<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 QUARTERLY PERIOD ENDED JUNE 28, 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, NY 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 NO X .
---- ----
AS OF THE CLOSE OF BUSINESS ON AUGUST 9, 1996, COINMACH LAUNDRY CORPORATION HAD
OUTSTANDING 9,940,636 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
<TABLE>
<CAPTION>
PART 1. Financial Information Page No.
--------------------- --------
<C> <S> <C>
Item 1. Financial Statements
Condensed Consolidated Balance Sheets (Unaudited)--
June 28, 1996 and March 29, 1996 3
Condensed Consolidated Statements of Operations (Unaudited)--
Three Months Ended June 28, 1996 and June 30, 1995 4
Consolidated Statement of Shareholders' Deficit (Unaudited)--
Three Months Ended June 28, 1996 and June 30, 1995 5
Condensed Consolidated Statements of Cash Flows (Unaudited)--
Three Months Ended June 28, 1996 and June 30, 1995 6
Notes to Condensed Consolidated Financial Statements (Unaudited) 7-10
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 11-14
<CAPTION>
PART II. Other Information 15
-----------------
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 16
- --------------
</TABLE>
Exhibit List
- ------------
2
<PAGE>
COINMACH LAUNDRY CORPORATION AND SUBSIDIARIES
---------------------------------------------
PART 1. FINANCIAL INFORMATION
---------------------
ITEM 1. FINANCIAL STATEMENTS
------- --------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
(dollars in thousands)
June 28, March 29,
1996 1996
-------- --------
(Unaudited) (Audited)
ASSETS:
Cash and cash equivalents $ 3,240 $ 19,858
Receivables, net 4,648 5,758
Inventories 5,204 4,443
Prepaid expenses 2,971 2,641
Advance rental payments 21,643 20,320
Property and equipment,
less accumulated
depreciation
of $24,680 and $ 19,509 92,139 82,699
Contract rights, less
accumulated amortization
of $11,124 and $ 8,925 65,033 59,745
Goodwill, less
accumulated amortization
of $2,970 and $ 2,386 43,737 44,071
Other assets, principally
debt issuance costs 11,661 9,613
-------- --------
Total assets $250,276 $249,148
======== ========
LIABILITIES AND
SHAREHOLDERS' DEFICIT:
Accounts payable $ 5,806 $ 6,085
Accrued commissions 8,596 7,380
Accrued interest 3,135 7,745
Other accrued expenses 8,144 7,557
Deferred income taxes 18,474 18,924
11-3/4% Senior Notes 196,655 196,655
12-3/4% Senior Notes 5,000 5,000
Long-term revolving
credit facility 5,000 -
Other long-term debt 2,006 1,110
Shareholders' deficit:
Common stock and capital
in excess of par value 17,903 17,903
Notes receivable from
management (492) (492)
Accumulated deficit (19,951) (18,719)
-------- --------
Total shareholders'
deficit (2,540) (1,308)
-------- --------
Total liabilities and
shareholders' deficit $250,276 $249,148
======== ========
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)
----------------------
Three Months Ended
---------------------
June 28, June 30,
1996 1995
---------- ---------
GROSS REVENUES $47,940 $46,527
OTHER COSTS AND EXPENSES:
Laundry operating expenses 32,580 32,754
General and administrative expenses 1,041 1,118
Depreciation and amortization 9,810 9,151
------- -------
43,431 43,023
------- -------
OPERATING INCOME 4,509 3,504
INTEREST EXPENSE 6,141 5,782
------- -------
LOSS BEFORE INCOME TAXES (1,632) (2,278)
------- -------
(BENEFIT) PROVISION FOR INCOME TAXES:
Currently payable 50 111
Deferred (450) (489)
------- -------
(400) (378)
------- -------
$(1,232) $(1,900)
NET LOSS ======= =======
PRO FORMA NET LOSS
PER COMMON AND COMMON EQUIVALENT SHARES $(.16) $(.24)
======= =======
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
COINMACH LAUNDRY CORPORATION AND SUBSIDIARIES
---------------------------------------------
COMBINED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
---------------------------------------------------------
(DOLLARS IN THOUSANDS, EXCEPT PAR VALUE AND SHARES)
<TABLE>
<CAPTION>
BALANCE AT BALANCE AT
MARCH 29, NET JUNE 28,
1996 LOSS 1996
------------ ----------- -----------
(Audited) (Unaudited) (Unaudited)
<S> <C> <C> <C>
Class A common stock, par value $.01:
Authorized shares - 1,959,021
Issued shares, end of period - 1,783,584...................... $ 18 $ - $ 18
Class B common stock, par value $.01:
Authorized shares - 345,710
Issued shares, end of each period - 265,044................... 3 - 3
Class C common stock, par value $.01:
Authorized shares - 305,212
Issued shared, end of period - 305,212........................ 3 - 3
Class D common stock, par value $.01:
Authorized shares - 305,212
Issued shares, end of each period - 0......................... - - -
Class E common stock, par value $.01:
Authorized shares - 175,436
Issued shares, end of period - 175,436........................ 2 - 2
Class F common stock, par value $.01:
Authorized shares - 3,086,045
Issued shares, end of period - 3,086,045...................... 30 - 30
Class G common stock, par value $.01:
Authorized shares - 618,428
Issued shares, end of period - 578,509........................ 6 - 6
Preferred stock, par value $.01:
10,000 authorized, none issued................................ - -
Capital in excess of par value.................................. 17,841 - 17,841
Accumulated deficit............. ............................... (18,719) (1,232) (19,951)
-------- ------- --------
(816) (1,232) (2,048)
Receivables from shareholders................................... (492) - (492)
-------- --------- --------
Total shareholders' deficit..................................... $(1,308) $ (1,232) $ (2,540)
======== ========= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
COINMACH LAUNDRY CORPORATION AND SUBSIDIARIES
---------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
(UNAUDITED)
-----------
(dollars in thousands)
<TABLE>
Three Months Ended
------------------------------
June 28, June 30,
1996 1995
-------------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,232) $ (1,900)
Adjustment to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 9,810 9,151
Deferred income taxes (450) (489)
Amortization of debt discount and deferred issue costs 130 363
Increase in other assets (821) (176)
Decrease (increase) in receivables, net 1,109 (890)
(Increase) decrease in inventories and prepayments (1,409) 973
Decrease in accounts payable (205) ( 515)
(Decrease) increase in accrued interest (4,610) 2,111
Increase in accrued expenses 1,494 272
-------- --------
Net cash provided by operating activities 3,816 8,900
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (5,942) (5,028)
Advance payment to location owners (2,628) (1,446)
Acquisition of net assets of acquired businesses (16,722) (11,925)
-------- --------
Net cash used for investing activities (25,292) (18,399)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Deferred debt issuance costs 79 -
Net borrowings of bank and other borrowings 4,887 5,862
Principal payments of capitalized lease obligations (108) -
Sale of common stock - 5,000
-------- --------
Net cash provided by financing activities 4,858 10,862
-------- --------
Net (decrease) increase in cash and cash equivalents (16,618) 1,363
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 19,858 10,773
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 3,240 $ 12,136
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<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 245,000 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 is also a distributor of laundromat equipment and turnkey laundromat
stores.
2. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of the
Company have been prepared in accordance with generally accepted accounting
principles ("GAAP") for interim financial information 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 generally accepted accounting principles for complete financial
statements. GAAP requires the Company's management 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, these unaudited condensed consolidated financial
statements contain all adjustments of a normal recurring nature necessary for a
fair presentation of the unaudited condensed consolidated balance sheets of the
Company at June 28, 1996 and of the Company's consolidated statements of
operations and cash flows for the three months ended June 28, 1996 and June 30,
1995.
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 related Prospectus dated
July 17, 1996. See Note 6.a."Subsequent Events-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 ended June 28,
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. In connection with the
Offering, the Company adopted the Amended and Restated 1996 Employee Stock
Option Plan (as amended, the "Plan"). With adoption of the Plan, the Company
will account for stock-based compensation awards under the provisions of
Accounting Principles Board Opinion No. 25, as permitted by FAS 123, but will
provide the necessary disclosure information in the fourth quarter of fiscal
1997.
7
<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 7,774,107 for three months ended June 28, 1996
and June 30, 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. See Note 6.b. "Subsequent Events - Reclassification and Stock
Split." The weighted average shares outstanding reflect as outstanding for all
periods presented (a) the shares issued and options granted using the treasury
stock method and (b) the shares which were sold at the initial public offering
price to retire the Preferred Stock (as defined). See Note 6.a. "Subsequent
events - Initial Public Offering."
5. LONG-TERM DEBT
The carrying amounts of the Company's long-term debt at June 28, 1996 and March
29, 1996 are as follows (in thousands):
June 28, March 29,
1996 1996
------- ---------
11 3/4% Senior Notes due 2005 $196,655 $196,655
12 3/4% Senior Notes due 2001 5,000 5,000
Revolving credit facility (up to $35 million) 5,000 -
Other secured and unsecured obligations 2,006 1,110
-------- --------
Total long-term debt $208,661 $202,765
======== ========
The Company also has the right under its 11 3/4% Senior Notes due 2005 and its
12 3/4% Senior Notes due 2001 (collectively, the "Senior Notes") to incur up to
$10.0 million of purchase money obligations and $5.0 million of other debt. At
June 28, 1996, $5.0 million was outstanding under the revolving credit facility.
Concurrent with the Offering (defined below), the Company repaid all amounts due
under the revolving credit facility.
6. SUBSEQUENT EVENTS
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, in connection with the Offering, 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 aggregated approximately $34.4 million,
before expenses.
8
<PAGE>
COINMACH LAUNDRY CORPORATION AND SUBSIDIARIES
---------------------------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) ( continued)
6. SUBSEQUENT EVENTS (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 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 the Coinmach Laundry's Class A common stock, Class
E common stock and Class F common stock prior to the Offering (collectively, the
"Preference Shares") received shares of Common Stock and shares of Series A
preferred stock, par value $.01 per share ("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 approximately 28,300 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 on July 12, 1996.
c. Redemption of Preferred Stock
Immediately following the Offering, approximately $19.2 million from the
proceeds of the Offering were used by the Company to retire all of the issued
and outstanding shares of Preferred Stock.
d. 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 totaling approximately $56,000. The
difference between the estimated fair market value of such stock (which
management believes to be 85% of the initial offering price in the Offering) and
the amount paid for such stock will be accounted for by the Company as
compensation expense. 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.
In connection with the Offering, Coinmach Laundry also granted options to
purchase up to 735,618 shares of Common Stock at 85% of the Offering price to
management and certain other individuals. With respect to such options granted
to employees of the Company, Coinmach Laundry will record such 15% discount as
compensation expense over an applicable four-year vesting period. These options
will vest 20% on the effective date of the Offering, and 20% on each successive
anniversary date of the Offering thereafter.
9
<PAGE>
COINMACH LAUNDRY CORPORATION AND SUBSIDIARIES
---------------------------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) ( continued)
6. SUBSEQUENT EVENTS (continued)
e. 1996 Employee Stock Option Plan
In connection with the Offering, Coinmach Laundry adopted the Plan which
provides for the issuance of options for 1,103,419 shares of Common Stock,
representing approximately 9% of Coinmach Laundry's issued and outstanding
Common Stock, at an exercise price not less than the prevailing market value of
a share of Common Stock on the date of grant. The Plan will be administered by
a committee of the Board of Directors of the Company (the "Compensation
Committee"). Subject to the terms of the Plan, the Compensation Committee will
select the participants and determine the terms and conditions of the options
granted pursuant to the Plan.
10
<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 245,000
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 the Company's Registration Statement.
COMPARISON OF THE THREE MONTHS ENDED JUNE 28, 1996 AND JUNE 30, 1995.
Gross revenues of approximately $47.9 million for the quarter ended June 28,
1996 were approximately $1.4 million or 3% higher than gross revenues for the
prior year's corresponding period. The improvement in gross revenues consisted
primarily of increased route revenues of approximately $2.6 million resulting
from the acquisition of a route business in the Midwest region, offset by a
decrease in distribution revenues of approximately $.9 million from Super
Laundry. During the quarter ended June 30,1995, the Company's machine base
declined by approximately 1,500 machines, primarily due to capital constraints,
but increased by approximately 2,000 machines during the quarter ended June
28,1996 (excluding the machines added due to the acquisition in the Midwest).
This favorable trend is primarily the result of a reorganization of the field
management team and additional capital provided by the Company's issuance of its
11 3/4% Senior Notes due 2005 on November 30, 1995 and December 14, 1995.
Laundry operating expenses decreased slightly for the quarter ended June 28,
1996, as compared to the prior year's period. An increase in laundry operating
expenses of approximately $1.7 million related to the acquisition of the Midwest
region route business was offset by (a) a reduction in expenses of approximately
$1.4 million primarily related to the implementation of cost savings programs in
the Company's field operations and the consolidation of certain operating
regions and a decrease in commission expense, and (b) a decrease in the cost of
sales of approximately $.5 million related to Super Laundry's decreased volume.
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)
- ---------------------
As a result of the above, operating income margins improved to approximately 9%
for the quarter ended June 28, 1996, as compared to approximately 7% for the
quarter ended June 30, 1995.
Interest expense increased by approximately $.4 million or approximately 6%.
Approximately $1.1 million of such increase was due primarily to the increased
debt level that resulted from the refinancing of its debt in November 1995.
Offsetting this increase was approximately $.7 million in interest expense due
to the decrease in the effective rate as the result of such refinancing.
EBITDA (earnings before deductions for interest, income taxes, depreciation and
amortization) was approximately $14.3 million for the quarter ended June 28,
1996, compared to approximately $12.7 million for the corresponding period in
1995, representing an improvement of approximately 13%. EBITDA margins improved
to approximately 30% for the quarter ended June 28, 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 an increase in EBITDA is an
indication of 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).
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
- -------------------------------
The Company continues to have substantial indebtedness and debt service
requirements. At June 28, 1996, the Company had outstanding long-term debt of
approximately $208.7 million and shareholders' deficit of approximately $2.5
million after restructuring charges and writeoffs.
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 June 28, 1996, $5.0 million was outstanding under
its revolving credit facility, which was repaid in July 1996 from a portion of
the net proceeds received from the Company's initial public offering. For
further details, see Note 6 to Unaudited Condensed Consolidated Financial
Statements, "Subsequent Events."
The expenses of the Company include significant amounts of depreciation and
amortization (approximately $9.8 million for the three months ended June 28,
1996) which have the effect of reducing net income but not operating cash flow.
In accordance with generally accepted accounting principles, a significant
amount of the purchase price of businesses acquired by the Company is allocated
to "contract rights", which costs are amortized over periods up to 15 years.
Although such accounting treatment has a favorable effect on 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.
The Company anticipates that it will continue to utilize cash flows from its
operations to finance its capital expenditures and working capital needs,
including interest payments on its outstanding indebtedness. Capital
expenditures for the three months ended June 28, 1996 were approximately $25.3
million. Of such amount, the Company spent approximately $16.7 million on the
acquisition of related businesses, including the acquisition in the Midwest, and
approximately $2.3 million related to the net increase in the machine base. The
balance was used to renew the existing machine base and for general corporate
purposes. The effect of incremental 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 will 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, the
Company 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 permit refinancing thereof.
An inability of the Company, however, to comply with covenants or other
conditions contained in the indenture 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 revolving credit facility or the indenture
governing the Senior Notes.
13
<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)
- -------------------------------
Coinmach Laundry used approximately $5.0 million of the net proceeds from the
Offering to repay the 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 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's 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.
14
<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 position 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
On April 30, 1996, the holders of a majority of each class of capital
stock of the Company approved an amendment to the Company's certificate
of incorporation changing the name of the company to "Coinmach Laundry
Corporation." On June 18, 1996, the holders of a majority of each class
of capital stock of the Company approved: (a) the 1996 Employee Stock
Option Plan (subsequently amended and restated by the board of
directors of the Company on July 26, 1996); (b) the Company's Third
Amended and Restated Certificate of Incorporation; (c) the Company's
Amended and Restated Bylaws; (d) the Certificate of Powers,
Designations, Preferences and Relative Participating, Optional and
other Special Rights of Series A Preferred Stock and Qualifications,
Limitations and Restrictions Thereof; (e) the Stock Split and the
Reclassification; and (f) the grant of certain non-qualified stock
options to members of management and certain other individuals.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits required to be filed with this report on Form 10-Q are
listed in the accompanying Index to Exhibits filed as part of this Form
10-Q.
b. No reports on Form 8-K were filed by the Company during the three
months ended June 28, 1996.
15
<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: August 9, 1996 /s/ Robert M. Doyle
-------------------------------------------
Robert M. Doyle
Senior Vice President and
Chief Financial Officer
(On behalf of registrant and as
Principal Financial Officer)
16
<PAGE>
COINMACH LAUNDRY CORPORATION AND SUBSIDIARIES
---------------------------------------------
EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
a. Exhibits
EXHIBIT
NUMBER DESCRIPTION
------ -----------
3.1 Third Amended and Restated Certificate of Incorporation of the
Company
3.2 Certificate of Powers, Designations, Preferences and Relative
Participating, Optional and other Special Rights of Series A
Preferred Stock and Qualifications, Limitations and Restrictions
Thereof
3.3 Second Amended and Restated Bylaws of the Company
10.1 Indenture, dated as of November 30, 1995, by and between Coinmach
Corporation ("Coinmach"), as Issuer, and Fleet National Bank of
Connecticut (formerly, Shawmut Bank Connecticut, National
Association), as Trustee (incorporated by reference from exhibit
number 4.1 to Coinmach's Registration Statement on Form S-1, file
number 333-00620)
10.2 First Supplemental Indenture, dated as of December 11, 1995, by
and between Coinmach, as Issuer, and Fleet National Bank of
Connecticut (formerly, Shawmut Bank Connecticut, National
Association), as Trustee (incorporated by reference from exhibit
number 4.2 to Coinmach's Registration Statement on Form S-1, file
number 333-00620)
10.3 First Supplemental Indenture, dated as of November 28, 1995, by
and between Solon Automated Services, Inc. ("Solon") and U.S.
Trust Company of New York, as Trustee (incorporated by reference
from exhibit number 4.3 to Coinmach's Registration Statement on
Form S-1, file number 333-00620)
10.4 Registration Rights Agreement, dated as of November 30, 1995, by
and between Coinmach and Lazard Freres & Co. LLC ("Lazard"), as
Initial Purchaser (incorporated by reference from exhibit number
4.6 to Coinmach's Registration Statement on Form S-1, file number
333-00620)
10.5 Addendum to Registration Rights Agreement, dated December 14,
1995, by and between Coinmach and Lazard, as Initial Purchaser
(incorporated by reference from exhibit number 4.8 to Coinmach's
Registration Statement on Form S-1, file number 333-00620)
10.6 Purchase Agreement, dated as of January 31, 1995, by and among
The Coinmach Corporation ("TCC"), CIC I Acquisition Corp.
("CIC"), the stockholders of CIC and Coinmach Holding Corp.
(incorporated by reference from exhibit number 10.1 to Coinmach's
Registration Statement on Form S-1, file number 333-00620)
10.7 Equity Purchase Agreement, dated as of January 31, 1995, by and
between TCC and Golder, Thoma, Cressey, Rauner Fund IV, L.P.
