<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
COINMACH LAUNDRY CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
COINMACH LAUNDRY CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
LOGO
COINMACH LAUNDRY CORPORATION
55 LUMBER ROAD
ROSLYN, NEW YORK 11576
Dear Stockholder:
On behalf of the Board of Directors, I cordially invite you to attend the
Annual Meeting of Stockholders (the "Annual Meeting") to be held at 1:00 p.m.,
on July 9, 1997 at The Park Hotel, 2200 Rexford Road, Charlotte, North
Carolina 28211.
I look forward to greeting you personally. The accompanying Proxy Statement
describes the matters to be acted on at the Annual Meeting, and I urge you to
read it carefully.
At the Annual Meeting, you will be asked to vote on the election of two
directors and to confirm the appointment of Ernst & Young LLP as independent
public accountants. You will also be asked at the Annual Meeting to approve
the Second Amended and Restated 1996 Employee Stock Option Plan. Your Board of
Directors believes that the approval of the Second Amended and Restated 1996
Employee Stock Option Plan is in the best interests of all stockholders and
has unanimously recommended that you vote "FOR" such proposal.
It is important that your shares be represented at the Annual Meeting
regardless of the number of shares you may hold. In order for your vote to be
counted, you must sign, date and return the enclosed proxy card or attend the
meeting in person. I urge you to sign and return the enclosed proxy card
promptly.
Sincerely,
Stephen R. Kerrigan
Chairman of the Board
and Chief Executive Officer
Roslyn, New York
June 13, 1997
<PAGE>
LOGO COINMACH LAUNDRY CORPORATION
55 LUMBER ROAD
ROSLYN, NEW YORK 11576
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 9, 1997
----------------
TO THE STOCKHOLDERS OF COINMACH LAUNDRY CORPORATION:
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Stockholders (the
"Annual Meeting") of Coinmach Laundry Corporation (the "Company") will be held
on Wednesday, July 9, 1997, at 1:00 p.m., eastern standard time, at The Park
Hotel, 2200 Rexford Road, Charlotte, North Carolina 28211 for the following
purposes:
(1) To elect two Class I directors of the Company to serve for the term
expiring at the 2000 annual meeting of stockholders of the Company;
(2) To approve the Second Amended and Restated 1996 Employee Stock Option
Plan;
(3) To confirm the appointment of Ernst & Young LLP as independent public
accountants of the Company for the fiscal year commencing March 29, 1997;
and
(4) To transact such other business as may properly come before the
meeting or any adjournments or postponements thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
NOTICE IS FURTHER GIVEN that the Company's Board of Directors has fixed May
26, 1997 as the record date for the determination of the stockholders entitled
to notice of, and to vote at, the Annual Meeting or any adjournments or
postponements thereof. A list of such stockholders will be available at the
time and place of the meeting and, during the ten days prior to the Annual
Meeting, at the office of the Secretary of the Company at the above address.
If you would like to attend the Annual Meeting and your shares are held by a
broker, bank or other nominee, you must bring to the Annual Meeting a recent
brokerage statement or a letter from the nominee confirming your beneficial
ownership of your shares. You must also bring a form of personal
identification. In order to vote your shares at the Annual Meeting, you must
obtain from the nominee a proxy issued in your name. Whether or not you plan
to attend the Annual Meeting, WE URGE YOU TO SIGN AND DATE THE ENCLOSED PROXY
AND RETURN IT PROMPTLY IN THE ACCOMPANYING POSTAGE-PAID RETURN ENVELOPE.
The annual report of the Company on Form 10-K for the fiscal year ended
March 28, 1997 is being mailed to all stockholders of record and accompanies
the Proxy Statement to which this notice is attached.
By Order of the Board of Directors,
Robert M. Doyle
Secretary
Roslyn, New York
June 13, 1997
<PAGE>
COINMACH LAUNDRY CORPORATION
55 LUMBER ROAD
ROSLYN, NEW YORK 11576
----------------
ANNUAL MEETING OF STOCKHOLDERS
JULY 9, 1997
----------------
PROXY STATEMENT
----------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (sometimes hereinafter referred to as the
"Board" or the "Board of Directors") of Coinmach Laundry Corporation (the
"Company") to be voted at the annual meeting of stockholders (the "Annual
Meeting"), to be held on July 9, 1997 at 1:00 p.m., eastern standard time, at
The Park Hotel, 2200 Rexford Road, Charlotte, North Carolina 28211 and at any
postponement or adjournment thereof, for the purposes set forth in the
foregoing Notice of Annual Meeting of Stockholders. This Proxy Statement and
the enclosed form of proxy are being sent to stockholders commencing on or
about June 13, 1997.
All expenses incident to the solicitation of proxies, including without
limitation, preparing, assembling and mailing the proxy solicitation
materials, will be paid by the Company. The Company has retained Corporate
Investor Communications, Inc. to assist in soliciting proxies for a fee of
approximately $1,500, which includes reimbursement of reasonable out-of-pocket
expenses. Additional solicitation by mail, telephone, telecopier or by
personal solicitation may be effected by directors, officers and regular
employees of the Company, for which they will receive no additional
compensation. Brokerage houses and other nominees, fiduciaries and custodians
nominally holding shares of Common Stock as of the Record Date (each as
hereinafter defined) will be requested to forward proxy soliciting material to
the beneficial owners of such shares, and will be reimbursed by the Company
for their reasonable out-of-pocket expenses.
VOTING RIGHTS AND SOLICITATION OF PROXIES
RECORD DATE AND SHARE OWNERSHIP
The Board of Directors has fixed the close of business on May 26, 1997 as
the record date for the determination of the stockholders entitled to receive
notice of, and to vote at, the Annual Meeting (the "Record Date"). The Company
has two classes of stock outstanding: (i) Class A common stock, par value $.01
per share (the "Common Stock"); and (ii) Class B non-voting common stock, par
value $0.01 per share (the "Non-Voting Common Stock"). Holders of record of
Common Stock at the close of business on the Record Date will be entitled to
vote at the Annual Meeting. On the Record Date, there were 10,004,278 shares
of Common Stock issued and outstanding and 480,648 shares of Non-Voting Common
Stock issued and outstanding.
VOTING AND QUORUM
Each share of Common Stock, the only securities of the Company entitled to
vote at the Annual Meeting, will be entitled to one vote at the Annual
Meeting. Holders of Common Stock are not entitled to cumulate their votes on
any matter to be considered at the Annual Meeting. The presence at the Annual
Meeting, in person or by proxy, of the holders of a majority of the total
number of shares of Common Stock outstanding on the Record Date constitutes a
quorum for the transaction of business at the Annual Meeting. Where a quorum
is present, the vote of the holders of a majority of shares of Common Stock
present in person or represented by proxy and
<PAGE>
entitled to vote will decide any question voted upon, and the two nominees for
director receiving the highest number of votes (i.e., a plurality) will be
elected as directors. If any votes are withheld, such withheld votes will be
excluded entirely from the vote and will have no effect.
Abstentions and broker non-votes (as hereinafter defined) are counted for
the purpose of determining whether a quorum is present at the Annual Meeting.
For the purpose of determining whether a proposal (except for the election of
directors) has received a majority vote, abstentions will be included in the
vote totals with the result that an abstention will have the same effect as a
negative vote. In instances where brokers are prohibited from exercising
discretionary authority for beneficial owners who have not returned a proxy
("broker non-votes"), those shares of Common Stock will not be included in the
vote totals and will have no effect on the vote.
