common Stock, which registration statement was effective upon
filing. Proceeds from the Offering were approximately $53.6 million,
after underwriting discounts and commissions. After giving effect to the
redemption of the Preferred Stock (as described below), net proceeds from
the Offering were approximately $34.4 million, before expenses.
In connection with the Offering, the underwriters were granted a 30-day
option to purchase up to an aggregate of 618,000 additional shares of
Common Stock to cover over-allotments (the "Over-Allotment Option"),
which Over-Allotment Option was exercised on August 16, 1996, with
respect to the purchase of an additional 63,642 shares of Common Stock.
-7-
<PAGE>
COINMACH LAUNDRY CORPORATION AND SUBSIDIARIES
---------------------------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
6. EQUITY RESTRUCTURING (CONTINUED)
b. Reclassification and Stock Split
In connection with the Offering, Coinmach Laundry approved a
reclassification (the "Reclassification") of all of its capital stock
pursuant to which all seven classes of the previously issued and
outstanding capital stock of Coinmach Laundry prior to the Offering were
converted into a class of preferred stock, a class of voting common stock
and a class of non-voting common stock. As part of the Reclassification,
holders of Coinmach Laundry's Class A common stock, Class E common stock
and Class F common stock immediately prior to the Offering (collectively,
the "Preference Shares") received, in respect of such Preference Shares,
shares of Common Stock and shares of Series A preferred stock, par value
$.01 per share (the "Preferred Stock") representing an amount equal to
the sum of: (a) preferred dividends on such Preference Shares in an
amount equal to the accrued yield (at a rate of 8% per annum, compounded
quarterly) on the original investment in such Preference Shares through
July 23, 1996; and (b) an amount equal to the original investment in such
Preference Shares. Holders of Preference Shares who were members of the
Company's management received an aggregate of 28,425 shares of Common
Stock, and holders of the Preference Shares who were not members of the
Company's management received an aggregate of 1,000 shares of Preferred
Stock.
In connection with the Reclassification, Coinmach Laundry also approved
an approximate 23-to-1 stock split (the "Stock Split") payable to
shareholders of record of Coinmach Laundry on July 12, 1996.
c. Redemption of Preferred Stock
Immediately following the Offering, approximately $19.2 million of the
proceeds of the Offering were used by the Company to retire all of the
issued and outstanding shares of Preferred Stock.
7. RELATED PARTY TRANSACTIONS
Prior to the Offering, Coinmach Laundry issued an additional 79,029
shares of its Class B common stock to certain members of management,
which shares were purchased through loans made by the Company aggregating
approximately $56,000. The difference between the estimated fair market
value of such stock (which management estimates to be 85% of the initial
offering price of the Common Stock in the Offering) and the amount paid
for such stock was approximately $887,000 and has been accounted for by
the Company as a stock-based compensation charge. In addition,
approximately $103,000 of receivables outstanding at June 28, 1996
relating to loans to management in connection with the purchase of common
stock of the Company were forgiven and has been accounted for by the
Company as a stock-based compensation charge.
On July 23, 1996, in connection with the Offering, Coinmach Laundry
granted certain non-qualified options (the "Options") to purchase up to
735,618 shares of Common Stock at 85% of the initial offering price of
the Common Stock in the Offering to certain members of management and
other individuals (collectively, the "Option Holders") pursuant to the
terms and conditions of option agreements entered into among Coinmach
Laundry and the Option Holders, dated July 23, 1996 (the "Option
Agreements"). On September 17, 1996, for the purpose of preserving the
percentage interest of issued and outstanding Common Stock on a fully
diluted basis represented by the Options (which percentage interest was
decreased as a result of the exercise of the Over-Allotment Option),
Coinmach Laundry granted additional non-qualified stock options to
purchase up to 3,819 shares of Common Stock to each of the Option Holders
(the "Additional Options"). The Additional Options are subject to the
terms and conditions of the Option Agreements as amended by that certain
Omnibus
-8-
<PAGE>
COINMACH LAUNDRY CORPORATION AND SUBSIDIARIES
---------------------------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) ( continued)
7. RELATED PARTY TRANSACTIONS (CONTINUED)
Amendment to Option Agreements, dated September 27, 1996. The Options
and Additional Options vest in five equal annual installments commencing
as of July 23, 1996, the effective date of the Offering. With respect to
Options and Additional Options granted to employees of the Company, the
Company will record the difference between the exercise price and the
$14.00 initial offering price of Common Stock in the Offering as a stock-
based compensation charge over the applicable four-year vesting period.
On September 17, 1996, Coinmach Laundry granted to Dr. Arthur B. Laffer
and Mr. Stephen G. Cerri, each of whom was appointed by the Board of
Directors of Coinmach Laundry on such date to serve, as independent
directors, options entitling each such director to purchase up to 60,000
shares of Common Stock (the "Independent Director Options"). The
Independent Director Options vest in four equal annual installments,
commencing on September 17, 1996, and entitle each such director to
purchase shares of Common Stock at $14.00 per share, the initial public
offering price of the Common Stock in the Offering. The Independent
Director Options are subject to the terms and conditions of option
agreements entered into by Coinmach Laundry and such directors and expire
on September 17, 2006. The Company will record the difference between
the exercise price of the Independent Director Options and the fair
market value of the Common Stock on September 17, 1996 as a stock-based
compensation charge over the applicable three-year vesting period.
For the three months ended September 27, 1996, the Company has recorded a
stock-based compensation charge of approximately $470,000 relating to the
Options, the Additional Options and the Independent Director Options.
8. GRANT OF STOCK OPTIONS UNDER COINMACH LAUNDRY'S EMPLOYEE STOCK OPTION
PLAN.
On August 8, 1996, Coinmach Laundry granted non-qualified options to
purchase up to 181,250 shares of Common Stock (the "Plan Options")
pursuant to Coinmach Laundry's Second Amended and Restated 1996 Employee
Stock Option Plan (the "Stock Option Plan") to certain members of
management and other employees of the Company (collectively, the "Plan
Option Holders"). The Plan Options are subject to the terms and
conditions of the Stock Option Plan and to the terms and conditions of
the individual option agreements entered into in accordance with the
Stock Option Plan among Coinmach Laundry and each of the Plan Option
Holders, dated as of August 8, 1996. The Plan Options vest in five equal
annual installments commencing on August 8, 1996, and entitle each Plan
Option Holder to purchase shares of Common Stock at an exercise price
equal to the per share fair market value of the Common Stock on the date
of grant. The Stock Option Plan provides for the issuance of options to
purchase 1,109,147 shares of Common Stock, representing approximately 9%
of Coinmach Laundry's issued and outstanding Common Stock and Non-Voting
Common Stock. The Stock Option Plan is administered by the Plan
Administration Committee, a committee of the Board of Directors of the
Company comprised solely of disinterested directors.
-9-
<PAGE>
COINMACH LAUNDRY CORPORATION AND SUBSIDIARIES
---------------------------------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
------- ---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
Except for the historical information contained herein, certain matters
discussed in this document are forward-looking statements that involve
certain risks and uncertainties, including the risks and uncertainties
discussed below, as well as the other risks set forth in the Registration
Statement.
GENERAL
-------
The Company, through its operating subsidiaries, is principally engaged
in supplying coin-operated laundry equipment services for multi-family
housing units in 28 states and the District of Columbia located
throughout the Northeast, Mid-Atlantic, Southeast, South-Central and
Midwest regions of the United States. The most significant revenue
source is derived from its routes, which are comprised of approximately
26,000 locations containing over 247,000 coin-operated washing machines
and dryers. The Company provides coin-operated laundry equipment
services to locations by leasing designated laundry rooms in buildings on
a long-term basis.
The Company, through its operating subsidiary, also owns and operates
Super Laundry Equipment Corp. ("Super Laundry"). Super Laundry's
business consists of constructing complete turnkey laundromat retail
stores, retrofitting existing laundromat retail stores, distributing
exclusive and non-exclusive lines of commercial coin and non-coin
machines and parts, and selling service contracts.
RESULTS OF OPERATIONS
---------------------
The following discussion should be read in conjunction with the attached
unaudited condensed consolidated financial statements and notes thereto
and with the Company's audited combined and consolidated financial
statements and notes thereto for the six month transition period ended
March 29, 1996, which are included in Coinmach Laundry's Registration
Statement.
COMPARISON OF THE THREE MONTHS AND SIX MONTH PERIODS ENDED SEPTEMBER 27,
1996 AND SEPTEMBER 29, 1995.
Gross revenues increased by approximately 8% and 5%, respectively, for
the three month and six month periods ended September 27, 1996, as
compared to gross revenues for the prior year's corresponding periods.
The improvement in gross revenues for the three month and six month
periods consisted primarily of increased route revenues resulting
substantially from the acquisition in April 1996 of the route business of
Allied Laundry Equipment Company (the "Allied Acquisition") located in
the Midwest region and by a slight increase in distribution revenues from
Super Laundry. During the six months ended September 29, 1995, the
Company's machine base declined by approximately 2,500 machines,
primarily due to capital constraints, but increased by approximately
3,800 machines during the six months ended September 27, 1996 (excluding
the machines added from the Allied Acquisition). This favorable trend is
primarily the result of a reorganization of the field management team and
additional capital resources provided by Coinmach Corporation's issuance
of its 11 3/4% Senior Notes due 2005.
Laundry operating expenses increased by approximately 3% and 1%,
respectively, for the three month and six month periods ended September
27, 1996, as compared to the prior year's corresponding periods. The
increase was due primarily to an increase in laundry operating expenses
related to the Allied Acquisition in the Midwest region as well as an
increase in the cost of sales related to Super Laundry's increased sales
volume. Such increase in laundry operating expenses was substantially
offset by a reduction in expenses primarily related to the implementation
of cost savings programs in the Company's field operations and
consolidation of certain operating regions.
-10-
<PAGE>
COINMACH LAUNDRY CORPORATION AND SUBSIDIARIES
---------------------------------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
------- ---------------------------------------------------------------
RESULTS OF OPERATIONS (continued)
---------------------
RESULTS OF OPERATIONS (continued)
---------------------
General and administrative expenses decreased by approximately 12% and
10%, respectively, for three month and six month periods ended September
27, 1996, as compared to the prior year's corresponding periods, due
primarily to the consolidation of the Company's corporate staff into its
existing facility in Roslyn, New York on September 29, 1995.
Depreciation and amortization increased by approximately 12% and 10%,
respectively, for the three month and six month periods ended September
27, 1996, as compared to the prior year's corresponding periods, due
primarily to the acquisition of the Midwest region route business in
April 1996, as well as an increase in capital expenditures resulting from
the elimination of capital constraints subsequent to September 29, 1995.
The Company incurred one-time restructuring costs of approximately $2.2
million in the three months ended September 29, 1995, to cover severance
payments to certain of its management, administrative and regional
personnel, costs to relocate certain financial and administrative
functions to Roslyn, New York, costs to integrate certain financial and
operating systems, and costs related to the consolidation of certain of
its regional offices.
Prior to the Offering, Coinmach Laundry had issued an additional 79,029
shares of its Class B common stock to certain members of management. The
difference between the estimated fair market value of such stock
(estimated by management to be 85% of the initial offering price of the
Common Stock in the Offering) and the amount paid for such stock was
approximately $.9 million and has been recorded by the Company as a
stock-based compensation charge. In addition, approximately $103,000 of
receivables relating to loans to management in connection with the
purchase of common stock of Coinmach Laundry were forgiven and has been
recorded by the Company as a stock-based compensation charge.
The Company also granted to management and certain other individuals
options to purchase certain shares of Common Stock at 85% of the initial
offering price of the Common Stock in the Offering. With respect to such
options granted to its employees, the Company will record such 15%
discount as a stock-based compensation charge over the applicable four
year vesting period. The Company also granted to two of its
disinterested directors options to purchase certain shares of Common
Stock. The Company will record the difference between the exercise price
of the such options and the fair market value of the Common Stock on the
date of grant as a stock-based compensation charge over the applicable
three-year vesting period. During the three months ended September 27,
1996, the Company recorded a stock-based compensation charge of
approximately $.5 million relating to the foregoing options.
As a result of the above, operating income margins improved to
approximately 6% and 7%, respectively, for the three month and six month
periods ended September 27, 1996, as compared to approximately 1% and 4%,
respectively, for the three month and six month periods ended September
29, 1995.
Interest expense decreased by approximately 1% for the three month period
ended September 27, 1996, but increased by approximately 3% for the six
month period ended September 27, 1996, as compared to the prior year's
corresponding periods. The increase for the six month period was due
primarily to the incurrence of debt resulting from the Company's
refinancing in November 1995. Offsetting this increase in interest
expense was the decrease in the effective interest rate as the result of
such refinancing, as well as interest income earned on excess cash
balances generated from the net proceeds from the Offering.
-11-
<PAGE>
COINMACH LAUNDRY CORPORATION AND SUBSIDIARIES
---------------------------------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
------- ---------------------------------------------------------------
RESULTS OF OPERATIONS (continued)
---------------------
RESULTS OF OPERATIONS (continued)
---------------------
EBITDA (earnings before deductions for interest, income taxes,
depreciation and amortization) was approximately $28.7 million (before
deduction for the stock-based compensation charges) for the six months
ended September 27, 1996, compared to approximately $24.5 million (before
deduction for restructuring costs) for the corresponding period in 1995,
representing an improvement of approximately 17%. EBITDA margins
improved to approximately 30% for the six months ended September 27,
1996, compared to approximately 27% for the corresponding period in 1995.
EBITDA is used by management and certain investors as an indicator of a
company's historical ability to service debt. Management believes that
an increase in EBITDA is an indication of a company's improved ability to
service existing debt, potential future increases in debt or capital
requirements. However, EBITDA is not intended to represent cash flows
for the period, nor has it been presented as an alternative to either (a)
operating income (as determined by GAAP) as an indicator of operating
performance or (b) cash flows from operating, investing and financing
activities (as determined by GAAP) as a measure of liquidity. Given that
EBITDA is not a measurement determined in accordance with GAAP and is
thus susceptible to varying calculations, EBITDA as presented may not be
comparable to other similarly titled measures of other companies.
The Company's effective income tax rate differs from the amount computed
by applying the U.S. federal statutory rate to loss before income taxes
as a result of state taxes and permanent book/tax differences (largely
goodwill amortization).
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
The Company continues to have substantial indebtedness and debt service
requirements. At September 27, 1996, the Company had outstanding long-
term debt of approximately $203.9 million and shareholders' equity of
approximately $28.6 million.
The Company's level of indebtedness will have several important effects
on its future operations, including the following: (a) a significant
portion of the Company's cash flow from operations will be required to
pay interest on its indebtedness and will not be available for other
purposes; (b) financial covenants contained in certain of the agreements
governing the Company's indebtedness will require the Company to meet
certain financial tests and limit its ability to borrow additional funds
or to dispose of assets; (c)the Company's ability to obtain additional
financing in the future for working capital, capital expenditures,
acquisitions, and general corporate purposes may be impaired; and (d) the
Company's ability to adapt to changes in the coin-operated laundry
equipment services industry and to economic conditions in general could
be limited. At September 27, 1996, there was no amount outstanding under
the Company's revolving credit facility.
The expenses of the Company include significant amounts of depreciation
and amortization (approximately $20.2 million for the six months ended
September 27, 1996) which have the effect of reducing net income but not
operating cash flow. In accordance with GAAP, a significant amount of
the purchase price of businesses acquired by the Company is allocated to
"contract rights", which costs are amortized over periods of up to 15
years. Although such accounting treatment has a favorable effect on
operating cash flow by reducing taxes, it also reduces net income. The
Company expects to continue such practice with future acquisitions, so as
to maximize cash flows through the recognition of related smaller net
income caused by the increased amortization. Such a practice will be
employed until the purchase price has been fully amortized.
-12-
<PAGE>
COINMACH LAUNDRY CORPORATION AND SUBSIDIARIES
---------------------------------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
------- ---------------------------------------------------------------
RESULTS OF OPERATIONS (continued)
---------------------
LIQUIDITY AND CAPITAL RESOURCES (continued)
-------------------------------
The Company anticipates that it will continue to utilize cash flows from
operations to finance its capital expenditures and working capital needs,
including interest payments on its outstanding indebtedness. Capital
expenditures for the six months ended September 27, 1996 were
approximately $35.1 million. Of such amount, the Company spent
approximately $17.6 million on the acquisition of related businesses,
including the Allied Acquisition and approximately $4.3 million related
to the net increase in the machine base. The balance was used to
maintain the existing machine base and for general corporate purposes.
The effect of incremental increases in revenues and EBITDA generated from
capital expended on acquisitions and the net increase in the machine base
may not be reflected in the financial results until subsequent reporting
periods, depending on the timing of the capital expended.
The Company's working capital requirements are, and are expected to
continue to be, minimal since a significant portion of the Company's
operating expenses are not paid until after cash is collected from the
installed machines. In connection with certain of the financing
agreements governing the Company's indebtedness, Coinmach Corporation is
required to make semi-annual cash interest payments on the Senior Notes
and will be required to make monthly interest payments under the
revolving credit facility. Management believes that the Company's future
operating activities will generate sufficient cash flow to repay
borrowings under the Senior Notes and the revolving credit facility or to
permit any necessary refinancings thereof. An inability of the Company,
however, to comply with covenants or other conditions contained in the
indentures governing the Senior Notes or in the revolving credit facility
could result in an acceleration of the amounts due thereunder. If the
Company is unable to meet its debt service obligations, it could be
required to take certain actions such as reducing or delaying capital
expenditures, selling assets, refinancing or restructuring its
indebtedness, selling additional equity capital or other actions. There
is no assurance that any of such actions could be effected on
commercially reasonable terms, if at all, or on terms permitted under the
Company's revolving credit facility or the indentures governing the
Senior Notes.
In July 1996, Coinmach Laundry used approximately $5.0 million of the net
proceeds from the Offering to repay amounts borrowed under the Company's
revolving credit facility. The balance of such net proceeds are
currently invested in short-term, investment grade, interest-bearing
securities, certificates of deposit or direct or guaranteed obligations
of the United States. The Company has not yet determined the specific
uses for the balance of the net proceeds of the Offering. As part of its
business strategy, the Company will continue to evaluate opportunities to
acquire local, regional and multi-regional route businesses. There can
be no assurance that the Company will find attractive acquisition
candidates or effectively manage the integration of acquired businesses
into its existing business.
INFLATION AND SEASONALITY
-------------------------
In general, the Company's laundry operating expenses and general and
administrative expenses are affected by inflation, and the effects of
inflation may be experienced by the Company in future periods.
Management believes that such effects have not been nor will be material
to the Company. The Company's business generally is not seasonal.
-13-
<PAGE>
COINMACH LAUNDRY CORPORATION AND SUBSIDIARIES
---------------------------------------------
PART II. OTHER INFORMATION
-----------------
ITEM 1. LEGAL PROCEEDINGS
From time to time, the Company has been, and expects to
continue to be, subject to legal proceedings and claims in the
ordinary course of its business. Although the amount of any
liability that could arise with respect to these actions can
not be accurately predicted, management believes that any such
liability, individually or in the aggregate, will not have a
material adverse effect on the financial condition and results
of operations of the Company.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
On September 17, 1996, the Board of Directors of the Company
(the "Board"): (i) appointed Dr. Arthur B. Laffer and Mr.