("GTCR Fund IV"), subsequently amended by the Omnibus Agreement
(as hereinafter defined) (incorporated by reference from exhibit
number 10.2 to Coinmach's Registration Statement on Form S-1,
file number 333-00620)
<PAGE>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
10.8 Investor Purchase Agreement, dated as January 31, 1995, by and
between TCC, GTCR Fund IV and President and Fellows of Harvard
College, subsequently amended by the Omnibus Agreement (as
hereinafter defined) (incorporated by reference from exhibit
number 10.3 to Coinmach's Registration Statement on Form S-1,
file number 333-00620)
10.9 Investor Purchase Agreement, dated as January 31, 1995, by and
between TCC, GTCR Fund IV, MCS Capital Management, Inc. and
Stephen R. Kerrigan, subsequently amended by the Omnibus
Agreement (as hereinafter defined) (incorporated by reference
from exhibit number 10.4 to Coinmach's Registration Statement on
Form S-1, file number 333-00620)
10.10 Stock Pledge Agreement, dated as of January 31, 1995, by and
between TCC and MCS Capital, Inc. (incorporated by reference from
exhibit number 10.5 to Coinmach's Registration Statement on Form
S-1, file number 333-00620)
10.11 Stock Pledge Agreement, dated as of January 31, 1995, by and
between TCC and Mitchell Blatt (incorporated by reference from
exhibit number 10.6 to Coinmach's Registration Statement on Form
S-1, file number 333-00620)
10.12 Promissory Note, dated January 31, 1995, of MCS Capital, Inc. in
favor of TCC, subsequently amended by the Omnibus Agreement (as
hereinafter defined) (incorporated by reference from exhibit
number 10.7 to Coinmach's Registration Statement on Form S-1,
file number 333-00620)
10.13 Promissory Note, dated January 31, 1995, of Mitchell Blatt in
favor of TCC, subsequently amended by the Omnibus Agreement (as
hereinafter defined) (incorporated by reference from exhibit
number 10.8 to Coinmach's Registration Statement on Form S-1,
file number 333-00620)
10.14 Management and Consulting Services Agreement, dated as of January
31, 1995, by and between GTCR Fund IV and TCC, subsequently
terminated by the Omnibus Agreement (as hereinafter defined)
(incorporated by reference from exhibit number 10.9 to Coinmach's
Registration Statement on Form S-1, file number 333-00620)
10.15 Senior Management Agreement, dated as of January 31, 1995, by and
between TCC, Stephen R. Kerrigan, MCS Capital, Inc. and GTCR Fund
IV, subsequently amended by the Omnibus Agreement (as hereinafter
defined) (incorporated by reference from exhibit number 10.10 to
Coinmach's Registration Statement on Form S-1, file number 333-
00620)
10.16 Senior Management Agreement, dated as of January 31, 1995, by and
between TCC, Coinmach Industries Co., L.P., Mitchell Blatt and
GTCR Fund IV, subsequently amended by the Omnibus Agreement (as
hereinafter defined) (incorporated by reference from exhibit
number 10.11 to Coinmach's Registration Statement on Form S-1,
file number 333-00620)
10.17 Senior Management Agreement, dated January 31, 1995, by and
between TCC, Coinmach Industries Co., L.P., Robert M. Doyle and
GTCR Fund IV, subsequently amended by the Omnibus Agreement (as
hereinafter defined) (incorporated by reference from exhibit
number 10.12 to Coinmach's Registration Statement on Form S-1,
file number 333-00620)
(ii)
<PAGE>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
10.18 Employment Agreement, dated as of August 4, 1995, by and between
Solon and John E. Denson (incorporated by reference from exhibit
number 10.13 to Coinmach's Registration Statement on Form S-1,
file number 333-00620)
10.19 Employment Agreement, dated as of July 1, 1995, by and between
Solon, Michael E. Stanky and GTCR Fund IV (incorporated by
reference from exhibit number 10.14 to Coinmach's Registration
Statement on Form S-1, file number 333-00620)
10.20 Stock Purchase Agreement, dated as of March 7, 1995, by and among
Ford Coin Laundries, Inc., Kwik Wash Laundries, Inc., Solon and
the Sellers (incorporated by reference from exhibit number 10.15
to Coinmach's Registration Statement on Form S-1, file number
333-00620)
10.21 Equity Purchase Agreement, dated as of July 26, 1995, between
GTCR Fund IV and SAS Acquisitions Inc. ("SAS"), subsequently
amended by the Omnibus Agreement (as hereinafter defined)
(incorporated by reference from exhibit number 10.21 to the
Company's Registration Statement on Form S-1, file number 333-
03587)
10.22 Investor Purchase Agreement, dated as of July 26, 1995, among
SAS, GTCR Fund IV, Heller Financial, Inc. ("Heller"), Jackson
National Life Insurance Company, Jackson National Life Insurance
Company of Michigan, James N. Chapman, Michael E. Marrus,
President and Fellows of Harvard College, MCS Capital, Inc.,
Mitchell Blatt, and Michael Stanky, subsequently amended by the
Omnibus Agreement (as hereinafter defined) (incorporated by
reference from exhibit number 10.22 to the Company's Registration
Statement on Form S-1, file number 333-03587)
10.23 Executive Stock Agreement, dated as of July 26, 1995, among SAS,
GTCR Fund IV, MCS Capital, Inc., Mitchell Blatt, Robert M. Doyle
and Michael Stanky (with spousal consents), subsequently amended
by the Omnibus Agreement (as hereinafter defined) (incorporated
by reference from exhibit number 10.23 to the Company's
Registration Statement on Form S-1, file number 333-03587)
10.24 Stockholders Agreement, dated as of July 26, 1995, among SAS and
GTCR Fund IV, Robert M. Doyle, Heller, Jackson National Life
Insurance Company, Jackson National Life Insurance Company of
Michigan, James N. Chapman, Michael E. Marrus, President and
Fellows of Harvard College, MCS Capital, Inc., Mitchell Blatt,
and Michael Stanky (collectively, the "SAS Stockholders")
(incorporated by reference from exhibit number 10.24 to the
Company's Registration Statement on Form S-1, file number 333-
03587)
10.25 Registration Agreement, dated as of July 26, 1995, among SAS and
each of the SAS Stockholders (incorporated by reference from
exhibit number 10.25 to the Company's Registration Statement on
Form S-1, file number 333-03587)
10.26 Management and Consulting Services Agreement, dated as of July
26, 1995, between SAS and GTCR IV, L.P. (incorporated by
reference from exhibit number 10.26 to the Company's Registration
Statement on Form S-1, file number 333-03587)
(iii)
<PAGE>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
10.27 Supply Agreement, dated July 26, 1995, by and among SAS, Solon
and Speed Queen Company (incorporated by reference from exhibit
number 10.16 to Coinmach's Registration Statement on Form S-1,
file number 333-00620)
10.28 Dealer Manager Agreement, dated October 20, 1995, by and among
TCC, Solon, Lazard and Fieldstone Private Capital Group, L.P.
(incorporated by reference from exhibit number 10.17 to
Coinmach's Registration Statement on Form S-1, file number 333-
00620)
10.29 Purchase Agreement, dated November 15, 1995, by and among TCC,
Solon and Lazard (incorporated by reference from exhibit number
10.18 to Coinmach's Registration Statement on Form S-1, file
number 333-00620)
10.30 Addendum to Purchase Agreement, dated December 11, 1995, by and
between Coinmach and Lazard (incorporated by reference from
exhibit number 10.19 to Coinmach's Registration Statement on Form
S-1, file number 333-00620)
10.31 Omnibus Agreement, dated as of November 30, 1995, among SAS,
Solon, TCC and each of the other parties executing a signature
page thereto (the "Omnibus Agreement") (incorporated by reference
from exhibit number 10.20 to Coinmach's Registration Statement on
Form S-1, file number 333-00620)
10.32 Credit Agreement, dated as of November 30, 1995, by and between
Coinmach, as Borrower and Heller Financial, Inc. ("Heller")
(incorporated by reference from exhibit number 10.21 to
Coinmach's Registration Statement on Form S-1, file number 333-
00620)
10.33 First Amendment to Credit Agreement, dated as of December 9,
1995, by and among Coinmach, Heller, SAS, and Super Laundry
Equipment Corp. (incorporated by reference from exhibit number
10.22 to Coinmach's Registration Statement on Form S-1, file
number 333-00620)
10.34 Form of Note, dated November 30, 1995, of Coinmach in favor of
Heller (included as an exhibit to Exhibit 10.26 hereto)
(incorporated by reference from exhibit number 10.23 to
Coinmach's Registration Statement on Form S-1, file number 333-
00620)
10.35 Pledge Agreement, dated as of November 30, 1995, by and between
Coinmach and Heller (incorporated by reference from exhibit
number 10.24 to Coinmach's Registration Statement on Form S-1,
file number 333-00620)
10.36 Guaranty, dated as of January 31, 1995, by Super Laundry
Management Corp. in favor of Heller (incorporated by reference
from exhibit number 10.25 to Coinmach's Registration Statement on
Form S-1, file number 333-00620)
10.37 Guaranty, dated as of November 30, 1995, by SLEC in favor of
Heller (incorporated by reference from exhibit number 10.26 to
Coinmach's Registration Statement on Form S-1, file number 333-
00620)
10.38 Security Agreement, dated as of November 30, 1995, by and between
Coinmach and Heller (incorporated by reference from exhibit
number 10.27 to Coinmach's Registration Statement on Form S-1,
file number 333-00620)
(iv)
<PAGE>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
10.39 Security Agreement, dated as of November 30, 1995, by and between
SLEC and Heller (incorporated by reference from exhibit number
10.28 to Coinmach's Registration Statement on Form S-1, file
number 333-00620)
10.40 Collateral Assignment of Leases of Coinmach to Heller, dated as
of November 30, 1995 (incorporated by reference from exhibit
number 10.29 to Coinmach's Registration Statement on Form S-1,
file number 333-00620)
10.41 Collateral Assignment of Leases of SLEC to Heller, dated as of
November 30, 1995 (incorporated by reference from exhibit number
10.30 to Coinmach's Registration Statement on Form S-1, file
number 333-00620)
10.42 Amended and Restated Management and Consulting Services
Agreement, dated as of November 30, 1995, by and between GTCR IV,
LP and SAS (incorporated by reference from exhibit number 10.42
to the Company's Registration Statement on Form S-1, file number
333-03587)
10.43 Amended and Restated Stockholders Agreement, dated as of November
30, 1995, among SAS and the signatories thereto (incorporated by
reference from exhibit number 10.43 to the Company's Registration
Statement on Form S-1, file number 333-03587)
10.44 Amended and Restated 1996 Employee Stock Option Plan of the
Company
10.45 Reclassification Agreement among the Company and the signatures
thereto, dated July 17, 1996
10.46 Option Agreement between the Company and MCS Capital, Inc., dated
July 23, 1996
10.47 Option Agreement between the Company and Ronald S. Brody, dated
July 23, 1996
10.48 Option Agreement between the Company and James N. Chapman, dated
July 23, 1996
10.49 Option Agreement between the Company and Robert M. Doyle, dated
July 23, 1996
10.50 Option Agreement between the Company and Michael E. Stanky, dated
July 23, 1996
10.51 Option Agreement between the Company and David A. Siegel, dated
July 23, 1996
10.52 Option Agreement between the Company and R. Daniel Osborne, dated
July 23, 1996
10.53 Option Agreement between the Company and John E. Denson, dated
July 23, 1996
10.54 Waiver of Registration Rights, dated May 8, 1996 among the
Company and the signatures thereto (incorporated by reference
from exhibit number 10.54 to the Company's Registration Statement
on Form S-1, file number 333-03587)
10.55 Voting Agreement among the Company and the signatories thereto,
dated July 23, 1996
(v)
<PAGE>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
10.56 Termination Agreement, dated as of July 23, 1996, by and between
GTCR IV, L.P. and the Company
27.1 Financial Data Schedule
b. Form 8-K
None
(vi)
<PAGE>
EXHIBIT A
THIRD AMENDED AND RESTATED
----------------------------
CERTIFICATE OF INCORPORATION
----------------------------
OF
--
COINMACH LAUNDRY CORPORATION
----------------------------
ARTICLE ONE
-----------
The name of the Corporation is COINMACH LAUNDRY CORPORATION.
ARTICLE TWO
-----------
The address of the Corporation's registered office in the State of
Delaware is 15 East North Street in the City of Dover, County of Kent 19901.
The name of its 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").
ARTICLE THREE
-------------
The purpose of the Corporation and the nature of the business to be
conducted or promoted by the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the Delaware General
Corporation Law (the "DGCL") either alone or with others through wholly or
partially owned subsidiaries, as a partner (limited or general) in any
partnership, as a joint venturer in any joint venture, or otherwise.
ARTICLE FOUR
------------
SECTION 1. The aggregate number of shares of stock which the
----------
Corporation has authority to issue is 17,000,000, consisting of 1,000,000 shares
of Series Preferred Stock, par value $.01 per share (the "Series Preferred
Stock"), 15,000,000 shares of Class A Common Stock, par value $.01 per share
(the "Class A Common Stock") and 1,000,000 shares of Class B Non-Voting Common
Stock, par value $.01 per share (the "Class B Common Stock"). The Class A Common
Stock and the Class B Common Stock are collectively referred to herein as the
"Common Securities." All of such shares shall be issued as fully paid and non-
assessable shares, and the holder thereof shall not be liable for any further
payments in respect thereof.
SECTION 2. The preferences, limitations, designations and relative
----------
rights of the shares of each class of stock of the Corporation and the
qualifications, limitations or restrictions thereof shall be as follows:
<PAGE>
A. Series Preferred Stock.
----------------------
1. Authorization; Series; Provisions.
---------------------------------
(a) The Board of Directors is authorized, subject to limitations
prescribed by law and the provisions of this Article Four, to provide for the
issuance of shares of Series Preferred Stock, in one or more series, and by
filing a certificate pursuant to the DGCL and adopting resolutions of the Board
of Directors, to establish from time to time the number of shares to be included
in each such series and to fix the designations, powers, preferences and rights
of the shares of each such series and the qualifications, limitations or
restrictions thereof.
(b) Authority is hereby expressly granted to the Board of Directors,
subject to the provisions of this Section 2, to authorize the issuance of one or
more series of Series Preferred Stock, and with respect to each such series to
fix by resolution or resolutions providing for the issuance of such series:
(i) the maximum number of shares to constitute such series and
the distinctive designation thereof;
(ii) whether the shares of such series shall have voting
rights, in addition to any voting rights provided by law, and, if so, the
terms of such voting rights;
(iii) the dividend rate, if any, on the shares of such series,
the conditions and dates upon which such dividends shall be payable, the
preference or relation which such dividends shall bear to the dividends
payable on any other class or classes or on any other series of capital
stock, and whether such dividends shall be cumulative or noncumulative;
(iv) whether the shares of such series shall be subject to
redemption by the Corporation and, if subject to redemption, the times,
prices and other terms and conditions of such redemption;
(v) the rights of the holders of shares of such series upon the
liquidation, dissolution or winding up of the Corporation;
(vi) whether or not the shares of such series shall be subject
to the operation of a retirement or sinking fund and, if so, the extent to
and manner in which any such retirement or sinking fund shall be applied to
the purchase or redemption of the shares of such series for retirement or
other corporate purposes and the terms and provisions relative to the
operation thereof;
(vii) whether or not the shares of such series shall be
convertible into, or exchangeable for, shares of stock of any other class
or classes, or of any other series of the same class, and if so convertible
or exchangeable, the price or prices or the rate or rates of conversion or
exchange and the method, if any, of adjusting the same;
-2-
<PAGE>
(viii) the limitations and restrictions, if any, to be
effective while any shares of such series are outstanding upon the payment
of dividends or making of other distributions on, and upon the purchase,
redemption or other acquisition by the Corporation of, Common Securities or
any other class or classes of stock of the Corporation ranking junior to
the shares of such series either as to dividends or distribution of assets
on liquidation, dissolution or winding up;
(ix) the conditions or restrictions, if any, upon the creation
of indebtedness of the Corporation or upon the issue of any additional
stock (including additional shares of such series or of any other series or
of any other class stock) ranking on a parity with or prior to the shares
of such series as to dividends or distribution of assets on liquidation,
dissolution or winding up; and
(x) any other preference and relative, participating, optional
or other special rights, and qualifications, limitations or restrictions
thereof as shall not be inconsistent with this Section 2.
2. Series Identical; Rank. All shares of any one series of Series
----------------------
Preferred Stock shall be identical with each other in all respects, except that
shares of any one series issued at different times may differ as to the dates
from which dividends, if any, thereon shall be cumulative; and all series shall
rank equally and be identical in all respects, except as permitted by the
foregoing provisions of subparagraph 1(b) hereof; and all shares of Series
Preferred Stock shall rank senior to the Common Securities both as to dividends
or distribution of assets on liquidation, dissolution or winding up.
3. Liquidation. In the event of any liquidation, dissolution or
-----------
winding up of the Corporation, before any payment or distribution of the assets
of the Corporation (whether capital or surplus) shall be made to or set apart
for the holders of any class or classes of stock of the Corporation ranking
junior to the Series Preferred Stock upon liquidation, the holders of the shares
of the Series Preferred Stock shall be entitled to receive payment at the rate
fixed herein or in the resolution or resolutions adopted by the Board of
Directors providing for the issue of such series, plus (if dividends on shares
of such series of Series Preferred Stock shall be cumulative) an amount equal to
all dividends (whether or not earned or declared) accumulated to the date of
final distribution to such holders; but they shall be entitled to no further
payment. If, upon any liquidation, dissolution or winding up of the
Corporation, the assets of the Corporation or proceeds thereof, distributable
among the holders of the shares of the Series Preferred Stock, shall be
insufficient to pay in full the preferential amount aforesaid, then such assets,
or the proceeds thereof, shall be distributed among such holders ratably in
accordance with the respective amounts which would be payable on such shares if
all amounts payable thereon were paid in full.
4. Voting Rights. Except as shall be otherwise stated and expressed
-------------
herein or in the resolution or resolutions of the Board of Directors providing
for the issue of any series and except as otherwise required by applicable law,
the holders of shares of Series Preferred Stock shall have, with respect to such
shares, no right or power to vote on any question or in any proceeding or to be
represented at, or to receive notice of, any meeting of stockholders.
-3-
<PAGE>
5. Reacquired Shares. Shares of any Series Preferred Stock which
-----------------
shall be issued and thereafter acquired by the Corporation through purchase,
redemption, exchange, conversion or otherwise shall return to the status of
authorized but unissued Series Preferred Stock unless otherwise provided in the
resolution or resolutions of the Board of Directors.
6. Change in Authorized Shares of a Series. Unless otherwise
---------------------------------------
provided in the resolution or resolutions of the Board of Directors providing
for the issuance thereof, the number of authorized shares of stock of any such
series may be increased or decreased (but not below the number of shares thereof
outstanding) by resolution or resolutions of the Board of Directors. In case
the number of shares of any such series of Series Preferred Stock shall be
decreased, the shares representing such decrease shall, unless otherwise
provided in the resolution or resolutions of the Board of Directors providing
for the issuance thereof, resume the status of authorized but unissued Series
Preferred Stock, undesignated as to series.
B. Common Securities.
-----------------
Except as otherwise provided in this Section 2B of Article Four or as
otherwise required by applicable law, all shares of Class A Common Stock and
Class B Common Stock shall be identical in all respects and shall entitle the
holders thereof to the same rights and privileges, subject to the same
qualifications, limitations and restrictions.
1. Voting Rights. Except as otherwise provided in this Section 2B
-------------
of Article Four or as otherwise required by applicable law, holders of Class A
Common Stock shall be entitled to one vote per share on all matters to be voted
on by the stockholders of the Corporation, and the holders of Class B Common
Stock shall have no right to vote on any matters to be voted on by the
stockholders of the Corporation; provided that the holders of Class B Common
Stock shall have the right to vote as a separate class on any merger or
consolidation of the Corporation with or into another entity or entities, or any
recapitalization or reorganization, in which shares of Class B Common Stock
would receive or be exchanged for consideration different on a per share basis
from consideration received with respect to or in exchange for the shares of
Class A Common Stock or would otherwise be treated differently from shares of
Class A Common Stock in connection with such transaction, except that shares of
Class B Common Stock may, without such a separate class vote, receive or be
exchanged for non-voting securities which are otherwise identical on a per share
basis in amount and form to the voting securities received with respect to or
exchanged for the Class A Common Stock so long as (i) such non-voting securities
are convertible into such voting securities on the same terms as the Class B
Common Stock is convertible into Class A Common Stock and (ii) all other
consideration is equal on a per share basis.
2. Dividends. Subject to the rights of each series of the Series
---------
Preferred Stock, dividends may be declared and paid or set apart for payment
upon the Common Securities out of any assets or funds of the Corporation legally
available for the payment of dividends, and the holders of Class A Common Stock
and Class B Common Stock shall be entitled to participate in such dividends
ratably on a per share basis; provided that (i) if dividends are declared which
are payable in shares of Class A Common Stock or Class B Common Stock, dividends
shall be declared which are payable at the same rate on both classes of Common
Securities and the
-4-
<PAGE>
dividends payable in shares of Class A Common Stock shall be payable to holders
of that class of stock and the dividends payable in shares of Class B Common
Stock shall be payable to holders of that class of stock and (ii) if the
dividends consist of other voting securities of the Corporation, the Corporation
shall make available to each holder of Class B Common Stock, at such holder's
request, dividends consisting of non-voting securities of the Corporation which
are otherwise identical to the voting securities and which are convertible into
or exchangeable for such voting securities on the same terms as the Class B
Common Stock is convertible into the Class A Common Stock.
3. Liquidation. Upon any liquidation, dissolution or winding up of
-----------
the Corporation, whether voluntary or involuntary, and after the holders of the
Series Preferred Stock of each series shall have been paid in full the amounts
to which they respectively shall be entitled in accordance with Section 2A of
Article Four, the terms of any outstanding Series Preferred Stock and applicable
law, or an amount sufficient to pay the aggregate amount to which the holders of
the Series Preferred Stock of each series shall be entitled shall have been
deposited with a bank or trust company having capital, surplus and undivided
profits of at least Twenty-Five Million Dollars ($25,000,000) as a trust fund
for the benefit of the holders of such Series Preferred Stock, the remaining net
assets of the Corporation shall be distributed pro rata to the holders of the
Common Securities and Series Preferred Stock.
4. Conversion.
----------
4A. Conversion of Non-Voting Common Stock.
-------------------------------------
(i) Each holder of Class B Common Stock is entitled at any time to
convert any or all of the shares of such holder's Class B Common Stock into the
same number of shares of Class A Common Stock (a "B/A Conversion Right");
provided, however, that as a precondition to any such conversion, each holder of
Class B Common Stock desiring to effect such a conversion becomes a party to and
executes any voting agreement or similar agreement in effect at such time among
a majority of the holders of Class A Common Stock, as the same may be revised or
modified from time to time; and provided further that no holder of Class B
Common Stock is entitled to exercise a B/A Conversion Right to the extent that
as a result of such exercise, such holder or its affiliates would directly or
indirectly own, control or have power to vote or dispose of a greater quantity
of securities of any kind issued by the Corporation than such holder and its
affiliates are permitted to own, control or have power to vote or dispose of
under any law or under any regulation, rule or other requirement of any
governmental authority at any time applicable to such holder and its affiliates;
(ii) At any time and from time to time, any holder of Class A Common
Stock, which Class A Common Stock was received upon the exercise of a B/A
Conversion Right (the "Converted Shares"), shall be entitled to convert any or
all of the Converted Shares into the same number of shares of Class B Common
Stock (an "A/B Conversion Right" and, together with the B/A Conversion Right,
the "Conversion Rights"); provided, however, that such holder shall only be
entitled to convert Converted Shares into shares of Class B Common stock to the
extent that, after giving effect to such conversion, such holder and its
affiliates do not directly or indirectly own, control or have power to vote a
greater quantity of securities of any kind
-5-
<PAGE>
issued by the Corporation than such holder and its affiliates are permitted to
own, control or have power to vote under any law, regulation, rule or other
requirement of any governmental authority at any time applicable to such holder
and its affiliates.
4B. Conversion Procedure.