PROXIES AND REVOCATION OF PROXIES
Proxies in the enclosed form are solicited by the Board of Directors in
order to provide each stockholder an opportunity to vote on all matters
scheduled to come before the Annual Meeting, whether or not the stockholder
attends in person. All proxies received pursuant to this solicitation will be
voted except as to matters where authority to vote is specifically withheld or
the holder has elected to abstain and, where a choice is specified as to the
proposal, they will be voted in accordance with such specification. In the
absence of specific directions, properly executed proxies will be voted "FOR"
(i) the election of the nominees listed below under "ELECTION OF DIRECTORS" as
Class I directors of the Company; (ii) the approval of the Second Amended and
Restated 1996 Employee Stock Option Plan; and (iii) the confirmation of the
appointment of Ernst & Young LLP as the Company's independent certified public
accountants for the current fiscal year. Any stockholder submitting a proxy
has the power to revoke the proxy prior to its exercise. A proxy may be
revoked (a) by delivering to the Secretary of the Company at or prior to the
Annual Meeting an instrument of revocation or a duly executed proxy bearing a
date or time later than the date or time of the proxy being revoked or (b) at
the Annual Meeting if the stockholder is present and elects to vote in person.
Mere attendance at the Annual Meeting will not serve to revoke a proxy.
SECURITY OWNERSHIP OF THE COMPANY
VOTING ARRANGEMENTS
The Company and each of Golder, Thoma, Cressey, Rauner Fund IV, L.P.
("GTCR"), the holder of 4,556,114 shares of Common Stock (or approximately
45.5% of the outstanding Common Stock entitled to vote at the Annual Meeting),
MCS Capital, Inc. ("MCS"), the holder of 442,769 shares of Common Stock (or
approximately 4.4% of the outstanding Common Stock entitled to vote at the
Annual Meeting), Mitchell Blatt, the holder of 396,313 shares of Common Stock
(or approximately 4.0% of the outstanding Common Stock entitled to vote at the
Annual Meeting) President and Fellows of Harvard College ("Harvard"), the
holder of 151,060 shares of Common Stock (or approximately 1.5% of the
outstanding Common Stock entitled to vote at the Annual Meeting), and Robert
M. Doyle, Michael E. Stanky, Charles Prato, James N. Chapman, Michael Marrus,
David Tulkop, Russell Harrison, Sash A. and Mary Spencer, the holders of an
aggregate of 273,580 shares of Common Stock (or approximately 2.7% of the
outstanding Common Stock entitled to vote at the Annual Meeting), are parties
to a Voting Agreement, dated July 23, 1996 (the "Voting Agreement"), pursuant
to which such stockholders agreed to vote their shares of Common Stock so that
the Board of Directors will consist of (i) two persons designated by GTCR
(currently Messrs. Rauner and Donnini), (ii) two persons who are officers,
employees or management of the Company and are designated by the holders of a
majority of Common Stock held by executive officers of the Company (currently
Messrs. Kerrigan and Blatt), (iii) two persons jointly designated by GTCR and
Mr. Kerrigan (currently Mr. Chapman and Dr. Laffer), and (iv) one person
designated by GTCR and approved by Mr. Kerrigan (currently Mr. Cerri).
2
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth the beneficial ownership of Common Stock as
of May 26, 1997, by (i) each director of the Company; (ii) each executive
officer of the Company named in the Summary Compensation Table set forth under
the caption "EXECUTIVE COMPENSATION" below, (iii) each person known by the
Company to own more than 5% of the outstanding shares of Common Stock; and
(iv) all directors and executive officers as a group. No director or executive
officer of the Company owns any shares of Non-Voting Common Stock. The Company
believes that, except as otherwise stated, the beneficial holders listed below
have sole voting and investment power regarding the shares of Common Stock
beneficially owned by them.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS/1/
---------------- -------------------- ----------
<S> <C> <C>
Golder, Thoma, Cressey, Rauner, Fund IV, L.P. 4,556,114 45.5%
...............................................
6100 Sears Tower
Chicago, IL 60606
MCS Capital, Inc. ............................. 566,010/2/ 5.7%
c/o Coinmach Corporation
521 East Morehead, Suite 590
Charlotte, NC 28202
OFFICERS AND DIRECTORS
Stephen R. Kerrigan............................ 566,010/3/ 5.7%
Mitchell Blatt................................. 416,313/4/ 4.2%
Robert M. Doyle................................ 137,964/5/ 1.4%
Michael E. Stanky.............................. 98,284/6/ *
John E. Denson................................. 11,503/7/ *
Bruce J. Rauner................................ 4,556,114/8/ 45.5%
David A. Donnini............................... 4,556,114/9/ 45.5%
James N. Chapman............................... 30,386/10/ *
Arthur B. Laffer............................... 15,000/11/ *
Stephen G. Cerri............................... 15,000/12/ *
All Officers and Directors as a group (10 5,846,574/13/ 58.4%
persons).......................................
</TABLE>
The Company believes that none of the executive officers and directors of
the Company have engaged in securities transactions for which they have failed
to file, or failed to file on a timely basis, Forms 4 or 5 with the Securities
and Exchange Commission.
- --------
* Percentage of shares beneficially owned does not exceed 1% of Common Stock
outstanding.
/1/Share percentage ownership is rounded to nearest tenth of 1% and reflects
the effect of dilution as a result of outstanding options to the extent such
options are, or within 60 days will become, exercisable. Shares underlying
any option which was exercisable on May 26, 1997 or becomes exercisable
within the next 60 days are deemed outstanding only for purposes of computing
the share ownership and share ownership percentage of the holder of such
option.
/2/Includes shares underlying options to purchase an aggregate of 123,241
shares of Common Stock at an exercise price of $11.90 per share, of which
61,622 are currently exercisable and 61,619 become exercisable within the
next 60 days. Does not include shares underlying options to purchase an
aggregate of 184,857 shares of Common Stock at an exercise price of $11.90
per share, which options are not currently exercisable nor become exercisable
within the next 60 days.
/3/The shares are owned beneficially by MCS, a corporation controlled by Mr.
Kerrigan. Includes shares underlying options held by MCS to purchase an
aggregate of 123,241 shares of Common Stock at an exercise price of $11.90
per share, of which 61,622 are currently exercisable and 61,619 become
exercisable within the next 60 days. Does not include shares underlying
options held by MCS to purchase an aggregate of 184,857 shares of Common
Stock at an exercise price of $11.90 per share, which options are not
currently exercisable nor become exercisable within the next 60 days.
/4/Includes shares underlying options to purchase an aggregate of 20,000
shares of Common Stock at an exercise price of $14.00 per share. Does not
include shares underlying options to purchase an aggregate of 80,000 shares
of Common Stock at an exercise price of $14.00 per share, which options are
not currently exercisable nor become exercisable within the next 60 days.
/5/Includes shares underlying options to purchase an aggregate of 28,756
shares of Common Stock at an exercise price of $11.90 per share, of which
14,378 are currently exercisable and 14,378 become exercisable within the
next 60 days. Does not include shares underlying options to purchase an
aggregate of 43,134 shares of Common Stock at an exercise price of $11.90 per
share, which options are not currently exercisable nor become exercisable
within the next 60 days.
3
<PAGE>
/6/Includes shares underlying options to purchase an aggregate of 41,409
shares of Common Stock at an exercise price of $11.90 per share, of which
20,705 are currently exercisable and 20,704 become exercisable within the
next 60 days. Does not include shares underlying options to purchase an
aggregate of 62,112 shares of Common Stock at an exercise price of $11.90 per
share, which options are not currently exercisable nor become exercisable
within the next 60 days. Also includes shares underlying options to purchase
an aggregate of 10,000 shares of Common Stock at an exercise price of $14.00
per share. Does not include shares underlying options to purchase an
aggregate of 40,000 shares of Common Stock at an exercise price of $14.00 per
share, which options are not currently exercisable nor become exercisable
within the next 60 days.
/7/Represents shares underlying options to purchase an aggregate of 11,503
shares of Common Stock at an exercise price of $11.90 per share, of which
5,752 shares are currently exercisable and 5,751 shares become exercisable
within the next 60 days. Does not include shares underlying options to
purchase an aggregate of 17,253 shares of Common Stock at an exercise price
of $11.90 per share, which options are not currently exercisable nor become
exercisable within the next 60 days.
/8/All such shares are held by GTCR, of which GTCR IV, L.P. ("GTCR IV"), is
the general partner. Mr. Rauner is a principal of Golder, Thoma, Cressey,
Rauner, Inc., the general partner of GTCR IV. Mr. Rauner disclaims beneficial
ownership of such shares.