Stephen G. Cerri to serve as directors on the Board and to serve
on the Company's Audit and Compensation Committees; (ii)
approved the grant of the Independent Director Options; (iii)
approved an amendment to the Stock Option Plan to increase the
aggregate number of shares of Common Stock subject to the Stock
Option Plan from 1,103,419 to 1,109,147; and (iv) approved the
grant of the Additional Options. See Note 7 to the Notes to
Condensed Consolidated Financial Statements included in this
Report.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) 3.1 Third Amended and Restated By-laws
10.1 Second Amended and Restated 1996 Employee Stock
Option Plan of Coinmach Laundry
10.2 Form of Option Agreement Relating to the Second
Amended and Restated 1996 Employee Stock Option Plan
10.3 Omnibus Amendment to Option Agreements, dated as of
September 17, 1996, by and among Coinmach Laundry,
MCS Capital, Inc., Ronald S. Brody, James N. Chapman,
Robert M. Doyle, Michael E. Stanky, David E. Siegel,
R. Daniel Osborne, John E. Denson, James McDonnell,
Russell Harrison, Charles Prato and Michael E. Marrus
10.4 Option Agreement, dated as of September 17, 1996, by
and between Coinmach Laundry and Arthur B. Laffer
10.5 Option Agreement, dated as of September 17, 1996, by
and between Coinmach Laundry and Stephen G. Cerri
27.1 Financial Data Schedule
(b) No reports on Form 8-K were filed by the Company during the
three months ended September 27 , 1996.
-14-
<PAGE>
COINMACH LAUNDRY CORPORATION AND SUBSIDIARIES
---------------------------------------------
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
COINMACH LAUNDRY CORPORATION
Date: November 8, 1996 /s/ Robert M. Doyle
--------------------------------------
Robert M. Doyle
Senior Vice President and
Chief Financial Officer
(On behalf of registrant and as
Principal Financial Officer)
-15-
<PAGE>
EXHIBIT 3.1
THIRD AMENDED AND RESTATED BY-LAWS
OF
COINMACH LAUNDRY CORPORATION
A Delaware Corporation
(HEREINAFTER, THE "CORPORATION")
ARTICLE I
OFFICES
-------
SECTION 1. REGISTERED OFFICE. The registered office of the
---------- -----------------
Corporation in the State of Delaware shall be located at 15 East North Street in
the City of Dover, County of Kent 19901. The name of the Corporation's
registered agent at such address is United Corporate Services, Inc. The
registered office and/or registered agent of the Corporation may be changed from
time to time by action of the board of directors of the Corporation (the "Board
of Directors" or the "Board").
SECTION 2. OTHER OFFICES. The Corporation may also have offices at
---------- -------------
such other places, both within and without the State of Delaware, as the Board
of Directors may from time to time determine or as the business of the
Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
------------------------
SECTION 1. PLACE AND TIME OF MEETINGS. An annual meeting of the
---------- --------------------------
stockholders shall be held each year for the purpose of electing directors and
conducting such other proper business as may come before the meeting. Unless
otherwise directed by the Board of Directors, annual meetings of stockholders
shall be held at such time and date as the Board of Directors, by resolution,
shall determine and as set forth in the notice of the meeting. At the annual
meeting stockholders shall elect directors and transact such other business as
properly may be brought before the meeting pursuant to Article II, Section 10
hereof.
SECTION 2. SPECIAL MEETINGS. Special meetings of stockholders may be
---------- ----------------
called for any purpose and may be held at such time and place, within or without
the State of Delaware, as shall be stated in a notice of meeting or in a duly
executed waiver of notice thereof. Such meetings may not be effected in lieu
thereof by written consent unless a majority of the Board approves the use of
such written consent with respect to the matters specified in the notices of
such meetings. Such meetings may be called at any time by the chairman of the
Board, the president of the Corporation, or the Board pursuant to a resolution
adopted by the affirmative vote of at least two members of the Board then in
office. The only matters that may
<PAGE>
be considered at any special meeting of the stockholders are the matters
specified in the notice of the meeting.
SECTION 3. PLACE OF MEETINGS. The Board of Directors may designate
---------- -----------------
any place, either within or without the State of Delaware, as the place of
meeting for any annual meeting or for any special meeting called by the Board of
Directors. If no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the principal executive office of the
Corporation.
SECTION 4. NOTICE. Whenever stockholders are required or permitted
---------- ------
to take action at a meeting, written or printed notice stating the place, date,
time, and, in the case of special meetings, the purpose or purposes, of such
meeting, shall be given to each stockholder not less than ten (10) nor more than
sixty (60) days before the date of the meeting. All such notices shall be
delivered, either personally or by mail, by or at the direction of the Board of
Directors, the chairman of the Board, the president or the secretary, and if
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail, postage prepaid, addressed to the stockholder at his, her or its
address as the same appears on the records of the Corporation. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends for the express purpose of objecting at the beginning of
the meeting to the transaction of any business because the meeting is not
lawfully called or convened.
SECTION 5. STOCKHOLDERS LIST. The officer having charge of the stock
---------- -----------------
ledger of the Corporation shall make, at least 10 days before every meeting of
the stockholders, a complete list of the stockholders entitled to vote at such
meeting arranged in alphabetical order, showing the address of each stockholder
and the number of shares registered in the name of each stockholder. Such list
shall be open to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least 10 days
prior to the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting or, if not
so specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof and may be inspected by any stockholder who is present.
SECTION 6. QUORUM. The holders of a majority of the outstanding
---------- ------
shares of capital stock entitled to vote, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders, except as
otherwise provided by statute or by the certificate of incorporation of the
Corporation, as it may be amended or restated from time to time (the
"Certificate of Incorporation"). If a quorum is not present, the holders of a
majority of the shares present in person or represented by proxy at the meeting,
and entitled to vote at the meeting, may adjourn the meeting to another time
and/or place. When a specified item of business requires a vote by a class or
series (if the Corporation shall then have outstanding shares of more than one
class or series) voting as a class, the holders of a majority of the shares of
such class or series shall constitute a quorum (as to such class or series) for
the transaction of such item of business.
-2-
<PAGE>
SECTION 7. ADJOURNED MEETINGS. When a meeting is adjourned to
---------- ------------------
another time and place, notice need not be given of the adjourned meeting if the
time and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting, the Corporation may transact any business
which might have been transacted at the original meeting. If the adjournment is
for more than thirty days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
SECTION 8. VOTE REQUIRED. When a quorum is present, the affirmative
---------- -------------
vote of the majority of shares present in person or represented by proxy at the
meeting and entitled to vote on the subject matter shall be the act of the
stockholders, unless (i) by express provisions of applicable law or of the
Certificate of Incorporation a different vote is required, in which case such
express provision shall govern and control the decision of such question, or
(ii) the subject matter is the election of directors, in which case Section 2 of
Article III hereof shall govern and control the approval of such subject matter.
SECTION 9. PROXIES. Each stockholder entitled to vote at a meeting
---------- -------
of stockholders may authorize another person or persons to act for him or her by
proxy, but no such proxy shall be voted or acted upon after three (3) years from
its date, unless the proxy provides for a longer period. A duly executed proxy
shall be irrevocable if it states that it is irrevocable and if, and only as
long as, it is coupled with an interest sufficient in law to support an
irrevocable power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the Corporation generally. Any proxy is suspended when the person
executing the proxy is present at a meeting of stockholders and elects to vote,
except that when such proxy is coupled with an interest and the fact of the
interest appears on the face of the proxy, the agent named in the proxy shall
have all voting and other rights referred to in the proxy, notwithstanding the
presence of the person executing the proxy. At each meeting of the
stockholders, and before any voting commences, all proxies filed at or before
the meeting shall be submitted to and examined by the secretary or a person
designated by the secretary, and no shares may be represented or voted under a
proxy that has been found to be invalid or irregular.
SECTION 10. BUSINESS BROUGHT BEFORE A MEETING. At an annual meeting
----------- ---------------------------------
of the stockholders, only such business shall be conducted as shall have been
properly brought before the meeting. To be properly brought before an annual
meeting, business must be (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors, (b)
brought before the meeting by or at the direction of the Board of Directors, or
(c) otherwise properly brought before the meeting by a stockholder. For
business to be properly brought before an annual meeting by a stockholder, the
stockholder must have given timely notice thereof in writing to the secretary of
the Corporation. To be timely, a stockholder's notice must be delivered to or
mailed and received at the principal executive offices of the Corporation, not
less than sixty (60) days nor more than ninety (90) days prior to the meeting;
provided, however, that, in the event that less than seventy (70) day's notice
- -------- -------
or prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be so received not
later than the close of business on the tenth day following the date on which
such notice of the date of the annual meeting was mailed or such public
-3-
<PAGE>
disclosure was made. A stockholder's notice to the secretary shall set forth as
to each matter the stockholder proposes to bring before the annual meeting (a) a
brief description of the business desired to be brought before the annual
meeting, (b) the name and address, as they appear on the Corporation's records,
of the stockholder proposing such business, (c) the class and number of shares
of the Corporation which are beneficially owned by the stockholder, and (d) any
material interest of the stockholder in such business. Notwithstanding anything
in these By-laws to the contrary, no business shall be conducted at an annual
meeting except in accordance with the procedures set forth in this Section 10 of
Article II. The presiding officer of an annual meeting shall, if the facts
warrant, determine that the business was not properly brought before the meeting
in accordance with the provisions of this Section 10 of Article II and if he
should so determine, he shall so declare at the meeting, and any such business
not properly brought before the meeting shall not be transacted.
ARTICLE III
DIRECTORS
---------
SECTION 1. GENERAL POWERS. The business and affairs of the
---------- --------------
Corporation shall be managed by or under the direction of the Board of
Directors. In addition to such powers as are herein and in the Certificate of
Incorporation expressly conferred upon it, the Board of Directors shall have and
may exercise all the powers of the Corporation, subject to the provisions of the
Delaware General Corporate Law, the Certificate of Incorporation and these By-
laws.
SECTION 2. NUMBER, ELECTION AND TERM OF OFFICE.
---------- ---------------------------- ------
(a) The number of directors which shall constitute the whole Board of
Directors shall be fixed from time to time by resolution adopted by affirmative
vote of a majority of the Board of Directors, except that such number shall not
be less than five (5) nor more than fifteen (15), the exact number to be
determined by resolution adopted by affirmative vote of a majority of the Board.
The Board shall at all times be comprised of at least two (2) Independent
Directors (as defined in the Certificate of Incorporation); provided, however,
-------- -------
that such requirement shall not apply at any time on or prior to October 15,
1996. The Board may be divided into classes as provided by the Certificate of
Incorporation.
(b) The directors shall be elected by a plurality of the votes of the
shares present in person or represented by proxy at the meeting and entitled to
vote in the election of directors; provided that, whenever the holders of any
--------
class or series of capital stock of the Corporation are entitled to elect one or
more directors pursuant to the provisions of the Certificate of Incorporation
(including, but not limited to, for purposes of these By-laws, pursuant to any
duly authorized certificate of designation), such directors shall be elected by
a plurality of the votes of such class or series present in person or
represented by proxy at the meeting and entitled to vote in the election of such
directors. Except as provided in Section 4 of this Article III, the directors
shall be elected in the manner set forth herein at the annual meeting of the
stockholders.
-4-
<PAGE>
SECTION 3. REMOVAL AND RESIGNATION. No director may at any time be
---------- -----------------------
removed without cause; provided, however, that if the holders of any class or
-------- -------
series of capital stock are entitled by the provisions of the Certificate of
Incorporation to elect one or more directors, such director or directors so
elected may be removed without cause only by the vote of the holders of a
majority of the outstanding shares of that class or series entitled to vote.
Any director may resign at any time upon written notice to the Corporation.
SECTION 4. VACANCIES. Vacancies and newly created directorships
---------- ---------
resulting from any increase in the total number of directors established by the
Board pursuant to Section 2 of this Article III may be filled only by the
affirmative vote of the majority of the total number of directors then in
office, though less than a quorum, or by a sole remaining director. Any
director elected to fill a vacancy resulting from any increase in the number of
directors shall hold office for a term that shall coincide with the remaining
term of the class of directors to which he is elected. A director elected to
fill a vacancy not resulting from an increase in the number of directors shall
have the same remaining term as that of his predecessor. Each director so
chosen shall hold office until a successor is duly elected and qualified or
until his or her earlier death, resignation or removal as herein provided.
Whenever holders of any class or classes of stock or series thereof are entitled
by the provisions of the Certificate of Incorporation to elect one or more
directors, vacancies and newly created directorships of such class or classes or
series may only be filled by the affirmative vote of the majority of the total
number of directors elected by such class or classes or series thereof then in
office, or by a sole remaining director so elected.
SECTION 5. NOMINATIONS.
---------- -----------
(a) Only persons who are nominated in accordance with the procedures
set forth in these By-laws shall be eligible to serve as directors. Nominations
of persons for election to the Board of Directors may be made at a meeting of
stockholders (i) by or at the direction of the Board of Directors or (ii) by any
stockholder of the Corporation who was a stockholder of record at the time of
giving of notice provided for in these By-laws, who is entitled to vote for the
election of directors at the meeting and who shall have complied with the notice
procedures set forth below in Section 5(b) of this Article III.
(b) In order for a stockholder to nominate a person for election to
the Board of Directors at a meeting of stockholders, such stockholder shall have
delivered timely notice of such stockholder's intent to make such nomination in
writing to the secretary of the Corporation. To be timely, a stockholder's
notice shall be delivered to or mailed and received at the principal executive
offices of the Corporation (x) in the case of an annual meeting, not less than
sixty (60) nor more than ninety (90) days prior to the first anniversary of the
preceding year's annual meeting; provided, however, that in the event that the
-------- -------
date of the annual meeting is changed by more than thirty (30) days from such
anniversary date, notice by the stockholder to be timely must be so received not
later than the close of business on the tenth (10) day following the earlier of
the day on which notice of the date of the meeting was mailed or public
disclosure of the meeting was made, and (y) in the case of a special meeting at
which directors are to be elected, not later than the close of business on the
tenth (10) day following the earlier of the day on which notice of the date of
the meeting was mailed or public disclosure of the
-5-
<PAGE>
meeting was made. Such stockholder's notice shall set forth (i) as to each
person whom the stockholder proposes to nominate for election as a director at
such meeting all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder
(including such person's written consent to being named in the proxy statement
as a nominee and to serving as a director if elected); (ii) as to the
stockholder giving the notice (A) the name and address, as they appear on the
Corporation's records, of such stockholder and (B) the class and number of
shares of the Corporation which are beneficially owned by such stockholder and
also which are owned of record by such stockholder; and (iii) as to the
beneficial owner, if any, on whose behalf the nomination is made, (A) the name
and address of such person and (B) the class and number of shares of the
Corporation which are beneficially owned by such person. At the request of the
Board of Directors, any person nominated by the Board of Directors for election
as a director shall furnish to the secretary of the Corporation that information
required to be set forth in a stockholder's notice of nomination which pertains
to the nominee.
(c) No person shall be eligible to serve as a director of the
Corporation unless nominated in accordance with the procedures set forth in this
Section 5 of Article III. The chairman of the meeting shall, if the facts
warrant, determine that a nomination was not made in accordance with the
procedures prescribed by this Section 5 of Article III, and if he should so
determine, he shall so declare to the meeting and the defective nomination shall
be disregarded. A stockholder seeking to nominate a person to serve as a
director must also comply with all applicable requirements of the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder with respect to the matters set forth in this Section 5 of the
Article III.
SECTION 6. ANNUAL MEETINGS. The annual meeting of the Board of
---------- ---------------
Directors shall be held without notice immediately after, and at the same place
as, the annual meeting of stockholders.
SECTION 7. OTHER MEETINGS AND NOTICE. Regular meetings, other than
---------- -------------------------
the annual meeting, of the Board of Directors may be held without notice at such
time and at such place as shall from time to time be determined by resolution of
the Board. Special meetings of the Board of Directors may be called by the
chairman of the Board or, upon the written request of at least a majority of the
directors then in office, by the secretary of the Corporation on at least 24
hours notice to each director, either personally, by telephone, by mail, or by
telecopy.
SECTION 8. CHAIRMAN OF THE BOARD, QUORUM, REQUIRED VOTE AND
---------- ------------------------------------------------
ADJOURNMENT. The Board of Directors shall elect, by the affirmative vote of the
- -----------
majority of the total number of directors then in office, a chairman of the
Board, who shall preside at all meetings of the stockholders and Board of
Directors at which he or she is present. If the chairman of the Board is not
present at a meeting of the stockholders or the Board of Directors, the
president (if the president is a director and is not also the chairman of the
Board) shall preside at such meeting, and, if the president is not present at
such meeting, a majority of the directors present at such meeting shall elect
one of their members to so preside. A majority of the total number of directors
then in office shall constitute a quorum for the transaction of
-6-
<PAGE>
business. Unless a different vote is required by express provision of
applicable law, the Certificate of Incorporation or these By-laws, the vote of a
majority of directors present at a meeting at which a quorum is present shall be
the act of the Board of Directors. If a quorum shall not be present at any
meeting of the Board of Directors, the directors present thereat may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
SECTION 9. COMMITTEES. The Board of Directors may, by resolution
---------- ----------
passed by a majority of the total number of directors then in office, designate
one or more committees, each committee to consist of one or more of the
directors of the Corporation, which to the extent provided in such resolution or
these By-laws shall have, and may exercise, the powers of the Board of Directors
in the management and affairs of the Corporation, except as otherwise limited by
applicable law. The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of the committee. Such committee or committees shall have
such name or names as may be determined from time to time by resolution adopted
by the Board of Directors. Each committee shall keep regular minutes of its
meetings and report the same to the Board of Directors when required.
SECTION 10. COMMITTEE RULES. Each committee of the Board of
----------- ---------------
Directors may fix its own rules of procedure and shall hold its meetings as
provided by such rules, except as may otherwise be provided by a resolution of
the Board of Directors designating such committee. Unless otherwise provided in
such a resolution, the presence of at least a majority of the members of the
committee shall be necessary to constitute a quorum. Unless otherwise provided
in such a resolution, in the event that a member and that member's alternates,
if alternates are designated by the Board of Directors as provided in Section 9
of this Article III, of such committee is or are absent or disqualified, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not such member or members constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in place of any such absent or disqualified member.
SECTION 11. COMMUNICATIONS EQUIPMENT. Members of the Board of
----------- ------------------------
Directors or any committee thereof may participate in and act at any meeting of
such Board or committee through the use of a conference telephone or other
communications equipment by means of which all persons participating in the
meeting can hear and speak with each other, and participation in the meeting
pursuant to this Section 11 shall constitute presence in person at the meeting.