--------------------
(i) Each exercise of a Conversion Right shall be effected by the
surrender of the certificate or certificates representing the shares to be
converted at the principal office of the Corporation at any time during normal
business hours, together with a written notice by the holder of such Class B
Common Stock or Converted Shares, as the case may be, stating that such holder
desires to convert such shares, or a stated number of such shares, represented
by such certificate or certificates into shares of Class A Common Stock or Class
B Common Stock, as the case may be, and stating that upon such conversion such
holder and its affiliates will not directly or indirectly own, control or have
the power to vote or dispose of a greater quantity of securities of any kind
issued by the Corporation than such holder and its affiliates are permitted to
own, control or have the power to vote or dispose of under any applicable law,
regulation, rule or other requirement of any governmental authority. Each
conversion shall be deemed to have been effected as of the close of business on
the date on which such certificate or certificates have been surrendered and
such notice has been received, and at such time the rights of the holder of the
Class B Common Stock or Converted Shares, as the case may be, shall cease and
the person or persons in whose name or names the certificate or certificates for
shares of Class A Common Stock or Class B Common Stock, as the case may be, are
to be issued upon such conversion shall be deemed to have become the holder or
holders of record of the shares represented thereby.
(ii) Promptly after the surrender of certificates and the receipt of
written notice, the Corporation shall issue and deliver in accordance with the
surrendering holder's instructions (a) the certificate or certificates for the
Class A Common Stock or Class B Common Stock, as the case may be, issuable upon
exercise of the Conversion Rights and (b) a certificate representing any share
of Class A Common Stock or Class B Common Stock, as the case may be, which was
represented by the certificate or certificates delivered to the Corporation in
connection with the exercise of a Conversion Right, but which were not
converted.
(iii) The issuance of certificates for Class A Common Stock and Class
B Common Stock upon exercise of Conversion Rights shall be made without charge
to the holders of such shares for any issuance tax in respect thereof or other
cost incurred by the Corporation in connection with such conversion and the
related issuance of Class A Common Stock or Class B Common Stock.
(iv) The Corporation shall at all times reserve and keep available
out of its authorized but unissued shares of Class A Common Stock, solely for
the purpose of issuance upon the conversion of the Class B Common Stock, such
number of shares of Class A Common Stock issuable upon the conversion of all
outstanding Class B Common Stock. All shares of Class A Common Stock which are
so issuable shall, when issued, be duly and validly issued, fully paid and
nonassessable and free from all taxes, liens and charges. The Corporation shall
take all such actions as may be necessary to assure that all such shares of
Class A Common
-6-
<PAGE>
Stock may be so issued without violation of any applicable law or governmental
regulation or any requirements of any domestic securities exchange upon which
shares of Class A Common Stock may be listed (except for official notice of
issuance which will be immediately transmitted by the Corporation upon
issuance).
(v) The Corporation shall at all times reserve and keep available out
of its authorized but unissued shares of Class B Common Stock, solely for the
purpose of issuance upon the conversion of the Converted Shares, such number of
shares of Class B Common Stock issuable upon the conversion of all outstanding
Converted Shares. All shares of Class B Common Stock which are so issuable
shall, when issued, be duly and validly issued, fully paid and nonassessable and
free from all taxes, liens and charges. The Corporation shall take all such
actions as may be necessary to assure that all such shares of Class B Common
Stock may be so issued without violation of any applicable law or governmental
regulation or any requirements of any domestic securities exchange upon which
shares of Class B Common Stock may be listed (except for official notice of
issuance which will be immediately transmitted by the Corporation upon
issuance).
(vi) The Corporation shall not close its books against the transfer
of shares of Common Securities in any manner which would interfere with the
timely conversion of any shares of Class A Common Stock or Class B Common Stock
permitted by this Third Amended and Restated Certificate of Incorporation.
(vii) Transfer Taxes, etc. If a shareholder exercises a Conversion
--------------------
Right, the Corporation shall pay any documentary, stamp or similar issue or
transfer tax due on the issue of shares of Class A Common Stock or Class B
Common Stock, as the case may be, upon such conversion. However, the
shareholder shall pay any such tax which is due if and because the shares are
issued in a name other than that of such holder.
4C. Stock Splits. If the Corporation in any manner subdivides or
------------
combines the outstanding shares of one class of Common Securities, the
outstanding shares of the other class of Common Securities shall be
proportionately subdivided or combined in a similar manner.
5. Amendment and Waiver. No amendment or waiver of any provision of
--------------------
this Section 2B of Article Four which adversely affects the holders of the Class
B Common Stock hereunder shall be effective without the prior approval of the
holders of a majority of the then-outstanding Class B Common Stock, voting as a
separate class.
C. General Provisions
------------------
1. Nonliquidating Events. A consolidation or merger of the
---------------------
Corporation with or into another corporation or corporations or a sale, whether
for cash, shares of stock, securities or properties, or any combination thereof,
of all or substantially all of the assets of the Corporation shall not be deemed
or construed to be a liquidation, dissolution or winding up of the Corporation
within the meaning of this Article Four.
-7-
<PAGE>
2. No Preemptive Rights. No holder of Series Preferred Stock or
--------------------
Common Securities of the Corporation shall be entitled, as such, as a matter of
right, to subscribe for or purchase any part of any new or additional issue of
stock of any class or series whatsoever or of securities convertible into stock
of any class whatsoever, whether now or hereafter authorized and whether issued
for cash or other consideration, or by way of dividend.
ARTICLE FIVE
------------
The Corporation is to have perpetual existence.
ARTICLE SIX
-----------
The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors, and the directors need not be
elected by ballot unless required by the Second Amended and Restated Bylaws of
the Corporation, as the same may be amended and restated from time to time (the
"Bylaws"). In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, alter, amend,
change, add to or repeal the Bylaws.
ARTICLE SEVEN
-------------
Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of the Corporation may be kept
outside the State of Delaware at such place or places as may be designated from
time to time by the Board of Directors or in the Bylaws. The Board of Directors
shall from time to time decide whether and to what extent and at what times and
under what conditions and requirements the accounts and books of the
Corporation, or any of them, except the stock book, shall be open to the
inspection of the stockholders, and no stockholder shall have any right to
inspect any books or documents of the Corporation except as conferred by
applicable law or as authorized by the Board of Directors.
ARTICLE EIGHT
-------------
Subject to the rights of the holders of any series of Series Preferred
Stock, (A) any action required or permitted to be taken by the stockholders of
the Corporation must be effected at an annual or special meeting of stockholders
of the Corporation and may not be effected in lieu thereof by any consent in
writing by such stockholders unless a majority of the Board approves the use of
such written consent with respect to the taking of such action, and (B) special
meetings of stockholders of the Corporation may be called by the chairman of the
Board, the president of the Corporation or the Board of Directors only pursuant
to a resolution adopted by the affirmative vote of at least two members of the
Board then in office.
-8-
<PAGE>
ARTICLE NINE
------------
(a) Subject to the rights of the holders of any series of Series
Preferred Stock, the number of directors which shall constitute the whole Board
shall be such as from time to time shall be fixed 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 of directors. The Board shall at all times be comprised of at
least two (2) Independent Directors; provided, however, that such requirement
-------- -------
shall not apply at any time on or prior to October 15, 1996. For the
purposes of this Third Amended and Restated Certificate of Incorporation,
"Independent Director" shall mean: (i) a director of the Corporation who shall
at no time be an officer or employee of the Corporation or of any direct or
ultimate parent, subsidiary or affiliate of the Corporation, (ii) a director of
the Corporation who shall at no time hold any beneficial interest in the
Corporation and (iii) a director of the Corporation who shall at no time have a
relationship which, in the opinion of a majority of the members of the Board of
Directors, would interfere with his or her exercise of independent judgment in
carrying out his or her responsibilities as a director.
The directors of the Corporation shall be divided into three classes
designated as follows: Class I, Class II and Class III. Membership in such
classes shall be as nearly equal in number as possible. The terms of office of
the initial Class I directors shall expire at the annual election of directors
by the stockholders of the Corporation in 1997, the term of office of the
initial Class II directors shall expire at the annual election of directors by
the stockholders of the Corporation in 1998, and the term of office of the
initial Class III directors shall expire at the annual election of directors by
the stockholders of the Corporation in 1999, or thereafter when their respective
successors in each case are elected by the stockholders and qualified, subject,
however, to prior death, resignation, retirement, disqualification or removal
from office for cause. At each succeeding annual election of directors by the
stockholders of the Corporation beginning in 1997, the directors chosen to
succeed those whose terms then expire shall be identified as being of the same
class as the directors they succeed and shall be elected for a term expiring at
the third succeeding annual election of directors by the stockholders of the
Corporation, or thereafter when their respective successors in each case are
elected by the stockholders and qualified. If the number of directors is
changed, any increase or decrease shall be apportioned among the classes so as
to maintain the number of directors in each class as nearly equal as possible,
and any additional director of any class elected to fill a vacancy resulting
from an increase in such class shall hold office for a term that shall coincide
with the remaining term of that class, but in no case will a decrease in the
number of directors shorten the term of any incumbent director.
Vacancies and newly created directorships resulting from any increase
in the number of directors may be filled only by the affirmative vote of the
majority of the Board of Directors then in office, although less than a quorum,
or by a sole remaining director. Any 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.
-9-
<PAGE>
Notwithstanding the foregoing, whenever the holders of any one or more
classes or series of Preferred Stock issued by the Corporation shall have the
right, voting separately by class or series, to elect directors at an annual or
special meeting of stockholders, the election, term of office, filling of
vacancies and other features of such directorships shall be governed by the
terms of this Third Amended and Restated Certificate of Incorporation
applicable thereto, and such directors so elected shall not be divided into
classes pursuant to this Section (a) of Article NINE unless expressly provided
by such terms.
(b) Except to the extent prohibited by law, the Board of Directors
shall have the right (which, to the extent exercised, shall be exclusive) to
establish the rights, powers, duties, rules and procedures that from time to
time shall govern the Board of Directors and each of its members, including
without limitation the vote required for any action by the Board of Directors,
and that from time to time shall affect the directors' power to manage the
business and affairs of the Corporation; and no bylaw shall be adopted by
stockholders which shall impair or impede the implementation of the foregoing.
ARTICLE TEN
-----------
(a) This Third Amended and Restated Certificate of Incorporation may
be amended, altered, or repealed and a new certificate of incorporation 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; provided, however, that: (i)
-------- -------
ARTICLE EIGHT, ARTICLE NINE and this ARTICLE TEN of this Third Amended and
Restated Certificate of Incorporation shall not be altered, amended or repealed
by, and no provision inconsistent herewith shall be adopted by, the stockholders
without the affirmative vote of the holders of at least 75% of the Class A
Common Stock, voting together as a single class; and (ii) no modification,
amendment or waiver of any provision of ARTICLE FOUR of this Third Amended and
Restated Certificate of Incorporation which:
(x) materially and adversely affects the rights of any class of
Common Securities vis-a-vis any other class of Common Securities shall be
effective without the prior approval of the holders of a majority of the
class of Common Securities adversely affected and then outstanding;
(y) materially and adversely affects the rights of any holder of
any shares of the same class of Common Securities shall be effective
without the prior approval of such holder; and
(z) affects the conversion rights or conversion features of any
class of Common Securities, shall be effective without the prior approval
of the holders of a majority of such class of Common Securities affected
and then outstanding.
(b) The 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,
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<PAGE>
alter or repeal the By-laws by a vote of not less than two-thirds of the
outstanding shares of Class A Common Stock, voting together as a single class;
provided, however, that Sections 2 and 11 of Article II, Sections 2, 3, 4 and 5
- -------- -------
of Article III and Article V of the 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 Class A Common Stock, voting
together as a single class.
ARTICLE ELEVEN
--------------
(a) To the fullest extent permitted by the DGCL as it now 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), no director of the
Corporation shall be liable to the Corporation or its stockholders for monetary
damages arising from a breach of fiduciary duty owed to the Corporation or its
stockholders.
(b) Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
ARTICLE TWELVE
--------------
The Corporation expressly elects to be governed by Section 203 of the
DGCL.
<PAGE>
EXHIBIT 3.2
COINMACH LAUNDRY CORPORATION
CERTIFICATE OF POWERS, DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL
AND OTHER SPECIAL RIGHTS OF SERIES A PREFERRED
STOCK AND QUALIFICATIONS, LIMITATIONS
AND RESTRICTIONS THEREOF
Dated as of July 17, 1996
<PAGE>
COINMACH LAUNDRY CORPORATION
CERTIFICATE OF POWERS, DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL
AND OTHER SPECIAL RIGHTS OF SERIES A PREFERRED
STOCK AND QUALIFICATIONS, LIMITATIONS
AND RESTRICTIONS THEREOF
PURSUANT TO SECTION 151 OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
COINMACH LAUNDRY CORPORATION (the "Corporation"), a corporation
-----------
organized and existing under the General Corporation Law of the State of
Delaware, does hereby certify that, pursuant to authority conferred upon the
Board of Directors of the Corporation by its Certificate of Incorporation and
pursuant to the provisions of Section 151 of the General Corporation Law of the
State of Delaware, said Board of Directors, by unanimous written consent dated
July 2, 1996, duly approved and adopted the following resolution (the
"Resolution"):
- -----------
RESOLVED, that, pursuant to the authority vested in the Board of
Directors of the Corporation by its Certificate of Incorporation, as
amended (hereinafter referred to as the "Certificate of
--------------
Incorporation"), the Board of Directors does hereby create, authorize
-------------
and provide for the issue of Series A Preferred Stock, par value $0.01
per share, with an aggregate stated value of $19,207,367.73 consisting
initially of 1,000 shares, having the designations, preferences,
relative, participating, optional and other special rights and
qualifications, limitations and restrictions thereof that are set
forth in the Certificate of Incorporation and in this Resolution as
follows:
1. Designation. The distinctive designation of such series is "Series A
-----------
Preferred Stock" (hereinafter in this
-1-
<PAGE>
Resolution called the "Preferred Stock"), par value $0.01 per share, which shall
---------------
consist of 1,000 shares of cumulative preferred stock having a stated value of
$19,207,367.73 per share (the "Stated Value").
------------
2. Rank. The Preferred Stock shall, with respect to dividend rights and
----
rights of liquidation, winding up and dissolution, rank senior to all other
equity securities of the Corporation, including all classes of the Corporation's
Class A common stock, par value $.01 per share (the "Class A Common Stock"),
--------------------
Class B common stock, par value $.01 per share (the "Class B Common Stock,"
--------------------
together with the Class A Common Stock, the "Common Stock") and all subsequently
------------
issued preferred stock of the Corporation (all of such equity securities of the
Corporation to which the Preferred Stock ranks senior are collectively referred
to herein as the "Junior Securities").
-----------------
3. Dividends.
---------
(a) With respect to each annual dividend period (hereinafter referred
to as an "Annual Dividend Period"), the holders of the shares of Preferred Stock
----------------------
shall be entitled to receive when, as and if declared by the Board of Directors
and to the extent permitted under the General Corporation Law of the State of
Delaware, out of the Corporation's retained earnings, surplus capital or other
funds legally available therefor (collectively, the "Legally Available Funds"),
-----------------------
cumulative dividends payable in cash on the shares of the Preferred Stock for
each such Annual Dividend Period at a rate per annum, in respect of such Annual
Dividend Period, equal to 8% of the
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<PAGE>
Liquidation Preference (as defined in section 5(a) hereof) of each share of
Preferred Stock for each Annual Dividend Period. Annual Dividend Periods shall
commence on January 1 of each year and shall end on and include the day next
preceding the first day of the next Annual Dividend Period; provided, however,
-------- -------
that the initial Annual Dividend Period shall consist of the period from and
including July 19, 1996 (the "Initial Accrual Date") to and including December
--------------------
31, 1996 (the "Initial Dividend Period"). All dividends described in this
-----------------------
Section 3(a) shall be payable on January 1 of each year (each of such dates
being a "Dividend Payment Date"), commencing January 1, 1998, with respect to
---------------------
the Initial Dividend Period or Annual Dividend Period, as applicable, then
ended. Such dividends shall be paid to the holders of record, as they appear on
the register of the Corporation for the Preferred Stock, at the close of
business 30 days prior to the respective Dividend Payment Date. Each of such
annual dividends shall be fully cumulative and shall accrue (whether or not
declared), without interest, from the first day of the Annual Dividend Period,
except that, with respect to the Initial Dividend Period, dividends shall accrue
from the Initial Accrual Date and shall be computed on the basis of a 360 day
year consisting of twelve 30 day months. Dividends shall accrue on a daily
basis without regard to the occurrence of a Dividend Payment Date or the
declaration of any dividend. Except with respect to any optional redemption (as
set forth in Section 6 hereof), no dividends on the Preferred Stock shall be
paid prior
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<PAGE>
to January 1, 1998. Except as expressly set forth herein, dividends on the
Preferred Stock shall be payable only in cash.
(b) All dividends paid with respect to shares of the Preferred Stock
pursuant to Section 3(a) shall be paid pro rata to the holders entitled thereto.
--- ----
In the event that Legally Available Funds of the Corporation available for the
payment of dividends shall be insufficient for the payment of the entire amount
of dividends payable for any Annual Dividend Period with respect to the
Preferred Stock, the amount of any Legally Available Funds shall be allocated
for the payment of dividends with respect to the Preferred Stock pro rata based
--- ----
upon the Liquidation Preference of the outstanding shares of Preferred Stock.
(c) (i) Holders of shares of the Preferred Stock shall be entitled to
receive the dividends provided for in Section 3(a) hereof in preference to and
in priority over any dividends upon any of the Junior Securities.
(ii) No dividends shall be paid on the Preferred Stock if such payment
would violate the terms of any instrument governing indebtedness of the
Corporation.
(iii) So long as any shares of the Preferred Stock are outstanding,
the Corporation (A) shall not declare, pay or set apart for payment any dividend
on any of the Junior Securities or make any payment on account of, or set apart
for payment money for a sinking or other similar fund for, the purchase,
redemption or other retirement of, any of the Junior Securities or any warrants,
rights, calls or options exercisable
-4-
<PAGE>
for or convertible into any of the Junior Securities, or make any distribution
in respect thereof, either directly or indirectly, and whether in cash,
obligations or shares of the Corporation or other property (other than (a)
distributions or dividends in Junior Securities to the holders of Junior
Securities, and (b) redemptions of Junior Securities issued to any of the
Corporation's executive officers or employees pursuant to any employee benefit,
stock option or bonus plan, which redemptions shall have been approved by a
majority of the Board of Directors) and (B) shall not permit any corporation or
other entity directly or indirectly controlled by the Corporation to purchase or
redeem any Junior Securities, or any warrants, rights, calls or options
exercisable for or convertible into any Junior Securities, unless prior to or
concurrently with such declaration, payment, setting apart for payment, purchase
or distribution, as the case may be, all accrued and unpaid dividends through
the most recent Dividend Payment Date on shares of the Preferred Stock shall
have been or be paid or declared or set aside for payment.
(d) Subject to the foregoing provisions of this Section 3 and the other
provisions of this Certificate of Designations, the Board of Directors may
declare, and the Corporation may pay or set apart for payment, dividends and
other distributions on any of the Junior Securities, and may purchase or
otherwise redeem any of the Junior Securities or any warrants, rights or options
exercisable for or convertible into any of the Junior Securities, and the
holders of the shares of the Preferred Stock shall not be entitled to share
therein.
-5-
<PAGE>
4. Protective Provisions. In addition to any other rights provided by
---------------------
law, so long as any shares of Preferred Stock shall be outstanding, the
Corporation shall not, without first obtaining the affirmative vote or written
consent of the holders of 66-2/3% of the Preferred Stock (voting together as a
class for this purpose):
(a) amend or repeal any provision of, or add any provision to the
Corporation's Certificate of Incorporation, which provision adversely affects
the rights, remedies or preferences of the holders of Preferred Stock;
(b) alter or change the preferences, rights, privileges or powers of,
or the restrictions provided for the benefit of the Preferred Stock;
(c) authorize or issue shares of any class or series of stock having
any preference or priority as to dividends or assets (i) superior to any such
preference or priority of the Preferred Stock, or (ii) on a parity with any such
preference or priority of the Preferred Stock; or
(d) reclassify any shares of Junior Securities other than the
Preferred Stock into shares having any preference or priority as to dividends or
liquidation superior to or on a parity with any such preference or priority of
the Preferred Stock.
5. Liquidation Preference.
----------------------
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation (a "Liquidation
-----------
Event"), the holders of shares of the
- -----
-6-
<PAGE>
Preferred Stock then outstanding shall be entitled to receive, prior to and in
preference to any distribution of any of the assets or surplus funds of the
Corporation to the holders of the Junior Securities, by reason of their
ownership of such Preferred Stock, out of the assets of the Corporation
available for distribution to its stockholders, an amount in cash equal to the
Stated Value for each share of Preferred Stock outstanding (the "Liquidation
-----------
Preference"), plus (to the extent not declared and paid pursuant to the
- ----------
immediately succeeding sentence) an amount in cash equal to all accrued but
unpaid dividends thereon to the date fixed for liquidation, dissolution or
winding up before any payment shall be made or any assets distributed to the
holders of any of the Junior Securities. After payment has been made to the
holders of the Preferred Stock of the full amount to which they shall be
entitled as aforesaid, the holders of shares of Junior Securities shall be
entitled to receive their respective pro rata portions of any and all remaining
--- ----
assets based on the number of shares of Junior Securities then held by them.