/9/All such shares are held by GTCR, of which GTCR IV is the general partner.
Mr. Donnini is a principal of Golder, Thoma, Cressey, Rauner, Inc., the
general partner of GTCR IV. Mr. Donnini disclaims beneficial ownership of
such shares.
/10/Includes shares underlying options to purchase an aggregate of 11,503
shares of Common Stock at an exercise price of $11.90 per share. Does not
include shares underlying options to purchase an aggregate of 17,253 shares
of Common Stock at an exercise price of $11.90 per share, which options are
not currently exercisable nor become exercisable within the next 60 days.
/11/Represents shares underlying options to purchase an aggregate of 15,000
shares of Common Stock at an exercise price of $14.00 per share. Does not
include shares underlying options to purchase an aggregate of 45,000 shares
of Common Stock at an exercise price of $14.00 per share, which options are
not currently exercisable nor become exercisable within the next 60 days.
/12/Represents shares underlying options to purchase an aggregate of 15,000
shares of Common Stock at an exercise price of $14.00 per share. Does not
include shares underlying options to purchase an aggregate of 45,000 shares
of Common Stock at an exercise price of $14.00 per share, which options are
not currently exercisable nor become exercisable within the next 60 days.
/13/In calculating the shares beneficially owned by executive officers and
directors as a group, (i) 4,556,114 shares of Common Stock owned by GTCR and
included in the beneficial ownership amounts of each of Messrs. Rauner and
Donnini, and (ii) 566,010 shares of Common Stock owned by MCS and included in
the beneficial ownership amount of Mr. Kerrigan, in each case as set forth in
the table above, are included only once. In calculating the percentage of
shares owned by executive officers and directors as a group, the shares of
Common Stock underlying all options which are beneficially owned by executive
officers and directors and which are currently exercisable or become
exercisable within the next 60 days are deemed outstanding.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's executive officers and directors, and
persons who own more than ten percent of a registered class of the Company's
equity securities, to file reports of ownership and changes in ownership with
the Securities and Exchange Commission (the "SEC") and the Nasdaq National
Market. Officers, directors and ten percent stockholders are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on its review of copies of such
Section 16(a) forms received by it and written representations from certain
persons that no other reports were required to be filed by them, the Company
believes that, during the Company's most recently completed fiscal year ended
March 28, 1997, all filing requirements applicable to its officers, directors,
and ten percent stockholders were complied with, except that: (i) GTCR and
Messrs. Blatt, Chapman, Denson, Doyle, Kerrigan, Osborne and Stanky failed to
file a Form 3 by July 23, 1996, the effective date of the Company's
registration statement on Form S-1 (the "Effective Date"), with respect to
shares of Common Stock owned by such persons on the Effective Date; (ii)
Messrs. Harrison, Marrus and Prato and MCS, each of whom may be deemed to be a
member of a "group" under Section 13(d) of the Exchange Act ("Section 13(d)")
on account of the execution of the Voting Agreement by such person, failed to
file in a timely manner a Form 3 with respect to (a) any deemed status as a
member of a Section 13(d) "group" and (b) a grant of options to such persons
on the Effective Date; (iii) Harvard, Harvard Management Company, Inc., Mr.
Tulkop and Sash A. and Mary Spencer, each of whom may be deemed to be a member
of a Section 13(d) "group" on account of the execution of the Voting Agreement
by such person, failed to file in a timely manner a Form 3 with respect
thereto; and (iv) Messrs. Cerri and Laffer failed to file a Form 3 in a timely
manner with respect to their election as directors of the Company.
4
<PAGE>
ELECTION OF DIRECTORS
The Board is divided into three classes of directors. Each class of
directors is elected to serve for a term of three years, so that the terms of
office of approximately one-third of the directors will expire each year. At
the Annual Meeting, two directors are to be elected in Class I to hold office
until the 2000 annual meeting of stockholders or until their successors are
elected and qualified. The persons designated as nominees for election as
directors in Class I are Stephen R. Kerrigan and David A. Donnini. Each of
such nominees is currently a director of the Company.
Should any one or more of these nominees become unable to serve for any
reason, or for good cause will not serve, the Board may, unless the Board by
resolution provides for a lesser number of directors, designate substitute
nominees, in which event the persons named in the enclosed proxy will vote
proxies that would otherwise be voted for all named nominees for the election
of such substitute nominee or nominees.
Certain information with respect to each of the nominees and directors
relating to principal occupations and directorships, and the approximate
number of shares of Common Stock beneficially owned by them, directly or
indirectly, has been furnished to the Company by such nominees and directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE
"FOR" BOTH NOMINEES.
<TABLE>
<CAPTION>
DIRECTOR
NAME, PRINCIPAL OCCUPATION FOR THE PAST FIVE YEARS, DIRECTORSHIPS AGE SINCE
- ----------------------------------------------------------------- --- --------
<S> <C> <C>
CLASS I DIRECTOR NOMINEES FOR
TERM EXPIRING IN 2000
STEPHEN R. KERRIGAN. Mr. Kerrigan has been Chief Executive 43 1995
Officer of the Company since April 1996 and of Coinmach
Corporation, a wholly-owned subsidiary of the Company
("Coinmach"), since November 1995. Mr. Kerrigan was President and
Treasurer of Solon Automated Services, Inc. ("Solon") and the
Company from April 1995 until April 1996, and Chief Executive
Officer of The Coinmach Corporation ("TCC") from January 1995
until November 1995./1/ Mr. Kerrigan has been a director and
Chairman of the Board of the Company since April 1995 and of
Coinmach since November 1995. Mr. Kerrigan was a director of TCC
from January 1995 to November 1995 and a director of Solon from
April 1995 to November 1995. Mr. Kerrigan served as Vice
President and Chief Financial Officer of TCC's predecessor,
Coinmach Industries Co., L.P. from 1987 until 1994. Mr. Kerrigan
was an executive officer of CIC I Acquisition Corp. ("CIC"),
which filed a voluntary petition for reorganization under Chapter
11 of the United States Bankruptcy Code in 1993.
DAVID A. DONNINI. Mr. Donnini has been a director of the Company 32 1995
since April 1995. Mr. Donnini was a director of Coinmach from
November 1995 to November 1996 and a director of TCC from January
1995 to November 1995. Mr. Donnini has been a Principal of GTCR
since 1993. From 1991 to 1993, Mr. Donnini was an Associate with
GTCR. Mr. Donnini serves as a director of Polymer Group, Inc.,
International Computer Graphics, Inc., U.S. Aggregates, Inc.,
Keystone Group Holdings, Inc., Dickson Media, Inc. and Cherrydale
Farms, Inc.
</TABLE>
- --------
1 On November 30, 1995, TCC merged with and into Solon (the "Merger") and
entered into a series of refinancing transactions, whereupon the surviving
corporation changed its name to "Coinmach Corporation." Coinmach Corporation
is the principal operating subsidiary of the Company.
5
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR
NAME, PRINCIPAL OCCUPATION FOR THE PAST FIVE YEARS, DIRECTORSHIPS AGE SINCE
- ----------------------------------------------------------------- --- --------
<S> <C> <C>
INCUMBENT CLASS II DIRECTORS
WHOSE TERMS EXPIRE IN 1998
DR. ARTHUR B. LAFFER. Dr. Laffer has been a director of the 57 1996
Company since September 1996. Dr. Laffer is a director of Mastec,
Inc., Nicholas Applegate Mutual Funds, Nicholas Applegate Growth
Equity Funds, Casmyn, Inc. and United States Filter Corporation.
Dr. Laffer has been Chairman and Chief Executive Officer of A.B.
Laffer, V.A. Canto & Associates, an economic consulting firm,
since 1979, Chief Executive Officer of Calport Asset Management,
Inc., a money management firm, since 1992 and Chief Executive
Officer of Laffer Advisors, Inc., a registered broker-dealer and
investment advisor since 1985.