SECTION 12. WAIVER OF NOTICE AND PRESUMPTION OF ASSENT. Any member
----------- ------------------------------------------
of the Board of Directors or any committee thereof who is present at a meeting
shall be conclusively presumed to have waived notice of such meeting except when
such member attends for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened. Such member shall be conclusively presumed to have assented
to any action taken unless his or her dissent shall be entered in the minutes of
the meeting or unless his or her written dissent to such action shall be filed
with the person acting as the secretary of the meeting before the adjournment
thereof or shall be
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forwarded by registered mail to the secretary of the Corporation immediately
after the adjournment of the meeting. Such right to dissent shall not apply to
any member who voted in favor of such action.
SECTION 13. ACTION BY WRITTEN CONSENT. Unless otherwise restricted
----------- -------------------------
by the Certificate of Incorporation, any action required or permitted to be
taken at any meeting of the Board of Directors, or of any committee thereof, may
be taken without a meeting if all members of the Board or committee, as the case
may be, consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the Board or committee, as applicable.
ARTICLE IV
OFFICERS
--------
SECTION 1. NUMBER. The officers of the Corporation shall be elected
---------- ------
by the Board of Directors and shall consist of a chairman of the Board, chief
executive officer, president, one or more vice-presidents, a chief operating
officer, a chief financial officer, a senior vice president, a secretary, a
treasurer and such other officers and assistant officers as may be deemed
necessary or desirable by the Board of Directors. Any number of offices may be
held by the same person. In its discretion, the Board of Directors may choose
not to fill any office for any period as it may deem advisable, except that the
offices of president and secretary shall be filled as expeditiously as possible.
SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the
---------- ---------------------------
Corporation shall be elected annually by the Board of Directors at its first
meeting held after each annual meeting of stockholders or as soon thereafter as
convenient. Vacancies may be filled or new offices created and filled at any
meeting of the Board of Directors. Each officer shall hold office until a
successor is duly elected and qualified or until his or her earlier death,
resignation or removal as hereinafter provided.
SECTION 3. REMOVAL. Any officer or agent elected by the Board of
---------- -------
Directors may be removed by the Board of Directors at its discretion, but such
removal shall be without prejudice to the contract rights, if any, of the person
so removed.
SECTION 4. VACANCIES. Any vacancy occurring in any office because of
---------- ---------
death, resignation, removal, disqualification or otherwise, may be filled by the
Board of Directors.
SECTION 5. COMPENSATION. Compensation of all officers shall be fixed
---------- ------------
by the Board of Directors or any committee thereof established for such purpose,
and no officer shall be prevented from receiving such compensation by virtue of
his or her also being a director of the Corporation.
SECTION 6. CHAIRMAN OF THE BOARD. The chairman of the Board shall be
---------- ---------------------
the chief executive officer of the Corporation, and shall have the powers and
perform the duties incident to that position. Subject to the powers of the
Board of Directors, he or she shall be in
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the general and active charge of the entire business and affairs of the
Corporation, and shall be its chief policy-making officer. He or she shall
preside at all meetings of the Board of Directors and stockholders and shall
have such other powers and perform such other duties as may be prescribed by the
Board of Directors or provided in these By-laws. The chairman of the Board is
authorized to execute bonds, mortgages and other contracts requiring a seal,
under the seal of the Corporation, except where required or permitted by
applicable law to be otherwise signed and executed and except where the signing
and execution thereof shall be expressly delegated by the Board of Directors to
some other officer or agent of the Corporation. Whenever the president is
unable to serve, by reason of sickness, absence or otherwise, the chairman of
the Board shall perform all the duties and responsibilities and exercise all the
powers of the president.
SECTION 7. THE PRESIDENT. The president of the Corporation, subject
---------- -------------
to the powers of the Board of Directors and the chairman of the Board, shall
have the general charge of the business, affairs and property of the
Corporation, and control over its officers, agents and employees; and shall see
that all orders and resolutions of the Board of Directors and the chief
executive officer are carried into effect. The president shall, in the absence
or disability of the chairman of the Board and chief executive officer, act with
all of the powers and be subject to all the restrictions of the chairman of the
Board and chief executive officer. The president is authorized to execute
bonds, mortgages and other contracts requiring a seal, under the seal of the
Corporation, except where required or permitted by applicable law to be
otherwise signed and executed and except where the signing and execution thereof
shall be expressly delegated by the Board of Directors to some other officer or
agent of the Corporation. The president shall have such other powers and
perform such other duties as may be prescribed by the chairman of the Board or
the Board of Directors or as may be provided in these By-laws.
SECTION 8. CHIEF OPERATING OFFICER. The chief operating officer of
---------- -----------------------
the Corporation, subject to the powers of the Board of Directors, shall have the
general and active charge of the management of the business of the Corporation;
and shall see that all orders and resolutions of the Board of Directors are
carried into effect. The chief operating officer is authorized to execute
bonds, mortgages and other contracts requiring a seal, under the seal of the
Corporation, except where required or permitted by applicable law to be
otherwise signed and executed and except where the signing and execution thereof
shall be expressly delegated by the Board of Directors to some other officer or
agent of the Corporation. The chief operating officer shall have such other
powers and perform such other duties as may be prescribed by the chairman of the
Board and chief executive officer or the Board of Directors or as may be
provided in these By-laws.
SECTION 9. CHIEF FINANCIAL OFFICER. The chief financial officer of
---------- -----------------------
the Corporation shall, under the direction of the chairman of the Board and
chief executive officer, be responsible for all financial and accounting matters
and for the direction of the offices of treasurer and controller. The chief
financial officer is authorized to execute bonds, mortgages and other contracts
requiring a seal, under the seal of the Corporation, except where required or
permitted by applicable law to be otherwise signed and executed and except where
the signing and execution thereof shall be expressly delegated by the Board of
Directors to some other officer or agent of the Corporation. The chief
financial officer shall have such other powers and
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<PAGE>
perform such other duties as may be prescribed by the chairman of the Board and
chief executive officer or the Board of Directors or as may be provided in these
By-laws.
SECTION 10. VICE-PRESIDENTS. The vice-president, or if there shall
----------- ---------------
be more than one, the vice-presidents in the order determined by the Board of
Directors or the chairman of the Board, shall, in the absence or disability of
the president, act with all of the powers and be subject to all the restrictions
of the president. The vice-presidents shall also perform such other duties and
have such other powers as the Board of Directors, the chairman of the Board, the
president or these By-laws may, from time to time, prescribe. The vice-
presidents may also be designated as executive vice-presidents or senior vice-
presidents, as the Board of Directors may from time to time prescribe.
SECTION 11. THE SECRETARY AND ASSISTANT SECRETARIES. The secretary
----------- ---------------------------------------
shall attend all meetings of the Board of Directors, all meetings of the
committees thereof and all meetings of the stockholders and record all the
proceedings of the meetings in a book or books to be kept for that purpose or
shall ensure that his or her designee attends each such meeting to act in such
capacity. Under the chairman of the Board's supervision, the secretary shall
give, or cause to be given, all notices required to be given by these By-laws or
by applicable law; shall have such powers and perform such duties as the Board
of Directors, the chairman of the Board, the president or these By-laws may,
from time to time, prescribe; and shall have custody of the corporate seal of
the Corporation. The secretary, or an assistant secretary, shall have authority
to affix the corporate seal to any instrument requiring it and when so affixed,
it may be attested by his or her signature or by the signature of such assistant
secretary. The Board of Directors may give general authority to any other
officer to affix the seal of the Corporation and to attest the affixing by his
or her signature. The assistant secretary, or if there be more than one, any of
the assistant secretaries in the order determined by the Board of Directors,
shall, in the absence or disability of the secretary, perform the duties and
exercise the powers of the secretary and shall perform such other duties and
have such other powers as the Board of Directors, the chairman of the Board, the
president, or secretary may, from time to time, prescribe.
SECTION 12. THE TREASURER AND ASSISTANT TREASURER. The treasurer
----------- -------------------------------------
shall have the custody of the corporate funds and securities; shall keep full
and accurate accounts of receipts and disbursements in books belonging to the
Corporation; shall deposit all monies and other valuable effects in the name and
to the credit of the Corporation as may be ordered by the chairman of the Board,
the chief financial officer or the Board of Directors; shall cause the funds of
the Corporation to be disbursed when such disbursements have been duly
authorized, taking proper vouchers for such disbursements; and shall render to
the chairman of the Board, the chief financial officer and the Board of
Directors, at its regular meeting or when the Board of Directors so requires, an
account of the Corporation; shall have such powers and perform such duties as
the Board of Directors, the chairman of the Board, the chief financial officer
or these By-laws may, from time to time, prescribe. If required by the Board of
Directors, the treasurer shall give the Corporation a bond (which shall be
rendered every six years) in such sums and with such surety or sureties as shall
be satisfactory to the Board of Directors for the faithful performance of the
duties of the office of treasurer and for the restoration to the Corporation, in
case of death, resignation, retirement, or removal from office, of all books,
papers, vouchers, money, and other property of whatever kind in the possession
or under the control of the
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<PAGE>
treasurer belonging to the Corporation. The assistant treasurer, or if there
are more than one, the assistant treasurers in the order determined by the Board
of Directors shall, in the absence or disability of the treasurer, perform the
duties and exercise the powers of the treasurer. The assistant treasurers shall
perform such other duties and have such other powers as the Board of Directors,
the chairman of the Board, the chief financial officer, treasurer or these By-
laws may, from time to time, prescribe.
SECTION 13. OTHER OFFICERS, ASSISTANT OFFICERS AND AGENTS. Officers,
----------- ---------------------------------------------
assistant officers and agents, if any, other than those whose duties are
provided for in these By-laws, shall have such authority and perform such duties
as may from time to time be prescribed by resolution of the Board of Directors.
SECTION 14. ABSENCE OR DISABILITY OF OFFICERS. In the case of the
----------- ---------------------------------
absence or disability of any officer of the Corporation and of any person hereby
authorized to act in such officer's place during such officer's absence or
disability, the Board of Directors may by resolution delegate the powers and
duties of such officer to any other officer or to any director, or to any other
person selected by it.
ARTICLE V
INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS
-------------------------------------------------
SECTION 1. RIGHT TO INDEMNIFICATION. Each person who was or is made
---------- ------------------------
a party or is threatened to be made a party to or is otherwise involved
(including involvement as a witness) in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter, a "proceeding"),
by reason of the fact that he or she is or was a director or officer of the
Corporation or, while a director or officer of the Corporation, is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to an employee benefit plan
(hereinafter, an "indemnitee"), whether the basis of such proceeding is alleged
action in an official capacity as a director or officer or in any other capacity
while serving as a director or officer, shall be indemnified and held harmless
by the Corporation to the fullest extent authorized by the Delaware General
Corporation Law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than permitted prior
thereto), against all expenses, liabilities, damages, actions, costs of
attachment or similar bonds, claims and losses (including without limitation,
costs of investigating, preparing or defending any such claim or action and
attorneys' fees and disbursements, judgments, fines, or penalties and amounts
paid in settlement) and any expenses of establishing a right to indemnification
under this Section 1 of ARTICLE V, reasonably incurred or suffered by such
indemnitee in connection therewith and such indemnification shall continue as to
an indemnitee who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of the indemnitee's heirs, executors and
administrators; provided, however, that, except as provided in Section 2 of
-------- -------
ARTICLE V with respect to proceedings to enforce rights to indemnification,
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<PAGE>
the Corporation shall indemnify any such indemnitee in connection with a
proceeding (or part thereof) initiated by such indemnitee only if such
proceeding (or part thereof) was authorized by the Board of Directors of the
Corporation. The right to indemnification conferred in this Section 1 of
ARTICLE V shall be a contract right and shall include the right to be paid by
the Corporation the expenses incurred in defending any such proceeding in
advance of its final disposition (hereinafter an "advance of expenses");
provided, however, that, if and to the extent that the Delaware General
- -------- -------
Corporation Law requires, an advance of expenses incurred by an indemnitee in
his or her capacity as a director or officer (and not in any other capacity in
which service was or is rendered by such indemnitee, including, without
limitation, service to an employee benefit plan) shall be made only upon
delivery to the Corporation of an undertaking (hereinafter an "undertaking"), by
or on behalf of such indemnitee, to repay all amounts so advanced if it shall
ultimately be determined by judicial decision (hereinafter a "final
adjudication") that such indemnitee is not entitled to be indemnified for such
expenses under this Section 1 of ARTICLE V or otherwise. The Corporation may,
by action of its Board of Directors, provide indemnification to employees and
agents of the Corporation with the same scope and effect as the foregoing
indemnification of directors and officers.
SECTION 2. PROCEDURE FOR INDEMNIFICATION. Any indemnification of a
---------- -----------------------------
director or officer of the Corporation or advance of expenses under Section 1 of
this ARTICLE V shall be made promptly, and in any event within forty-five (45)
days (or, in the case of an advance of expenses, twenty (20) days), upon the
written request of the director or officer. If a determination by the
Corporation that the director or officer is entitled to indemnification pursuant
to this ARTICLE V is required, and the Corporation fails to respond within sixty
(60) days to a written request for indemnity, the Corporation shall be deemed to
have approved the request. If the Corporation denies a written request for
indemnification or advance of expenses, in whole or in part, or if payment in
full pursuant to such request is not made within forty-five (45) days (or, in
the case of an advance of expenses, twenty (20) days), the right to
indemnification or advances as granted by this ARTICLE V shall be enforceable by
the director or officer in any court of competent jurisdiction. Such person's
costs and expenses incurred in connection with successfully establishing his or
her right to indemnification, in whole or in part, in any such action shall also
be indemnified by the Corporation. It shall be a defense to any such action
(other than an action brought to enforce a claim for the advance of expenses
where the undertaking required pursuant to Section 1 of this ARTICLE V, if any,
has been tendered to the Corporation) that the claimant has not met the
standards of conduct which make it permissible under the Delaware General
Corporation Law for the Corporation to indemnify the claimant for the amount
claimed, but the burden of such defense shall be on the Corporation. Neither
the failure of the Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable standard of conduct
set forth in the Delaware General Corporation Law, nor an actual determination
by the Corporation (including its Board of Directors, independent legal counsel,
or its stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct. The procedure for
indemnification of other employees and agents for whom indemnification is
provided pursuant to Section 1 of this ARTICLE V shall be
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<PAGE>
the same procedure set forth in this Section 2 for directors or officers, unless
otherwise set forth in the action of the Board of Directors providing
indemnification for such employee or agent.
SECTION 3. SERVICE FOR SUBSIDIARIES. Any person serving as a
---------- ------------------------
director, officer, employee or agent of a wholly-owned subsidiary of the
Corporation ("Subsidiary") shall be conclusively presumed to be serving in such
capacity at the request of the Corporation.
SECTION 4. RELIANCE. Persons who after the date of the adoption of
---------- --------
this provision become or remain directors or officers of the Corporation or who,
while a director or officer of the Corporation, become or remain a director,
officer, employee or agent of a Subsidiary, shall be conclusively presumed to
have relied on the rights to indemnity, advance of expenses and other rights
contained in this ARTICLE V in entering into or continuing such service. The
rights to indemnification and to the advance of expenses conferred in this
ARTICLE V shall apply to claims made against an indemnitee arising out of acts
or omissions which occurred or occur both prior and subsequent to the adoption
hereof.
SECTION 5. NON-EXCLUSIVITY OF RIGHTS. The rights to indemnification
---------- -------------------------
and to the advance of expenses conferred in this ARTICLE V shall not be
exclusive of any other right which any person may have or hereafter acquire
under the Certificate of Incorporation or under any statute, by-law, agreement,
vote of stockholders or disinterested directors or otherwise.
SECTION 6. INSURANCE. The Corporation may purchase and maintain
---------- ---------
insurance on its own behalf and on behalf of any person who is or was a
director, officer, employee or agent of the Corporation or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
expense, liability or loss asserted against him or her and incurred by him or
her in any such capacity, whether or not the Corporation would have the power to
indemnify such person against such expenses, liability or loss under the
Delaware General Corporation Law.
ARTICLE VI
CERTIFICATES OF STOCK
---------------------
SECTION 1. FORM. Every holder of stock in the Corporation shall be
---------- ----
entitled to have a stock certificate, signed by, or in the name of the
Corporation by the chairman of the Board, the president or a vice-president and
the chief financial officer, treasurer, secretary or an assistant secretary of
the Corporation, certifying the number of shares owned by such holder in the
Corporation. If such a certificate is countersigned (1) by a transfer agent or
an assistant transfer agent other than the Corporation or its employee or (2) by
a registrar, other than the Corporation or its employee, the signature of any
such chairman of the Board, president, vice-president, chief financial officer,
treasurer, secretary, or assistant secretary may be facsimiles. In case any
officer or officers who have signed, or whose facsimile signature or signatures
have been used on, any such certificate or certificates shall cease to be such
officer or officers of the Corporation whether because of death, resignation or
otherwise before such certificate or certificates have been delivered by the
Corporation, such certificate or certificates may
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<PAGE>
nevertheless be issued and delivered as though the person or persons who signed
such certificate or certificates or whose facsimile signature or signatures have
been used thereon had not ceased to be such officer or officers of the
Corporation. All certificates for shares shall be consecutively numbered or
otherwise identified. The name of the person to whom the shares represented
thereby are issued, with the number of shares and date of issue, shall be
entered on the books of the Corporation. Shares of stock of the Corporation
shall only be transferred on the books of the Corporation by the holder of
record thereof or by such holder's attorney duly authorized in writing, upon
surrender to the Corporation of the certificate or certificates for such shares
endorsed by the appropriate person or persons, with such evidence of the
authenticity of such endorsement, transfer, authorization, and other matters as
the Corporation or its transfer agent may reasonably require, and accompanied by
all necessary stock transfer stamps. In that event, it shall be the duty of the
Corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate or certificates, and record the transaction on its books.
The Board of Directors may appoint a bank or trust company organized under the
laws of the United States or any state thereof to act as its transfer agent or
registrar, or both in connection with the transfer of any class or series of
securities of the Corporation.
SECTION 2. LOST CERTIFICATES. The Board of Directors may direct a
---------- -----------------
new certificate or certificates to be issued in place of any certificate or
certificates previously issued by the Corporation alleged to have been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen, or destroyed. When
authorizing such issue of a new certificate or certificates, the Corporation
may, in its discretion and as a condition precedent to the issuance thereof,
require the owner of such lost, stolen, or destroyed certificate or
certificates, or his or her legal representative, to give the Corporation a bond
sufficient to indemnify the Corporation against any claim that may be made
against the Corporation on account of the loss, theft or destruction of any such
certificate or the issuance of such new certificate.
SECTION 3. FIXING A RECORD DATE FOR STOCKHOLDER MEETINGS. In order
---------- ---------------------------------------------
that the Corporation may determine the stockholders entitled to notice of or to
vote at any meeting of stockholders or any adjournment thereof, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which record date shall not be more than sixty (60) nor less than
ten (10) days before the date of such meeting. If no record date is fixed by
the Board of Directors, the record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be the close of business
on the next day preceding the day on which notice is first given. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
--------
however, that the Board of Directors may fix a new record date for the adjourned
- -------
meeting.