Upon the occurrence of a Liquidation Event, the Corporation, by resolution of
its Board of Directors, shall, to the extent of any Legally Available Funds and
prior to the filing of a certificate of dissolution with respect to such
transaction, declare a mandatory dividend on the Preferred Stock payable before
any distribution is made to any holder of any Junior Securities, in an amount
equal to any accrued and unpaid dividends on the Preferred Stock as of such
date, and if the Corporation does not have sufficient Legally Available Funds to
declare and pay all dividends accrued
-7-
<PAGE>
at the time of such liquidation, dissolution or winding up, an amount equal to
any remaining accrued and unpaid dividends shall be added to the payment to be
received by the holder of the Preferred Stock in such liquidation, dissolution
or winding up. If upon the occurrence of a Liquidation Event, the assets and
funds of the Corporation, or proceeds thereof, are not sufficient to permit the
payment in full of the preferential liquidation payments payable to the holders
of outstanding shares of the Preferred Stock, then the holders of all such
shares shall share ratably in such distribution of assets and funds of the
Corporation in proportion to the full amounts to which the holders of
outstanding shares of the Preferred Stock are entitled.
(b) If, upon the completion of the distributions contemplated by
paragraph (a) of this Section 5, assets remain in the Corporation, the remaining
assets legally available for the distribution, if any, shall be divided ratably
between the holders of the Corporation's Junior Securities.
(c) The fair value of the assets or property to be distributed upon the
occurrence of a Liquidation Event shall be determined in good faith by the Board
of Directors of the Corporation.
(d) Neither (i) the voluntary sale, conveyance, exchange or transfer
(for cash, shares of stock, securities or other consideration) of all or
substantially all the property or assets of the Corporation, nor (ii) the
consolidation or merger of the Corporation with one or more corporations or
other form of
-8-
<PAGE>
reorganization with the effect that, immediately after such transaction, the
stockholders of the Corporation immediately prior to such transaction hold less
than a majority in interest of the total voting power entitled to vote in the
election of directors, managers or trustees of the Corporation or such other
person or entity surviving such transaction, shall be deemed to be a Liquidation
Event, unless such event shall be in connection with a dissolution or winding up
of the business and operations of the Corporation.
6. Optional Redemption.
-------------------
(a) The Corporation may, at its option, redeem any or all shares of the
Preferred Stock, at any time or from time to time, at a redemption price per
share equal to the Stated Value thereof, plus an amount equal to accrued and
unpaid dividends thereon (whether or not declared) to and including the date of
redemption.
(b) If less than all the outstanding shares of Preferred Stock are to
be redeemed, the shares to be redeemed shall be selected pro rata as nearly as
--- ----
practicable or by lot.
7. Procedure for Redemption.
------------------------
(a) If Legally Available Funds are not available at the time of any
redemption date to redeem all of the shares of Preferred Stock then due to be
redeemed, any such unredeemed shares shall be redeemable, at the option of the
holder thereof, at such time as the Corporation has Legally Available Funds
therefor. Shares of Preferred Stock which are subject to redemption, but which
have not been redeemed and for which the
-9-
<PAGE>
redemption price has not been paid or set aside with respect thereto due to
insufficient Legally Available Funds, shall continue to be entitled to the
dividend and other rights, preferences and privileges of the Preferred Stock
until such shares have been redeemed and the redemption price has been paid or
set aside with respect thereto.
(b) In the event the Corporation shall redeem shares of the Preferred
Stock pursuant to Section 6, written notice of such redemption shall be given,
by first class mail, postage prepaid, mailed not less than 5 days nor more than
90 days prior to the applicable redemption date, to each holder of record of the
shares to be redeemed at such holder's address as the same appears on the stock
register or transfer books of the Corporation; provided, however, that no
-------- -------
failure to give such notice nor any defect therein shall affect the validity of
the proceeding for the redemption of any shares of the Preferred Stock to be
redeemed, except as to the holder to whom the Corporation has failed to give
said notice or except as to the holder whose notice was defective. Each such
notice shall state: (i) the applicable redemption date; (ii) the total number of
shares of Preferred Stock to be redeemed and the number of shares of Preferred
Stock to be redeemed from such holder; (iii) the applicable redemption price;
(iv) the place or places where certificates for such shares are to be
surrendered for payment of the applicable redemption price; and (v) that
dividends on the shares to be redeemed will cease to accrue upon such
redemption.
-10-
<PAGE>
(c) Notice having been mailed in accordance with Section 7(b) hereof,
from and after the applicable redemption date (unless default shall be made by
the Corporation in providing money for the payment of the applicable redemption
price, together with an amount equal to all accrued and unpaid dividends, if
any, to the redemption date, of the shares called for redemption), dividends on
the shares of the Preferred Stock so called for redemption shall cease to
accrue, and said shares shall be cancelled and shall no longer be deemed to be
outstanding, and all rights of the holders thereof as stockholders of the
Corporation (except the right to receive from the Corporation the applicable
redemption price and any accrued and unpaid dividends without interest) shall
cease. Upon surrender by any holder of Preferred Stock in accordance with said
notice of the certificates for any shares so redeemed (properly endorsed or
assigned for transfer, if the Board of Directors shall so require and the notice
shall so state), such shares shall be redeemed by the Corporation at the
applicable redemption price. If fewer than all the shares represented by any
such certificate are redeemed, a new certificate shall be issued, without cost
to the holder thereof, representing the shares which have not been redeemed.
8. Definitions. In this Certificate of Designations, the following terms
-----------
have the meanings specified or referred to in this Section 8 and shall be
equally applicable to both the singular and plural forms.
-11-
<PAGE>
"Annual Dividend Period" shall have the meaning assigned to such
----------------------
term in Section 3 herein.
"Class A Common Stock" shall have the meaning assigned to such
--------------------
term in Section 2 herein.
"Class B Common Stock" shall have the meaning assigned to such
--------------------
term in Section 2 herein.
"Common Stock" shall have the meaning assigned to such term in
------------
Section 2 herein.
"Dividend Payment Date" shall have the meaning assigned to such
---------------------
term in Section 3 herein.
"Initial Dividend Period" shall have the meaning assigned to such
-----------------------
term in Section 3 herein.
"Junior Securities" shall have the meaning assigned to such term
-----------------
in Section 2 herein.
"Legally Available Funds" shall have the meaning assigned to such
-----------------------
term in Section 3(a) herein.
"Liquidation Event" shall have the meaning assigned to such term
-----------------
in Section 5(a) herein.
"Liquidation Preference" shall have the meaning assigned to such
----------------------
term in Section 5(a) herein.
"Preferred Stock" shall have the meaning assigned to such term in
---------------
Section 1 herein.
"Stated Value" shall have the meaning assigned to such term in
------------
Section 1 herein.
9. No Sinking Fund. The shares of Preferred Stock shall not be subject to
---------------
the operation of any mandatory purchase, retirement or sinking fund.
-12-
<PAGE>
10. No Other Rights. Except as expressly set forth herein, the holders of
---------------
the Preferred Stock shall have no voting or other rights other than those
provided by law.
11. Reacquired Shares. Shares of Preferred Stock redeemed by the
-----------------
Corporation, or otherwise acquired by the Corporation, shall be cancelled, shall
cease to be outstanding and shall be restored to the status of authorized but
unissued shares of the Corporation's preferred stock, without designation as to
class, and may thereafter be issued, but not as shares of Preferred Stock.
12. Conversion and Preemptive Rights. The Preferred Stock is not entitled
--------------------------------
to any conversion, preemptive or subscription rights with respect to any
securities of the Corporation.
13. Severability of Provisions. Whenever possible, each provision hereof
--------------------------
shall be interpreted in a manner as to be effective and valid under applicable
law, but if any provision hereof is held to be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating or otherwise adversely affecting
the remaining provisions hereof. If a court of competent jurisdiction should
determine that a provision hereof would be valid or unenforceable if a period of
time were extended or shortened or a particular percentage were increased or
decreased, then such court may make such change as shall be necessary to render
the provision in question effective and valid under applicable law.
-13-
<PAGE>
IN WITNESS WHEREOF, COINMACH LAUNDRY CORPORATION has caused this
Certificate to be signed by Robert M. Doyle, Senior Vice President of the
Corporation, this 17th day of July, 1996.
COINMACH LAUNDRY CORPORATION
By: /s/ ROBERT M. DOYLE
-------------------------
Robert M. Doyle
Senior Vice President
-14-
<PAGE>
EXHIBIT 3.3
SECOND 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 11
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 11 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 11 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 directors shall be classified with respect to the time for which they
severally hold office, into three classes, as nearly equal in number as
possible, as determined by the Board, Class I to hold office initially for a
term expiring at the annual meeting of stockholders to be held during the fiscal
year ending in 1997, Class II to hold office initially for a term expiring at
the annual meeting of stockholders to be held during the fiscal year ending
1998, and Class III to hold office initially for a term expiring at the annual
meeting of the stockholders to be held during the fiscal year ending in 1999,
with the members of each class to hold office until their successors are duly
elected and qualified or until their earlier death, resignation or removal as
hereinafter provided. At each annual meeting of stockholders, the successors of
the class of directors whose term expires at that meeting shall be elected to
hold office for a term expiring at the annual meeting of stockholders held in
the third year following the year of their election.
4
<PAGE>
(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.
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
5
<PAGE>
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 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
6
<PAGE>
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 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
7
<PAGE>
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 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.
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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 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
9
<PAGE>
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 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
10
<PAGE>
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 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 of
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
11
<PAGE>
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, 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
12
<PAGE>
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 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.
13
<PAGE>
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 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
14
<PAGE>
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 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 received 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
15
<PAGE>
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 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
16
<PAGE>
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 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 11 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
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Exhibit 10.44
COINMACH LAUNDRY CORPORATION
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 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.
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
-1-
<PAGE>
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 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."
------
-2-
<PAGE>
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.
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.
-3-
<PAGE>
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 to Section 6.7, the
Committee shall not have the right to permit the exercise of any Option after
its Expiration Date.
-4-
<PAGE>
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 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
-5-
<PAGE>
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 and subject to Section 7, 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 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
-6-
<PAGE>
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
1,103,419 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 1,103,419
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 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.
-7-
<PAGE>
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 ox 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 compensation under Section 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
-8-
<PAGE>
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 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.
"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
-9-
<PAGE>
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 (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
-10-
<PAGE>
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 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
-11-
<PAGE>
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 10.45
RECLASSIFICATION AGREEMENT
--------------------------
THIS RECLASSIFICATION AGREEMENT (this "Agreement") is made and entered into
this 17th day of July 1996, by and among Coinmach Laundry Corporation (formerly
known as SAS Acquisitions Inc.), a Delaware corporation (the "Company"), Golder,
Thoma, Cressey, Rauner Fund IV, L.P. ("GTCR"), President and Fellows of Harvard
College ("Harvard"), MCS Capital, Inc. ("MCS Capital"), Heller Financial, Inc.
("Heller"), Mitchell Blatt ("Blatt"), Robert M. Doyle ("Doyle"), Michael Stanky
("Stanky"), James N. Chapman ("Chapman"), Michael E. Marrus ("Marrus"), Charles
Prato ("Prato"), David Tulkop ("Tulkop"), Russell Harrison ("Harrison"), S. A.
Spencer ("Spencer"), Jackson National Life Insurance Company ("JNL" and,
together with all of the foregoing parties other than the Company, the
"Shareholders").
RECITALS
WHEREAS, (i) GTCR owns 72,153 shares of the Company's Class A Common Stock,
par value $.01 per share (the "Existing Class A Common Stock) and 125,532.4476
shares of the Company's Class F Common Stock, par value $.01 per share (the
"Class F Common Stock"); (ii) Harvard owns 2,405 shares of Existing Class A
Common Stock and 4,184.0687 shares of Class F Common Stock; (iii) MCS Capital
owns 1,479 shares of Existing Class A Common Stock, 5,415 shares of the
Company's Class B Common Stock, par value $.01 per share (the "Existing Class B
Common Stock"), 1,201.9027 shares of Class F Common Stock and 10,386.6 shares of
the Company's Class G Common Stock, par value $.01 per share (the "Class G
Common Stock"); (iv) Heller owns 6,621.4575 shares of the Company's Class C
Common Stock, par value $.01 per share (the "Class C Common Stock") and 3,806
shares of the Company's Class E Common Stock, par value $.01 per share (the
"Class E Common Stock"); (v) Blatt owns 398 shares of Existing Class A Common
Stock, 5,415 of Existing Class B Common Stock, 692.44 of Class F Common Stock
and 10,386.6 of Class G Common Stock; (vi) Doyle owns 2,599 shares of Existing
Class B Common Stock, 1,731.1 shares of Class G Common Stock and 316.2720 shares
of Class F Common Stock; (vii) Stanky owns 425 shares of Existing Class A Common
Stock and 1,500 shares of Existing Class B Common Stock; (viii) Chapman owns 300
shares of Existing Class A Common Stock and 519.33 shares of Class F Common
Stock; (ix) Marrus owns 228 shares of Existing Class A Common Stock and 399.8841
shares of Class F Common Stock; (x) Prato owns 1,298.325 shares of Class G
Common Stock; (xi) Tulkop owns 865.55 shares of Class G Common Stock; (xii)
Harrison owns 432.775 shares of Class G Common Stock; (xiii) Spencer owns
1,054.2399 shares of Class F Common Stock; (xiv) JNL owns 6,621.4575 shares of
Class C Common Stock and 3,806 shares of Class E Common Stock;
<PAGE>
Reclassfication Agreement
Page 2
WHEREAS, the Company has recently filed a registration statement with the
Securities and Exchange Commission with respect to an underwritten public
offering for its Class A Common Stock, par value $.01 per share ("Class A Common
Stock");
WHEREAS, the managing underwriters of the Initial Public Offering have
advised the Company that the success of the Initial Public Offering is
contingent upon certain factors including (i) the reclassification of all of the
Common Securities and (ii) the relinquishment of certain rights of the
Shareholders relating thereto;
WHEREAS, in connection with the Initial Public Offering, the parties hereto
desire to amend, convert and/or terminate certain of the securities and/or
contractual rights among them and desire to enter into this Agreement to
evidence the same;
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned, intending legally to be bound hereby, agree as
follows:
SECTION 1
Reclassification of Shares
--------------------------
1.1 Reclassification of Common Securities. Subject to the terms and
-------------------------------------
conditions hereof and effective at the Effective Time, all of the issued and
outstanding shares of capital stock of the Company shall be reclassified,
without any action on the part of the holders thereof (the "Reclassification"),
in the following manner: (a) Existing Class A Common Stock, Existing Class B
Common Stock, Class D Common Stock, Class F Common Stock and Class G Common
Stock shall be reclassified on a share-for-share basis into an equivalent
aggregate number of shares of Class A Common Stock, having the preferences,
limitations, designations and relative rights set forth in the Third Restated
Certificate (as defined in Section 3.1 hereof); (b) Class C Common Stock and
Class E Common Stock shall be reclassified on a share-for-share basis into an
equivalent aggregate number of shares of Class B Common Stock, par value $.01
per share of the Company (the "Class B Common Stock"), having the preferences,
limitations, designations and relative rights set forth in the Third Restated
Certificate; and (c) Existing Class A Common Stock, Class E Common Stock and
Class F Common Stock (collectively, the "Preference Shares") shall be
reclassfied, such that, in addition to the issuance of Class A Common Stock and
Class B Common Stock described in clauses (a) and (b) above, the holders of such
Preference Shares shall also receive, in the manner and
<PAGE>
Reclassfication Agreement
Page 3
in the share amounts set forth in Section 1.3 hereof, shares of Class A Common
Stock (the "Additional Common Stock") shares of the Company's non-participating,
non-voting Series A Preferred Stock, par value $.01 per share (the "Preferred
Stock", and, together with the Additional Common Stock, the "Additional Shares")
equal to the sum of (i) the Unpaid Yield (as defined in the Amended and Restated
Certificate of Incorporation of the Company) on the Preference Shares from the
date of issuance thereof through and including the date on which the Preferred
Stock is issued in exchange for the Preference Shares (the "Preferred Stock
Issuance Date"), and (ii) $17,339,062, the aggregate Unreturned Preferred Amount
(as defined in the Amended and Restated Certificate of Incorporation of the
Company) in respect of the Preference Shares (collectively, the "Preferred
Yield").
1.2 Stock Split. Immediately following the Reclassification, the Company
-----------
shall effect a 23.04729-for-1 stock split (the "Stock Split") in respect of the
Class A Common Stock (other than the shares of Additional Common Stock issued
pursuant to Sections 1.1(c) and 1.3) and the Class B Common Stock, whereby
Shareholders of Class A Common Stock and Class B Common Stock will hold shares
of Class A Common Stock (other than the shares of Additional Common Stock issued
pursuant to Sections 1.1(c) and 1.3) and Class B Common Stock in an amount
determined by multiplying the number of shares of Class A Common Stock (other
than the shares of Additional Common Stock issued pursuant to Sections 1.1(c)
and 1.3) and/or Class B Common Stock held by each such Shareholder by 23.04729
(the "Conversion Ratio"). After giving effect to the Stock Split (but prior to
giving effect to the issuance of the Additional Shares), there shall be an
aggregate of 5,792,211 shares of Class A Common Stock and an aggregate of
480,648 shares of Class B Common Stock issued and outstanding, all of which
shall be held in the amounts and by the Shareholders listed below:
[TABLE TO FOLLOW]
<PAGE>
Reclassfication Agreement
Page 4
<TABLE>
<CAPTION>
SHARES OF CLASS A SHARES OF CLASS B
SHAREHOLDER COMMON STOCK COMMON STOCK
===================================================
<S> <C> <C>
GTCR 4,556,114 0
MCS Capital 425,972 0
Blatt 389,316 0
Spencer 24,297 0
Heller 0 240,324
JNL 0 240,324
Harvard 151,860 0
Doyle 107,086 0
Stanky 44,366 0
Chapman 18,883 0
Prato 29,923 0
Marrus 14,471 0
Tulkop 19,949 0
Harrison 9,974 0
TOTAL: 5,792,211 480,648
===================================================
</TABLE>
1.3 Unpaid Yield and Unreturned Preferred Amount. As part of the
--------------------------------------------
Reclassification described in Section 1.1 above and subject to the terms and
conditions of this Agreement, holders of Preference Shares shall receive
Additional Shares representing the Preferred Yield. The portion of the
Additional Shares consisting of the Preferred Stock and the portion of the
Additional Shares consisting of the Additional Common Stock shall, in each case,
be issued to holders of Preference Shares on the Preferred Stock Issuance Date
as follows: (a) an aggregate of 1,000 shares of Preferred Stock shall be issued
to GTCR, Harvard, Heller, JNL, Spencer, Chapman and Marrus in the following
respective amounts: 924.5, 30.8, 16.4, 16.4, 5.2, 3.8 and 2.9, and (b) Shares of
Additional Common Stock comprising a portion of the Additional Shares shall be
issued to MLS Capital, Blatt, Stanky and Doyle in an amount determined by
dividing (x) the aggregate Preferred Yield of such person's Preference Shares to
be reclassified by (y) the initial public offering price of the Class A Common
Stock in the Initial Public Offering (fractions shall be rounded to the nearest
whole number.
<PAGE>
Reclassfication Agreement
Page 5
SECTION 2
Closing; Mechanics of Reclassification
--------------------------------------
2.1 Closing of Reclassification. The closing of the Reclassification (the
---------------------------
"Closing") shall take place at the offices of Cahill Gordon & Reindel, 80 Pine
Street, New York, New York at 10:00 A.M., New York City time, on July 23, 1996.
2.2 No Fractional Shares. No fractional share of Class A Common Stock,
--------------------
Class B Common Stock or Preferred Stock shall be issued in the Reclassification.
All shares of Common Securities shall be reclassified in the manner and in the
amounts set forth in Sections 1.1 and 1.2 of this Agreement.
2.3 Cancellation of Shares. At the Effective Time (upon effectiveness of
----------------------
the Reclassification and the Stock Split), all shares of capital stock of the
Company evidencing the Common Securities shall be cancelled, retired and deemed
to be no longer outstanding, and no payment of any kind, except as otherwise set
forth in this Agreement, shall be made with respect thereto and all rights of
the holders of such shares as shareholders of the Company shall cease.
<PAGE>
Reclassfication Agreement
Page 6
2.4 Status of Treasury Shares. At the Effective Time (upon effectiveness
-------------------------
of the Reclassification and the Stock Split), each share of capital stock of the
Company, if any, held in treasury immediately prior to the Effective Time shall
be cancelled and retired and no payment shall be made with respect thereto.
2.5 Deliveries at the Closing. At the Closing, the Company will deliver
-------------------------
stock certificates evidencing the shares of Class A Common Stock (including the
Additional Common Stock), Class B Common Stock and Preferred Stock to be
exchanged against the delivery by the Shareholders of certificates evidencing
the shares of Common Securities held by such Shareholders, which shares shall be
cancelled immediately thereafter. Delivery by the Shareholders at the Closing
(or any time thereafter) of stock certificates representing the Common
Securities shall not be a condition precedent to the effectiveness of the
Reclassification or the Stock Split; provided, however, that no certificate or
-------- -------
certificates representing shares of Class A Common Stock (including the
Additional Common Stock), Class B Common Stock or Preferred Stock shall be
delivered to any Shareholder by the Company without such Shareholder first
having tendered to the Company, as required by the terms and conditions of this
Agreement, any and all certificates held by such Shareholder representing shares
(or fractional interests therein) of Common Securities or a written affidavit
executed by such Shareholder, in form and substance acceptable to the Company,
attesting to the loss, destruction or mutilation of such certificate or
certificates.
(a) Deliveries by the Company. At the Closing, the Company will
-------------------------
deliver or cause to be delivered to each Shareholder:
(A) one or more certificates for shares of Class A Common Stock
in the share amount(s) set forth in this Section 2.5;
(B) one or more certificates for shares of Class B Common Stock
in the share amount(s) set forth in this Section 2.5; and
(C) one or more certificates for shares of Preferred Stock in the
share amount(s) set forth in this Section 2.5.