STEPHEN G. CERRI. Mr. Cerri has been a director of the Company 62 1996
since September 1996. Mr. Cerri has been Chairman and Chief
Executive Officer of Alinabal Holdings Corporation, manufacturer
of electro-mechanical and mechanical products, since November
1987 and a consultant with Capstone Management Resources, Inc., a
firm which provides consulting services to clientele involved in
leveraged transactions.
JAMES N. CHAPMAN. Mr. Chapman has been a director of the Company 35 1995
since April 1995. Mr. Chapman is presently a Vice President--
Investment Banking with The Renco Group, Inc., a financial
services company. Mr. Chapman was a Principal of Fieldstone
Private Capital Group, L.P. a private holding company, from its
inception in 1990 to May 1996. Mr. Chapman was a director of
Coinmach from November 1995 to November 1996 and a director of
TCC, from January 1995 to November 1995.
INCUMBENT CLASS III DIRECTORS
WHOSE TERMS EXPIRE IN 1999
MITCHELL BLATT. Mr. Blatt has been President and Chief Operating 45 1995
Officer of the Company since April 1996 and of Coinmach since
November 1995. Mr. Blatt was the President and Chief Operating
Officer of TCC from January 1995 to November 1995. Mr. Blatt has
been a director of the Company and Coinmach since November 1995.
Mr. Blatt joined TCC as Vice President-General Manager in 1982
and was Vice President and Chief Operating Officer from January
1988 to February 1994. Mr. Blatt was an executive officer of CIC,
which filed a voluntary petition for reorganization under Chapter
11 of the United States Bankruptcy Code in 1993.
BRUCE V. RAUNER. Mr. Rauner has been a director of the Company 41 1995
since April 1995. Mr. Rauner was a director of Coinmach from
November 1995 to November 1996 and a director of TCC from January
1995 to November 1995. Mr. Rauner has been a Principal and
General Partner with GTCR since 1984, where he is responsible for
originating and making new investments, monitoring portfolio
companies and recruiting and training associates. Mr. Rauner
serves as a director of ERO, Inc., COREStaff, Inc., Cherrydale
Farms, Inc., Esquire Communications Ltd., International Computer
Graphics, Inc., Lason Systems, Inc., U.S. Aggregates, Inc. and
Polymer Group, Inc.
</TABLE>
6
<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
COMMITTEES OF THE BOARD
The Board has three standing committees: an Audit Committee, a Compensation
Committee and a Plan Administration and Compensation Committee. The Board does
not have a nominating committee or a committee performing the functions of a
nominating committee.
AUDIT COMMITTEE. The Audit Committee is charged with recommending the
appointment of the Company's independent auditors, consulting with the
independent auditors and reviewing the results of internal audits, independent
audits, and the audit report with the independent auditors engaged by the
Company. Further, the Audit Committee is empowered to make independent
investigations and inquiries into all financial reporting or other financial
matters of the Company, as it deems necessary. The members of the Audit
Committee are Dr. Laffer and Messrs. Cerri and Chapman.
COMPENSATION COMMITTEE. The Compensation Committee reviews and recommends to
the Board the compensation of executive officers and the adoption of any
compensation plans in which executive officers are eligible to participate.
The members of the Compensation Committee are Dr. Laffer and Messrs. Donnini
and Cerri.
PLAN ADMINISTRATION AND COMPENSATION COMMITTEE. The Plan Administration and
Compensation Committee administers the Company's Second Amended and Restated
1996 Employee Stock Option Plan (the "Option Plan") and reviews and recommends
to the Board the awards or grants to be made thereunder. The members of the
Plan Administration and Compensation Committee are Messrs. Donnini and Rauner.
COMPENSATION OF DIRECTORS
Directors receive no cash remuneration for their service as directors, other
than reimbursement of reasonable travel and related expenses for attendance at
Board meetings. The Company has granted each of Dr. Laffer and Mr. Cerri
options to purchase 60,000 shares of Common Stock, in each case, at an
exercise price of $14.00 per share (the initial offering price of Common Stock
in the Company's initial public offering in July 1996 (the "Offering")), all
of which options vest in four equal annual installments commencing on the date
of grant and on each of the next three anniversaries thereafter. The Company
has granted Mr. Chapman options to purchase 28,756 shares of Common Stock at
an exercise price of $11.90 per share, 5,752 of which are currently
exercisable and the remainder of which vest in four equal annual installments
commencing on the first anniversary of the date of grant. None of such
directors has exercised any options to date.
ATTENDANCE AT BOARD OF DIRECTORS MEETINGS
During the fiscal year ended March 28, 1997, the Board of Directors of the
Company held three regularly scheduled meetings. The Plan Administration and
Compensation Committee held one meeting. The Compensation Committee and the
Audit Committee did not meet during the 1997 fiscal year. Each director who is
standing for re-election attended all meetings of the Board and of the
committees of the Board on which they served.
7
<PAGE>
EXECUTIVE OFFICERS
The following table sets forth certain information regarding the executive
officers of the Company:
<TABLE>
<CAPTION>
NAME AGE TITLE
---- --- -----
<C> <C> <S>
Stephen R. Kerrigan................. 43 Chairman of the Board and Chief
Executive Officer, Director
Mitchell Blatt...................... 45 President, Chief Operating Officer,
Director
Robert M. Doyle..................... 40 Chief Financial Officer, Senior Vice
President, Treasurer, Secretary
John E. Denson...................... 59 Senior Vice President-Corporate
Development
Michael E. Stanky................... 45 Senior Vice President
R. Daniel Osborne................... 41 Area Vice President
David A. Siegel..................... 39 Area Vice President
</TABLE>
For additional information regarding Messrs. Kerrigan and Blatt see
"ELECTION OF DIRECTORS" above.
Mr. Doyle has been Chief Financial Officer, Senior Vice President, Treasurer
and Secretary of the Company since April 1996 and of Coinmach since November
1995. Mr. Doyle has been a director of Coinmach since November 1995. Mr. Doyle
served as Vice President, Treasurer and Secretary of TCC from January 1995 to
November 1995. Mr. Doyle joined Coinmach's predecessor in 1987 as Controller.
In 1988, Mr. Doyle became Director of Accounting, and was promoted in 1989 to
Vice President and Controller. Mr. Doyle was an executive officer of CIC which
filed a voluntary petition for reorganization under Chapter 11 of the United
States Bankruptcy Code in 1993.
Mr. Denson has been Senior Vice President of the Company since April 1996
and of Coinmach since November 1995. Mr. Denson was Senior Vice President,
Finance of Solon from June 1987 until November 1995. Mr. Denson has served as
an officer of Solon under various titles since 1973, and served as a director
and Co-Chief Executive Officer of Solon from November 1994 to April 1995.
Mr. Stanky has been Senior Vice President of the Company since April 1996
and of Coinmach since November 1995. Mr. Stanky was a Senior Vice President of
Solon from July 1995 to November 1995. Mr. Stanky served Solon in various
capacities since 1976, and in 1985 was promoted to Area Vice President
responsible for Solon's South-Central Region. Mr. Stanky served as a Co-Chief
Executive Officer of Solon from November 1994 to April 1995.
Mr. Osborne has been Area Vice President of the Company since April 1996 and
of Coinmach since November 1995. Mr. Osborne served Solon in various
capacities from 1987 to November 1995. In July 1995, Mr. Osborne was promoted
to Area Vice President of Coinmach responsible for the Company's Southeast
Region.
Mr. Siegel has been Area Vice President of the Company since April 1996 and
of Coinmach since November 1995. Mr. Siegel served Solon in various capacities
since 1985, and in August 1995 was promoted to Area Vice President of Coinmach
responsible for the Company's Mid-Atlantic Region.