SECTION 4. FIXING A RECORD DATE FOR OTHER PURPOSES. In order that
---------- ---------------------------------------
the Corporation may determine the stockholders entitled to receive payment of
any dividend or other distribution or allotment or any rights or the
stockholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purposes of any other lawful action,
the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted,
and which record date shall be
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<PAGE>
not more than sixty (60) days prior to such action. If no record date is fixed,
the record date for determining stockholders for any such purpose shall be at
the close of business on the day on which the Board of Directors adopts the
resolution relating thereto.
SECTION 5. REGISTERED STOCKHOLDERS. Prior to the surrender to the
---------- -----------------------
Corporation of the certificate or certificates for a share or shares of stock
with a request to record the transfer of such share or shares, the Corporation
may treat the registered owner as the person entitled to receive dividends, to
vote, to receive notifications, and otherwise to exercise all the rights and
powers of an owner. The Corporation shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof.
SECTION 6. SUBSCRIPTIONS FOR STOCK. Unless otherwise provided for in
---------- -----------------------
the subscription agreement, subscriptions for shares shall be paid in full at
such time, or in such installments and at such times, as shall be determined by
the Board of Directors. Any call made by the Board of Directors for payment on
subscriptions shall be uniform as to all shares of the same class or as to all
shares of the same series. In case of default in the payment of any installment
or call when such payment is due, the Corporation may proceed to collect the
amount due in the same manner as any debt due the Corporation.
ARTICLE VII
GENERAL PROVISIONS
------------------
SECTION 1. DIVIDENDS. Dividends upon the capital stock of the
---------- ---------
Corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, in accordance with applicable law. Dividends may be paid in cash, in
property, or in shares of the capital stock, subject to the provisions of the
Certificate of Incorporation. Before payment of any dividend, there may be set
aside out of any funds of the Corporation available for dividends such sum or
sums as the directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Corporation, or
any other purpose and the directors may modify or abolish any such reserve in
the manner in which it was created.
SECTION 2. CHECKS, DRAFTS OR ORDERS. All checks, drafts or other
---------- ------------------------
orders for the payment of money by or to the Corporation and all notes and other
evidences of indebtedness issued in the name of the Corporation shall be signed
by such officer or officers, agent or agents of the Corporation, and in such
manner, as shall be determined by resolution of the Board of Directors or a duly
authorized committee thereof.
SECTION 3. CONTRACTS. In addition to the powers otherwise granted to
---------- ---------
officers pursuant to ARTICLE IV hereof, the Board of Directors may authorize any
officer or officers, or any agent or agents, of the Corporation to enter into
any contract or to execute and deliver any
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instrument in the name of and on behalf of the Corporation, and such authority
may be general or confined to specific instances.
SECTION 4. LOANS. The Corporation may lend money to, or guarantee
---------- -----
any obligation of, or otherwise assist any officer or other employee of the
Corporation or of its subsidiaries, including any officer or employee who is a
director of the Corporation or its subsidiaries, whenever, in the judgment of
the directors, such loan, guaranty or assistance may reasonably be expected to
benefit the Corporation. The loan, guaranty or other assistance may be with or
without interest, and may be unsecured, or secured in such manner as the Board
of Directors shall approve, including, without limitation, a pledge of shares of
stock of the Corporation. Nothing contained in this section shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the Corporation at
common law or under any statute.
SECTION 5. FISCAL YEAR. The fiscal year of the Corporation shall be
---------- -----------
fixed by resolution of the Board of Directors.
SECTION 6. CORPORATE SEAL. The Board of Directors shall provide a
---------- --------------
corporate seal which shall be in the form of a circle and shall have inscribed
thereon the name of the Corporation and the words "Corporate Seal, Delaware".
The seal may be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise.
SECTION 7. VOTING SECURITIES OWNED BY CORPORATION. Voting securities
---------- --------------------------------------
in any other corporation held by the Corporation shall be voted by the chairman
of the Board, the chief executive officer, the president or a vice-president,
unless the Board of Directors specifically confers authority to vote with
respect thereto, which authority may be general or confined to specific
instances, upon some other person or officer. Any person authorized to vote
securities shall have the power to appoint proxies, with general power of
substitution.
SECTION 8. INSPECTION OF BOOKS AND RECORDS. Any stockholder of
---------- -------------------------------
record, in person or by attorney or other agent, shall, upon written demand
under oath stating the purpose thereof, have the right during the usual hours
for business to inspect for any proper purpose the Corporation's stock ledger, a
list of its stockholders, and its other books and records, and to make copies or
extracts therefrom. A proper purpose shall mean any purpose reasonably related
to such person's interest as a stockholder. In every instance where an attorney
or other agent shall be the person who seeks the right to inspection, the demand
under oath shall be accompanied by a power of attorney or such other writing
which authorizes the attorney or other agent to so act on behalf of the
stockholder. The demand under oath shall be directed to the Corporation at its
registered office in the State of Delaware or at its principal place of
business. The Corporation shall have a reasonable amount of time to respond to
any such request.
SECTION 9. SECTION HEADINGS. Section headings in these By-laws are
---------- ----------------
for convenience of reference only and shall not be given any substantive effect
in limiting or otherwise construing any provision herein.
SECTION 10. INCONSISTENT PROVISIONS. In the event that any provision
----------- -----------------------
of these By-laws is or becomes inconsistent with any provision of the
Certificate of Incorporation, Delaware
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<PAGE>
General Corporation Law or any other applicable law, the provision of these By-
laws shall not be given any effect to the extent of such inconsistency but shall
otherwise be given full force and effect.
ARTICLE VIII
AMENDMENTS
----------
These By-laws may be amended, altered, or repealed and new By-laws
adopted at any meeting of the Board of Directors by the affirmative vote of a
majority of the total number of directors then in office. The stockholders of
the Corporation may only amend, alter or repeal these By-laws by a vote of not
less than two-thirds of the outstanding shares of voting common stock of the
Corporation, voting together as a single class; provided, however, that Sections
-------- -------
2 and 10 of ARTICLE II, Sections 2, 3, 4 and 5 of ARTICLE III and ARTICLE V of
these By-laws shall not be altered, amended or repealed by, and no provision
inconsistent therewith shall be adopted by, the stockholders of the Corporation
without the affirmative vote of the holders of at least 75% of the outstanding
shares of the voting common stock, voting together as a single class.
-17-
<PAGE>
EXHIBIT 10.1
COINMACH LAUNDRY CORPORATION
SECOND AMENDED AND RESTATED
---------------------------
1996 EMPLOYEE STOCK OPTION PLAN
-------------------------------
ARTICLE 1
IDENTIFICATION OF THE PLAN
1.1 Title. The plan described herein shall be known as the Coinmach
-----
Laundry Corporation Second Amended and Restated 1996 Employee Stock Option Plan
(the "Plan").
----
1.2 Purpose. The purpose of this Plan is (i) to compensate certain
-------
officers and employees of Coinmach Laundry Corporation (the "Company") and its
-------
Subsidiaries for services rendered by such persons after the date of adoption of
this Plan to the Company or any Subsidiary; (ii) to provide certain officers and
employees of the Company and its Subsidiaries with significant additional
incentive to promote the financial success of the Company; and (iii) to provide
an incentive which may be used to induce able persons to enter into or remain in
the employment of the Company or any Subsidiary.
1.3 Effective Date. The Plan shall become effective on July 23, 1996 (the
--------------
"Effective Date"). The Plan, however, is subject to approval by the
--------------
stockholders of the Company. If stockholder approval is not granted within
twelve (12) months from the date of its adoption by the Board, the Plan shall
thereupon terminate. Grants of Options may be made prior to stockholder
approval, but any such Options granted shall not be exercisable prior to
stockholder approval and shall terminate without any further action by the
Company if stockholder approval is not given.
1.4 Defined Terms. Certain capitalized terms used herein have the
-------------
meanings as set forth in Section 10.1 of the Plan.
ARTICLE 2
ADMINISTRATION OF THE PLAN
2.1 Committee's Powers. This Plan shall be administered by a committee
------------------
(the "Committee") composed of persons appointed by the Board of Directors of the
---------
Company in accordance with the provisions of Section 2.2. The Committee shall
have full power and authority to prescribe, amend and rescind rules and
procedures governing administration of this Plan. The Committee shall have full
power and authority (i) to interpret the terms of this Plan, the terms of the
Options and the rules and procedures established by the Committee and (ii) to
determine the meaning of or requirements imposed by or rights of any person
under this Plan, any Option or any rule or procedure established by the
Committee. Each action of the Committee which is within the scope of the
authority delegated to the Committee by this Plan or by the Board shall be
binding on all persons.
-1-
<PAGE>
2.2 Committee Membership. The Committee shall be composed of two or more
--------------------
members of the Board, each of whom is a "disinterested person," as defined in
Securities and Exchange Commission Rule 16b-3, as amended ("Rule 16b-3"), or any
successor rules or government pronouncements. The Board shall have the power to
determine the number of members which the Committee shall have and to change the
number of membership positions on the Committee from time to time. The Board
shall appoint all members of the Committee. The Board may from time to time
appoint members to the Committee in substitution for, or in addition to, members
previously appointed and may fill vacancies, however caused, on the Committee.
Any member of the Committee may be removed from the Committee by the Board at
any time with or without cause. If at any time no special committee has been
constituted by the Board especially for the purposes of this Plan, then the
members of the Board who are "disinterested persons" as defined in Rule 16b-3
shall have all powers and rights delegated to the "Committee" under this Plan.
Notwithstanding anything to the contrary in this Section 2.2, the Committee
shall not grant an Option to a Section 16 Holder unless the Committee is
constituted so as to comply with Securities and Exchange Commission Rule 16b-3,
as amended, or any successor rules or government pronouncements.
2.3 Committee Procedures. The Committee shall hold its meetings at such
--------------------
times and places as it may determine. The Committee may make such rules and
regulations for the conduct of its business as it shall deem advisable. Unless
the Board or the Committee expressly decides to the contrary, a majority of the
members of the Committee shall constitute a quorum and any action taken by a
majority of the Committee members in attendance at a meeting at which a quorum
of Committee members are present shall be deemed an act of the Committee.
2.4 Indemnification. No member of the Committee shall be liable, in the
---------------
absence of bad faith, for any act or omission with respect to his or her service
on the Committee under this Plan. Service on the Committee shall constitute
service as a director of the Company so that the members of the Committee shall
be entitled to indemnification and reimbursements as directors of the Company
for any action or any failure to act in connection with service on the Committee
to the full extent provided for at any time in the Company's Certificate of
Incorporation and By-Laws, or in any insurance policy or other agreement
intended for the benefit of the Company's directors.
ARTICLE 3
EMPLOYEES ELIGIBLE TO RECEIVE OPTIONS
A person shall be eligible to be granted an Option only if on the proposed
Granting Date for such option such person is a full-time, salaried employee of
the Company or any Subsidiary, excluding non-management directors of the
Company. A person eligible to be granted an Option is herein called a "Key
---
Employee."
- --------
ARTICLE 4
GRANT OF OPTIONS
4.1 Power to Grant Options. The Committee shall have the right and the
----------------------
power to grant at any time to any Key Employee an option entitling such person
to purchase Common Stock from the Company in such quantity, at such price, on
such terms and subject to such conditions
-2-
<PAGE>
consistent with the provisions of this Plan as may be established by the
Committee on or prior to the Granting Date for such option. Each option to
purchase Common Stock which shall be granted by the Committee pursuant to the
provisions of this Plan is herein called an "Option."
------
4.2 Granting Date. An Option shall be deemed to have been granted under
-------------
this Plan on the date (the "Granting Date") which the Committee designates as
-------------
the Granting Date at the time it approves such Option, provided that the
Committee may not designate a Granting Date with respect to any Option which is
earlier than the date on which the granting of such Option is approved by the
Committee.
4.3 Option Terms Which The Committee May Determine. The Committee shall
----------------------------------------------
have the power to determine the Key Employee to whom Options are granted, the
number of Shares subject to each Option, the number of Options awarded to each
Key Employee and the time at which each Option is granted. Except as otherwise
expressly provided in this Plan, the Committee shall also have the power to
determine, at the time of the grant of each Option, all terms and conditions
governing the rights and obligations of the holder with respect to such Option,
including but not limited to: (a) the purchase price per Share or the method by
which the purchase price per Share will be determined; (b) the length of the
period during which the Option may be exercised and any limitations on the
number of Shares purchasable with the Option at any given time during such
period; (c) the times at which the Option may be exercised; (d) any conditions
precedent to be satisfied before the Option may be exercised, such as vesting
period; (e) any restrictions on resale of any Shares purchased upon exercise of
the Option; and (f) whether the Option will constitute an Incentive Stock
Option.
4.4 Option Agreement. No person shall have any rights under any Option
----------------
unless and until the Company and the person to whom such Option is granted have
executed and delivered an agreement expressly granting the Option to such person
and containing provisions setting forth the terms of the Option (an "Option
------
Agreement").
- ---------
ARTICLE 5
OPTION TERMS
5.1 Plan Provisions Control Option Terms. The terms of this Plan shall
------------------------------------
govern all the Options. In the event any provision of any Option Agreement
conflicts with any term in this Plan as constituted on the Granting Date of such
Option, the term in this Plan as constituted on the Granting Date of the Option
shall control. Except as provided in Article 8, the terms of any Option may not
be changed after the Granting Date of such Option without the express approval
of the Company and the Option Holder.
5.2 Price Limitation. Subject to Article 8, the price at which each Share
----------------
may be purchased upon the exercise of any Option may not be less than the Per
Share Market Value on the Granting Date for such Option.
5.3 Term Limitation. No Incentive Stock Option may be granted under this
---------------
Plan which is exercisable more than ten years after its Granting Date. This
Section 5.3 shall not be deemed to limit the term which the Committee may
specify for any Options granted under the Plan which are not intended to be
Incentive Stock Options.
-3-
<PAGE>
5.4 Transfer Limitations. No Option granted pursuant to this Plan shall
--------------------
be transferable other than by will or the laws of descent and distribution or
exercisable during the lifetime of the person to whom the Option is initially
granted by anyone other than the initial grantee. It shall be a condition
precedent to any transfer of any Option in accordance with the immediately
preceding sentence that the transferee executes and delivers an agreement
acknowledging such Option has been acquired for investment and not for
distribution and is and shall remain subject to this Plan and the Option
Agreement. The "Holder" of any Option shall mean (i) the initial grantee of
------
such Option or (ii) any permitted transferee.
5.5 $100,000 Per Year Limit on Incentive Stock Options. No Key Employee
--------------------------------------------------
may be granted Incentive Stock Options if the value of the Shares subject to
those options which first become exercisable in any given calendar year (and the
value of the Shares subject to any other Incentive Stock Options issued to the
Key Employee under the Plan or any other plan of the Company or its Subsidiaries
which first become exercisable in such year) exceeds $100,000. For this
purpose, the value of Shares shall be determined on the Granting Date. Any
Incentive Stock Options issued in excess of the $100,000 limit shall be treated
as Options that are not Incentive Stock Options. Incentive Stock Options shall
be taken into account in the order in which they were granted.
5.6 No Right to Employment Conferred. Nothing in this Plan or (in the
--------------------------------
absence of an express provision to the contrary) in any Option Agreement (i)
confers any right or obligation on any person to continue in the employ of the
Company or any Subsidiary or (ii) affects or shall affect in any way any
person's right or the right of the Company or any Subsidiary to terminate such
person's employment with the Company or any Subsidiary at any time, for any
reason, with or without cause.
ARTICLE 6
OPTION EXERCISE
6.1 Normal Option Term. Except as otherwise expressly provided in
------------------
Sections 6.3, 6.5 or 6.7 or in the Option Agreement, the right to exercise any
Option shall terminate at the earlier of the following dates: (i) the
Termination Date of the initial grantee of the Option or (ii) the Expiration
Date of the Option.
6.2 Exercise Time. No option granted to a Section 16 Holder shall become
-------------
exercisable within six months of the applicable Granting Date, except in the
case of the death or permanent disability of the Holder as provided in Section
6.5 below. Notwithstanding the terms of the Option Agreement, if any Option is
issued to a Holder who is not a Section 16 Holder on the Granting Date and such
Holder becomes a Section 16 Holder before such Holder exercises such Option,
then such Option shall not become exercisable within six months of the
applicable Granting Date, except in the case of the death or permanent
disability of the Holder as provided in Section 6.5 below. Subject to the
preceding two sentences, each Option shall become exercisable at the time
provided in the Option Agreement, provided that the Committee in its sole
discretion shall have the right (but shall not in any case be obligated) to
permit the exercise of such Option prior to such time.
6.3 Extension of Exercise Time. The Committee in its sole discretion
--------------------------
shall have the right (but shall not in any case be obligated) to permit any
Option to be exercised after the Termination Date of the Holder of such Option.
Notwithstanding the preceding sentence, but subject
-4-
<PAGE>
to Section 6.7, the Committee shall not have the right to permit the exercise of
any Option after its Expiration Date.
6.4 Exercise Procedures. Each Option shall be exercised by written notice
-------------------
to the Company. Any Holder of any Option shall be required, as a condition to
such Holder's right to purchase securities with such Option, to supply the
Committee at such person's expense with such evidence, representations,
agreements or assurances (including, but not limited to, opinions of counsel
satisfactory to the Committee) as the Committee may deem necessary or desirable
in order to establish to the satisfaction of the Committee the right of such
person to exercise such Option and of the propriety of the sale of securities by
reason of such exercise under the Securities Act and any other laws or
requirements of any governmental authority specified by the Committee. The
Company shall not be obligated to sell any Shares subject to such Option until
all evidence, representations, agreements and assurances required by the
Committee have been supplied. An Option Holder shall not have any rights as a
stockholder with respect to Shares issuable under any Option until and unless
such Shares are sold and delivered to such Option Holder. The purchase price of
Shares purchased upon the exercise of an Option shall be paid in full in cash or
by check by the Option Holder at the time of the delivery of such Shares,
provided that the Committee may (but need not) permit payment to be made by (i)
delivery to the Company of outstanding Shares, (ii) retention by the Company of
Shares which would otherwise be transferred to the Option Holder upon exercise
of the Option or (iii) any combination of cash, check, the Holder's delivery of
outstanding Shares and retention by the Company of Shares which would otherwise
be transferred to the Option Holder upon exercise of the Option, and provided
further that no portion of the purchase price of Shares purchased on the
exercise of an Incentive Stock Option may be paid by retention of Shares by the
Company. In the event an Incentive Stock Option is granted, the Committee may
(but need not) permit payment to be made by (i) cash or check or (ii) delivery
to the Company of outstanding Shares. In the event any Common Stock is
delivered to or retained by the Company to satisfy all or any part of the
purchase price, the part of the purchase price deemed to have been satisfied by
such Common Stock shall be equal to the product derived by multiplying (i) the
Per Share Market Value as of the date of exercise by (ii) the number of Shares
delivered to or retained by the Company. The number of Shares delivered to or
retained by the Company in satisfaction of the purchase price shall not be a
number which when multiplied by the Per Share Market Value as of the date of
exercise would result in a product greater than the purchase price. No
fractional Shares shall be delivered to or retained by the Company in
satisfaction of the purchase price. To the extent such fractional share would
result, the Option Holder shall make up such difference in cash. With respect
to any exercise of an Option that is permitted to be made by delivery to the
Company of outstanding Shares of Common Stock or retention by the Company of
Shares which would otherwise be transferable to the Option Holder, the Option
Holder shall be required to deposit with the Company an amount in cash
sufficient to allow the Company to satisfy any tax or other withholding
requirements under applicable law. Any part of the purchase price paid in cash
or by check upon the exercise of any Option shall be added to the general funds
of the Company and may be used for any proper corporate purpose.