(b) Deliveries by GTCR. At the Closing, GTCR will deliver or cause to
------------------
be delivered to the Company, in exchange for an aggregate of 4,556,114 shares of
Class A Common Stock and 924.5 shares of Preferred Stock, stock certificates
representing (i) 72,153 shares of Existing Class A Common Stock and (ii)
125,532.4476 shares of Class F Common Stock.
<PAGE>
Reclassfication Agreement
Page 7
(c) Deliveries by Harvard. At the Closing, Harvard will deliver or
---------------------
cause to be delivered to the Company, in exchange for an aggregate of 151,860
shares of Class A Common Stock and 30.8 shares of Preferred Stock, stock
certificates representing (i) 2,405 shares of Existing Class A Common Stock and
(ii) 4,184.0687 shares of Class F Common Stock.
(d) Deliveries by MCS Capital. At the Closing, MCS Capital will
-------------------------
deliver or cause to be delivered to the Company, in exchange for an aggregate of
425,972 shares of Class A Common Stock and such additional shares of Class A
Common Stock equal to MCS Capital's portion of Additional Common Stock
comprising a portion of the Additional Shares, stock certificates representing
(i) 1,479 shares of Existing Class A Common Stock, (ii) 5,415 shares of Existing
Class B Common Stock, (iii) 1,201.9027 shares of Class F Common Stock, and (iv)
10,386.6 shares of Class G Common Stock.
(e) Deliveries by Heller. At the Closing, Heller will deliver or
--------------------
cause to be delivered to the Company, in exchange for an aggregate of 240,324
shares of Class B Common Stock and 16.4 shares of Preferred Stock, stock
certificates representing (i) 6,621.4575 shares of Class C Common Stock, and
(ii) 3,806 shares of Class E Common Stock.
(f) Deliveries by JNL. At the Closing, JNL will deliver or cause to
-----------------
be delivered to the Company, in exchange for an aggregate of 240,324 shares of
Class B Common Stock and 16.4 shares of Preferred Stock, stock certificates
representing (i) 6,621.4575 shares of Class C Common Stock, and (ii) 3,806
shares of Class E Common Stock.
(g) Deliveries by Blatt. At the Closing, Blatt will deliver or cause
-------------------
to be delivered to the Company, in exchange for an aggregate of 389,316 shares
of Class A Common Stock and such additional shares of Class A Common Stock equal
to Blatt's portion of the Additional Common Stock comprising a portion of the
Additional Shares, stock certificates representing (i) 398 shares of Existing
Class A Common Stock, (ii) 5,415 shares of Existing Class B Common Stock, (iii)
692.44 shares of Class F Common Stock, and (vi) 10,386.6 shares of Class G
Common Stock.
(h) Deliveries by Doyle. At the Closing, Doyle will deliver or cause
-------------------
to be delivered to the Company, in exchange for an aggregate of 107,086 shares
of Class A Common Stock and such additional shares of Class A Common Stock equal
to Doyle's portion of the Additional Common Stock comprising a portion of the
Additional Shares, stock certificates representing (i) 2,599 shares of Existing
Class B Common Stock, (ii) 1,731.1 shares of Class G Common Stock, and (iii)
316.2720 shares of Class F Common Stock.
(i) Deliveries by Spencer. At the Closing, Spencer will deliver or
---------------------
cause to be delivered to the Company, in exchange for an aggregate of 24,297
shares of Class A Common Stock and 5.2 shares of Preferred Stock, a stock
certificate representing 1,054.2399 shares of Class F Common Stock.
<PAGE>
Reclassfication Agreement
Page 8
(j) Deliveries by Stanky. At the Closing, Stanky will deliver or
--------------------
cause to be delivered to the Company, in exchange for an aggregate of 44,366
shares of Class A Common Stock and such additional shares of Class A Common
Stock equal to Stanky's portion of the Additional Common Stock comprising a
portion of the Additional Shares, stock certificates representing (i) 425 shares
of Existing Class A Common Stock, and (ii) 1,500 shares of Existing Class B
Common Stock.
(k) Deliveries by Chapman. At the Closing, Chapman will deliver or
---------------------
cause to be delivered to the Company, in exchange for an aggregate of 18,883
shares of Class A Common Stock and 3.8 shares of Preferred Stock, stock
certificates representing (i) 300 shares of Existing Class A Common Stock, and
(ii) 519.33 shares of Class F Common Stock.
(l) Deliveries by Marrus. At the Closing, Marrus will deliver or
--------------------
cause to be delivered to the Company, in exchange for an aggregate of 14,471
shares of Class A Common Stock and 2.9 shares of Preferred Stock, stock
certificates representing (i) 228 shares of Existing Class A Common Stock, and
(ii) 399.8841 shares of Class F Common Stock.
(m) Deliveries by Prato. At the Closing, Prato will deliver or cause
-------------------
to be delivered to the Company, in exchange for an aggregate of 29,923 shares of
Class A Common Stock, stock certificates representing 1,298.325 shares of
Existing Class G Common Stock.
(n) Deliveries by Tulkop. At the Closing, Tulkop will deliver or
--------------------
cause to be delivered to the Company, in exchange for an aggregate of 19,949
shares of Class A Common Stock, stock certificates representing 865.55 shares of
Class G Common Stock.
(o) Deliveries by Harrison. At the Closing, Harrison will deliver or
----------------------
cause to be delivered to the Company, in exchange for an aggregate of 9,974
shares of Class A Common Stock, stock certificates representing 432.775 shares
of Class G Common Stock.
SECTION 3
Amended and Restated Certificate of Incorporation
-------------------------------------------------
3.1 Third Restated Certificate. The Company shall authorize the
--------------------------
amendment and restatement of the Company's Amended and Restated Certificate of
Incorporation in the form attached hereto as Exhibit A (the "Third Restated
Certificate"). Each of the Shareholders hereby approves such amendment and
restatement pursuant to Section 242 of the General Corporation Law of the State
of Delaware and expressly consents to the execution and
<PAGE>
Reclassfication Agreement
Page 9
filing thereof by the Company, at or prior to the Effective Time, with the
Secretary of State of the State of Delaware.
3.1 Authorization of Capital Stock. The Company shall authorize, subject
------------------------------
to the terms and conditions of this Agreement, (a) 15,000,000 shares of Class A
Common Stock, (b) 1,000,000 shares of Class B Common Stock, and (c) 1,000,000
shares of Preferred Stock.
SECTION 4
Representations and Warranties of the Company
---------------------------------------------
The Company hereby represents to each of the Shareholders that
as of the date hereof and on the Preferred Stock Issuance Date:
(a) the Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware,
and the Company has the requisite corporate power and authority to
enter into and perform this Agreement and to issue the Class A Common
Stock, the Class B Common Stock and the Preferred Stock contemplated
hereby;
(b) upon the consummation of the transactions contemplated
hereby, the authorized capital stock of the Company will consist of:
(i) 15,000,000 shares of Class A Common Stock, of which 5,792,211
shares, plus the number of shares of Additional Common Stock issued
hereunder, will be issued and outstanding (not including up to an
additional 4,600,000 shares of Class A Common Stock to be issued in
the Initial Public Offering); (ii) 1,000,000 shares of Class B Common
Stock, of which 480,648 shares will be issued and outstanding; and
(iii) 1,000,000 shares of Preferred Stock, of which 1,000 shares will
be issued and outstanding on the Preferred Stock Issuance Date;
(c) the shares of Class A Common Stock, Class B Common Stock
and Preferred Stock issued pursuant to the terms of this Agreement
shall be duly authorized, fully paid, validly issued and non-
assessable; and
(d) the Company's execution, delivery and performance of this
Agreement, the filing of the Certificate of Designations and the
amendment of the Company's articles of incorporation by filing the
Third Restated Certificate have each been duly authorized by all
necessary corporate and shareholder action, and each of this
Agreement, the Third Restated Certificate and the Certificate of
Designations constitutes a valid and binding obligation of the Company
which is enforceable in accordance with its terms, except to the
extent that such enforceability may be limited by (i) bankruptcy,
insolvency, fraudulent conveyance, preferential transfer,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to or affecting creditors' rights and remedies
generally or (ii) general principles of equity (whether such
enforceability is considered in a proceeding in equity or at law), and
by the discretion of the court before which any proceeding therefor
may be brought, and the authorization, execution, delivery and
fulfillment of and compliance with the terms of each of this
Agreement, the Third Restated Certificate and the Certificate of
Designations, do not and shall not (i) conflict with or result in a
breach of the terms, conditions or provisions of, (ii) constitute a
default under, (iii) result in the creation of any lien, security
interest, charge or encumbrance upon the Company's or any of its
subsidiary's capital stock or assets pursuant to, (iv) give any third
party the right to modify, terminate or accelerate any obligation
under, (v) result in a violation of, or (vi) require any
authorization, consent, approval, exemption or other action by or
notice or declaration to, or filing with, any court or administrative
or governmental body or agency pursuant to, the Certificate of
Designations or the Third Restated Certificate or bylaws of the
Company or any of its subsidiaries, or any law, statute, rule or
regulation to which the Company or any of its subsidiaries is subject,
or any agreement, instrument, order, judgment or decree to which the
Company or any of its subsidiaries is subject.
SECTION 5
Definitions
-----------
5.1 Definitions. For purposes of this Agreement, the following terms
-----------
shall have the meanings set forth below:
"Certificate of Designations" shall mean that certain Certificate of
Designations, Preferences and Relative, Participating, Optional and Other
Special Rights of Preferred Stock and Qualifications, Limitations and
Restrictions Thereof of Coinmach Laundry Corporation relating to the Preferred
Stock and filed by the Company with the Secretary of State of the State of
Delaware at or prior to the Effective Time.
"Common Securities" shall mean, collectively, the Existing Class A
Common Stock, Existing Class B Common Stock, Class C Common Stock, the Company's
Class D Common Stock, par value $.01 per share (the "Class D Common Stock"),
Class E Common Stock, Class F Common Stock, and Class G Common Stock.
"Effective Time" shall mean 10:00 A.M., New York City time on July
18, 1996.
"Initial Public Offering" means the Company's underwritten public
offering of approximately 4,120,000 shares of Class A Common Stock (excluding up
to 618,000 shares issuable upon exercise by the underwriters of an over-
allotment option) to be effected pursuant to a registration statement on Form S-
1 filed with, and declared effective by, the Securities and Exchange Commission
("SEC") under the Securities Act of 1933, as amended.
<PAGE>
Reclassfication Agreement
Page 10
SECTION 6
Miscellaneous
-------------
6.1 Termination. This Agreement may be terminated (a) at any time by
-----------
the mutual consent of the parties to this Agreement; or (b) by either the
Company or any Shareholder if (i) the Effective Time has not occurred prior to
October 1, 1996, and (ii) the party electing to terminate this Agreement is not
in default of any of the provisions of this Agreement. In the event of
termination of this Agreement, each party (and each of their respective agents,
directors or officers, where appropriate) shall have no liability or further
obligation to any other party to this Agreement, except that nothing herein will
relieve any party from liability for any willful breach of this Agreement.
6.2 Remedies. Any party having any rights under any provision of
--------
this Agreement will be entitled to enforce such rights specifically, to recover
damages by reason of any breach of any provision of this Agreement and to
exercise all other rights or remedies available at law or in equity.
6.3 Amendment and Waiver. The parties to this Agreement may, by
--------------------
mutual consent, amend, modify or supplement this Agreement in such manner as may
be agreed upon by them in writing at any time. No modification, amendment or
waiver of any provision of this Agreement will be effective against the Company
or a Shareholder, unless such modification, amendment or waiver is approved in
writing by such party. The failure of any party to enforce any of the
provisions of this Agreement will in no way be construed as a waiver of such
provisions and will not affect the right of such party thereafter to enforce
each and every provision of this Agreement, in each case in accordance with its
terms.
6.4 Additional Documents. Each party to this Agreement shall
--------------------
cooperate, shall take such further action and shall execute and deliver such
further documents, certificates and instruments as may be reasonably requested
by any other party to this Agreement in order to carry out the provisions and
purposes of this Agreement.
6.5 Successors and Assigns. Except as otherwise expressly provided
----------------------
herein, all covenants and agreements contained in this Agreement by or on behalf
of any of the parties hereto will bind and inure to the benefit of the
respective successors and assigns of the parties hereto whether so expressed or
not.
6.6 Severability. Whenever possible, each provision of this
------------
Agreement will be interpreted in such manner as to be
<PAGE>
Reclassfication Agreement
Page 11
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.
6.7 Counterparts. This Agreement may be executed in two or more
------------
counterparts, any of which need not contain the signatures of more than one
party, but all such counterparts taken together will constitute one and the same
agreement.
6.8 Governing Law. THE DELAWARE GENERAL CORPORATION LAW WILL GOVERN
-------------
ALL ISSUES CONCERNING THE RELATIVE RIGHTS OF THE COMPANY AND ITS SHAREHOLDERS.
ALL OTHER QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY AND INTERPRETATION OF
THIS AGREEMENT AND THE EXHIBITS AND SCHEDULES HERETO WILL BE GOVERNED BY THE
INTERNAL LAWS, AND NOT THE LAW OF CONFLICTS, OF THE STATE OF NEW YORK.
[SIGNATURE PAGES TO FOLLOW]
<PAGE>
Reclassfication Agreement
Page 12
IN WITNESS WHEREOF, the undersigned have executed this Agreement effective
upon the date set forth above.
COINMACH LAUNDRY CORPORATION
By: /s/ ROBERT M. DOYLE
--------------------------
Name: Robert M. Doyle
Title: Senior Vice President
GOLDER, THOMA, CRESSEY, RAUNER FUND IV, L.P.
By: GTCR IV, L.P.,
its General Partner
By: GOLDER, THOMA, CRESSEY, RAUNER, INC.,
its General Partner
By: /s/ BRUCE V. RAUNER
--------------------------
Name: Bruce V. Rauner
Title:
MCS CAPITAL, INC.
By: /s/ STEPHEN R. KERRIGAN
--------------------------
Stephen R. Kerrigan
President
PRESIDENT AND FELLOWS OF HARVARD
COLLEGE
By: Harvard Management
Company, Inc.
By: /s/ TIMOTHY S. PETERSON
---------------------------
Name: Timothy S. Peterson
Title: Authorized Signatory
By: /s/ JACK R. MEYER
---------------------------
Name: Jack R. Meyer
Title: Authorized Signatory
<PAGE>
Reclassfication Agreement
Page 13
HELLER FINANCIAL, INC.
By: /s/ ELLEN T. COOK
--------------------------------
Name: Ellen T. Cook
Title: Assistant Vice President
JACKSON NATIONAL LIFE INSURANCE
COMPANY
as Agent
By: PPM America, Inc.
By: /s/ WILLIAM T. CONSIDINE
----------------------------
Name: William T. Considine
Title: Vice President
/s/ MITCHELL BLATT
-----------------------------
Mitchell Blatt
/s/ ROBERT M. DOYLE
-----------------------------
Robert M. Doyle
/s/ MICHAEL STANKY
-----------------------------
Michael Stanky
/s/ CHARLES PRATO
-----------------------------
Charles Prato
/s/ JAMES N. CHAPMAN
-----------------------------
James N. Chapman
/s/ MICHAEL MARRUS
-----------------------------
Michael Marrus
<PAGE>
Reclassfication Agreement
Page 14
/s/ DAVID TULKOP
-----------------------------
David Tulkop
/s/ RUSSELL HARRISON
-----------------------------
Russell Harrison
<PAGE>
EXHIBIT 10.46
[MCS]
OPTION AGREEMENT
----------------
THIS OPTION AGREEMENT (the "Agreement") is made and entered into this 23rd
---------
day of July, 1996, by and between Coinmach Laundry Corporation, a Delaware
corporation (the "Corporation"), and MCS Capital, Inc. (the
-----------
"Optionee").
--------
RECITALS
--------
A. Optionee is a corporation controlled by Stephen R. Kerrigan
("Kerrigan").
B. Kerrigan has served and continues to serve as an executive officer of
the Corporation and its subsidiaries, and has rendered and continues to render
certain managerial and advisory and/or other similar services and make other
valuable contributions to the Corporation (the "Services").
--------
C. In consideration for Kerrigan's continued provision of the Services,
the Corporation desires to grant to Optionee options to purchase shares of the
Corporation's common stock, par value $.01 per share (the "Common Stock"),
------------
subject to the terms and conditions of this Agreement.
D. In consideration for the grant of such options to Optionee, Kerrigan
desires to continue 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 the Optionee, at no cost or expense to
Optionee of any kind, irrevocable options ("Options") to purchase from the
-------
Corporation 306,508 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 the Optionee to purchase one share of
Common Stock at an exercise price (the "Exercise Price") equal to $11.90 per
--------------
share.
<PAGE>
Option Agreement
Page 2
4. Terms of Options. Subject to the terms and conditions contained
----------------
herein, the Optionee shall be entitled to exercise Options to purchase an
aggregate of up to 306,508 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 of directors of the Corporation (the
"Board").
-----
<TABLE>
<CAPTION>
Number of Options Vesting
Vesting Date on the Vesting Date
------------ -------------------------
<S> <C>
July 23, 1996 61,304
July 23, 1997 61,301
July 23, 1998 61,301
July 23, 1999 61,301
July 23, 2000 61,301
</TABLE>
Notwithstanding any provision to the contrary in this Agreement, any
and all Options not exercised on or prior to July 23, 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 July 23, 2006, shall be referred to herein as the "Option Period".
-------------
5. Conditions to Exercise of Options. No Option may be exercised by
---------------------------------
Optionee to the extent that, at the time of such proposed exercise, Kerrigan
is not, in the reasonable discretion of the Board, providing, when and as
requested by the Corporation, Services in a manner and on economic terms
reasonably satisfactory to the Corporation and consistent with past practice;
provided, however, that (i) upon Kerrigan's death or incapacitation or (ii) upon
- -------- -------
termination of Kerrigan's employment by the Corporation without Cause, Optionee
shall be entitled to exercise, pursuant to the terms and conditions of this
Agreement, all Options that have vested on or prior to the date of death or
incapacitation or termination, as the case may be. For purposes of this
Agreement, "Cause" means (i) a material breach of any agreement with the
Corporation, its subsidiaries, affiliates or corporate parent or its
stockholders by Kerrigan (after notice and reasonable opportunity to cure), (ii)
a breach of Kerrigan's duty of loyalty to the Corporation or any of its
subsidiaries, affiliates or corporate parent or any act of dishonesty, gross
negligence, willful misconduct or fraud with respect to the Corporation or any
of its subsidiaries, affiliates or corporate parent or any of their respective
stockholders, customers or suppliers, (iii) the commission by Kerrigan of a
felony, a crime involving moral turpitude or other act or omission tending to
cause harm to the standing and reputation of, or otherwise bring public disgrace
or disrepute to, the Corporation or any of its subsidiaries, affiliates or
corporate parent, (iv) Optionee's continued failure or refusal to perform any
material duty to the Corporation or any of its subsidiaries, affiliates or
corporate parent which is normally attached to his position (after notice and
reasonable opportunity to cure), or (v) Kerrigan's gross negligence or willful
misconduct in performing those duties which are normally attached to his
position (after notice and reasonable opportunity to cure). For purposes of this
Agreement, "Kerrigan's duty of loyalty to the Corporation or any of its
-----------------------------------------------------------
subsidiaries, affiliates or corporate parent" shall include Kerrigan's fiduciary
- --------------------------------------------
obligation to place the interests of the Corporation and its subsidiaries,
affiliates or corporate parent ahead of his personal interests and thereby not
knowingly profit personally at the expense of the Corporation or any of its
subsidiaries, affiliates or corporate parent, and shall also include
specifically the affirmative obligation to disclose promptly to the Board any
known conflicts of interest Kerrigan may have with respect to the Corporation
and its subsidiaries, affiliates or corporate parent, and the negative
obligations not to usurp corporate opportunities of the Corporation or any of
its subsidiaries, affiliates or corporate parent, not to engage in any
"conflict-of-interest" transactions with the Corporation or its subsidiaries,
affiliates or corporate parent (without the approval of the Board), and not to
compete directly with the Corporation or its subsidiaries, affiliates or
corporate parent (without the approval of the Board).
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 delivery date
of such notice, on which to close the exercise of such Options (the "Closing").
-------
-2-
<PAGE>
Option Agreement
Page 3
7. Closing. At or prior to the Closing, the Optionee shall have
-------
delivered to the Corporation (a) the aggregate Exercise Price of the Options
paid 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 issued 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 structure affecting the kind or number of issued shares of
Common Stock as a class, the Corporation shall equitably adjust the number,
kind, and purchase price of the shares subject to the Option 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 the Option immediately prior to
such capital change, for the same aggregate Exercise Price as the Optionee would
have paid at the 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
-3-
<PAGE>
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 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, 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 conditional 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. Restrictions on Transferability; Legends.
----------------------------------------
(a) This Agreement, the Options granted hereby, the shares of Common
Stock issuable upon exercise thereof, and any other securities issuable pursuant
to Section 9 hereof (collectively, the "Securities") shall not be transferable
----------
by the
-4-
<PAGE>
Optionee without the prior written consent of the Corporation. No transfer of
the 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 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 without registration under the Securities
Act of 1933, as amended (the "1933 Act"), and compliance with state securities
--------
and Blue Sky laws, or in the event that they are not so registered, unless (i)
an exemption from the 1933 Act registration requirements is available
thereunder, and (ii) Optionee has furnished the Corporation with written notice
of such proposed transfer, and the Corporation's legal counsel, in its
reasonable opinion, shall deem such proposed transfer to be so exempt.
(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 the 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, (ii) an
agreement among the stockholders of the Corporation in effect at the time of the
sale of the shares of Common Stock issuable upon exercise of the Options, or
(iii) if such an agreement set forth in clause (ii) above is not in effect, an
agreement among the stockholders of the Corporation reasonably acceptable to the
Corporation pursuant to which the stockholders of the Corporation may, among
other things, establish certain restrictions and rights to maintain continuity
of ownership and control of the Corporation.