8
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth all compensation awarded to, earned by or
paid to the Chief Executive Officer and the next four most highly compensated
executive officers of the Company (the "Named Executive Officers") for all
services rendered in all capacities for the fiscal years ended March 31, 1995,
March 29, 1996 and March 28, 1997. In connection with the Merger, Solon and
Coinmach Industries Co., L.P., predecessors of the Company, changed their
fiscal years from September 30, 1995 and December 31, 1995, respectively, to
the last Friday in March 1996. Accordingly, (i) fiscal years prior to March
28, 1997 have been restated to conform such periods to fiscal years ending the
last Friday in March, and (ii) compensation for the Named Executive Officers
has been adjusted to reflect the amount of compensation awarded to, earned by
or paid in each of the fiscal periods shown.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------------------------------------------------------
SECURITIES
OTHER ANNUAL UNDERLYING
NAME AND PRINCIPAL FISCAL SALARY BONUS COMPENSATION OPTIONS ALL OTHER
OCCUPATION YEAR ($) ($) ($) (#) COMPENSATION/1/
------------------ ------ ------- ------- ------------ ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Stephen R. Kerrigan 1997 330,841 400,000 40,385/2/ 308,098/3/ 60,839/4/
Chief Executive Officer 1996 290,000 91,250 -- -- 13,024/5/
1995 200,763 -- -- -- 14,898/5/
Mitchell Blatt 1997 238,942 112,000 -- 100,000 61,548/6/
President, Chief 1996 215,000 91,250 -- -- 22,849/7/
Operating Officer 1995 197,497 -- -- -- 20,942/7/
Robert M. Doyle 1997 149,997 62,500 -- 71,890 17,825/8/
Chief Financial Officer 1996 110,577 25,000 -- -- 2,338/9/
1995 84,281 -- -- -- 3,238/9/
John E. Denson 1997 125,589 25,000 -- 28,756 2,327/10/
Senior Vice President 1996 125,300 -- -- -- 2,233/11/
1995 124,900 35,295 -- -- 67,752/11/,/12/
Michael E. Stanky 1997 150,500 37,500 -- 153,521 5,462/13/
Senior Vice President 1996 141,425 -- -- -- 1,253/14/
1995 127,373 53,628 -- -- 65,183/14/,/15/
</TABLE>
- --------
/1/The Company has not previously offered and presently does not have a long
term incentive program. The Company does not presently intend to offer any
such program to its executive officers or other employees.
/2/Represents reimbursement of certain out-of-pocket relocation expenses.
/3/Options are held by MCS, a corporation controlled by Mr. Kerrigan.
/4/Includes $45,109 in forgiven indebtedness; $5,938 in imputed interest,
calculated at a rate of 9.5% per annum, on an interest free loan made by
the Company to Mr. Kerrigan; $4,554 in automobile allowances; $2,424 in
club membership fees; $1,875 in contributions to the Company Profit Sharing
Plan; and $939 in life insurance premiums paid for Mr. Kerrigan.
/5/Includes club membership fees for fiscal years 1996 and 1995 of $4,600 each
year; expense allowances for fiscal years 1996 and 1995 of $3,596 and
$5,472, respectively; automobile allowances for fiscal years 1996 and 1995
of $2,688 and $2,688, respectively; and contribution by TCC to the Company
Profit Sharing Plan for fiscal years 1996 and 1995 of $2,140 and $2,138,
respectively.
/6/Includes $45,109 in forgiven indebtedness; $4,231 in automobile allowances;
$9,600 in club membership fees; $1,875 in contributions to the Company
Profit Sharing Plan; and $733 in life insurance premiums paid for Mr.
Blatt.
/7/Includes club membership fees for fiscal years 1996 and 1995 of $10,000
each year; expense allowances for fiscal years 1996 and 1995 of $7,310 and
$7,779, respectively; automobile allowances for fiscal years 1996 and 1995
of $3,417 and $1,025, respectively; and contribution by TCC to the Company
Profit Sharing Plan for fiscal years 1996 and 1995 of $2,122 and $2,138,
respectively.
/8/Includes $13,703 in forgiven indebtedness; $1,762 in automobile allowances;
$1,875 in contributions to the Company Profit Sharing Plan; and $485 in
life insurance premiums paid for Mr. Doyle.
/9/Includes automobile allowances for fiscal years 1996 and 1995, of $1,004
and $2,169 respectively; and contributions by TCC to the Company Profit
Sharing Plan for fiscal years 1996 and 1995 of $1,334 and $1,069,
respectively.
/10/Includes $104 in imputed interest, calculated at a rate of 9.5% per annum,
on an interest free loan made by the Company to Mr. Denson; $233 in
automobile allowances; and $1,149 in contributions to the Company Profit
Sharing Plan.
/11/Includes automobile allowances for fiscal years 1996 and 1995, of $1,150
and $3,085, respectively; and contributions by Solon to the Solon
Retirement Savings Plan for fiscal years 1996 and 1995 of $1,083 and
$2,167, respectively.
9
<PAGE>
/12/Includes a $62,500 lump sum payment to Mr. Denson on April 6, 1995 due to a
change in control of Solon.
/13/Includes $3,919 in forgiven indebtedness; $355 in automobile allowances;
and $1,188 in contributions to the Company Profit Sharing Plan.
/14/Includes contributions by Solon to the Solon Retirement Savings Plan for
fiscal years 1996 and 1995 of $1,253 and $2,433, respectively.
/15/Includes a $62,750 lump sum payment to Mr. Stanky on April 6, 1995 due to a
change in control of Solon.
EMPLOYMENT CONTRACTS
Employment Agreements of Stephen R. Kerrigan, Mitchell Blatt and Robert M.
Doyle. On January 31, 1995, TCC and each of Stephen R. Kerrigan, Mitchell
Blatt and Robert M. Doyle (each, a "Senior Manager"), entered into Senior
Management Agreements (collectively, the "Senior Management Agreements"). In
connection with the Merger, the obligations of TCC under the Senior Management
Agreements were assumed by Coinmach and certain amendments to such agreements
were effected pursuant to the Omnibus Agreement, dated as of November 30, 1995
(the "Omnibus Agreement"). The Senior Management Agreements provide for annual
base salaries of $225,000, $225,000 and $100,000 for each of Messrs. Kerrigan,
Blatt and Doyle, respectively, which amounts are reviewed annually by the
Board. In 1996, the Board approved increases in annual salaries for each of
Messrs. Kerrigan, Blatt and Doyle to $350,000, $250,000 and $150,000,
respectively, which, in the case of Messrs. Kerrigan and Blatt, became
effective in July 1996. The Board, in its sole discretion, may grant each
Senior Manager an annual bonus. Each Senior Management Agreement is terminable
at the will of the Senior Managers or at the discretion of the Board. Senior
Managers are entitled to severance pay upon termination of their employment.
If employment is terminated by the Company without Cause (as defined in the
Senior Management Agreements) and no event of default has occurred under any
bank credit facility to which the Company is a party, Senior Managers are
entitled to receive severance pay in an amount equal to 1.5 times their
respective annual base salaries then in effect, payable in 18 equal monthly
installments. If employment is terminated by the Company and an event of
default has occurred and is continuing under any bank credit facility to which
the Company is a party, Senior Managers are entitled to receive severance pay
in an amount equal to their respective annual base salaries then in effect,
payable in 12 equal monthly installments. Under limited circumstances, Senior
Managers are entitled to receive half of the severance pay to which they are
otherwise entitled if employment with the Company is terminated by them.
Employment Agreement of John E. Denson. The Company entered into an
employment agreement with Mr. Denson, dated as of September 5, 1996, for a
term of one year which is automatically renewable each year for successive
one-year terms. Such agreement provides for an annual base salary of $110,000,
commencing January 1, 1997, which amount is to be reviewed each December by
the Board. The Board may, in its discretion, grant Mr. Denson a performance-
based annual bonus. The agreement is terminable at the will of Mr. Denson or
at the discretion of the Board. Under the terms of such employment agreement,
Mr. Denson is entitled to receive severance pay upon termination of employment
by the Company without Cause (as defined in such agreement) in an amount equal
to the greater of $110,000 or his annual base salary then in effect.
Employment Agreement of Michael E. Stanky. On July 1, 1995, the Company
entered into an employment agreement with Mr. Stanky providing for an annual
base salary of $150,000. The terms and conditions of Mr. Stanky's employment
agreement are substantially similar to those contained in the Senior
Management Agreements.