Notwithstanding Article 7, unless the Board shall otherwise determine, for each
Share delivered to or retained by the Company as payment of all or part of the
purchase price upon the exercise of any Option, the aggregate number of Shares
subject to this Plan shall be increased by one Share.
6.5 Death, Permanent Disability, Retirement or Termination Without Cause
---------------------------------------------------------------------
Of Option Holder.
- ----------------
(a) Death. Except as otherwise expressly provided in the Option Agreement,
-----
if the Holder of an Option dies while such Option Holder is still employed by
the Company or any
-5-
<PAGE>
Subsidiary, then the right to exercise all unexpired installments of such Option
which have not yet vested or became exercisable shall be accelerated to the date
of death and shall become exercisable as of the date of death. Except as
otherwise provided in the option Agreement and subject to Section 6.7, if the
Holder of an option dies and such Option is then exercisable at the date of
death (for any reason including acceleration of vesting pursuant to the
preceding sentence), then the Holder's estate or the person or persons to whom
the Holder's rights under the Option shall pass by reason of the Holder's death
shall have the right to exercise the Option for 90 days after the date of death,
and the Option shall expire at the end of such 90 day period.
(b) Permanent Disability. Except as otherwise provided in the Option
--------------------
Agreement, if the Holder of an option suffers a Permanent Disability while such
Holder is still employed by the Company or any Subsidiary, then the right to
exercise all unexpired installments of such Option which have not yet vested or
became exercisable shall be accelerated to the date of such Permanent Disability
and shall become exercisable as of the date of such Permanent Disability (the
"Permanent Disability Date"). Except as otherwise provided in the Option
- --------------------------
Agreement and subject to Section 6.7, if the Holder of an Option suffers a
Permanent Disability and such Option is exercisable at the Permanent Disability
Date (for any reason including acceleration pursuant to the preceding sentence),
then such Holder shall have the right to exercise such Option for one year after
the Permanent Disability Date, and the Option shall expire at the end of such
one year period.
(c) Retirement. Except as otherwise provided in the Option Agreement, if
----------
the Holder of an Option elects to voluntarily retire from the Corporation or any
Subsidiary while such Holder is still employed by the Company or any Subsidiary,
then any installments of such Option which have not yet vested or become
---
exercisable shall remain outstanding for up to three years following the date of
such retirement. During such three year period, the time period for the vesting
of an Option contained in an Option Agreement will be deemed to continue to be
satisfied during such retirement and counted toward determining whether any time
period has been satisfied for vesting of the Option. Except as otherwise
provided in the Option Agreement and subject to Section 6.7, if the Holder of an
Option retires and such Option is or becomes exercisable at the time of or
following such retirement, then such Holder shall have the right to exercise
such option for three years after the date of retirement, and the Option shall
expire at the end of such three-year period. Notwithstanding anything in this
Section 6.5(c) or an Option Agreement to the contrary, if the Committee
determines in the good faith exercise of its judgment that any Holder who has
retired engages in any conduct detrimental to the Company, upon such
determination by the Committee, such Option shall immediately and without
further action on the part of the Company, expire and become unexerciseable. No
notice of such determination need be given to any Holder in such circumstance.
Notwithstanding the foregoing, the tax treatment available pursuant to Section
422 of the Code upon the exercise of an Incentive Stock Option will not be
available to a holder who exercises any such Option more than three months after
the date of retirement.
(d) Termination Without Cause. Except as otherwise provided in the Option
-------------------------
Agreement, if the Holder of an Option is terminated without Cause and such
Option is currently exercisable at the time of such termination, then such
Holder shall have the right to exercise such Option for 30 days after the date
of such termination, and the Option shall expire at the end of such 30 day
period.
6.6 Taxes. The Company or any Subsidiary shall be entitled, if the
-----
Committee deems it necessary or desirable, to withhold from an Option Holder's
salary or other compensation (or to secure payment from the Option Holder in
lieu of withholding) all or any portion of any
-6-
<PAGE>
withholding or other tax due from the Company or any Subsidiary with respect to
any Shares deliverable under such Holder's Option or the Committee may (but need
not) permit payment of such withholding by the Company's retention of Shares
which would otherwise be transferred to the Option Holder upon exercise of the
Option. In the event any Common Stock is retained by the Company to satisfy all
or any part of the withholding, the part of the withholding deemed to have been
satisfied by such Common Stock shall be equal to the product derived by
multiplying the Per Share Market Value as of the date of exercise by the number
of Shares retained by the Company. The number of Shares retained by the Company
in satisfaction of withholding shall not be a number which when multiplied by
the Per Share Market Value as of the date of exercise would result in a product
greater than the withholding amount. No fractional Shares shall be retained by
the Company in satisfaction of withholding. Notwithstanding Article 7, unless
the Board shall otherwise determine, for each Share retained by the Company in
satisfaction of all or any part of the withholding amount, the aggregate number
of Shares subject to this Plan shall be increased by one Share. The Company may
defer delivery under a Holder's Option until indemnified to its satisfaction
with respect to such withholding or other taxes.
6.7 Securities Law Compliance. Each Option shall be subject to the
-------------------------
condition that such Option may not be exercised if and to the extent the
Committee determines that the sale of securities upon exercise of the Option may
violate the Securities Act or any other law or requirement of any governmental
authority. The Company shall not be deemed by any reason of the granting of any
Option to have any obligation to register the Shares subject to such Option
under the Securities Act or to maintain in effect any registration of such
Shares which may be made at any time under the Securities Act. An Option shall
not be exercisable if the Committee or the Board determines there is non-public
information material to the decision of the Holder to exercise such Option which
the Company cannot for any reason communicate to such Holder. Notwithstanding
Sections 6.1, 6.3 and 6.5 and the terms of the Option Agreement, if (i) any
Holder makes a bona fide request to exercise any Option which complies with
Section 6.4, (ii) the Committee or the Board determines such Option cannot be
exercised for a period of time pursuant to this Section 6.7 and (iii) such
Option expires during such period, then the term of such Option shall be
extended until the end of such period; provided, however, that the term of an
Incentive Stock Option cannot be extended beyond ten years after its Granting
Date.
ARTICLE 7
SHARES SUBJECT TO THE PLAN
Except as provided in Sections 6.4 and 6.6 and Article 8, an aggregate of
1,109,147 Shares of Common Stock shall be subject to this Plan. Except as
provided in Sections 6.4 and 6.6 and Article 8, the Options shall be limited so
that the sum of the following shall not as of any given time exceed 1,109,147
Shares: (i) all Shares subject to Options outstanding under this Plan at the
given time and (ii) all Shares which shall have been sold by the Company by
reason of the exercise at or prior to the given time of any of the Options. The
Common Stock issued under the Plan may be either authorized and unissued shares,
shares reacquired and held in the treasury of the Corporation, or both, all as
from time to time determined by the Board. In the event any Option shall expire
or be terminated before it is fully exercised, then all Shares formerly subject
to such Option as to which such Option was not exercised shall be available for
any Option subsequently granted in accordance with the provisions of this Plan.
Notwithstanding anything contained in this Plan, the maximum
-7-
<PAGE>
aggregate number of Shares subject to Options that may be granted to any one Key
Employee in any one calendar year shall not exceed 400,000 Shares.
ARTICLE 8
ADJUSTMENTS TO REFLECT ORGANIC CHANGES
The Board shall appropriately and proportionately adjust the number and
kind of Shares subject to outstanding Options, the price for which Shares may be
purchased upon the exercise of outstanding Options, and the number and kind of
Shares available for options subsequently granted under this Plan to reflect any
stock dividend, stock split, combination or exchange of shares, merger,
consolidation or other change in the capitalization of the Company which the
Board determines to be similar, in its substantive effect upon this Plan or the
Options, to any of the changes expressly indicated in this sentence. The Board
may (but shall not be required to) make any appropriate adjustment to the number
and kind of Shares subject to outstanding Options, the price for which Shares
may be purchased upon the exercise of outstanding Options, and the number and
kind of Shares available for Options subsequently granted under this Plan to
reflect any spin-off, spin-out or other distribution of assets to stockholders
or any acquisition of the Company's stock or assets or other change which the
Board determines to be similar, in its substantive effect upon this Plan or the
Options, to any of the changes expressly indicated in this sentence. The
Committee shall have the power to determine the amount of the adjustment to be
made in each case described in the preceding two sentences, but no adjustment
approved by the Committee shall be effective until and unless it is approved by
the Board. In the event of any reorganization, reclassification, consolidation,
merger or sale of all or substantially all of the Company's assets which is
effected in such a way that holders of Common Stock are entitled to receive
(either directly or upon subsequent liquidation) stock, securities or assets
with respect to or in exchange for Common Stock, the Board may (but shall not be
required to) substitute the per share amount of such stock, securities or assets
for Shares upon any subsequent exercise of any Option. If any fractional Share
becomes subject to any Option as a result of any change made under this Article
8, then (i) such Option may not be exercised with respect to such fractional
Share until and unless such Option is exercised as to all other Shares subject
to such option and (ii) if such Option is exercised with respect to such
fractional Share, the Company shall have the right to deliver to the Holder in
lieu of such fractional Share cash in an amount equal to the product derived by
multiplying the fraction representing the portion of a full Share represented by
such fractional Share times the Per Share Market Value on the exercise date of
the Option with respect to such fractional Share established as prescribed in
this Plan.
ARTICLE 9
AMENDMENT AND TERMINATION OF THE PLAN
9.1 Amendment. Except as provided in the following two sentences, the
---------
Board shall have complete power and authority to amend this Plan at any time and
no approval by the Company's stockholders or by any other person, committee or
other entity of any kind shall be required to make any amendment approved by the
Board effective. The Board shall not, without the affirmative approval of the
Company's stockholders, amend the Plan in any manner which would cause any
outstanding Incentive Stock Options to no longer qualify as Incentive Stock
Options or which would cause the Plan not to satisfy the requirements relating
to performance based
-8-
<PAGE>
compensation under (S) 162(m) of the Code. If any Section 16 Holder holds any
Option, the Board shall not, without the affirmative vote of the holders of a
majority of the securities of the Company present, or represented, and entitled
to vote at a meeting duly held in accordance with applicable law, make any
amendment to this Plan which materially (i) increases the benefits accruing to
participants under the Plan, (ii) increases the number of shares of Common Stock
which may be issued under the Plan or (iii) modifies the requirements as to
eligibility for participation in the Plan. No termination or amendment of this
Plan may, without the consent of the Holder of any Option prior to termination
or the adoption of such amendment, materially and adversely affect the rights of
such Holder under such Option.
9.2 Termination. The Board shall have the right and the power to
-----------
terminate this Plan at any time, provided that no Incentive Stock Options may be
granted after the tenth anniversary of the adoption of this Plan. No Option
shall be granted under this Plan after the termination of this Plan, but the
termination of this Plan shall not have any other effect. Any Option
outstanding at the time of the termination of this Plan may be exercised after
termination of this Plan at any time prior to the Expiration Date of such Option
to the same extent such Option would have been exercisable had this Plan not
terminated.
ARTICLE 10
DEFINITIONS AND OTHER PROVISIONS OF THE PLAN
10.1 Definitions. Each term defined in this Section 10.1 has the meaning
-----------
indicated in this Section 10.1 whenever such term is used in this Plan:
"Board of Director" and "Board" both mean the Board of Directors of the
----------------- -----
Company as constituted at the time the term is applied.
"Cause" means (i) the willful refusal to follow directions given by the
-----
Board, (ii) commission of any act involving moral turpitude or any act which
brings or could bring the Company into disrepute or materially damages its
relations with its customers, suppliers, licensors or financing sources, (iii)
the violation of any statutory or common law duty of loyalty to the Company or
(iv) a good faith determination by a majority of the Board that continued
employment is not in the best interests of the Company.
"Common Stock" means the issued or issuable class A common stock, par value
------------
$.01 per share, of the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Committee" has the meaning such term is given in Section 2.1 of this Plan.
---------
"Company" as applied as of any given time shall mean Coinmach Laundry
-------
Corporation, a Delaware corporation, except that if prior to the given time any
corporation or other entity has acquired all or a substantial part of the assets
of the Company (as herein defined) and has agreed to assume the obligations of
the Company under this Plan, or is the survivor in a merger or consolidation to
which the Company was a party, such corporation or other entity shall be deemed
to be the Company at the given time.
-9-
<PAGE>
"Expiration Date" as applied to any option means the date specified in the
---------------
Option Agreement between the Company and the Holder as the expiration date of
such Option. If no expiration date is specified in the Option Agreement
relating to any Option, then the Expiration Date of such option shall be the day
prior to the tenth anniversary of the Granting Date of such Option.
Notwithstanding the preceding sentences, if the person to whom any Incentive
Stock Option is granted owns, on the Granting Date of such Option, stock
possessing more than ten percent of the total combined voting power of all
classes of stock of the Company (or of any parent or Subsidiary of the Company
in existence on the Granting Date of such Option), and if no expiration date is
specified in the Option Agreement relating to such Option, then the Expiration
Date of such Option shall be the day prior to the fifth anniversary of the
Granting Date of such Option.
"Granting Date" has the meaning such term is given in Section 4.2 of this
-------------
Plan.
"Holder" has the meaning such term is given in Section 5.4 of this Plan.
------
"Incentive Stock Option" means an incentive stock option, as defined in
----------------------
Code Section 422, which is granted pursuant to this Plan.
"Key Employee" has the meaning such term is given in Article 3 of this
------------
Plan.
"Option" has the meaning such term is given in Section 4.1 of this Plan.
------
"Option Agreement" has the meaning such term is given in Section 4.4 of
----------------
this Plan.
"Permanent Disability" shall mean a physical or mental disability suffered
--------------------
by an initial grantee of an Option which the Committee determines in its sole
discretion will permanently prevent such initial grantee from working for the
Company in the same or a substantially similar position as such initial grantee
occupied prior to suffering such disability.
"Permanent Disability Date" has the meaning such term is given in Section
-------------------------
6.5 of this Plan.
"Per Share Market Value" on any given date shall be the fair market value
----------------------
of one Share as of the close of business on the given date determined in such
manner as shall be prescribed in good faith by the Committee; provided, that as
--------
long as the Shares are traded on a national securities exchange or national
automated quotation system (such as the Nasdaq National Market), the Per Share
Market Value shall be the reported closing price of the Shares on such date.
"Plan" has the meaning such term is given in Section 1.1 of this Plan.
----
"Section 16 Holder" refers to any person who, with respect to the Company,
-----------------
is subject to Section 16 of the Securities Exchange Act of 1934, as amended, at
any time or any law or statute which succeeds Section 16.
"Securities Act" at any given time shall consist of: (i) the Securities Act
--------------
of 1933 as constituted at the given time; (ii) any other law or laws promulgated
prior to the given time by the United States Government which are in effect at
the given time and which regulate or govern any matters at any time regulated or
governed by the Securities Act of 1933; (iii) all regulations, rules,
registration forms and other governmental pronouncements issued under the laws
specified in clauses
-10-
<PAGE>
(i) and (ii) of this sentence which are in effect at the given time; and (iv)
all interpretations by any governmental agency or authority of the things
specified in clause (i), (ii) or (iii) of this sentence which are in effect at
the given time. Whenever any provision of this Plan requires that any action be
taken in compliance with any provision of the Securities Act, such provision
shall be deemed to require compliance with the Securities Act as constituted at
the time such action takes place.
"Share" means a share of Common Stock.
-----
"Subsidiary" means any corporation in which the Company owns, directly or
----------
indirectly, 50% or more of the total combined voting power of all classes of
securities of such corporation.
"Termination Date" as applied to the initial grantee of any Option means,
----------------
except as otherwise provided in the Option Agreement, the first date on which
such initial grantee is not employed by either the Company or any Subsidiary for
any reason (including, but not limited to, voluntary termination or termination
for Cause) other than as a result of the death, Permanent Disability, retirement
or termination without Cause of such Holder, in which case the provisions set
forth in Section 6 shall apply. The Committee may specify in the original terms
of an Option (or if not so specified, shall determine) whether an authorized
leave of absence or absence on military or government service or absence for any
other reason shall constitute a termination of employment with the Company or
any Subsidiary for the purposes of this Plan.
10.2 Headings. Section headings used in this Plan are for convenience
--------
only, do not constitute a part of this Plan and shall not be deemed to limit,
characterize or affect in any way any provisions of this Plan. All provisions
in this Plan shall be construed as if no headings had been used in this Plan.
10.3 Severability.
------------
(a) General. Whenever possible, each provision in this Plan and in every
-------
Option at any time granted under this Plan shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Plan or any Option at any time granted under this Plan is held to be prohibited
by or invalid under applicable law, then (i) such provision shall be deemed
amended to accomplish the objectives of the provision as originally written to
the fullest extent permitted by law and (ii) all other provisions of this Plan
and every option at any time granted under this Plan shall remain in full force
and effect.
(b) Incentive Stock Options. Whenever possible, each provision in this
-----------------------
Plan and in every option at any time granted under this Plan which is evidenced
by an Option Agreement which expressly states such Option is intended to
constitute an Incentive Stock Option under Code Section 422 (an "intended ISO")
------------
shall be interpreted in such manner as to entitle such intended ISO to the tax
treatment afforded by the Code to Options which do constitute Incentive Stock
Options under Code Section 422, but if any provision of this Plan or any
intended ISO at any time granted under this Plan is held to be contrary to the
requirements necessary to entitle such intended ISO to the tax treatment
afforded by the Code to Options which do constitute Incentive Stock Options
under Code Section 422, then (i) such provision shall be deemed to have
contained from the outset such language as shall be necessary to entitle such
intended ISO to the tax treatment afforded by the Code to Options which do
constitute Incentive Stock Options under Code Section 422, and (ii) all other
provisions of this Plan and such intended ISO shall remain in full force and
effect. If any Option Agreement
-11-
<PAGE>
covering an intended ISO granted under this Plan does not explicitly include any
terms required to entitle such intended ISO to the tax treatment afforded by the
Code to Options which do constitute Incentive Stock Options under Code Section
422, then all such terms shall be deemed implicit in the intention to afford
such treatment to such Option and such Option shall be deemed to have been
granted subject to all such terms.