(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 EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH
LAWS,
-5-
<PAGE>
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 JULY 23, 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.
13. 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 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.
14. Representations and Warranties of the Optionee. The 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 and shall acquire the shares of Common Stock
issuable upon exercise of the Options, for
-6-
<PAGE>
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 the shares of Common
Stock issuable upon exercise of the Options in the absence of registration under
the 1933 Act or exemption therefrom as provided herein.
15. No Finders. Neither the Corporation nor the individual parties
----------
hereto have 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 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 hereinabove stated 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
-7-
<PAGE>
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 or subsequent breach.
[SIGNATURE PAGE TO FOLLOW]
-8-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COINMACH LAUNDRY CORPORATION
By: /s/ Robert M. Doyle
---------------------------
Name: Robert M. Doyle
Title: Senior Vice President
MCS CAPITAL, INC.
By: /s/ Stephen R. Kerrigan
---------------------------
Name: Stephen R. Kerrigan
Title: President
-9-
<PAGE>
EXHIBIT 10.47
[RB]
OPTION AGREEMENT
----------------
THIS OPTION AGREEMENT (the "Agreement") is made and entered into this 23rd
---------
day of July, 1996, by and between Coinmach Laundry Corporation, a Delaware
corporation (the "Corporation"), and Ronald S. Brody (the "Optionee").
----------- --------
RECITALS
--------
A. Optionee has rendered certain legal, managerial and advisory and/or
other similar services to the Corporation (the "Services").
--------
B. In consideration for Optionee's continued provision of the Services,
the Corporation desires to grant to Optionee options to purchase shares of the
Corporation's 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
continue 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 the Optionee, at no cost or expense to
Optionee of any kind, irrevocable options ("Options") to purchase from the
-------
Corporation 57,215 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 the Optionee to purchase one share of
Common Stock at an exercise price (the "Exercise Price") equal to $11.90 per
--------------
share.
4. Terms of Options. Subject to the terms and conditions contained
----------------
herein, the Optionee shall be entitled to exercise Options to purchase an
aggregate of up to 57,215 shares of Common Stock. Such Options shall be
exercisable by Optionee
<PAGE>
Option Agreement
Page 2
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 of directors of the Corporation (the "Board").
-----
Number of Options Vesting
Vesting Date on the Vesting Date
------------ -------------------------
<TABLE>
<CAPTION>
<S> <C>
July 23, 1996 11,443
July 23, 1997 11,443
July 23, 1998 11,443
July 23, 1999 11,443
July 23, 2000 11,443
</TABLE>
Notwithstanding any provision to the contrary in this Agreement, any
and all Options not exercised on or prior to July 23, 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 July 23, 2006, shall be referred to herein as the "Option Period".
-------------
5. Conditions to Exercise of Options. No Option may be exercised by
---------------------------------
Optionee to the extent that, at the time of such proposed exercise, (i) Optionee
is, directly or indirectly, obligated, liable or indebted to the Corporation in
an amount in excess of $50,000; or (ii) Optionee is not, in the reasonable
discretion of the Board, providing, when and as requested by the Corporation,
Services in a manner and on economic terms reasonably satisfactory to the
Corporation and consistent with past practice.
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 delivery date
of such notice, on which to close the exercise of such Options (the "Closing").
-------
7. Closing. At or prior to the Closing, the Optionee shall have
-------
delivered to the Corporation (a) the aggregate Exercise Price of the Options
paid 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
-2-
<PAGE>
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 issued 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 structure affecting the kind or number of issued shares of
Common Stock as a class, the Corporation shall equitably adjust the number,
kind, and purchase price of the shares subject to the Option 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 the Option immediately prior to
such capital change, for the same aggregate Exercise Price as the Optionee would
have paid at the 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 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
-3-
<PAGE>
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, 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 conditional 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. Restrictions on Transferability; Legends.
----------------------------------------
(a) This Agreement, the Options granted hereby, the shares of Common
Stock issuable upon exercise thereof, 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 the 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 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.
-4-
<PAGE>
(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 without registration under the Securities
Act of 1933, as amended (the "1933 Act"), and compliance with state securities
--------
and Blue Sky laws, or in the event that they are not so registered, unless (i)
an exemption from the 1933 Act registration requirements is available
thereunder, and (ii) Optionee has furnished the Corporation with written notice
of such proposed transfer, and the Corporation's legal counsel, in its
reasonable opinion, shall deem such proposed transfer to be so exempt.
(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 the 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, (ii) an
agreement among the stockholders of the Corporation in effect at the time of the
sale of the shares of Common Stock issuable upon exercise of the Options, or
(iii) if such an agreement set forth in clause (ii) above is not in effect, an
agreement among the stockholders of the Corporation reasonably acceptable to the
Corporation pursuant to which the stockholders of the Corporation may, among
other things, establish certain restrictions and rights to maintain continuity
of ownership and control of the Corporation.
(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 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 JULY 23, 1996, A COPY OF
WHICH IS ON FILE WITH THE CORPORATION, AND MAY NOT BE TRANSFERRED,
-5-
<PAGE>
PLEDGED OR DISPOSED OF EXCEPT IN ACCORDANCE WITH THE TERMS AND
CONDITIONS THEREOF.
13. 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 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.
14. Representations and Warranties of the Optionee. The 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 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
-6-
<PAGE>
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 the shares of Common
Stock issuable upon exercise of the Options in the absence of registration under
the 1933 Act or exemption therefrom as provided herein.
15. No Finders. Neither the Corporation nor the individual parties
----------
hereto have 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 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 hereinabove stated 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
-7-
<PAGE>
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 or subsequent breach.
[SIGNATURE PAGE TO FOLLOW]
-8-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COINMACH LAUNDRY CORPORATION
By: /s/ Robert M. Doyle
----------------------------
Name: Robert M. Doyle
Title: Senior Vice President
/s/ Ronald S. Brody
----------------------------
Ronald S. Brody
-9-
<PAGE>
EXHIBIT 10.48
[Chapman]
---------
OPTION AGREEMENT
----------------
THIS OPTION AGREEMENT (the "Agreement") is made and entered into this 23rd
---------
day of July, 1996, by and between Coinmach Laundry Corporation, a Delaware
corporation (the "Corporation"), and James N. Chapman (the "Optionee").
----------- --------
RECITALS
--------
A. Optionee has rendered certain managerial and advisory and/or other
similar services to the Corporation (the "Services").
--------
B. In consideration for Optionee's continued provision of the Services,
the Corporation desires to grant to Optionee options to purchase shares of the
Corporation's 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
continue 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 the Optionee, at no cost or expense to
Optionee of any kind, irrevocable options ("Options") to purchase from the
-------
Corporation 28,607 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 the Optionee to purchase one share of
Common Stock at an exercise price (the "Exercise Price") equal to $11.90 per
--------------
share.
4. Terms of Options. Subject to the terms and conditions contained
----------------
herein, the Optionee shall be entitled to exercise Options to purchase an
aggregate of up to 28,607 shares of Common Stock. Such Options shall be
exercisable by Optionee subject to, and only to the extent that, (i) with
respect to any
<PAGE>
Option Agreement
Page 2
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 of directors of the Corporation (the "Board").
-----
Number of Options Vesting
Vesting Date on the Vesting Date
------------ -------------------------
July 23, 1996 5,723
July 23, 1997 5,721
July 23, 1998 5,721
July 23, 1999 5,721
July 23, 2000 5,721
Notwithstanding any provision to the contrary in this Agreement, any
and all Options not exercised on or prior to July 23, 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 July 23, 2006, shall be referred to herein as the "Option Period".
-------------
5. Conditions to Exercise of Options. No Option may be exercised by
---------------------------------
Optionee to the extent that, at the time of such proposed exercise, (i) Optionee
is, directly or indirectly, obligated, liable or indebted to the Corporation in
an amount in excess of $50,000; or (ii) Optionee is not, in the reasonable
discretion of the Board, providing, when and as requested by the Corporation,
Services in a manner and on economic terms reasonably satisfactory to the
Corporation and consistent with past practice.
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 delivery date
of such notice, on which to close the exercise of such Options (the "Closing").
-------
7. Closing. At or prior to the Closing, the Optionee shall have
-------
delivered to the Corporation (a) the aggregate Exercise Price of the Options
paid 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
-2-
<PAGE>
Exercise Price, the Corporation shall deliver to Optionee a certificate
representing the shares of Common Stock issued 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 structure affecting the kind or number of issued shares of
Common Stock as a class, the Corporation shall equitably adjust the number,
kind, and purchase price of the shares subject to the Option 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 the Option immediately prior to
such capital change, for the same aggregate Exercise Price as the Optionee would
have paid at the 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 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
-3-
<PAGE>
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, 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 conditional 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. Restrictions on Transferability; Legends.
----------------------------------------
(a) This Agreement, the Options granted hereby, the shares of Common
Stock issuable upon exercise thereof, 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 the 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 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.
-4-
<PAGE>
(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 without registration under the Securities
Act of 1933, as amended (the "1933 Act"), and compliance with state securities
--------
and Blue Sky laws, or in the event that they are not so registered, unless (i)
an exemption from the 1933 Act registration requirements is available
thereunder, and (ii) Optionee has furnished the Corporation with written notice
of such proposed transfer, and the Corporation's legal counsel, in its
reasonable opinion, shall deem such proposed transfer to be so exempt.
(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 the 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, (ii) an
agreement among the stockholders of the Corporation in effect at the time of the
sale of the shares of Common Stock issuable upon exercise of the Options, or
(iii) if such an agreement set forth in clause (ii) above is not in effect, an
agreement among the stockholders of the Corporation reasonably acceptable to the
Corporation pursuant to which the stockholders of the Corporation may, among
other things, establish certain restrictions and rights to maintain continuity
of ownership and control of the Corporation.
(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 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 JULY 23, 1996, A COPY OF
WHICH IS ON FILE WITH THE CORPORATION, AND MAY NOT BE TRANSFERRED,
-5-
<PAGE>
PLEDGED OR DISPOSED OF EXCEPT IN ACCORDANCE WITH THE TERMS AND
CONDITIONS THEREOF.
13. 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 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.
14. Representations and Warranties of the Optionee. The 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 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
-6-
<PAGE>
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 the shares of Common
Stock issuable upon exercise of the Options in the absence of registration under
the 1933 Act or exemption therefrom as provided herein.
15. No Finders. Neither the Corporation nor the individual parties
----------
hereto have 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 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 hereinabove stated 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
-7-
<PAGE>
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 or subsequent breach.
[SIGNATURE PAGE TO FOLLOW]
-8-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COINMACH LAUNDRY CORPORATION
By: /s/ Robert M. Doyle
--------------------------------
Name: Robert M. Doyle
Title: Senior Vice President
/s/ James N. Chapman
-----------------------------------
James N. Chapman
-9-
<PAGE>
EXHIBIT 10.49
[DOYLE]
OPTION AGREEMENT
----------------
THIS OPTION AGREEMENT (the "Agreement") is made and entered into this 23rd
---------
day of July, 1996, by and between Coinmach Laundry Corporation, a Delaware
corporation (the "Corporation"), and Robert M. Doyle (the "Optionee").
----------- --------
RECITALS
--------
A. Optionee has served and continues to serve as an executive officer of
the Corporation and its subsidiaries, has made and continues to make valuable
contributions to the Corporation, and has rendered and continues to render
certain managerial and advisory and/or other similar services to the Corporation
(collectively, the "Services").
--------
B. In consideration for Optionee's continued provision of the Services,
the Corporation desires to grant to Optionee options to purchase shares of the
Corporation's 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
continue 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 the Optionee, at no cost or expense to
Optionee of any kind, irrevocable options ("Options") to purchase from the
-------
Corporation 71,519 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 the Optionee to purchase one share of
Common Stock at an exercise price (the "Exercise Price") equal to $11.90 per
--------------
share.
<PAGE>
Option Agreement
Page 2
4. Terms of Options. Subject to the terms and conditions contained
----------------
herein, the Optionee shall be entitled to exercise Options to purchase an
aggregate of up to 71,519 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 of directors of the Corporation (the
"Board").
-----
Number of Options Vesting
Vesting Date on the Vesting Date
------------ -------------------------
July 23, 1996 14,307
July 23, 1997 14,303
July 23, 1998 14,303
July 23, 1999 14,303
July 23, 2000 14,303
Notwithstanding any provision to the contrary in this Agreement, any
and all Options not exercised on or prior to July 23, 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 July 23, 2006, shall be referred to herein as the "Option Period".
-------------
5. Conditions to Exercise of Options. No Option may be exercised by
---------------------------------
Optionee to the extent that, at the time of such proposed exercise, Optionee is
not, in the reasonable discretion of the Board, providing, when and as requested
by the Corporation, Services in a manner and on economic terms reasonably
satisfactory to the Corporation and consistent with past practice; provided,
--------
however, that (i) upon Optionee's death or incapacitation or (ii) upon
- -------
termination of Optionee's employment by the Corporation without Cause, Optionee
shall be entitled to exercise, pursuant to the terms and conditions of this
Agreement, all Options that have vested on or prior to the date of death or
incapacitation or termination, as the case may be. For purposes of this
Agreement, "Cause" means (i) a material breach of any agreement with the
-----
Corporation, its subsidiaries, affiliates or corporate parent or its
stockholders by Optionee (after notice and reasonable opportunity to cure), (ii)
a breach of Optionee's duty of loyalty to the Corporation or any of its
subsidiaries, affiliates or corporate parent or any act of dishonesty, gross
negligence, willful misconduct or fraud with respect to the Corporation or any
of its subsidiaries, affiliates or corporate parent or any of their respective
stockholders, customers or suppliers, (iii) the commission by Optionee of a
felony, a crime involving moral turpitude or other act or omission tending to
cause harm to the standing and reputation of, or otherwise bring public disgrace
or disrepute to, the Corporation or any of its subsidiaries, affiliates or
corporate parent, (iv) Optionee's continued failure or refusal to perform any
material duty to the Corporation or any of its subsidiaries, affiliates or
corporate parent which is normally attached to his position (after notice and
reasonable opportunity to cure), or (v) Optionee's gross negligence or willful
misconduct in performing those duties which are normally attached to his
position (after notice and reasonable opportunity to cure). For purposes of this
Agreement, "Optionee's duty of loyalty to the Corporation or any of its
-----------------------------------------------------------
subsidiaries, affiliates or corporate parent" shall include Optionee's fiduciary
- --------------------------------------------
obligation to place the interests of the Corporation and its subsidiaries,
affiliates or corporate parent ahead of his personal interests and thereby not
knowingly profit personally at the expense of the Corporation or any of its
subsidiaries, affiliates or corporate parent, and shall also include
specifically the affirmative obligation to disclose promptly to the Board any
known conflicts of interest Optionee may have with respect to the Corporation
and its subsidiaries, affiliates or corporate parent, and the negative
obligations not to usurp corporate opportunities of the Corporation or any of
its subsidiaries, affiliates or corporate parent, not to engage in any
"conflict-of-interest" transactions with the Corporation or its subsidiaries,
affiliates or corporate parent (without the approval of the Board), and not to
compete directly with the Corporation or its subsidiaries, affiliates or
corporate parent (without the approval of the Board).
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 delivery date
of such notice, on which to close the exercise of such Options (the "Closing").
-------
-2-
<PAGE>
Option Agreement
Page 3
7. Closing. At or prior to the Closing, the Optionee shall have
-------
delivered to the Corporation (a) the aggregate Exercise Price of the Options
paid 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 issued 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 structure affecting the kind or number of issued shares of
Common Stock as a class, the Corporation shall equitably adjust the number,
kind, and purchase price of the shares subject to the Option 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 the Option immediately prior to
such capital change, for the same aggregate Exercise Price as the Optionee would
have paid at the 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
-3-
<PAGE>
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 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, 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 conditional 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. Restrictions on Transferability; Legends.
----------------------------------------
(a) This Agreement, the Options granted hereby, the shares of Common
Stock issuable upon exercise thereof, and any other securities issuable pursuant
to Section 9 hereof (collectively, the "Securities") shall not be transferable
----------
by the
-4-
<PAGE>
Optionee without the prior written consent of the Corporation. No transfer of
the 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 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 without registration under the Securities
Act of 1933, as amended (the "1933 Act"), and compliance with state securities
--------
and Blue Sky laws, or in the event that they are not so registered, unless (i)
an exemption from the 1933 Act registration requirements is available
thereunder, and (ii) Optionee has furnished the Corporation with written notice
of such proposed transfer, and the Corporation's legal counsel, in its
reasonable opinion, shall deem such proposed transfer to be so exempt.
(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 the 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, (ii) an
agreement among the stockholders of the Corporation in effect at the time of the
sale of the shares of Common Stock issuable upon exercise of the Options, or
(iii) if such an agreement set forth in clause (ii) above is not in effect, an
agreement among the stockholders of the Corporation reasonably acceptable to the
Corporation pursuant to which the stockholders of the Corporation may, among
other things, establish certain restrictions and rights to maintain continuity
of ownership and control of the Corporation.
(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 EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH
LAWS,
-5-
<PAGE>
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 JULY 23, 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.
13. 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 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.
14. Representations and Warranties of the Optionee. The 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 and shall acquire the shares of Common Stock
issuable upon exercise of the Options, for
-6-
<PAGE>
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 the shares of Common
Stock issuable upon exercise of the Options in the absence of registration under
the 1933 Act or exemption therefrom as provided herein.
15. No Finders. Neither the Corporation nor the individual parties
----------
hereto have 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 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 hereinabove stated 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
-7-
<PAGE>
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 or subsequent breach.
[SIGNATURE PAGE TO FOLLOW]
-8-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COINMACH LAUNDRY CORPORATION
By:/s/ John E. Denson
-------------------------------
Name: John E. Denson
Title: Senior Vice President
/s/ Robert M. Doyle
----------------------------------
Robert M. Doyle
-9-
<PAGE>
EXHIBIT 10.50
[STANKY]
OPTION AGREEMENT
----------------
THIS OPTION AGREEMENT (the "Agreement") is made and entered into this 23rd
---------
day of July, 1996, by and between Coinmach Laundry Corporation, a Delaware
corporation (the "Corporation"), and Michael E. Stanky (the "Optionee").
----------- --------
RECITALS
--------
A. Optionee has served and continues to serve as an executive officer of
the Corporation and its subsidiaries, has made and continues to make valuable
contributions to the Corporation, and has rendered and continues to render
certain managerial and advisory and/or other similar services to the Corporation
(collectively, the "Services").
--------
B. In consideration for Optionee's continued provision of the Services,
the Corporation desires to grant to Optionee options to purchase shares of the
Corporation's 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
continue 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 the Optionee, at no cost or expense to
Optionee of any kind, irrevocable options ("Options") to purchase from the
-------
Corporation 102,987 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 the Optionee to purchase one share of
Common Stock at an exercise price (the "Exercise Price") equal to $11.90 per
--------------
share.
<PAGE>
Option Agreement
Page 2
4. Terms of Options. Subject to the terms and conditions contained
----------------
herein, the Optionee shall be entitled to exercise Options to purchase an
aggregate of up to 102,987 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 of directors of the Corporation (the
"Board").
-----
Number of Options Vesting
Vesting Date on the Vesting Date
------------ -------------------------
July 23, 1996 20,599
July 23, 1997 20,597
July 23, 1998 20,597
July 23, 1999 20,597
July 23, 2000 20,597
Notwithstanding any provision to the contrary in this Agreement, any
and all Options not exercised on or prior to July 23, 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 July 23, 2006, shall be referred to herein as the "Option Period".
-------------
5. Conditions to Exercise of Options. No Option may be exercised by
---------------------------------
Optionee to the extent that, at the time of such proposed exercise, Optionee is
not, in the reasonable discretion of the Board, providing, when and as requested
by the Corporation, Services in a manner and on economic terms reasonably
satisfactory to the Corporation and consistent with past practice; provided,
--------
however, that (i) upon Optionee's death or incapacitation or (ii) upon
- -------
termination of Optionee's employment by the Corporation without Cause, Optionee
shall be entitled to exercise, pursuant to the terms and conditions of this
Agreement, all Options that have vested on or prior to the date of death or
incapacitation or termination, as the case may be. For purposes of this
Agreement, "Cause" means (i) a material breach of any agreement with the
-----
Corporation, its subsidiaries, affiliates or corporate parent or its
stockholders by Optionee (after notice and reasonable opportunity to cure), (ii)
a breach of Optionee's duty of loyalty to the Corporation or any of its
subsidiaries, affiliates or corporate parent or any act of dishonesty, gross
negligence, willful misconduct or fraud with respect to the Corporation or any
of its subsidiaries, affiliates or corporate parent or any of their respective
stockholders, customers or suppliers, (iii) the commission by Optionee of a
felony, a crime involving moral turpitude or other act or omission tending to
cause harm to the standing and reputation of, or otherwise bring public disgrace
or disrepute to, the Corporation or any of its subsidiaries, affiliates or
corporate parent, (iv) Optionee's continued failure or refusal to perform any
material duty to the Corporation or any of its subsidiaries, affiliates or
corporate parent which is normally attached to his position (after notice and
reasonable opportunity to cure), or (v) Optionee's gross negligence or willful
misconduct in performing those duties which are normally attached to his
position (after notice and reasonable opportunity to cure). For purposes of this
Agreement, "Optionee's duty of loyalty to the Corporation or any of its
-----------------------------------------------------------
subsidiaries, affiliates or corporate parent" shall include Optionee's fiduciary
- --------------------------------------------
obligation to place the interests of the Corporation and its subsidiaries,
affiliates or corporate parent ahead of his personal interests and thereby not
knowingly profit personally at the expense of the Corporation or any of its
subsidiaries, affiliates or corporate parent, and shall also include
specifically the affirmative obligation to disclose promptly to the Board any
known conflicts of interest Optionee may have with respect to the Corporation
and its subsidiaries, affiliates or corporate parent, and the negative
obligations not to usurp corporate opportunities of the Corporation or any of
its subsidiaries, affiliates or corporate parent, not to engage in any
"conflict-of-interest" transactions with the Corporation or its subsidiaries,
affiliates or corporate parent (without the approval of the Board), and not to
compete directly with the Corporation or its subsidiaries, affiliates or
corporate parent (without the approval of the Board).