PROFIT SHARING AND RETIREMENT SAVINGS PLAN
The Company offers a profit sharing and retirement savings plan (the "Profit
Sharing Plan") to all current eligible employees of the Company who have
completed one year of service. Pursuant to the Profit Sharing Plan, eligible
employees may defer from 2% up to 15% of their salaries up to a maximum level
imposed by applicable federal law ($9,500 in 1996). The percentage of
compensation contributed to the plan is deducted from each eligible employee's
salary and considered tax-deferred savings under applicable federal income tax
law. Pursuant to the Profit Sharing Plan, the Company contributes increasing
matching contribution amounts, based upon the number of years of service
completed by eligible participants, up to a maximum contribution of 1.5% of an
10
<PAGE>
eligible employee's salary (subject to the Internal Revenue Code limitation on
compensation taken into account for such purpose). Matching contribution
percentages range from 5% for one to two years of service up to 25% for five
or more years of service, of the amount contributed to the Profit Sharing Plan
by the respective eligible employee. Eligible employees become vested with
respect to matching contributions made by the Company pursuant to a vesting
schedule based upon an eligible employee's years of service. After two years
of service, an eligible employee is 20% vested in all matching contributions
made to the Profit Sharing Plan. Such employee becomes vested in equal
increments thereafter through the sixth year of service, at which time such
employee becomes 100% vested. Eligible participants are always 100% vested in
their own contributions, including investment earnings on such amounts.
The Company made the following matching contributions during its fiscal year
ended March 28, 1997 to the Named Executive Officers appearing in the Summary
Compensation Table above: Mr. Kerrigan $1,875; Mr. Doyle $1,875; Mr. Blatt
$1,875; Mr. Denson $1,149; and Mr. Stanky $1,188.
OPTION GRANTS
The following table sets forth certain information concerning grants of
stock made during the fiscal year ended March 28, 1997 to each of the Named
Executive Officers.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT
ASSUMED ANNUAL RATES OF
SHARE
PRICE APPRECIATION FOR TEN
YEAR
OPTION TERM ($)/1/
---------------------------
PERCENTAGE
OF TOTAL
OPTIONS MARKET
NUMBER GRANTED TO EXERCISE PRICE PER OPTION
OF EMPLOYEES PRICE SHARE ON TERM
OPTIONS IN FISCAL PER DATE OF EXPIRATION
NAME GRANTED YEAR SHARE ($) GRANT ($) DATE 0% 5% 10%
---- ------- ---------- --------- --------- ---------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Stephen R. Kerrigan..... 308,098/2/ 38.2% 11.90 14.00 7/23/06 647,006 3,359,662 7,521,410
Chief Executive Officer
Mitchell Blatt.......... 100,000/3/ 12.4% 14.00 14.00 8/08/06 0 880,452 2,231,239
President, Chief
Operating Officer
Robert M. Doyle......... 71,890/4/ 8.9% 11.90 14.00 7/23/06 150,969 783,926 1,755,007
Chief Financial Officer
John E. Denson.......... 28,756/5/ 3.6% 11.90 14.00 7/23/06 60,388 313,571 702,003
Senior Vice President
Michael E. Stanky....... 103,521/6/ 12.8% 11.90 14.00 7/23/06 217,394 1,128,847 2,527,195
Senior Vice President 50,000/7/ 6.2% 14.00 14.00 8/08/06 0 440,226 1,115,620
</TABLE>
- --------
/1/These amounts represent certain assumed rates of appreciation only. Actual
gains, if any, on stock option exercises are dependent upon the future
market performance of Common Stock and the date on which the options are
exercised. The values represented in this table may not necessarily be
achieved.
/2/Options are held by MCS, a corporation controlled by Mr. Kerrigan. 61,622
shares underlying the option are immediately exercisable, and the remaining
shares become exercisable in four equal annual installments commencing on
July 23, 1997.
/3/20,000 shares underlying the option are immediately exercisable, and the
remaining shares become exercisable in four equal annual installments
commencing on August 8, 1997.
/4/14,378 shares underlying the option are immediately exercisable, and the
remaining shares become exercisable in four equal annual installments
commencing on July 23, 1997.
/5/5,752 shares underlying the option are immediately exercisable, and the
remaining shares underlying the options become exercisable in four equal
annual installments commencing on July 23, 1997.
/6/20,705 shares underlying the option are immediately exercisable, and the
remaining shares become exercisable in four equal annual installments
commencing on July 23, 1997.
/7/10,000 shares underlying the option are immediately exercisable, and the
remaining shares become exercisable in four equal annual installments
commencing on August 8, 1997.
11
<PAGE>
FISCAL YEAR-END OPTIONS AND OPTION VALUES
The following table presents certain information relating to the number and
value of unexercised stock options beneficially owned by the Named Executive
Officers as of March 28, 1997. None of such officers who owned options to
purchase Common Stock during the fiscal year ended March 28, 1997 exercised
any of such options during such period.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL YEAR IN-THE-MONEY OPTIONS
END AT FISCAL YEAR END
(#) ($)/1/
-------------------------- -------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
--- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Stephen R. Kerrigan ..... 61,622/2/ 246,476/2/ 345,083 1,380,266
Chief Executive Officer
Mitchell Blatt........... 20,000/3/ 80,000/3/ 70,000 280,000
President, Chief
Operating Officer
Robert M. Doyle ......... 14,378/2/ 57,512/2/ 80,517 322,067
Chief Financial Officer
John E. Denson........... 5,752/2/ 23,004/2/ 32,211 128,822
Senior Vice President
Michael E. Stanky ....... 20,705/2/ 82,816/2/ 115,948 463,770
Senior Vice President 10,000/3/ 40,000/3/ 35,000 140,000
</TABLE>
- --------
/1/The value of unexercised in-the-money options, whether or not exercisable,
equals the difference between the fair market value of such options at
fiscal year-end and the exercise price of such options. The closing price
per share of Common Stock as reported on the Nasdaq National Market on March
28, 1997 was $17.50. The exercise price per share of options granted on July
23, 1996 (the "July Options") and options granted on September 17, 1996 (the
"September Options") is $11.90. The exercise price per share of options
granted on August 8, 1996 is $14.00.
/2/These options consist of July Options and September Options, all of which
options are exercisable at an exercise price of $11.90 per share. On
September 17, 1996, the Company granted options to holders of the July
Options to purchase certain additional shares of Common Stock in order to
offset the dilution of the July Options resulting from the exercise of a
30-day over-allotment option granted to underwriters in the Offering.
/3/These options were granted on August 8, 1996 and are exercisable at an
exercise price of $14.00 per share.
12
<PAGE>
STOCK PERFORMANCE GRAPH
The graph below compares the percentage changes in the Company's cumulative
total stockholder return from July 23, 1996 (the date of the Offering) through
March 27, 1997 (the last day that the Nasdaq National Market was open during
the Company's 1997 fiscal year) with the cumulative total return of the NASDAQ
Composite Index and the Russell 2000 Index for the same periods. This graph
assumes the investment of $100 in Common Stock, the NASDAQ Composite Index and
the Russell 2000 Index on July 23, 1996 and the reinvestment of all dividends.
[GRAPHIC]
<TABLE>
<CAPTION>
JULY 23, SEPTEMBER 30, DECEMBER 31, MARCH 27,
1996 1996 1996 1997
-------- ------------- ------------ ---------
<S> <C> <C> <C> <C>
Coinmach Laundry
Corporation................ $100 $144 $124 $121
NASDAQ Composite Index..... $100 $111 $116 $114
Russell 2000 Index......... $100 $107 $112 $108
</TABLE>
The Company believes it is the only publicly traded provider of coin-
operated laundry equipment services in the United States. Accordingly, there
are no companies with which the Company may directly compare its stock
performance.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended March 28, 1997, Mr. Kerrigan, Chairman of the
Board and Chief Executive Officer of the Company, served on the Compensation
Committee, together with Dr. Laffer and Mr. Cerri, from its formation in
September 1996 to November 1996. At the Board's direction, the Compensation
Committee was reconstituted and is presently comprised of Dr. Laffer and
Messrs. Cerri and Donnini.