10.4 No Strict Construction. No rule of strict construction shall be
----------------------
applied against the Company, the Committee or any other person in the
interpretation of any of the terms of this Plan, any Option or any rule or
procedure established by the Committee.
10.5 Choice of Law. This Plan and all documents contemplated hereby, and
-------------
all remedies in connection therewith and all questions or transactions relating
thereto, shall be construed in accordance with and governed by the internal laws
of the State of Delaware.
-12-
<PAGE>
EXHIBIT 10.2
FORM OF OPTION AGREEMENT
RELATING TO THE SECOND AMENDED AND RESTATED
1996 EMPLOYEE STOCK OPTION PLAN
-------------------------------------------
Coinmach Laundry Corporation
55 Lumber Road
Roslyn, New York 11576
Name
Address
Re: Coinmach Laundry Corporation
Grant of Non-Qualified Stock Option
-----------------------------------
Dear ________:
In consideration of your continued employment with Coinmach Laundry
Corporation and/or its wholly-owned subsidiaries (collectively, the "Company"),
the Company is pleased to advise you (the "Optionee") that its Board of
Directors has granted to you a non-qualified stock option (an "Option"), subject
to the terms and conditions of the Company's Second Amended and Restated 1996
Employee Stock Option Plan (the "Plan"), a copy of which is attached hereto.
1. Definitions. Capitalized terms used in this Agreement and not
-----------
otherwise defined herein shall have the meanings given to such terms in the
Plan.
2. Option.
------
(a) Term. Your Option is to purchase up to _______ shares of Class A
----
common stock, par value $.01 per share, of the Company (the "Option Shares") at
-------------
an exercise price per share of $_____ (the "Exercise Price"), payable upon
--------------
exercise as set forth in paragraph 2(b) below. Your Option will expire at the
close of business on August 8, 2006, subject to earlier expiration in connection
with the termination or ending of your employment for any reason as provided in
paragraph 4(b) below and as provided in the Plan (such date of such event, the
"Expiration Date").
---------------
(b) Payment of Option Price. Subject to paragraph 3 below, your Option may
-----------------------
be exercised in whole or in part upon payment of an amount (the "Option Price")
------------
equal to the product of (i) the Exercise Price multiplied by (ii) the number of
Option Shares to be acquired. Payment of the exercise price shall be made as
provided in the Plan.
(c) Non-Qualified Stock Option. Your Option is a non-qualified stock
--------------------------
option and is not intended to be an Incentive Stock Option.
---
3. Exercisability/Vesting.
----------------------
(a) Normal Vesting. Your Option may be exercised only to the extent it has
--------------
vested. Except as otherwise provided below, your Option will fully vest and
become exercisable with respect to all of your Option Shares in accordance with
the vesting schedule set forth below, if and
<PAGE>
only if you are, and have been, continuously employed by the Company from the
date of this Agreement through and including the date on which your Option is
fully exercised; provided that if you voluntarily retire from the Company prior
to such date, such Option may still vest in accordance with the schedule set
forth below, subject to the terms and conditions covering retirement in the
Plan:
Number of Options Vesting
Vesting Date on the Vesting Date
------------ -------------------------
August 8, 1996 [ 20% ]
August 8, 1997 [ 20% ]
August 8, 1998 [ 20% ]
August 8, 1999 [ 20% ]
August 8, 2000 [ 20% ]
(b) Death. If you die while still employed by the Company, then the right
-----
to exercise all unexpired installments of your Option which have not yet become
vested shall be accelerated and the Option shall become fully vested and
exercisable as of the date of your death; provided, however, that your estate or
-------- -------
the person (or persons) to whom your rights under the Option pass by reason of
your death, shall have the right to exercise the Option for a period of 90 days
after the date of your death and your Option shall expire at the earlier of (i)
the end of such 90 day period or (ii) the Expiration Date.
(c) Permanent Disability. If you suffer a Permanent Disability while still
--------------------
employed by the Company, then the right to exercise all unexpired installments
of your Option which have not yet become vested shall be accelerated and the
Option shall become exercisable as of the date on which you suffer a Permanent
Disability; provided, however, that you shall have the right to exercise such
-------- -------
Option for one year after the date on which you suffer a Permanent Disability,
and the Option shall expire at the earlier of (i) the end of such one year
period or (ii) the Expiration Date.
4. Expiration of Option.
--------------------
(a) Normal Expiration. In no event shall any part of your Option be
-----------------
exercisable after the Expiration Date set forth in paragraph 2(a) above.
(b) Expiration Upon Termination of Employment. In the event that your
-----------------------------------------
employment with the Company is terminated or ends for any reason other than
voluntary retirement on or prior to the date on which your Option is fully
exercised, your Option shall immediately expire and not be exercisable under any
circumstance; provided, however, that any portion of your Option that was vested
-------- -------
and exercisable on the date your employment with the Company terminated or ended
(for any reason other than for Cause, Permanent Disability, death or voluntary
retirement) shall expire 30 days from the date of such termination, but in no
event later than the Expiration Date. If your employment with the Company is
terminated for Cause, any vested and exercisable portion of your Option will be
forfeited as of the date of your termination. If your employment with the
Company is terminated due to voluntary retirement, your Option may continue to
be vested and become exercisable, subject to the terms and conditions covering
retirement in the Plan, for a period of up to three years following the date of
your retirement. By your acceptance of this Option, you acknowledge and agree
that the Plan provides that if, at any time during your retirement, you engage
in conduct that the Committee determines to be detrimental to the Company, your
Option is subject to immediate forfeiture without prior notice.
-2-
<PAGE>
5. Procedure for Exercise. You may exercise all or any portion of your
----------------------
Option, to the extent it has vested and is outstanding, at any time and from
time to time prior to its expiration, by delivering written notice to the
Company as provided in the Plan.
6. Securities Laws Restrictions and Other Restrictions on Transfer of
------------------------------------------------------------------
Option Shares. You represent that when you exercise your Option you will be
- -------------
purchasing Option Shares for your own account and not on behalf of others. You
understand and acknowledge that federal and state securities laws govern and
restrict your right to offer, sell or otherwise dispose of any Option Shares
unless your offer, sale or other disposition thereof is registered under the
Securities Act of 1933, as amended (the "Securities Act") and state securities
laws, or in the opinion of the Company's counsel, such offer, sale or other
disposition is exempt from registration or qualification thereunder. You agree
that you will not offer, sell or otherwise dispose of any Option Shares in any
manner which would: (i) require the Company to file any registration statement
with the Securities and Exchange Commission (or any similar filing under state
law) or to amend or supplement any such filing or (ii) violate or cause the
Company to violate the Securities Act, the rules and regulations promulgated
thereunder or any other state or federal law. You further understand that the
certificates for any Option Shares you purchase will bear such legends as the
Company deems necessary or desirable in connection with the Securities Act or
other rules, regulations or laws.
7. Transfer Limitations. Your Option is personal to you and may only be
--------------------
transferred as a result of your death, testate or intestate, by will or the laws
of descent and distribution. It shall be a condition precedent to transfer of
your Option that the transferee executes and delivers an agreement acknowledging
that such Option has been acquired for investment and not for distribution and
is and shall remain subject to this Agreement and the Plan.
8. Waiver of Tax Responsibility. You understand that the Company has
----------------------------
assumed no responsibility for advising you as to the tax consequences to you
under the Option granted by this Agreement. You should consult with your
individual tax advisor concerning the applicability of Federal, state and local
tax laws to the Option and to your personal tax circumstances.
9. Withholding Tax. Not later than the date as of which an amount first
---------------
must be included in your gross income for Federal income tax purposes with
respect to the Option, you may be required to pay the Company or make
arrangements satisfactory to the Company regarding the payment of, any Federal,
state and local taxes of any kind required by law to be withheld or paid with
respect to such amount. The obligations of the Company pursuant to this
Agreement shall be conditioned upon such payments or arrangements with the
Company, if such payments or arrangements are required, and the Company shall,
to the extent permitted by law, have the right to deduct any such taxes from any
payment of any kind (including salary or any other compensation) otherwise due
you from the Company.
10. Conformity with Plan. Your Option is intended to conform in all
--------------------
respects with, and is subject to all applicable provisions of, the Plan, which
is incorporated herein by reference. Inconsistencies between this Agreement and
the Plan shall be resolved in accordance with the terms of the Plan. By
executing and returning the enclosed copy of this Agreement, you acknowledge
your receipt of this Agreement and the Plan and agree to be bound by all of the
terms of this Agreement and the Plan.
11. Rights of Participants. Nothing in this Agreement shall confer upon
----------------------
you any right or obligation to continue in the employ of the Company or any
Subsidiary or shall affect in any
-3-
<PAGE>
way the right of the Company or any Subsidiary to terminate your employment with
the Company or any Subsidiary at any time, for any reason, with or without
Cause.
12. Additional Restrictions on Transfer.
-----------------------------------
(a) Restricted Legend. Unless the Option Shares are covered by an
-----------------
effective registration statement under the Securities Act, the certificates
representing the Option Shares will bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED
ON __________ __, 199 AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER ANY STATE
SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAW OR AN EXEMPTION FROM REGISTRATION THEREUNDER."
(b) Opinion of Counsel. You may not sell, transfer or dispose of any
------------------
Option Shares (except pursuant to an effective registration statement under the
Securities Act) without first delivering to the Company an opinion of counsel
reasonably acceptable in form and substance to the Company that registration
under the Securities Act or any applicable state securities law is not required
in connection with such transfer.
13. Remedies. Each party to this Agreement will be entitled to
--------
enforce its rights under this Agreement, specifically, to recover damages and
costs (including attorney's fees) caused by any breach of any provision of this
Agreement and to exercise all other rights existing in its favor. The parties
hereto acknowledge and agree that money damages may not be an adequate remedy
for any breach of the provisions of this Agreement and that any party hereto
may, in its sole discretion, apply to any court of law or equity of competent
jurisdiction for specific performance and/or injunctive relief (without posting
bond or other security) in order to enforce or prevent any violation of the
provisions of this Agreement.
14. Amendment. Any provision of this Agreement may be amended or
---------
waived only with the prior written consent of the holder of the Option and the
Company.
15. Severability. Whenever possible, each provision of this
------------
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
16. Counterparts. This Agreement may be executed simultaneously in
------------
two or more counterparts, each of which shall constitute an original, but all of
which taken together shall constitute one and the same Agreement.
17. Descriptive Headings. The descriptive headings of this Agreement
--------------------
are inserted for convenience only and do not constitute a part of this
Agreement.
-4-
<PAGE>
18. Governing Law. All questions concerning the construction,
-------------
validity and interpretation of this Agreement will be governed by the internal
law, and not the law of conflicts, of the State of Delaware.
19. Notices. All notices, demands or other communications to be
-------
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when delivered personally
or mailed by certified or registered mail, return receipt requested and postage
prepaid, to the recipient. Such notices, demands and other communications shall
be sent to you and to the Company at the addresses indicated below:
(a) If to the Optionee:
(b) If to the Company:
Coinmach Laundry Corporation
55 Lumber Road
Roslyn, New York 11576
Attention: Robert M. Doyle
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
20. Entire Agreement. This Agreement, together with the Plan,
----------------
constitutes the entire understanding between you and the Company and supersedes
all other agreements, whether written or oral, with respect to the acquisition
by you of Common Stock of the Company.
-5-
<PAGE>
Please execute each of the two enclosed copies of this Agreement in
the space below to confirm your understanding and acceptance of the agreements
contained in this Agreement.
Very truly yours,
COINMACH LAUNDRY CORPORATION
By: _________________________
Robert M. Doyle
Senior Vice President
Attachments: 1. Additional Copy of this Agreement
2. Copy of the Plan
The undersigned hereby acknowledges having read this Agreement and the
Plan and hereby agrees to be bound by all provisions set forth herein and in the
Plan.
Dated as of August 8, 1996
OPTIONEE
___________________________________
-6-
<PAGE>
EXHIBIT 10.3
OMNIBUS AMENDMENT TO OPTION AGREEMENTS
--------------------------------------
This Agreement (the "Omnibus Amendment to Option Agreements"), dated
as of September 17, 1996, is made by and among Coinmach Laundry Corporation, a
Delaware corporation, with offices at 55 Lumber Road, Roslyn, New York 11576
(together with any and all present and future affiliates and subsidiaries
thereof, the "Corporation"), and each of MCS Capital, Inc. ("MCS"), Ronald S.
Brody ("Brody"), James N. Chapman ("Chapman"), Robert M. Doyle ("Doyle"),
Michael E. Stanky ("Stanky"), David A. Siegel ("Siegel"), R. Daniel Osborne
("Osborne"), John E. Denson ("Denson"), James McDonnell ("McDonnell"), Russell
Harrison ("Harrison"), Charles Prato ("Prato") and Michael E. Marrus ("Marrus"
and together with MCS, Brody, Chapman, Doyle, Stanky, Siegel, Osborne, Denson,
McDonnell, Harrison and Prato, the "Optionees").
WHEREAS, the Corporation and each Optionee entered into an Option
Agreement, dated July 23, 1996, pursuant to which the Corporation granted to
each such Optionee certain options to purchase its Class A common stock, par
value $.01 per share (the "Common Stock"), subject to the terms and conditions
set forth in such Option Agreement (collectively, the "Option Agreements");
WHEREAS, in connection with the initial public offering of the
Corporation's Common Stock (the "Offering"), on August 16, 1996, the
underwriters in the Offering exercised their over-allotment option to purchase
additional shares of Common Stock thereby increasing the aggregate number of
issued and outstanding shares of Common Stock;
WHEREAS, subject to the terms and conditions hereof, the Corporation
and each Optionee desire to amend the Option Agreements to increase the number
of options granted thereunder so as to preserve, on a pro-rata basis, the
percentage interest of issued and outstanding Common Stock on a fully diluted
basis represented by the stock options granted pursuant to the Option
Agreements;
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, and intending to be legally bound
hereby, the parties hereto agree to amend the Option Agreements as follows:
1. Defined Terms. All capitalized terms contained in this Omnibus
-------------
Amendment to Option Agreements not otherwise defined herein shall have the
meanings ascribed to such terms in the Option Agreements.
2. Grant of Options. Section 1 of each Option Agreement is hereby
----------------
amended by replacing the number of shares of Common Stock granted to each
Optionee set forth in Section 1 of the Option Agreements with the number of
shares of Common Stock appearing beside each such Optionee's name set forth on
Schedule A attached hereto.
3. Terms of Options. The first sentence of Section 4 of each Option
----------------
Agreement is hereby amended by replacing the number of shares of Common Stock
each Optionee is entitled to purchase upon exercise of Options with the number
of shares of Common Stock appearing beside each such Optionee's name set forth
on Schedule A attached hereto. Additionally, the vesting schedule set forth in
Section 4 of each Option Agreement is hereby amended by replacing the number of
shares of Common Stock set forth below the column captioned "Number of Options
Vesting on the Vesting Date" with the number of shares of Common Stock appearing
beside each such Optionee's
<PAGE>
Omnibus Amendment to Option Agreements
Page 2
name and set forth below the column captioned "Number of Options Vesting on the
Vesting Date" set forth on Schedule A attached hereto.
4. Reaffirmation of Representations and Warranties. Each Optionee
-----------------------------------------------
hereby reaffirms to the Corporation, but only with respect to such Optionee,
that each of the representations and warranties made by such Optionee in Section
13 of the Option Agreements are true and correct as of the date hereof.
5. Notices. Section 16 of each Option Agreement is hereby amended
-------
in its entirety as follows:
"Notices. Any notice or other communication to be given by any party
-------
hereunder to any other party shall be in writing, delivered personally,
mailed by certified or registered mail, return receipt requested, or sent
by a nationally recognized courier service, and shall be addressed to such
party at its address stated on its signature page to the Omnibus Amendment
to Option Agreements, dated September __, 1996, by and among the
Corporation, Optionee and certain other parties or to such other address as
may have been furnished by any party to the other pursuant to this Section
16, and shall be deemed to be given on the date of receipt."
6. Voting Agreement. Upon exercise of the Options by each Optionee
----------------
pursuant to the terms hereof and the Option Agreements, each Optionee shall
become party to the Voting Agreement, dated July 23, 1996 (the "Voting
------
Agreement"), by and among the Corporation and the signatories thereto, by
- ---------
executing a written agreement, substantially in the form of the Voting
Agreement, pursuant to which such Optionee agrees to be bound by all of the
provisions thereof.
7. Entire Agreement. Except as herein specifically amended, all
----------------
other terms, covenants and provisions of each of the Option Agreements shall
remain in full force and effect and shall be performed by the parties thereto in
accordance therewith.
[SIGNATURE PAGES FOLLOW]
<PAGE>
Omnibus Amendment to Option Agreements
Page 3
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Omnibus Amendment to Option Agreements as of the date first above stated.
COINMACH LAUNDRY CORPORATION
/s/ Robert M. Doyle
By: ______________________________
Robert M. Doyle
Senior Vice President
Address: 55 Lumber Road
Roslyn, New York 11576
<PAGE>
Omnibus Amendment to Option Agreements
Page 4
MCS CAPITAL, INC.