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 delivery date
of such notice, on which to close the exercise of such Options (the "Closing").
-------
-2-
<PAGE>
Option Agreement
Page 3
7. Closing. At or prior to the Closing, the Optionee shall have
-------
delivered to the Corporation (a) the aggregate Exercise Price of the Options
paid 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 issued 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 structure affecting the kind or number of issued shares of
Common Stock as a class, the Corporation shall equitably adjust the number,
kind, and purchase price of the shares subject to the Option 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 the Option immediately prior to
such capital change, for the same aggregate Exercise Price as the Optionee would
have paid at the 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
-3-
<PAGE>
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 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, 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 conditional 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. Restrictions on Transferability; Legends.
----------------------------------------
(a) This Agreement, the Options granted hereby, the shares of Common
Stock issuable upon exercise thereof, and any other securities issuable pursuant
to Section 9 hereof (collectively, the "Securities") shall not be transferable
----------
by the
-4-
<PAGE>
Optionee without the prior written consent of the Corporation. No transfer of
the 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 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 without registration under the Securities
Act of 1933, as amended (the "1933 Act"), and compliance with state securities
--------
and Blue Sky laws, or in the event that they are not so registered, unless (i)
an exemption from the 1933 Act registration requirements is available
thereunder, and (ii) Optionee has furnished the Corporation with written notice
of such proposed transfer, and the Corporation's legal counsel, in its
reasonable opinion, shall deem such proposed transfer to be so exempt.
(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 the 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, (ii) an
agreement among the stockholders of the Corporation in effect at the time of the
sale of the shares of Common Stock issuable upon exercise of the Options, or
(iii) if such an agreement set forth in clause (ii) above is not in effect, an
agreement among the stockholders of the Corporation reasonably acceptable to the
Corporation pursuant to which the stockholders of the Corporation may, among
other things, establish certain restrictions and rights to maintain continuity
of ownership and control of the Corporation.
(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 EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH
LAWS,
-5-
<PAGE>
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 JULY 23, 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.
13. 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 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.
14. Representations and Warranties of the Optionee. The 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 and shall acquire the shares of Common Stock
issuable upon exercise of the Options, for
-6-
<PAGE>
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 the shares of Common
Stock issuable upon exercise of the Options in the absence of registration under
the 1933 Act or exemption therefrom as provided herein.
15. No Finders. Neither the Corporation nor the individual parties
----------
hereto have 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 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 hereinabove stated 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
-7-
<PAGE>
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 or subsequent breach.
[SIGNATURE PAGE TO FOLLOW]
-8-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COINMACH LAUNDRY CORPORATION
By: /s/ Robert M. Doyle
---------------------------------
Name: Robert M. Doyle
Title: Senior Vice President
/s/ Michael E. Stanky
-------------------------------------
Michael E. Stanky
-9-
<PAGE>
EXHIBIT 10.51
[SIEGEL]
OPTION AGREEMENT
----------------
THIS OPTION AGREEMENT (the "Agreement") is made and entered into this 23rd
---------
day of July, 1996, by and between Coinmach Laundry Corporation, a Delaware
corporation (the "Corporation"), and David A. Siegel (the "Optionee").
----------- --------
RECITALS
--------
A. Optionee has served and continues to serve as an executive officer of
the Corporation and its subsidiaries, has made and continues to make valuable
contributions to the Corporation, and has rendered and continues to render
certain managerial and advisory and/or other similar services to the Corporation
(collectively, the "Services").
--------
B. In consideration for Optionee's continued provision of the Services,
the Corporation desires to grant to Optionee options to purchase shares of the
Corporation's 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
continue 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 the Optionee, at no cost or expense to
Optionee of any kind, irrevocable options ("Options") to purchase from the
-------
Corporation 28,607 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 the Optionee to purchase one share of
Common Stock at an exercise price (the "Exercise Price") equal to $11.90 per
--------------
share.
<PAGE>
Option Agreement
Page 2
4. Terms of Options. Subject to the terms and conditions contained
----------------
herein, the Optionee shall be entitled to exercise Options to purchase an
aggregate of up to 28,607 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 of directors of the Corporation (the
"Board").
-----
Number of Options Vesting
Vesting Date on the Vesting Date
------------ -------------------------
July 23, 1996 5,723
July 23, 1997 5,721
July 23, 1998 5,721
July 23, 1999 5,721
July 23, 2000 5,721
Notwithstanding any provision to the contrary in this Agreement, any
and all Options not exercised on or prior to July 23, 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 July 23, 2006, shall be referred to herein as the "Option Period".
-------------
5. Conditions to Exercise of Options. No Option may be exercised by
---------------------------------
Optionee to the extent that, at the time of such proposed exercise, Optionee is
not, in the reasonable discretion of the Board, providing, when and as requested
by the Corporation, Services in a manner and on economic terms reasonably
satisfactory to the Corporation and consistent with past practice; provided,
--------
however, that (i) upon Optionee's death or incapacitation or (ii) upon
- -------
termination of Optionee's employment by the Corporation without Cause, Optionee
shall be entitled to exercise, pursuant to the terms and conditions of this
Agreement, all Options that have vested on or prior to the date of death or
incapacitation or termination, as the case may be. For purposes of this
Agreement, "Cause" means (i) a material breach of any agreement with the
-----
Corporation, its subsidiaries, affiliates or corporate parent or its
stockholders by Optionee (after notice and reasonable opportunity to cure), (ii)
a breach of Optionee's duty of loyalty to the Corporation or any of its
subsidiaries, affiliates or corporate parent or any act of dishonesty, gross
negligence, willful misconduct or fraud with respect to the Corporation or any
of its subsidiaries, affiliates or corporate parent or any of their respective
stockholders, customers or suppliers, (iii) the commission by Optionee of a
felony, a crime involving moral turpitude or other act or omission tending to
cause harm to the standing and reputation of, or otherwise bring public disgrace
or disrepute to, the Corporation or any of its subsidiaries, affiliates or
corporate parent, (iv) Optionee's continued failure or refusal to perform any
material duty to the Corporation or any of its subsidiaries, affiliates or
corporate parent which is normally attached to his position (after notice and
reasonable opportunity to cure), or (v) Optionee's gross negligence or willful
misconduct in performing those duties which are normally attached to his
position (after notice and reasonable opportunity to cure). For purposes of this
Agreement, "Optionee's duty of loyalty to the Corporation or any of its
-----------------------------------------------------------
subsidiaries, affiliates or corporate parent" shall include Optionee's fiduciary
- --------------------------------------------
obligation to place the interests of the Corporation and its subsidiaries,
affiliates or corporate parent ahead of his personal interests and thereby not
knowingly profit personally at the expense of the Corporation or any of its
subsidiaries, affiliates or corporate parent, and shall also include
specifically the affirmative obligation to disclose promptly to the Board any
known conflicts of interest Optionee may have with respect to the Corporation
and its subsidiaries, affiliates or corporate parent, and the negative
obligations not to usurp corporate opportunities of the Corporation or any of
its subsidiaries, affiliates or corporate parent, not to engage in any
"conflict-of-interest" transactions with the Corporation or its subsidiaries,
affiliates or corporate parent (without the approval of the Board), and not to
compete directly with the Corporation or its subsidiaries, affiliates or
corporate parent (without the approval of the Board).
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 delivery date
of such notice, on which to close the exercise of such Options (the "Closing").
-------
-2-
<PAGE>
Option Agreement
Page 3
7. Closing. At or prior to the Closing, the Optionee shall have
-------
delivered to the Corporation (a) the aggregate Exercise Price of the Options
paid 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 issued 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 structure affecting the kind or number of issued shares of
Common Stock as a class, the Corporation shall equitably adjust the number,
kind, and purchase price of the shares subject to the Option 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 the Option immediately prior to
such capital change, for the same aggregate Exercise Price as the Optionee would
have paid at the 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
-3-
<PAGE>
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 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, 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 conditional 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. Restrictions on Transferability; Legends.
----------------------------------------
(a) This Agreement, the Options granted hereby, the shares of Common
Stock issuable upon exercise thereof, and any other securities issuable pursuant
to Section 9 hereof (collectively, the "Securities") shall not be transferable
----------
by the
-4-
<PAGE>
Optionee without the prior written consent of the Corporation. No transfer of
the 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 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 without registration under the Securities
Act of 1933, as amended (the "1933 Act"), and compliance with state securities
--------
and Blue Sky laws, or in the event that they are not so registered, unless (i)
an exemption from the 1933 Act registration requirements is available
thereunder, and (ii) Optionee has furnished the Corporation with written notice
of such proposed transfer, and the Corporation's legal counsel, in its
reasonable opinion, shall deem such proposed transfer to be so exempt.
(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 the 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, (ii) an
agreement among the stockholders of the Corporation in effect at the time of the
sale of the shares of Common Stock issuable upon exercise of the Options, or
(iii) if such an agreement set forth in clause (ii) above is not in effect, an
agreement among the stockholders of the Corporation reasonably acceptable to the
Corporation pursuant to which the stockholders of the Corporation may, among
other things, establish certain restrictions and rights to maintain continuity
of ownership and control of the Corporation.
(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 EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH
LAWS,
-5-
<PAGE>
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 JULY 23, 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.
13. 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 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.
14. Representations and Warranties of the Optionee. The 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 and shall acquire the shares of Common Stock
issuable upon exercise of the Options, for
-6-
<PAGE>
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 the shares of Common
Stock issuable upon exercise of the Options in the absence of registration under
the 1933 Act or exemption therefrom as provided herein.
15. No Finders. Neither the Corporation nor the individual parties
----------
hereto have 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 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 hereinabove stated 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
-7-
<PAGE>
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 or subsequent breach.
[SIGNATURE PAGE TO FOLLOW]
-8-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COINMACH LAUNDRY CORPORATION
By: /s/ Robert M. Doyle
-------------------------------
Name: Robert M. Doyle
Title: Senior Vice President
/s/ David A. Siegel
-----------------------------------
David A. Siegel
-9-
<PAGE>
EXHIBIT 10.52
[OSBORNE]
OPTION AGREEMENT
----------------
THIS OPTION AGREEMENT (the "Agreement") is made and entered into this 23rd
---------
day of July, 1996, by and between Coinmach Laundry Corporation, a Delaware
corporation (the "Corporation"), and R. Daniel Osborne (the "Optionee").
----------- --------
RECITALS
--------
A. Optionee has served and continues to serve as an executive officer of
the Corporation and its subsidiaries, has made and continues to make valuable
contributions to the Corporation, and has rendered and continues to render
certain managerial and advisory and/or other similar services to the Corporation
(collectively, the "Services").
B. In consideration for Optionee's continued provision of the Services,
the Corporation desires to grant to Optionee options to purchase shares of the
Corporation's 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
continue 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 the Optionee, at no cost or expense to
Optionee of any kind, irrevocable options ("Options") to purchase from the
-------
Corporation 28,607 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 the Optionee to purchase one share of
Common Stock at an exercise price (the "Exercise Price") equal to $11.90 per
--------------
share.
<PAGE>
Option Agreement
Page 2
4. Terms of Options. Subject to the terms and conditions contained
----------------
herein, the Optionee shall be entitled to exercise Options to purchase an
aggregate of up to 28,607 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 of directors of the Corporation (the
"Board").
-----
Number of Options Vesting
Vesting Date on the Vesting Date
------------ -------------------------
July 23, 1996 5,723
July 23, 1997 5,721
July 23, 1998 5,721
July 23, 1999 5,721
July 23, 2000 5,721
Notwithstanding any provision to the contrary in this Agreement, any
and all Options not exercised on or prior to July 23, 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 July 23, 2006, shall be referred to herein as the "Option Period".
-------------
5. Conditions to Exercise of Options. No Option may be exercised by
---------------------------------
Optionee to the extent that, at the time of such proposed exercise, Optionee is
not, in the reasonable discretion of the Board, providing, when and as requested
by the Corporation, Services in a manner and on economic terms reasonably
satisfactory to the Corporation and consistent with past practice; provided,
--------
however, that (i) upon Optionee's death or incapacitation or (ii) upon
- -------
termination of Optionee's employment by the Corporation without Cause, Optionee
shall be entitled to exercise, pursuant to the terms and conditions of this
Agreement, all Options that have vested on or prior to the date of death or
incapacitation or termination, as the case may be. For purposes of this
Agreement, "Cause" means (i) a material breach of any agreement with the
-----
Corporation, its subsidiaries, affiliates or corporate parent or its
stockholders by Optionee (after notice and reasonable opportunity to cure), (ii)
a breach of Optionee's duty of loyalty to the Corporation or any of its
subsidiaries, affiliates or corporate parent or any act of dishonesty, gross
negligence, willful misconduct or fraud with respect to the Corporation or any
of its subsidiaries, affiliates or corporate parent or any of their respective
stockholders, customers or suppliers, (iii) the commission by Optionee of a
felony, a crime involving moral turpitude or other act or omission tending to
cause harm to the standing and reputation of, or otherwise bring public disgrace
or disrepute to, the Corporation or any of its subsidiaries, affiliates or
corporate parent, (iv) Optionee's continued failure or refusal to perform any
material duty to the Corporation or any of its subsidiaries, affiliates or
corporate parent which is normally attached to his position (after notice and
reasonable opportunity to cure), or (v) Optionee's gross negligence or willful
misconduct in performing those duties which are normally attached to his
position (after notice and reasonable opportunity to cure). For purposes of this
Agreement, "Optionee's duty of loyalty to the Corporation or any of its
-----------------------------------------------------------
subsidiaries, affiliates or corporate parent" shall include Optionee's fiduciary
- --------------------------------------------
obligation to place the interests of the Corporation and its subsidiaries,
affiliates or corporate parent ahead of his personal interests and thereby not
knowingly profit personally at the expense of the Corporation or any of its
subsidiaries, affiliates or corporate parent, and shall also include
specifically the affirmative obligation to disclose promptly to the Board any
known conflicts of interest Optionee may have with respect to the Corporation
and its subsidiaries, affiliates or corporate parent, and the negative
obligations not to usurp corporate opportunities of the Corporation or any of
its subsidiaries, affiliates or corporate parent, not to engage in any
"conflict-of-interest" transactions with the Corporation or its subsidiaries,
affiliates or corporate parent (without the approval of the Board), and not to
compete directly with the Corporation or its subsidiaries, affiliates or
corporate parent (without the approval of the Board).
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 delivery date
of such notice, on which to close the exercise of such Options (the "Closing").
-------
-2-
<PAGE>
Option Agreement
Page 3
7. Closing. At or prior to the Closing, the Optionee shall have
-------
delivered to the Corporation (a) the aggregate Exercise Price of the Options
paid 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 issued 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 structure affecting the kind or number of issued shares of
Common Stock as a class, the Corporation shall equitably adjust the number,
kind, and purchase price of the shares subject to the Option 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 the Option immediately prior to
such capital change, for the same aggregate Exercise Price as the Optionee would
have paid at the 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
-3-
<PAGE>
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 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, 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 conditional 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. Restrictions on Transferability; Legends.
----------------------------------------
(a) This Agreement, the Options granted hereby, the shares of Common
Stock issuable upon exercise thereof, and any other securities issuable pursuant
to Section 9 hereof (collectively, the "Securities") shall not be transferable
----------
by the
-4-
<PAGE>
Optionee without the prior written consent of the Corporation. No transfer of
the 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 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 without registration under the Securities
Act of 1933, as amended (the "1933 Act"), and compliance with state securities
--------
and Blue Sky laws, or in the event that they are not so registered, unless (i)
an exemption from the 1933 Act registration requirements is available
thereunder, and (ii) Optionee has furnished the Corporation with written notice
of such proposed transfer, and the Corporation's legal counsel, in its
reasonable opinion, shall deem such proposed transfer to be so exempt.
(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 the 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, (ii) an
agreement among the stockholders of the Corporation in effect at the time of the
sale of the shares of Common Stock issuable upon exercise of the Options, or
(iii) if such an agreement set forth in clause (ii) above is not in effect, an
agreement among the stockholders of the Corporation reasonably acceptable to the
Corporation pursuant to which the stockholders of the Corporation may, among
other things, establish certain restrictions and rights to maintain continuity
of ownership and control of the Corporation.
(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 EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH
LAWS,
-5-
<PAGE>
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 JULY 23, 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.
13. 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 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.
14. Representations and Warranties of the Optionee. The 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 and shall acquire the shares of Common Stock
issuable upon exercise of the Options, for
-6-
<PAGE>
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 the shares of Common
Stock issuable upon exercise of the Options in the absence of registration under
the 1933 Act or exemption therefrom as provided herein.
15. No Finders. Neither the Corporation nor the individual parties
----------
hereto have 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 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 hereinabove stated 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
-7-
<PAGE>
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 or subsequent breach.
[SIGNATURE PAGE TO FOLLOW]
-8-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COINMACH LAUNDRY CORPORATION
By: /s/ Robert M. Doyle
-------------------------------
Name: Robert M. Doyle
Title: Senior Vice President
/s/ R. Daniel Osborne
-----------------------------------
R. Daniel Osborne
-9-
<PAGE>
EXHIBIT 10.53
[DENSON]
OPTION AGREEMENT
----------------
THIS OPTION AGREEMENT (the "Agreement") is made and entered into this 23rd
---------
day of July, 1996, by and between Coinmach Laundry Corporation, a Delaware
corporation (the "Corporation"), and John E. Denson (the "Optionee").
----------- --------
RECITALS
--------
A. Optionee has served and continues to serve as an executive officer of
the Corporation and its subsidiaries, has made and continues to make valuable
contributions to the Corporation, and has rendered and continues to render
certain managerial and advisory and/or other similar services to the Corporation
(collectively, the "Services").
--------
B. In consideration for Optionee's continued provision of the Services,
the Corporation desires to grant to Optionee options to purchase shares of the
Corporation's 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
continue 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 the Optionee, at no cost or expense to
Optionee of any kind, irrevocable options ("Options") to purchase from the
-------
Corporation 28,607 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 the Optionee to purchase one share of
Common Stock at an exercise price (the "Exercise Price") equal to $11.90 per
--------------
share.
<PAGE>
Option Agreement
Page 2
4. Terms of Options. Subject to the terms and conditions contained
----------------
herein, the Optionee shall be entitled to exercise Options to purchase an
aggregate of up to 28,607 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 of directors of the Corporation (the
"Board").
-----
Number of Options Vesting
Vesting Date on the Vesting Date
------------ -------------------------
<TABLE>
<CAPTION>
<S> <C>
July 23, 1996 5,723
July 23, 1997 5,721
July 23, 1998 5,721
July 23, 1999 5,721
July 23, 2000 5,721
</TABLE>
Notwithstanding any provision to the contrary in this Agreement, any
and all Options not exercised on or prior to July 23, 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 July 23, 2006, shall be referred to herein as the "Option Period".
-------------
5. Conditions to Exercise of Options. No Option may be exercised by
---------------------------------
Optionee to the extent that, at the time of such proposed exercise, Optionee is
not, in the reasonable discretion of the Board, providing, when and as requested
by the Corporation, Services in a manner and on economic terms reasonably
satisfactory to the Corporation and consistent with past practice; provided,
--------
however, that (i) upon Optionee's death or incapacitation or (ii) upon
- -------
termination of Optionee's employment by the Corporation without Cause, Optionee
shall be entitled to exercise, pursuant to the terms and conditions of this
Agreement, all Options that have vested on or prior to the date of death or
incapacitation or termination, as the case may be. For purposes of this
Agreement, "Cause" means (i) a material breach of any agreement with the
-----
Corporation, its subsidiaries, affiliates or corporate parent or its
stockholders by Optionee (after notice and reasonable opportunity to cure), (ii)
a breach of Optionee's duty of loyalty to the Corporation or any of its
subsidiaries, affiliates or corporate parent or any act of dishonesty, gross
negligence, willful misconduct or fraud with respect to the Corporation or any
of its subsidiaries, affiliates or corporate parent or any of their respective
stockholders, customers or suppliers, (iii) the commission by Optionee of a
felony, a crime involving moral turpitude or other act or omission tending to
cause harm to the standing and reputation of, or otherwise bring public disgrace
or disrepute to, the Corporation or any of its subsidiaries, affiliates or
corporate parent, (iv) Optionee's continued failure or refusal to perform any
material duty to the Corporation or any of its subsidiaries, affiliates or
corporate parent which is normally attached to his position (after notice and
reasonable opportunity to cure), or (v) Optionee's gross negligence or willful
misconduct in performing those duties which are normally attached to his
position (after notice and reasonable opportunity to cure). For purposes of this
Agreement, "Optionee's duty of loyalty to the Corporation or any of its
-----------------------------------------------------------
subsidiaries, affiliates or corporate parent" shall include Optionee's fiduciary
- --------------------------------------------
obligation to place the interests of the Corporation and its subsidiaries,
affiliates or corporate parent ahead of his personal interests and thereby not
knowingly profit personally at the expense of the Corporation or any of its
subsidiaries, affiliates or corporate parent, and shall also include
specifically the affirmative obligation to disclose promptly to the Board any
known conflicts of interest Optionee may have with respect to the Corporation
and its subsidiaries, affiliates or corporate parent, and the negative
obligations not to usurp corporate opportunities of the Corporation or any of
its subsidiaries, affiliates or corporate parent, not to engage in any
"conflict-of-interest" transactions with the Corporation or its subsidiaries,
affiliates or corporate parent (without the approval of the Board), and not to
compete directly with the Corporation or its subsidiaries, affiliates or
corporate parent (without the approval of the Board).