13
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
MANAGEMENT AND CONSULTING SERVICES
On July 17, 1996, the Company paid GTCR IV, L.P., the general partner of
GTCR, a $500,000 fee in connection with the termination of the Management and
Consulting Services Agreement entered into between the Company and GTCR, IV,
L.P. on July 26, 1995 (the "Management Agreement"). No other fees were paid to
GTCR, IV, L.P. pursuant to the Management Agreement during the fiscal year
ended March 28, 1997.
During the 1997 fiscal year, the Company agreed to pay Mr. Chapman $250,000
in 25 equal monthly installments of $10,000 per month for general financial
advisory and investment banking services. Additionally, the Company paid Mr.
Chapman a fee of $125,000 in January 1997 for services provided in arranging
bank financing relating to the Company's January 1997 acquisition of Kwik Wash
Laundries, L.P.
REGISTRATION RIGHTS AGREEMENT
The Company and GTCR, MCS and Messrs. Blatt, Doyle, Stanky and Chapman are
parties to a registration rights agreement, dated July 26, 1995 (the "Company
Registration Agreement"), pursuant to which the Company granted such parties
certain rights with respect to the registration under the Securities Act, for
resale to the public, of their respective Registrable Securities (as defined
in the Company Registration Agreement). The Company Registration Agreement
provides that, among other things, at any time after the Company has completed
an Initial Public Offering (as defined in the Company Registration Agreement),
GTCR has the right to "demand" registrations under the Securities Act with
respect to all or a portion of GTCR's Registrable Securities. The Company
Registration Agreement also provides for customary provisions regarding: (i)
the priority among holders of securities with respect to the number of shares
to be registered pursuant to any demand or piggyback registration; and (ii)
indemnification by the Company of the holders of Registrable Securities.
CERTAIN LOANS TO MEMBERS OF MANAGEMENT
As of May 26, 1997, Mr. Kerrigan (directly and indirectly through MCS, an
entity controlled by Mr. Kerrigan), and Mr. Blatt owed the Company $672,620
and $172,620, respectively, plus interest accrued thereon. During the 1997
fiscal year, the largest aggregate amount owed to the Company by Mr. Kerrigan
(directly and indirectly through MCS) and Mr. Blatt equalled $672,620 and
$214,166, respectively, plus interest accrued thereon. The indebtedness of
each of MCS and Mr. Blatt is evidenced by promissory notes dated (i) January
31, 1995 in the original principal amount of $140,000; (ii) July 26, 1995 in
the original amount of $52,370; and (iii) May 3, 1996 in the original amount
of $21,797. Each such note accrues interest at a rate of 8% per annum and was
delivered to the Company in connection with the purchase of Company securities
by MCS and Mr. Blatt. The promissory notes dated January 31, 1995 are payable
in four equal annual installments commencing on January 31, 1996. The
promissory notes dated July 26, 1995 and May 3, 1996 are payable in eight
equal annual installments commencing on July 26, 1996 and May 3, 1997,
respectively. During the 1997 fiscal year, the Company forgave the repayment
of approximately $45,109 by each of MCS and Mr. Blatt, which amounts represent
the aggregate amount of the first installment of principal and interest owed
by MCS and Mr. Blatt under the notes dated January 31, 1995 and July 26, 1995.
In connection with Coinmach's establishment of a corporate development
office in Charlotte, North Carolina and the relocation of Messrs. Kerrigan and
Denson to such office in September 1996 and March 1997, respectively, Coinmach
extended loans to each of Messrs. Kerrigan and Denson in the principal amounts
of $500,000 and $80,000, respectively. The loan to Mr. Denson (the "Denson
Loan") is an interest free demand loan that is secured by certain real
property owned by Mr. Denson. The loan to Mr. Kerrigan (the "Kerrigan Loan")
provides for the repayment of principal and interest in five equal annual
installments commencing in July 1997 (each payment date, a "Payment Date") and
accrual of interest at a rate of 7.5% per annum. The Kerrigan Loan provides
that payments of principal and interest will be forgiven on each Payment Date
provided that Mr. Kerrigan is employed by Coinmach on such Payment Date. If
Mr. Kerrigan ceases to be employed by
14
<PAGE>
Coinmach for a reason other than (i) a change in control of Coinmach, (ii) the
death or disability of Mr. Kerrigan while employed by Coinmach, or (iii) cause
(each, a "Termination Event"), then all outstanding amounts due under the
Kerrigan Loan will be forgiven as of the date of the Termination Event. If Mr.
Kerrigan's employment is terminated upon the occurrence of any event that is
not a Termination Event, then all outstanding amounts due under the Kerrigan
Loan will become due and payable within 30 business days following the
termination of Mr. Kerrigan's employment.
REDEMPTION OF PREFERRED STOCK
In July 1996, the Company utilized a portion of the proceeds of the Offering
to redeem all of the outstanding shares of its preferred stock, par value $.01
per share (the "Preferred Stock"). GTCR and Mr. Chapman, the holders of 924.5
shares and 3.8 shares of Preferred Stock, respectively, received $17,776,942
and $73,069, respectively, upon the redemption of such shares by the Company.
15
<PAGE>
PROPOSAL TO ADOPT THE SECOND AMENDED AND RESTATED 1996 EMPLOYEE STOCK OPTION
PLAN
The Second Amended and Restated 1996 Employee Stock Option Plan is being
submitted for approval by the stockholders of the Company.
At a meeting on July 2, 1996, the Board approved the 1996 Employee Stock
Option Plan (as amended and restated, the "Option Plan") subject to
stockholder approval. A copy of the Option Plan is attached as Exhibit A to
this Proxy Statement. Set forth below is a summary of the principal terms of
the Option Plan, which should be reviewed carefully by stockholders prior to
voting on this proposal. This summary is not complete and is qualified in its
entirety by reference to the Option Plan.
The Option Plan was approved by the stockholders of the Company prior to the
Effective Date and became effective on the Effective Date. The Option Plan
grants the Board the power and authority to amend the Option Plan at any time
without requiring the Board to obtain stockholder approval as a condition to
the effectiveness of such amendment. The Board amended the Option Plan as
follows: (i) on July 26, 1996 to increase the number of shares of Common Stock
subject to the Option Plan from 1,090,183 to 1,103,419, to offset the dilutive
effect of the Company's registration of an additional 120,000 shares of Common
Stock in the Offering; and (ii) on September 17, 1996 to increase the number
of shares of Common Stock subject to the Option Plan from 1,103,419 to
1,109,147, to offset the dilutive effect of the Company's issuance of shares
of Common Stock upon the exercise of the underwriters' over-allotment option
granted in connection with the Offering.
The Option Plan is administered by the Plan Administration and Compensation
Committee (the "Plan Committee"), comprised of disinterested members of the
Board. The Plan Committee has authority under the Option Plan to designate the
persons to whom options will be granted, and, subject to the various
provisions of the Option Plan, to fix the number of shares to be subject to
such options and the other terms and conditions of such options. Under the
Option Plan, the Plan Committee may grant incentive stock options ("Incentive
Options") or options which do not qualify as incentive stock options ("Non-
Incentive Options") under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"). The Plan Committee has full power to construe and
interpret the Option Plan and to establish rules for its administration. The
Plan Committee's determinations are binding upon all persons.
The Option Plan is intended to attract, retain, and provide incentives to
key employees of the Company and to compensate certain officers and employees
of the Company by offering them an opportunity to acquire or increase a
proprietary interest in the Company. Options under the Option Plan may be
granted to full-time, salaried employees of the Company and its parents or
subsidiaries. No directors of the Company will be eligible to receive options
under the Option Plan unless they are also full-time salaried employees of the
Company or one of its subsidiaries.