/s/ Stephen R. Kerrigan
By: ______________________________
Stephen R. Kerrigan
President
Address: 55 Lumber Road
Roslyn, New York 11576
<PAGE>
Omnibus Amendment to Option Agreements
Page 5
/s/ Ronald S. Brody
____________________________________
Ronald S. Brody
Address: 429 East 52nd Street
Apartment 14A
New York, New York 10022
<PAGE>
Omnibus Amendment to Option Agreements
Page 6
/s/ James N. Chapman
____________________________________
James N. Chapman
Address: 14 Alpine Road
Greenwich, Connecticut 06830
<PAGE>
Omnibus Amendment to Option Agreements
Page 7
/s/ Robert M. Doyle
____________________________________
Robert M. Doyle
Address: 55 Lumber Road
Roslyn, New York 11576
<PAGE>
Omnibus Amendment to Option Agreements
Page 8
/s/ Michael E. Stanky
____________________________________
Michael E. Stanky
Address: 4430 Bronze Way
Dallas, Texas 75236
<PAGE>
Omnibus Amendment to Option Agreements
Page 9
/s/ David A. Siegel
____________________________________
David A. Siegel
Address: 10818 St. Mary's
Houston, Texas 77079
<PAGE>
Omnibus Amendment to Option Agreements
Page 10
/s/ R. Daniel Osborne
____________________________________
R. Daniel Osborne
Address: 910 Westham Parkway
Richmond, Virginia 23229
<PAGE>
Omnibus Amendment to Option Agreements
Page 11
/s/ John E. Denson
____________________________________
John E. Denson
Address: 111 Cove Lane
Media, Pennsylvania 19063
<PAGE>
Omnibus Amendment to Option Agreements
Page 12
/s/ James McDonnell
____________________________________
James McDonnell
Address: 341 Carriage House Lane
Haddonfield, New Jersey 08033
<PAGE>
Omnibus Amendment to Option Agreements
Page 13
/s/ Russell Harrison
____________________________________
Russell Harrison
Address: 55 Lumber Road
Roslyn, New York 11576
<PAGE>
Omnibus Amendment to Option Agreements
Page 14
/s/ Charles Prato
____________________________________
Charles Prato
Address: 55 Lumber Road
Roslyn, New York 11576
<PAGE>
Omnibus Amendment to Option Agreements
Page 15
/s/ Michael E. Marrus
____________________________________
Michael E. Marrus
Address: 755 Park Avenue
New York, New York 10021
<PAGE>
SCHEDULE A TO OMNIBUS AMENDMENT TO OPTION AGREEMENTS
<TABLE>
<CAPTION>
===================================================================
NUMBER OF OPTIONS VESTING
GRANT OF OPTIONS ON THE VESTING DATE/*/
===================================================================
<S> <C> <C>
MCS 308,098| 61,622; 61,619; 61,619; 61,619; 61,619
- ---------------------------|---------------------------------------
Brody 57,512| 11,504; 11,502; 11,502; 11,502; 11,502
- ---------------------------|---------------------------------------
Chapman 28,756| 5,752; 5,751; 5,751; 5,751; 5,751
- ---------------------------|---------------------------------------
Doyle 71,890| 14,378; 14,378; 14,378; 14,378; 14,378
- ---------------------------|---------------------------------------
Stanky 103,521| 20,705; 20,704; 20,704; 20,704; 20,704
- ---------------------------|---------------------------------------
Siegel 28,756| 5,752; 5,751; 5,751; 5,751; 5,751
- ---------------------------|---------------------------------------
Osborne 28,756| 5,752; 5,751; 5,751; 5,751; 5,751
- ---------------------------|---------------------------------------
Denson 28,756| 5,752; 5,751; 5,751; 5,751; 5,751
- ---------------------------|---------------------------------------
McDonnell 28,756| 5,752; 5,751; 5,751; 5,751; 5,751
- ---------------------------|---------------------------------------
Harrison 14,378| 2,878; 2,875; 2,875; 2,875; 2,875
- ---------------------------|---------------------------------------
Prato 11,502| 2,302; 2,300; 2,300; 2,300; 2,300
- ---------------------------|---------------------------------------
Marrus 28,756| 5,752; 5,751; 5,751; 5,751; 5,751
===========================|=======================================
</TABLE>
_________
/*/ Represents the number of shares of Common Stock vesting on each of July 23,
1996, July 23, 1997, July 23, 1998, July 23, 1999 and July 23, 2000,
respectively.
<PAGE>
EXHIBIT 10.4
OPTION AGREEMENT
----------------
THIS OPTION AGREEMENT (the "Agreement") is made and entered into as of this
---------
17th day of September, 1996, by and between Coinmach Laundry Corporation, a
Delaware corporation (the "Corporation") and Arthur B. Laffer (the "Optionee").
----------- --------
RECITALS
--------
A. The Corporation desires that Optionee render certain advisory and/or
other similar services and make other valuable contributions to the Corporation
in his capacity as a member of the Board of Directors (the "Board") of the
-----
Corporation (the "Services").
--------
B. In consideration for Optionee's provision of Services, the Corporation
desires to grant to Optionee options to purchase shares of the Corporation's
Class A common stock, par value $.01 per share (the "Common Stock"), subject to
------------
the terms and conditions of this Agreement.
C. In consideration for the grant of such options, Optionee desires to
render Services to the Corporation.
AGREEMENT
---------
NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. Grant of Options. Subject to the terms and conditions contained
----------------
herein, the Corporation hereby grants to Optionee, at no cost or expense of any
kind to Optionee of any kind, irrevocable options ("Options") to purchase from
the Corporation 60,000 shares of Common Stock.
2. Non-qualified Stock Options. The Options represented hereby are non-
---------------------------
qualified stock options and are not intended by the Corporation to qualify under
any section of the Internal Revenue Code of 1986, as amended.
3. Exercise Price. Subject to the terms and conditions contained herein,
--------------
each of the Options shall entitle Optionee to purchase one share of Common Stock
at an exercise price (the "Exercise Price") equal to $14.00 per share.
--------------
4. Terms of Options. Subject to the terms and conditions contained
----------------
herein, Optionee shall be entitled to exercise Options to purchase an aggregate
of up to 60,000 shares of Common Stock. Such Options shall be exercisable by
Optionee subject to, and only to the extent that (i) with respect to any such
Option, such Option has vested in accordance with the vesting schedule set forth
below and (ii) at the time of exercise of such Option, all conditions to
exercise set forth in this Agreement are satisfied to the reasonable
satisfaction of the Board.
<PAGE>
Vesting Schedule
----------------
Number of Options Vesting
Vesting Date on the Vesting Date
------------ -------------------------
September 17, 1996 15,000
September 17, 1997 15,000
September 17, 1998 15,000
September 17, 1999 15,000
Notwithstanding any provision to the contrary in this Agreement, any and
all Options not exercised on or prior to September 17, 2006 (whether or not
exercisable at such time) shall automatically expire, and Optionee shall have no
rights in or to such Options after such date. The period from the date hereof
to September 17, 2006 shall be referred to herein as the "Option Period".
-------------
5. Conditions to Exercise of Options. No Option may be exercised by such
---------------------------------
Optionee to the extent that, at the time of such proposed exercise, (i) such
Optionee is, directly or indirectly, obligated, liable or indebted to the
Corporation in an amount in excess of $50,000; or (ii) such Optionee is not, in
the reasonable discretion of the Board, providing, when and as requested by the
Corporation, Services in a manner reasonably satisfactory to the Corporation.
6. Exercise Procedure. The Options may be exercised by Optionee, subject
------------------
to the terms and conditions contained herein, in whole or in part, at any time
during the Option Period by prior written notice delivered to the Corporation.
Such notice shall set forth the number of shares of Common Stock to be
purchased. Upon receipt thereof, the Corporation and the Optionee shall
mutually agree to a time and date, not later than 30 days from the receipt of
such notice by the Corporation, on which to exercise of such Options (the
"Closing Date").
------------
7. Closing. On or prior to the Closing Date, the Optionee shall deliver
-------
or shall cause to be delivered to the Corporation the aggregate Exercise Price
of the Options to be exercised in cash or by certified or bank check or wire
transfer to an account designated by the Corporation. At such time that the
Corporation is able to confirm to its reasonable satisfaction receipt in full of
the Exercise Price, the Corporation shall deliver to Optionee a certificate
representing the shares of Common Stock issuable upon exercise of the Options as
soon as practicable thereafter.
8. Fractional Shares; Calculations. The Corporation shall not be required
-------------------------------
to issue fractions of a share of Common Stock upon exercise of the Options. The
number of shares of Common Stock subject to the Optionee's Options shall be
rounded to the nearest whole share, and the aggregate number of shares subject
to the Options shall be adjusted accordingly. All calculations required to be
made hereunder shall, prior to such rounding, be carried out to at least the
third decimal place.
9. Changes in Stock.
----------------
(a) Subject to any required action by the stockholders of the Corporation,
if at any time while one or more Options granted hereunder are outstanding, the
outstanding shares of Common Stock are increased or decreased or changed into or
exchanged for a different number or kind of shares of the Corporation through a
stock dividend, stock split, reverse stock split, stock combination,
reclassification, reorganization, merger, consolidation or similar change in
corporate
<PAGE>
structure affecting the kind or number of issued shares of Common Stock as a
class, the Corporation shall adjust the number, kind, and purchase price of the
shares subject to such Options so that the Optionee shall be entitled to
purchase the number of shares which the Optionee would have received, as a
result of the capital change, for the shares of Common Stock that he would have
acquired by exercising such Options immediately prior to such capital change,
for the same aggregate Exercise Price as the Optionee would have paid at such
prior time.
(b) In case the Corporation shall be a party to any transaction (including,
without limitation, a merger, consolidation, sale of all or substantially all of
the Corporation's assets or a recapitalization of the Common Stock) in which the
previously outstanding shares of Common Stock shall be changed into or exchanged
for different securities of the Corporation or common stock or other securities
of another corporation or interests in a noncorporate entity or other property
(including cash) or any combination of any of the foregoing or in case the
Corporation shall pay any dividend or make any distribution to the holders of
its Common Stock, other than regularly-scheduled cash dividends (each such
transaction being herein called a "Transaction" and the date of consummation of
-----------
a Transaction being herein called a "Consummation Date"), then lawful and
-----------------
adequate provision shall be made so that, upon the exercise hereof of Options
hereunder at any time after the Consummation Date of such Transaction, the
Optionee shall be entitled to receive, in lieu of the Common Stock issuable
hereunder, the kind and amount of securities or other property to which he or
she would actually have been entitled as a stockholder of the Corporation upon
the consummation of such Transaction if the Optionee had exercised his Options
immediately prior thereto. The provisions of this Section 9(b) shall similarly
apply to successive Transactions.
10. No Voting or Dividend Rights or Rights to Continued Employment.
--------------------------------------------------------------
Except as may be specifically provided in Section 9 hereof, nothing contained
herein shall be construed as conferring upon the Optionee the rights of a
stockholder of the Corporation in respect of the shares subject to the Options,
including without limitation, the right to vote as a stockholder, or to receive
any dividends paid or other distributions made to, stockholders. If Optionee
is, or hereinafter becomes, an employee or director of the Corporation or any
subsidiary thereof, nothing contained in this Agreement shall be deemed to
confer upon Optionee any right to continued employment with, or a continued
officer or directorship position with, the Corporation or any subsidiary
thereof, nor shall it interfere in any way with the right of the Corporation to
terminate Optionee in accordance with the provisions regarding such termination
set forth in Optionee's written employment agreement with the Corporation, if
any, or if there exists no such agreement, to terminate Optionee at will, and/or
terminate Optionee's directorship or officer position in accordance with the
Corporation's Certificate of Incorporation and By-laws and/or applicable law, as
the case may be.
11. Withholding Tax. Not later than the date as of which an amount first
---------------
must be included in the gross income of Optionee for Federal income tax purposes
with respect to the Options, Optionee may be required to pay the Corporation, or
make arrangements satisfactory to the Corporation regarding the payment of, any
Federal, state and local taxes of any kind required by law to be withheld or
paid with respect to such amount. The obligations of the Corporation pursuant
to this Agreement shall be conditioned upon such payments or arrangements with
the Corporation, if such payments or arrangements are required, and the
Corporation shall, to the extent permitted by law, have the right to deduct any
such taxes from any payment of any kind otherwise due to Optionee from the
Corporation.
12. Voting Agreement. Upon exercise of the Options by Optionee pursuant
----------------
to the terms hereof, Optionee shall become party to the Voting Agreement, dated
July 23, 1996 (the "Voting Agreement"), by and among the Corporation and the
----------------
signatories thereto, by executing a written
<PAGE>
agreement, substantially in the form of the Voting Agreement, pursuant to which
Optionee agrees to be bound by all of the provisions thereof.
13. Restrictions on Transferability; Legends.
----------------------------------------
(a) This Agreement, the Options granted hereby, the shares of Common Stock
issuable upon exercise of such Options, and any other securities issuable
pursuant to Section 9 hereof (collectively, the "Securities") shall not be
----------
transferable by the Optionee without the prior written consent of the
Corporation. No transfer of Options by Optionee by will or by the laws of
descent and distribution shall be effective to bind the Corporation unless the
Corporation shall have been furnished with prior written notice thereof and a
copy of the will and/or such other evidence as the Corporation may deem
necessary to establish the validity of the transfer and the acceptance by the
transferee or transferees of the terms and conditions of this Agreement and the
Options.
(b) Anything in this Agreement to the contrary notwithstanding, Optionee
hereby agrees that Optionee shall not sell, transfer by any means or otherwise
dispose of the Securities (i) without (A) registration under the Securities Act
of 1933, as amended (the "1933 Act"), and compliance with state securities and
--------
Blue Sky laws or (B) an available exemption from registration under the Act and
such laws, which in the opinion of Optionee's legal counsel, which counsel and
opinion are reasonably satisfactory to the Corporation and its legal counsel, is
available, and (ii) Optionee has furnished the Corporation with written notice
of such proposed transfer, and such proposed transfer is reasonably satisfactory
to the Corporation and its legal counsel.
(c) Anything in this Agreement to the contrary notwithstanding, Optionee
hereby agrees that Optionee shall not sell, transfer by any means or otherwise
dispose of any Securities, except in accordance with (i) the Corporation's
policy, if any, regarding the sale and disposition of securities owned by
employees, directors and/or officers of the Corporation, or (ii) any voting or
other similar agreement among the stockholders of the Corporation in effect at
the time of the sale of the Securities.
(d) Each certificate representing the shares of Common Stock issuable upon
exercise of the Options shall be stamped or otherwise imprinted with the legends
in substantially the following forms:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN
MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT
OR SUCH LAWS OR AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER SUCH
ACT AND SUCH LAWS, WHICH, IN THE OPINION OF COUNSEL FOR THE HOLDER,
WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO COUNSEL FOR
THIS CORPORATION, IS AVAILABLE.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
PURSUANT TO AN OPTION
<PAGE>
AGREEMENT, DATED AS OF SEPTEMBER 17, 1996, A COPY OF WHICH IS ON FILE
WITH THE CORPORATION, AND MAY NOT BE TRANSFERRED, PLEDGED OR DISPOSED
OF EXCEPT IN ACCORDANCE WITH THE TERMS AND CONDITIONS THEREOF.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A VOTING
AGREEMENT, DATED AS OF JULY 23, 1996, AS AMENDED FROM TIME TO TIME,
AMONG THE CORPORATION AND CERTAIN OF THE CORPORATION'S STOCKHOLDERS,
AND, BY ACCEPTING ANY INTEREST IN SUCH SECURITIES, THE PERSON OR
ENTITY WHO ACCEPTS SUCH INTEREST SHALL BE DEEMED TO AGREE TO AND SHALL
BECOME BOUND BY ALL THE PROVISIONS OF SUCH VOTING AGREEMENT. A COPY
OF SUCH VOTING AGREEMENT SHALL BE FURNISHED WITHOUT CHARGE BY THE
CORPORATION TO THE HOLDER HEREOF UPON WRITTEN REQUEST.
14. Representations and Warranties of the Corporation. The
-------------------------------------------------
Corporation hereby represents and warrants to, and agrees with, the Optionee
that as of the date hereof:
(a) The Corporation is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware.
(b) The Corporation has full corporate power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to carry
out the transactions contemplated hereby. All corporate acts and other
corporate proceedings required to be taken by or on the part of the Corporation
to authorize the Corporation to carry out this Agreement and the transactions
contemplated hereby have been duly and properly taken.
(c) The shares of Common Stock issuable upon exercise of the Options
have been duly authorized, and when such shares are issued to the Optionee and
payment therefor has been received, in each case in accordance with this
Agreement, such shares will be validly issued, fully paid and non-assessable.
The Corporation has reserved the required number of shares of Common Stock for
issuance upon exercise of the Options based on the number of issued and
outstanding shares of Common Stock on the date hereof and assuming the exercise
of all of the Options, and will, from time to time, reserve such additional
shares of Common Stock as may become issuable upon exercise of the Options.
(d) The Corporation has not engaged any finder or broker in connection
with the execution and delivery of this Agreement.
15. Representations and Warranties of the Optionee. Optionee hereby
----------------------------------------------
represents and warrants to, and agrees with, the Corporation that as of the date
hereof:
(a) Optionee has the requisite legal capacity to execute and deliver
this Agreement, to perform its, his or her other obligations hereunder and to
carry out the transactions contemplated hereby.
<PAGE>
(b) Optionee is acquiring the Options and shall acquire the shares of
Common Stock issuable upon exercise of the Options, for Optionee's own account
and not with a view towards the distribution thereof in violation of applicable
Federal and state securities laws.
(c) Optionee acknowledges and agrees that (a) Optionee must bear the
economic risk of the investment in the shares of Common Stock issuable upon
exercise of the Options, which may not be sold by Optionee unless registered
under the 1933 Act or an exemption therefrom is available thereunder and (b) the
Corporation is under no obligation to register the Options or the shares of
Common Stock issuable upon exercise of the Options for sale under the 1933 Act.
(d) Optionee has had both the opportunity to ask questions and receive
answers from the officers and directors of the Corporation and all persons
acting on the Corporation's behalf concerning the terms and conditions of the
Options and this Agreement.
(e) Optionee is aware that the Corporation shall place stop transfer
orders with its transfer agent against the transfer of shares of Common Stock
issuable upon exercise of the Options in the absence of registration under the
1933 Act or an available exemption therefrom as provided herein.
(f) Optionee has not engaged any finder or broker in connection with
the execution and delivery of this Agreement.
16. Notices. Any notice or other communication to be given by any
-------
party hereunder to any other party hereunder shall be in writing, delivered
personally, mailed by certified or registered mail, return receipt requested, or
sent by a nationally recognized courier service, and shall be addressed to such
party at its address stated on such party's signature page or to such other
address as may have been furnished by any party to the other parties pursuant to
this Section 16, and shall be deemed to be given on the date of receipt.
17. Miscellaneous.
-------------
(a) Governing Law; Arbitration; Jurisdiction. This Agreement shall be
----------------------------------------
enforced, governed and construed in all respects in accordance with the laws of
the State of New York, without regard to its principles of conflicts of laws.
Any dispute arising hereunder shall be resolved by arbitration before the
American Arbitration Association in the City of New York, pursuant to the rules
of said body then obtaining; provided that any party may seek injunctive or
--------
other equitable relief pursuant to the terms hereof and for such purpose, the
parties hereto irrevocably submit to the exclusive personal jurisdiction of any
state or Federal court located in New York County. The parties irrevocably
waive, to the fullest extent permitted by law, any objection to which they may
now or hereafter have to the laying of the venue of any such suit, action or
proceeding brought in such a court and any claim that any such suit, action or
proceeding has been brought in an inconvenient forum.
(b) Severability. If any provision of this Agreement is invalid or
------------
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of law. Any
provision hereof that may prove invalid or unenforceable under any law shall not
affect the validity or enforceability of any other provision hereof.
<PAGE>
(c) Entire Agreement. This Agreement constitutes the entire agreement
----------------
between the parties hereto with respect to the subject matter hereof and may be
amended only by a writing executed by both parties hereto.
(d) Headings. The headings of this Agreement are for convenience only
--------
and shall not affect the meaning of the terms hereof.
(e) Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
(f) Waiver. The waiver by any party hereto of a breach of any
------
provision of this Agreement shall not operate or be construed as a waiver of any
other provision or subsequent breach of such provisions or any other provision.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COINMACH LAUNDRY CORPORATION
/s/ Robert M. Doyle
By: ______________________________
Robert M. Doyle
Senior Vice President
Address: 55 Lumber Road
Roslyn, New York 11576
/s/ Arthur B. Laffer
____________________________________
Arthur B. Laffer
Address: 5405 Morehouse Drive
Suite 340
San Diego, California 92121
<PAGE>
EXHIBIT 10.5
OPTION AGREEMENT
----------------
THIS OPTION AGREEMENT (the "Agreement") is made and entered into as of this
---------
17th day of September, 1996, by and between Coinmach Laundry Corporation, a
Delaware corporation (the "Corporation") and Stephen G. Cerri (the "Optionee").