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 delivery date
of such notice, on which to close the exercise of such Options (the "Closing").
-------
2
<PAGE>
Option Agreement
Page 3
7. Closing. At or prior to the Closing, the Optionee shall have
-------
delivered to the Corporation (a) the aggregate Exercise Price of the Options
paid 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 issued 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 structure affecting the kind or number of issued shares of
Common Stock as a class, the Corporation shall equitably adjust the number,
kind, and purchase price of the shares subject to the Option 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 the Option immediately prior to
such capital change, for the same aggregate Exercise Price as the Optionee would
have paid at the 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
3
<PAGE>
Option Agreement
Page 4
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 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, 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 conditional 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. Restrictions on Transferability; Legends.
----------------------------------------
(a) This Agreement, the Options granted hereby, the shares of Common
Stock issuable upon exercise thereof, and any other securities issuable pursuant
to Section 9 hereof (collectively, the "Securities") shall not be transferable
----------
by the
4
<PAGE>
Option Agreement
Page 5
Optionee without the prior written consent of the Corporation. No transfer of
the 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 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 without registration under the Securities
Act of 1933, as amended (the "1933 Act"), and compliance with state securities
--------
and Blue Sky laws, or in the event that they are not so registered, unless (i)
an exemption from the 1933 Act registration requirements is available
thereunder, and (ii) Optionee has furnished the Corporation with written notice
of such proposed transfer, and the Corporation's legal counsel, in its
reasonable opinion, shall deem such proposed transfer to be so exempt.
(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 the 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, (ii) an
agreement among the stockholders of the Corporation in effect at the time of the
sale of the shares of Common Stock issuable upon exercise of the Options, or
(iii) if such an agreement set forth in clause (ii) above is not in effect, an
agreement among the stockholders of the Corporation reasonably acceptable to the
Corporation pursuant to which the stockholders of the Corporation may, among
other things, establish certain restrictions and rights to maintain continuity
of ownership and control of the Corporation.
(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 EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH
LAWS,
5
<PAGE>
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 JULY 23, 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.
13. 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 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.
14. Representations and Warranties of the Optionee. The 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 and shall acquire the shares of Common Stock
issuable upon exercise of the Options, for
6
<PAGE>
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 the shares of Common
Stock issuable upon exercise of the Options in the absence of registration under
the 1933 Act or exemption therefrom as provided herein.
15. No Finders. Neither the Corporation nor the individual parties
----------
hereto have 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 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 hereinabove stated 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
7
<PAGE>
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 or subsequent breach.
[SIGNATURE PAGE TO FOLLOW]
8
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COINMACH LAUNDRY CORPORATION
By: /s/ Robert M. Doyle
-------------------------------
Name: Robert M. Doyle
Title: Senior Vice President
/s/ John E. Denson
----------------------------------
John E. Denson
9
<PAGE>
EXHIBIT 10.55
VOTING AGREEMENT
THIS VOTING AGREEMENT (the "Agreement") is made and entered into this 23rd
---------
day of July, 1996, by and among Coinmach Laundry Corporation, a Delaware
corporation (the "Company"), and the shareholders of the Company whose names are
-------
set forth on the signature pages hereto (collectively, the "Stockholders").
------------
Recitals
--------
A. Concurrently with the execution and delivery of this Agreement, the
Company is engaging in an underwritten public offering (the "Initial Public
---------------
Offering") registered under the Securities Act of 1933, as amended the
- -------- ---
("Securities Act"), of shares of the Company's Class A common stock, par value
- ------------------
$.01 per share (the "Class A Common Stock").
--------------------
B. Pursuant to the terms of the Amended and Restated Stockholders
Agreement, dated November 30, 1995, among the Company and each of the
signatories thereto (the "Stockholders Agreement"), paragraph 1 of the
----------------------
Stockholders Agreement providing for the appointment of the directors of the
Company terminates upon the consummation of the Initial Public Offering.
C. Following the consummation of the Initial Public Offering, the
Stockholders desire to enter into an agreement among themselves as to the
designation of the members of the board of directors of the Company (the
"Board").
-----
Agreement
---------
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree as follows:
1. Shares Subject to Agreement. Each Stockholder agrees to hold all of
---------------------------
its or his respective Voting Shares subject to the provisions of this Agreement.
For purposes of this Agreement, "Voting Shares" means shares of (A) Class A
Common Stock issued and outstanding on the date hereof, and (B) Class A Common
Stock hereafter issued and outstanding, including without limitation, any Class
A Common Stock issued upon conversion of the Company's non-voting Class B common
stock, par value $.01 per share (the "Non-Voting Common Stock"). As to any
-----------------------
particular shares constituting Voting Shares, such shares shall cease to be
Voting Shares under this Agreement when they have been (x) registered and sold
under the Securities Act or (y) sold to the public through a broker, dealer or
market pursuant to the provisions of Rule 144 or Rule 144A (or any similiar
provision therein force) adopted under the Securities Act.
2. Holders of Non-Voting Common Stock. Each holder of Non-Voting Common
----------------------------------
Stock agrees that, effective immediately upon conversion of all or any
<PAGE>
Voting Agreement
Page 2
portion of their Non-Voting Common Stock into Class A Common Stock, in
accordance with the terms and conditions of the Company's articles of
incorporation (as amended from time to time, the "Certificate of Incorporation")
----------------------------
each such holder shall automatically become a party to this Agreement, and
thereafter each agrees to be bound by all provisions hereof without any further
action required to be taken.
3. Obligation to Vote Voting Shares for Specific Nominees. Each
------------------------------------------------------
Stockholder agrees it shall vote all Voting Shares held by such Stockholder and
shall take all other necessary or desirable action within its control (whether
in its capacity as a stockholder, director, member of a board committee or
officer of the Company or otherwise, and including, without limitation,
attendance at meetings in person or by proxy for purposes of obtaining a quorum
and execution of written consents in lieu of meetings) so that (a) the Board
shall initially consist of five members and, so long as the Board shall consist
of at least five members, the individuals designated below are selected as
nominees to the Board in accordance with the Certificate of Incorporation and
the Bylaws of the Company as amended from time to time, with the effect that,
at any given time, the directors of the Company shall be comprised of: (i) two
individuals designated by Golder, Thoma, Cressey, Rauner Fund IV, L.P. ("GTCR")
----
(collectively, the "GTCR Directors"), (ii) two members of the Company's
--------------
management or employees or officers of the Company, in each case, designated by
the holders of a majority of the Voting Shares held by the executive officers
(the "Executives") of the Company (such Executives as designated in the
----------
Company's Board resolutions), which individuals initially shall be Stephen R.
Kerrigan (the "Management Director" and Mitchell Blatt ("Blatt" and, together
------------------- -----
with the Management Director, the "Executive Directors") (the designation of the
-------------------
Executive Director that will be the Management Director shall be determined by
the holders of a majority of the Voting Shares held by the Executives), and
(iii) an individual designated by GTCR and reasonably acceptable to the
Management Director (the "Outside Director"), which individual initially shall
----------------
be James N. Chapman;
(b) within 90 days after the date of the consummation of the Initial Public
Offering and necessary to satisfy the listing requirements of the Nasdaq
National Market, or as a majority of the Board may otherwise determine, the
Board shall be increased by up to two members who shall not be members of
management, employees or officers of the Company (each such member, an
"Independent Director"), and so long as the Board shall consist of 6 or 7
--------------------
members, such sixth and seventh members shall be Independent Directors as
described in and shall be designated pursuant to this paragraph (b), and each
such Independent Director shall be designated by the mutual agreement of GTCR
and the Management Director; provided, however, that (i) if one Independent
-------- -------
Director is to be designated and GTCR and the Management Director cannot agree
as to the designation of such Independent Director, such Independent Director
shall be designated by GTCR and reasonably acceptable to the Management
Director, and (ii) if two Independent Directors are to be designated and GTCR
and the Management Director cannot agree as to the designation of both such
Independent Directors, one such Independent Director shall be designated by GTCR
and reasonably acceptable to the Management Director and one such Independent
Director shall be designated by the Management Director and reasonably
acceptable to GTCR.
(c) in the event the number of directors constituting the Board is for any
reason increased above seven or decreased below five, such additional or
remaining directorships shall be apportioned evenly between (i) directors
designated by GTCR (which directors shall be GTCR Directors) and (ii) directors
designated by the holders of a majority of the Voting Shares held by the
Executives (which directors shall be Executive Directors), and in the event that
such additional or remaining directorships cannot be evenly apportioned, the
remaining directorship shall be designated by GTCR and the Management Director
(which director shall be an Outside Director).
<PAGE>
Voting Agreement
Page 3
4. Removal from Board. Except as required by applicable law, (i) the
------------------
removal from the Board of any GTCR Director or Outside Director shall be only at
the request of GTCR; (ii) the removal from the Board of any Independent Director
shall be only at the request of GTCR and the Management Director; and (iii) the
removal from the Board of any Executive Director shall be only at the request of
the holders of a majority of the Voting Shares held by the Executives; provided
that, if any Executive Director ceases to be an employee or officer of the
Company, he or she shall be removed as a director promptly after his or her
employment with the Company ceases. No director may at any time be removed
without cause.
5. Vacancy on Board. In the event that any director ceases to serve as a
----------------
member of the Board during his or her term of office, the Stockholders shall
designate and cause to be nominated the individuals set forth in Section 3
hereof. If any party fails to designate a representative to fill a directorship
pursuant to the terms of this Agreement, the election of an individual to such
directorship shall be accomplished in accordance with the Company's bylaws and
applicable law.
6. Termination. This Agreement shall terminate and be of no further force
-----------
and effect at such time as GTCR holds in the aggregate less than twenty-percent
(20%) of all issued and outstanding Voting Shares.
7. Stockholders Agreement. The Stockholders Agreement shall terminate and
----------------------
shall be of no further force and effect upon the consummation of the Initial
Public Offering.
8. Amendment. Any term hereof may be amended and the observance of any
---------
term or condition hereof may be waived (either generally or in a particular
instance and either retroactively or prospectively) only upon the written
consent of the Company and each other party hereto. Any amendment or waiver so
effective shall be binding upon the Company, all parties hereto, any assignee of
any such party, and any other Stockholders of the Company subject to the terms
of this Agreement. The failure of any party to enforce any of the provisions of
this Agreement shall in no way be construed as a waiver of such provisions and
shall not affect the right of such party thereafter to enforce each and every
provision of this Agreement in accordance with its terms.
9. Successors in Interest.
----------------------
(a) The provisions of this Agreement shall be binding upon all successors
in interest to any of the Voting Shares. Stockholder shall not be permitted to
transfer any of the Voting Shares unless and until the person or entity to whom
such security is to be transferred shall have executed a written agreement,
substantially in the form of this Agreement, pursuant to which such person or
<PAGE>
Voting Agreement
Page 4
entity becomes a party to this Agreement and agrees to be bound by all the
provisions hereof as if such person were a Stockholder.
(b) Each certificate representing one or more Voting Shares shall be
marked by the Company with a legend reading as follows:
"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."
Upon termination of this Agreement pursuant to Section 6 hereof or
when Shares cease to be Voting Shares, the holders of certificates bearing such
legend shall be entitled to receive new certificates from the Company at no
charge that do not bear such legend.
10. Notices. Any notice required or permitted to be given to a party
-------
hereto pursuant to the provisions of this Agreement shall be in writing and
shall be effective upon personal delivery or upon deposit in the U.S. mail,
registered or certified, with postage prepaid or with a nationally recognized
overnight delivery service and properly addressed to the party to be notified.
Mailed notices shall be addressed, and sent to the Company at the principal
offices of the Company, and if to the Stockholders, at their respective
addresses set forth below their respective signatures below.
11. Governing Law. The corporate law of the State of Delaware shall
-------------
govern all issues and questions concerning the relative rights of the Company
and the Stockholders. All other issues and questions concerning the
construction, validity, interpretation and enforceability of this Agreement and
the exhibits and schedules hereto shall be governed by, and construed in
accordance with, the internal laws of the State of New York, without giving
effect to any choice of law or conflict of law rules or provisions (whether of
the State of New York or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of New York.
12. Waiver of Jury Trial. THE PARTIES HERETO EACH HEREBY WAIVE TRIAL
--------------------
BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR
<PAGE>
Voting Agreement
Page 5
OTHERWISE) IN ANY WAY ARISING OUT OF, OR RELATED TO, OR CONNECTED WITH, THIS
AGREEMENT.
13. Invalidity. In the event that any one or more of the provisions
----------
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
14. Descriptive Headings. The descriptive headings of this Agreement
--------------------
are inserted for convenience only and do not constitute a part of this
Agreement.
15. Entire Agreement. This Agreement constitutes the full and entire
----------------
understanding and agreement among the parties hereto regarding the subject
matter hereof and supersedes and preempts any prior or contemporaneous
negotiations, promises, understandings, agreements, representations or covenants
of every nature whatsoever by or among the parties, written or oral, which may
have related to the subject matter hereof in any way.
16. Counterparts. This Agreement may be signed in one or more
------------
counterparts, each of which together shall constitute one and the same
instrument.
[SIGNATURE PAGES FOLLOW]
<PAGE>
Voting Agreement
Page 6
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date and year first above written.
COINMACH LAUNDRY CORPORATION
By: /s/ ROBERT M. DOYLE
__________________________
Name: Robert M. Doyle
Title: Senior Vice President
Address: 55 Lumber Road
Roslyn, New York 11576
GOLDER, THOMA, CRESSEY, RAUNER FUND IV, L.P.
By: GTCR IV, L.P.
Its: General Partner
By: GOLDER, THOMA, CRESSEY, RAUNER, INC.
Its: General Partner
By: /s/ BRUCE V. RAUNER
__________________________
Name: Bruce V. Rauner
Title:
Address: 6100 Sears Tower
Chicago, Illinois 60606
MCS CAPITAL, INC.
By: /s/ STEPHEN R. KERRIGAN
__________________________
Stephen R. Kerrigan
Title: President
Address: 55 Lumber Road
Roslyn, New York 11576
<PAGE>
Voting Agreement
Page 7
HARVARD MANAGEMENT COMPANY, INC.
By: HARVARD MANAGEMENT COMPANY, INC.
By:/s/ TIMOTHY S. PETERSON
---------------------------------
Name: Timothy S. Peterson
Title: Authorized Signatory
By: /s/ JACK R. MEYER
----------------------------------
Name: Jack R. Meyer
Title: Authorized Signatory
Address: 600 Atlantic Avenue
Boston, Massachusetts 02210
/s/ MITCHELL BLATT
--------------------------------------
Mitchell Blatt
Address: 55 Lumber Road
Roslyn, New York 11576
/s/ ROBERT M. DOYLE
--------------------------------------
Robert M. Doyle
Address: 55 Lumber Road
Roslyn, New York 11576
/s/ MICHAEL E. STANKY
--------------------------------------
Michael E. Stanky
Address: 4430 Bronze Way
Dallas, Texas 75236
/s/ CHARLES PRATO
--------------------------------------
Charles Prato
Address: 55 Lumber Road
Roslyn, New York 11576
<PAGE>
Voting Agreement
Page 8
/s/ JAMES N. CHAPMAN
------------------------------
James N. Chapman
Address: 14 Alpine Road
Greenwich, Connecticut 06830
/s/ MICHAEL E. MARRUS
------------------------------
Michael E. Marrus
Address: 755 Park Avenue
New York, New York 10021
/s/ DAVID TULKOP
------------------------------
David Tulkop
Address: 55 Lumber Road
Roslyn, New York 11576
/s/ RUSSELL HARRISON
------------------------------
Russell Harrison
Address: 55 Lumber Road
Roslyn, New York 11576
/s/ S. A. SPENCER
------------------------------
S. A. Spencer
Address: c/o Holding Capital Group, Inc.
685 Fifth Avenue
New York, New York 10022
<PAGE>
Voting Agreement
Page 9
THE UNDERSIGNED, NOT IN THEIR CAPACITY AS
PARTIES TO THIS AGREEMENT AND SOLELY
AS HOLDERS OF THE NON-VOTING COMMON STOCK,
HEREBY ACKNOWLEDGE AND AGREE ONLY
WITH RESPECT TO SECTIONS 2 AND 7 HEREOF:
HELLER FINANCIAL, INC.
By: /s/ ELLEN T. COOK
__________________________
Name: Ellen T. Cook
Title: Assistant Vice President
Address: 500 West Monroe Street
Chicago, Illinois 60661
JACKSON NATIONAL LIFE INSURANCE COMPANY
By: /s/ WILLIAM T. CONSIDINE
__________________________
Name: William T. Considine
Title: Vice President
Address: c/o PPM America, Inc.
225 West Wacker Drive
Chicago, Illinois 60661
<PAGE>
Exhibit 10.56
TERMINATION AGREEMENT
THIS TERMINATION AGREEMENT (the "Agreement") is made and entered into this
---------
23rd day of July 1996, by and between Coinmach Laundry Corporation (formerly SAS
Acquisitions Inc.), a Delaware corporation ("Coinmach"), with its principal
--------
office at 55 Lumber Road, Roslyn, New York 11576, and GTCR IV, L.P., a Delaware
limited partnership ("GTCR"), located at 6100 Sears Tower, Chicago, Illinois
----
60606.
Recitals
--------
A. Coinmach and GTCR entered into an Amended and Restated Management and
Consulting Services Agreement, dated November 30, 1995 (the "Management
----------
Agreement") pursuant to which GTCR agreed to provide certain management and
- ---------
consulting services to Coinmach; and
B. GTCR has agreed to terminate the Management Agreement upon the terms
and conditions set forth herein.
Agreement
---------
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree as follows:
1. Termination. Effective immediately upon GTCR's receipt of payment by
-----------
Coinmach of $500,000 (the "Final Management Fee"), which payment shall be made
--------------------
by wire transfer of immediately available funds to an account designated in
writing by GTCR, the parties hereto agree to terminate the Management Agreement
in all respects, and all rights, obligations, interests, claims and causes of
action under the Management Agreement of either party thereunder upon such
termination shall be canceled, terminated, released and extinguished in all
respects, and the parties thereto shall have no further rights or obligations
thereunder. GTCR hereby agrees that the Final Management Fee shall constitute
payment in full of any and all fees, costs, expenses and other payments of any
kind to which GTCR is entitled under the Management Agreement.
2. Mutual Representations. Each party hereto represents and warrants to
----------------------
the other party that, as of the date hereof: (i) it has full power and authority
to execute, deliver and perform its obligations under this Agreement; and (ii)
the
<PAGE>
Termination Agreement
Page 2
execution, delivery and performance of this Agreement has not resulted, nor will
result, in any breach of any provision of, or constitute a default (or an event
which with or without notice and/or lapse of time would constitute a default),
under its certificate of incorporation, bylaws or partnership agreement, as
applicable, or any material agreement or instrument to which it is a party or by
which it is bound, or any law, statute, order, judgment, rule or regulation
applicable to it of any court or other governmental authority.
3. Miscellaneous. This Agreement constitutes the entire agreement among
-------------
the parties hereto with respect to the subject matter referred to herein and
supersedes all prior or contemporaneous negotiations, promises, covenants,
agreements or representations of every nature whatsoever with respect to
thereto. This Agreement cannot be amended, modified or supplemented except by
an instrument in writing executed by each of the parties hereto. This Agreement
may be executed in counterparts, each of which when so executed shall be an
original, but all such counterparts shall together constitute but one and the
same instrument. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York (without regard to
any conflict of laws provisions thereof). This Agreement shall be binding upon
each party hereto, and their respective successors and assigns.
[SIGNATURE PAGES FOLLOWS]
<PAGE>
Termination Agreement
Page 3
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date and year first above written.
COINMACH LAUNDRY CORPORATION
By: /s/Robert M. Doyle
-----------------------
Robert M. Doyle
Senior Vice President
GTCR IV, L.P.
By: Golder, Thoma, Cressey,
Rauner, Inc., its General
Partner
By: /s/Bruce V. Rauner
-----------------------
Name: Bruce V. Rauner
Title:
<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.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-28-1997
<PERIOD-START> MAR-30-1996
<PERIOD-END> JUN-28-1996
<CASH> 3,240
<SECURITIES> 0
<RECEIVABLES> 4,648
<ALLOWANCES> 0
<INVENTORY> 5,204
<CURRENT-ASSETS> 0
<PP&E> 116,819
<DEPRECIATION> 24,680
<TOTAL-ASSETS> 250,276<F1>
<CURRENT-LIABILITIES> 0
<BONDS> 201,655
0
0
<COMMON> 17,903
<OTHER-SE> (20,443)
<TOTAL-LIABILITY-AND-EQUITY> 250,276
<SALES> 0<F2>
<TOTAL-REVENUES> 47,940
<CGS> 0
<TOTAL-COSTS> 32,580<F3>
<OTHER-EXPENSES> 10,851
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,141
<INCOME-PRETAX> (1,632)
<INCOME-TAX> (400)<F4>
<INCOME-CONTINUING> (1,232)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,232)<F5>
<EPS-PRIMARY> (.16)
<EPS-DILUTED> 0
<FN>
<F1>Includes Advance Rental Payments of $21,643, Contract Rights of $65,033, and
Goodwill of $43,737, each net of accumulated amortization, for the 3 months
ended June 28, 1996.
<F2>Total Revenues include Sales of laundromats and equipment of $4,558, for the
3 months ended June 28, 1996.
<F3>Total Costs include Cost of Goods Sold of $3,375, for the 3 months ended
June 28, 1996.
<F4>The provision (benefit) for income taxes consists of $50 currently payable
and ($450) deferred, for the 3 months ended June 28, 1996.
<F5>In addition, EBITDA (earnings before deductions for interest, income taxes,
depreciation and amortization) of $14,319, 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>