----------- --------
RECITALS
--------
A. The Corporation desires that Optionee render certain advisory and/or
other similar services and make other valuable contributions to the Corporation
in his capacity as a member of the Board of Directors (the "Board") of the
-----
Corporation (the "Services").
--------
B. In consideration for Optionee's provision of Services, the Corporation
desires to grant to Optionee options to purchase shares of the Corporation's
Class A common stock, par value $.01 per share (the "Common Stock"), subject to
------------
the terms and conditions of this Agreement.
C. In consideration for the grant of such options, Optionee desires to
render Services to the Corporation.
AGREEMENT
---------
NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. Grant of Options. Subject to the terms and conditions contained
----------------
herein, the Corporation hereby grants to Optionee, at no cost or expense of any
kind to Optionee of any kind, irrevocable options ("Options") to purchase from
-------
the Corporation 60,000 shares of Common Stock.
2. Non-qualified Stock Options. The Options represented hereby are non-
---------------------------
qualified stock options and are not intended by the Corporation to qualify under
any section of the Internal Revenue Code of 1986, as amended.
3. Exercise Price. Subject to the terms and conditions contained herein,
--------------
each of the Options shall entitle Optionee to purchase one share of Common Stock
at an exercise price (the "Exercise Price") equal to $14.00 per share.
--------------
4. Terms of Options. Subject to the terms and conditions contained
----------------
herein, Optionee shall be entitled to exercise Options to purchase an aggregate
of up to 60,000 shares of Common Stock. Such Options shall be exercisable by
Optionee subject to, and only to the extent that (i) with respect to any such
Option, such Option has vested in accordance with the vesting schedule set forth
below and (ii) at the time of exercise of such Option, all conditions to
exercise set forth in this Agreement are satisfied to the reasonable
satisfaction of the Board.
<PAGE>
Option Agreement
Page 2
Vesting Schedule
----------------
Number of Options Vesting
Vesting Date on the Vesting Date
------------ -------------------------
September 17, 1996 15,000
September 17, 1997 15,000
September 17, 1998 15,000
September 17, 1999 15,000
Notwithstanding any provision to the contrary in this Agreement, any
and all Options not exercised on or prior to September 17, 2006 (whether or not
exercisable at such time) shall automatically expire, and Optionee shall have no
rights in or to such Options after such date. The period from the date hereof
to September 17, 2006 shall be referred to herein as the "Option Period".
-------------
5. Conditions to Exercise of Options. No Option may be exercised by
---------------------------------
such Optionee to the extent that, at the time of such proposed exercise, (i)
such Optionee is, directly or indirectly, obligated, liable or indebted to the
Corporation in an amount in excess of $50,000; or (ii) such Optionee is not, in
the reasonable discretion of the Board, providing, when and as requested by the
Corporation, Services in a manner reasonably satisfactory to the Corporation.
6. Exercise Procedure. The Options may be exercised by Optionee,
------------------
subject to the terms and conditions contained herein, in whole or in part, at
any time during the Option Period by prior written notice delivered to the
Corporation. Such notice shall set forth the number of shares of Common Stock
to be purchased. Upon receipt thereof, the Corporation and the Optionee shall
mutually agree to a time and date, not later than 30 days from the receipt of
such notice by the Corporation, on which to exercise of such Options (the
"Closing Date").
------------
7. Closing. On or prior to the Closing Date, the Optionee shall
-------
deliver or shall cause to be delivered to the Corporation the aggregate Exercise
Price of the Options to be exercised in cash or by certified or bank check or
wire transfer to an account designated by the Corporation. At such time that
the Corporation is able to confirm to its reasonable satisfaction receipt in
full of the Exercise Price, the Corporation shall deliver to Optionee a
certificate representing the shares of Common Stock issuable upon exercise of
the Options as soon as practicable thereafter.
8. Fractional Shares; Calculations. The Corporation shall not be
-------------------------------
required to issue fractions of a share of Common Stock upon exercise of the
Options. The number of shares of Common Stock subject to the Optionee's Options
shall be rounded to the nearest whole share, and the aggregate number of shares
subject to the Options shall be adjusted accordingly. All calculations required
to be made hereunder shall, prior to such rounding, be carried out to at least
the third decimal place.
<PAGE>
Option Agreement
Page 3
9. Changes in Stock.
----------------
(a) Subject to any required action by the stockholders of the
Corporation, if at any time while one or more Options granted hereunder are
outstanding, the outstanding shares of Common Stock are increased or decreased
or changed into or exchanged for a different number or kind of shares of the
Corporation through a stock dividend, stock split, reverse stock split, stock
combination, reclassification, reorganization, merger, consolidation or similar
change in corporate structure affecting the kind or number of issued shares of
Common Stock as a class, the Corporation shall adjust the number, kind, and
purchase price of the shares subject to such Options so that the Optionee shall
be entitled to purchase the number of shares which the Optionee would have
received, as a result of the capital change, for the shares of Common Stock that
he would have acquired by exercising such Options immediately prior to such
capital change, for the same aggregate Exercise Price as the Optionee would have
paid at such prior time.
(b) In case the Corporation shall be a party to any transaction
(including, without limitation, a merger, consolidation, sale of all or
substantially all of the Corporation's assets or a recapitalization of the
Common Stock) in which the previously outstanding shares of Common Stock shall
be changed into or exchanged for different securities of the Corporation or
common stock or other securities of another corporation or interests in a
noncorporate entity or other property (including cash) or any combination of any
of the foregoing or in case the Corporation shall pay any dividend or make any
distribution to the holders of its Common Stock, other than regularly-scheduled
cash dividends (each such transaction being herein called a "Transaction" and
-----------
the date of consummation of a Transaction being herein called a "Consummation
------------
Date"), then lawful and adequate provision shall be made so that, upon the
- ----
exercise hereof of Options hereunder at any time after the Consummation Date of
such Transaction, the Optionee shall be entitled to receive, in lieu of the
Common Stock issuable hereunder, the kind and amount of securities or other
property to which he or she would actually have been entitled as a stockholder
of the Corporation upon the consummation of such Transaction if the Optionee had
exercised his Options immediately prior thereto. The provisions of this Section
9(b) shall similarly apply to successive Transactions.
10. No Voting or Dividend Rights or Rights to Continued Employment.
--------------------------------------------------------------
Except as may be specifically provided in Section 9 hereof, nothing contained
herein shall be construed as conferring upon the Optionee the rights of a
stockholder of the Corporation in respect of the shares subject to the Options,
including without limitation, the right to vote as a stockholder, or to receive
any dividends paid or other distributions made to, stockholders. If Optionee is,
or hereinafter becomes, an employee or director of the Corporation or any
subsidiary thereof, nothing contained in this Agreement shall be deemed to
confer upon Optionee any right to continued employment with, or a continued
officer or directorship position with, the Corporation or any subsidiary
thereof, nor shall it interfere in any way with the right of the Corporation to
terminate Optionee in accordance with the provisions regarding such termination
set forth in Optionee's written employment agreement with the Corporation, if
any, or if there exists no such agreement, to terminate Optionee at will, and/or
terminate Optionee's directorship or officer position in accordance with the
Corporation's Certificate of Incorporation and By-laws and/or applicable law, as
the case may be.
<PAGE>
Option Agreement
Page 4
11. Withholding Tax. Not later than the date as of which an amount
---------------
first must be included in the gross income of Optionee for Federal income tax
purposes with respect to the Options, Optionee may be required to pay the
Corporation, or make arrangements satisfactory to the Corporation regarding the
payment of, any Federal, state and local taxes of any kind required by law to be
withheld or paid with respect to such amount. The obligations of the
Corporation pursuant to this Agreement shall be conditioned upon such payments
or arrangements with the Corporation, if such payments or arrangements are
required, and the Corporation shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind otherwise due to
Optionee from the Corporation.
12. Voting Agreement. Upon exercise of the Options by Optionee
----------------
pursuant to the terms hereof, Optionee shall become party to the Voting
Agreement, dated July 23, 1996 (the "Voting Agreement"), by and among the
----------------
Corporation and the signatories thereto, by executing a written agreement,
substantially in the form of the Voting Agreement, pursuant to which Optionee
agrees to be bound by all of the provisions thereof.
13. Restrictions on Transferability; Legends.
----------------------------------------
(a) This Agreement, the Options granted hereby, the shares of Common
Stock issuable upon exercise of such Options, and any other securities issuable
pursuant to Section 9 hereof (collectively, the "Securities") shall not be
----------
transferable by the Optionee without the prior written consent of the
Corporation. No transfer of Options by Optionee by will or by the laws of
descent and distribution shall be effective to bind the Corporation unless the
Corporation shall have been furnished with prior written notice thereof and a
copy of the will and/or such other evidence as the Corporation may deem
necessary to establish the validity of the transfer and the acceptance by the
transferee or transferees of the terms and conditions of this Agreement and the
Options.
(b) Anything in this Agreement to the contrary notwithstanding,
Optionee hereby agrees that Optionee shall not sell, transfer by any means or
otherwise dispose of the Securities (i) without (A) registration under the
Securities Act of 1933, as amended (the "1933 Act"), and compliance with state
--------
securities and Blue Sky laws or (B) an available exemption from registration
under the Act and such laws, which in the opinion of Optionee's legal counsel,
which counsel and opinion are reasonably satisfactory to the Corporation and its
legal counsel, is available, and (ii) Optionee has furnished the Corporation
with written notice of such proposed transfer, and such proposed transfer is
reasonably satisfactory to the Corporation and its legal counsel.
(c) Anything in this Agreement to the contrary notwithstanding,
Optionee hereby agrees that Optionee shall not sell, transfer by any means or
otherwise dispose of any Securities, except in accordance with (i) the
Corporation's policy, if any, regarding the sale and disposition of securities
owned by employees, directors and/or officers of the Corporation, or (ii) any
voting or other similar agreement among the stockholders of the Corporation in
effect at the time of the sale of the Securities.
<PAGE>
Option Agreement
Page 5
(d) Each certificate representing the shares of Common Stock issuable
upon exercise of the Options shall be stamped or otherwise imprinted with the
legends in substantially the following forms:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS
AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN
AVAILABLE EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS, WHICH,
IN THE OPINION OF COUNSEL FOR THE HOLDER, WHICH COUNSEL AND OPINION ARE
REASONABLY SATISFACTORY TO COUNSEL FOR THIS CORPORATION, IS AVAILABLE.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED PURSUANT
TO AN OPTION AGREEMENT, DATED AS OF SEPTEMBER 17, 1996, A COPY OF WHICH IS
ON FILE WITH THE CORPORATION, AND MAY NOT BE TRANSFERRED, PLEDGED OR
DISPOSED OF EXCEPT IN ACCORDANCE WITH THE TERMS AND CONDITIONS THEREOF.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A VOTING
AGREEMENT, DATED AS OF JULY 23, 1996, AS AMENDED FROM TIME TO TIME, AMONG
THE CORPORATION AND CERTAIN OF THE CORPORATION'S STOCKHOLDERS, AND, BY
ACCEPTING ANY INTEREST IN SUCH SECURITIES, THE PERSON OR ENTITY WHO ACCEPTS
SUCH INTEREST SHALL BE DEEMED TO AGREE TO AND SHALL BECOME BOUND BY ALL THE
PROVISIONS OF SUCH VOTING AGREEMENT. A COPY OF SUCH VOTING AGREEMENT SHALL
BE FURNISHED WITHOUT CHARGE BY THE CORPORATION TO THE HOLDER HEREOF UPON
WRITTEN REQUEST.
14. Representations and Warranties of the Corporation. The
-------------------------------------------------
Corporation hereby represents and warrants to, and agrees with, the Optionee
that as of the date hereof:
(a) The Corporation is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware.
(b) The Corporation has full corporate power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to carry
out the transactions contemplated hereby. All corporate acts and other
corporate proceedings required to be taken by or on the part of the Corporation
to authorize the Corporation to carry out this Agreement and the transactions
contemplated hereby have been duly and properly taken.
<PAGE>
Option Agreement
Page 6
(c) The shares of Common Stock issuable upon exercise of the Options
have been duly authorized, and when such shares are issued to the Optionee and
payment therefor has been received, in each case in accordance with this
Agreement, such shares will be validly issued, fully paid and non-assessable.
The Corporation has reserved the required number of shares of Common Stock for
issuance upon exercise of the Options based on the number of issued and
outstanding shares of Common Stock on the date hereof and assuming the exercise
of all of the Options, and will, from time to time, reserve such additional
shares of Common Stock as may become issuable upon exercise of the Options.
(d) The Corporation has not engaged any finder or broker in connection
with the execution and delivery of this Agreement.
15. Representations and Warranties of the Optionee. Optionee hereby
----------------------------------------------
represents and warrants to, and agrees with, the Corporation that as of the date
hereof:
(a) Optionee has the requisite legal capacity to execute and deliver
this Agreement, to perform its, his or her other obligations hereunder and to
carry out the transactions contemplated hereby.
(b) Optionee is acquiring the Options and shall acquire the shares of
Common Stock issuable upon exercise of the Options, for Optionee's own account
and not with a view towards the distribution thereof in violation of applicable
Federal and state securities laws.
(c) Optionee acknowledges and agrees that (a) Optionee must bear the
economic risk of the investment in the shares of Common Stock issuable upon
exercise of the Options, which may not be sold by Optionee unless registered
under the 1933 Act or an exemption therefrom is available thereunder and (b) the
Corporation is under no obligation to register the Options or the shares of
Common Stock issuable upon exercise of the Options for sale under the 1933 Act.
(d) Optionee has had both the opportunity to ask questions and receive
answers from the officers and directors of the Corporation and all persons
acting on the Corporation's behalf concerning the terms and conditions of the
Options and this Agreement.
(e) Optionee is aware that the Corporation shall place stop transfer
orders with its transfer agent against the transfer of shares of Common Stock
issuable upon exercise of the Options in the absence of registration under the
1933 Act or an available exemption therefrom as provided herein.
(f) Optionee has not engaged any finder or broker in connection with
the execution and delivery of this Agreement.
16. Notices. Any notice or other communication to be given by any
-------
party hereunder to any other party hereunder shall be in writing, delivered
personally, mailed by certified or registered mail, return receipt requested, or
sent by a nationally recognized courier service, and shall be addressed to such
party at its address stated on such party's signature page or to such other
<PAGE>
Option Agreement
Page 7
address as may have been furnished by any party to the other parties pursuant to
this Section 16, and shall be deemed to be given on the date of receipt.
17. Miscellaneous.
-------------
(a) Governing Law; Arbitration; Jurisdiction. This Agreement shall be
----------------------------------------
enforced, governed and construed in all respects in accordance with the laws of
the State of New York, without regard to its principles of conflicts of laws.
Any dispute arising hereunder shall be resolved by arbitration before the
American Arbitration Association in the City of New York, pursuant to the rules
of said body then obtaining; provided that any party may seek injunctive or
--------
other equitable relief pursuant to the terms hereof and for such purpose, the
parties hereto irrevocably submit to the exclusive personal jurisdiction of any
state or Federal court located in New York County. The parties irrevocably
waive, to the fullest extent permitted by law, any objection to which they may
now or hereafter have to the laying of the venue of any such suit, action or
proceeding brought in such a court and any claim that any such suit, action or
proceeding has been brought in an inconvenient forum.
(b) Severability. If any provision of this Agreement is invalid or
------------
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of law. Any
provision hereof that may prove invalid or unenforceable under any law shall not
affect the validity or enforceability of any other provision hereof.
(c) Entire Agreement. This Agreement constitutes the entire agreement
----------------
between the parties hereto with respect to the subject matter hereof and may be
amended only by a writing executed by both parties hereto.
(d) Headings. The headings of this Agreement are for convenience only
--------
and shall not affect the meaning of the terms hereof.
(e) Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
(f) Waiver. The waiver by any party hereto of a breach of any
------
provision of this Agreement shall not operate or be construed as a waiver of any
other provision or subsequent breach of such provisions or any other provision.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COINMACH LAUNDRY CORPORATION
/s/ Robert M. Doyle
By: ______________________________
Robert M. Doyle
Senior Vice President
Address: 55 Lumber Road
Roslyn, New York 11576
/s/ Stephen G. Cerri
____________________________________
Stephen G. Cerri
Address: 28 Woodmont Road
Milford, Connecticut 06460
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM * FORM 10-Q
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
*Identify the financial statement(s) to be referenced in the legend.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> MAR-28-1997 MAR-28-1997
<PERIOD-START> JUN-29-1996 MAR-30-1996
<PERIOD-END> SEP-27-1996 SEP-27-1996
<CASH> 32,529 32,529
<SECURITIES> 0 0
<RECEIVABLES> 5,821 5,821
<ALLOWANCES> 0 0
<INVENTORY> 5,492 5,492
<CURRENT-ASSETS> 0 0
<PP&E> 123,943 123,943
<DEPRECIATION> 30,124 30,124
<TOTAL-ASSETS> 280,276<F1> 280,276<F1>
<CURRENT-LIABILITIES> 0 0
<BONDS> 203,909 203,909
0 0
0 0
<COMMON> 51,273 51,273
<OTHER-SE> (22,646) (22,646)
<TOTAL-LIABILITY-AND-EQUITY> 280,276 280,276
<SALES> 0<F2> 0<F2>
<TOTAL-REVENUES> 46,506 94,446
<CGS> 0 0
<TOTAL-COSTS> 31,016<F3> 63,596<F3>
<OTHER-EXPENSES> 12,924<F5> 23,775<F5>
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 6,001 12,142
<INCOME-PRETAX> (3,435) (5,067)
<INCOME-TAX> (1,200)<F4> (1,600)<F4>
<INCOME-CONTINUING> (2,235) (3,467)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (2,235)<F6> (3,467)<F6>
<EPS-PRIMARY> (.23) (.43)
<EPS-DILUTED> 0 0
<FN>
<F1>Includes Advance Rental Payments of $22,528, Contract Rights of $63,217, and
Goodwill of $43,173, each net of accumulated amortization, at September 27,
1996.
<F2>Total Revenues include Sales of laundromats and equipment of $4,614 and
$9,172, for the 3 months and 6 months ended September 27, 1996, respectively.
<F3>Total Costs include Cost of Goods Sold of $3,083 and $6,458, for the 3 months
and 6 months ended September 27, 1996, respectively.
<F4>The provision (benefit) for income taxes consists of $100 and $150 currently
payable and ($1,350) and ($1,750) deferred, for the 3 months and 6 months ended
September 27, 1996, respectively.
<F5>A stock-based compensation charge was recorded of $1,460 for the 3 month and 6
month periods ended September 27, 1996.
<F6>In addition, EBITDA (earnings before deductions for interest, income taxes,
depreciation and amortization) of $28,727 (before the deduction for the
stock-based compensation charge), was generated for the reported period.
EBITDA is used by management and certain investors as an indicator of a
company's historical ability to service debt.
</FN>
</TABLE>