The Option Plan provides that the Company may grant options for the purchase
of up to 1,109,147 shares of Common Stock. The Company will receive no cash
payment in connection with the grant of options or rights thereunder.
DESCRIPTION OF THE OPTION PLAN
All options granted under the Option Plan are subject to the following
terms:
- The option must be evidenced by a written agreement between the Company
and the option holder.
- The exercise price of the option must be not less than 100% of the fair
market value of Common Stock at the date of grant.
- Options granted under the Option Plan shall become exercisable at such
time or times and into such amounts of Common Stock as may be determined
by the Plan Committee in its sole discretion, subject to the terms and
conditions of the Option Plan.
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- If an option holder's employment by the Company or a subsidiary
terminates prior to an option's stated expiration date on account of the
death of such holder, all options underlying such holder's option
agreement shall vest immediately on the date of death and shall expire on
the date that is 90 days after the death of such holder, unless provided
otherwise in such holder's option agreement. If an option holder's
employment by the Company or a subsidiary terminates prior to an option's
stated expiration date on account of the disability of such holder, all
options underlying such holder's option agreement shall vest immediately
on the date of disability and shall expire on the date that is one year
after the date of disability of such holder, unless provided otherwise in
such holder's option agreement. If an option holder elects to voluntarily
retire from the Company or a subsidiary, all unvested options shall
continue to vest for a period of three years following the retirement
date and the holder of such option shall have the right to exercise any
vested portion of such option during such three-year period, unless
otherwise provided in such holder's option agreement or in the Option
Plan. If an option holder's employment by the Company or a subsidiary is
terminated without cause, the holder of such option shall have the right
to exercise any vested options for a period of 30 days following the date
of such termination, unless otherwise provided in such holder's option
agreement.
- The exercise price payable upon the exercise of an option granted under
the Option Plan must be paid in cash or check upon exercise or, if the
Plan Committee has so permitted, in the case of Non-Incentive Options, by
delivery of other shares of Common Stock or by retention by the Company
of the shares of Common Stock which would otherwise be transferred to the
option holder, in each case, having an aggregate fair market value equal
to the exercise price or by delivering a combination of cash and Common
Stock.
Incentive Options granted under the Option Plan will be subject to the
following terms, in addition to the terms described above which are applicable
to all options granted under the Option Plan:
- An option holder cannot transfer an Incentive Option granted under the
Option Plan except by his will or the laws of intestacy.
- During an option holder's life, only the option holder can exercise an
Incentive Option.
- The aggregate fair market value (determined at the time of grant) of the
shares of Common Stock subject to all Incentive Options granted to any
one person under the Option Plan (or any other plan of the Company and
its subsidiaries and parents) which are exercisable for the first time in
any calendar year cannot exceed $100,000.
- Each Incentive Option granted under the Option Plan will expire no more
than ten years after the date of its grant.
The Option Plan provides that the total number of shares subject to the
Option Plan and the exercise price per share may be proportionately adjusted
by the Board in the event of a stock dividend, stock split, combination or
exchange of shares, merger, consolidation or other change in the
capitalization of the Company. In the event of a reorganization,
reclassification, consolidation, merger or sale of substantially all of the
assets, the Board may adjust the number, type, or price of options to reflect
the event.
Under the terms of the Option Plan, the Board may amend the Option Plan at
any time without the approval of the Company's stockholders so long as any
amendment does not affect outstanding options or adversely affect the Option
Plan's qualification under the Code. The Board must obtain the affirmative
vote of a majority of all issued and outstanding shares of Common Stock to
amend the Option Plan in any manner which would cause any outstanding
Incentive Options to no longer qualify as Incentive Options or which would
cause the Option Plan not to satisfy the Code requirements relating to
performance based compensation. If any option holder is deemed to be an
"insider" for purposes of Section 16 of the Exchange Act, the Board must
obtain the affirmative vote of a majority of all issued and outstanding shares
of Common Stock in order to (i) increase the total number of shares of Common
Stock for which incentive stock options may be granted and outstanding under
the Option Plan in the aggregate or to any one person, (ii) increase the
benefits accruing to participants under the Option Plan, or (iii) modify the
eligibility requirements for participation in the Option Plan.
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The Option Plan is being submitted for stockholder approval in order to meet
certain requirements of the Code with respect to the granting of Incentive
Options and the deductibility of stock-based compensation pursuant to Section
162(m) of the Code. In addition, stockholder approval is required in order to
comply with the conditions of Rule 16b-3 ("Rule 16b-3") under the Exchange
Act. Compliance with Rule 16b-3 permits, among other things, officers of the
Company to surrender for credit, at current fair market value, shares of
previously purchased Common Stock in payment of the applicable option exercise
price and to receive cash upon surrender of options granted under the Option
Plan without incurring "short-swing profit" liability under the Exchange Act.
The Board believes that compliance with Rule 16b-3 substantially enhances the
incentive compensation benefits of the Incentive Options.
FEDERAL INCOME TAX CONSEQUENCES
A. Incentive Options
Except as described below, neither the granting nor the exercise of an
Incentive Option under the Option Plan will result in recognition of income or
loss to the grantee of the option for Federal income tax purposes. If (i) the
option holder retains ownership of Common Stock issued upon exercise of an
Incentive Option for at least two years from the grant of the option and one
year after the stock was transferred to the option holder pursuant to such
exercise and at all times during the period beginning on the date of the
granting of the option and ending on the day three months before the date of
exercise, and (ii) the option holder was an employee of the Company or a
parent or subsidiary of the Company, or a corporation or parent or subsidiary
of such corporation issuing or assuming such option in a transaction to which
Section 424(a) of the Code applies, then the option holder will be entitled to
long-term capital gain treatment on any gain from the subsequent sale of
Common Stock. The basis of Common Stock will be its exercise price. Any gain
from the subsequent sale of stock issued upon exercise of an Incentive Option
or loss (measured by the difference between the amount realized on disposition
and the basis) will be long-term capital gain or loss. Generally, the Company
will not be entitled to any deduction in connection with the grant or exercise
of incentive stock options under the Option Plan or the sale of Common Stock
issued upon exercise of such options.
If an option holder does not satisfy the holding period for Common Stock
acquired upon exercise of an incentive stock option, any gain realized upon
the disposition of such Common Stock will be taxed as ordinary income for
Federal income tax purposes to the extent of the difference between the option
exercise price and the lesser of (i) the fair market value of Common Stock on
the date the option was exercised and (ii) the amount realized upon
disposition of Common Stock. Any amount realized by the option holder in
excess of such difference will be either long-term or short-term capital gain,
depending on the holding period for Common Stock. The Company will be entitled
to a deduction equal to the amount of ordinary income recognized by the option
holder.
If an option holder exercises an Incentive Option granted under the Option
Plan by delivering Common Stock which was acquired upon the prior exercise of
an incentive stock option and which had not been held for the required holding
period, then the option holder would recognize ordinary income from the
disposition of such previously acquired Common Stock. The amount of ordinary
income would be determined in the same manner as in the case of any premature
disposition of stock received under an incentive stock option, as described
above, and the Company would be entitled to a deduction in the amount of such
ordinary income. If Common Stock delivered to pay the exercise price upon
exercise of an incentive stock option had not been acquired upon the prior
exercise of an incentive stock option, or if it has been acquired upon
exercise of an Incentive Option and held for the required period, then the
option holder would not recognize any income or gain from such delivery. In
such event, the basis and holding period of the shares of Common Stock
received will carry over to such shares to the extent the number of such
shares received equals the number of shares of Common Stock tendered, and any
excess shares of Common Stock received will have a zero basis and a new
holding period (which will be subject to the one-year and two-year holding
period rules described above).
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B. Non-Incentive Options
Employees who have been granted Non-Incentive Options will not recognize
income for Federal income tax purposes at the time the options are granted.
Upon exercise of a Non-Incentive Option for cash, in general, a holder will
recognize ordinary income for Federal income tax purposes to the extent of any
excess of the fair market value of the Company's Common Stock received upon
exercise over the exercise price of such Common Stock. Notwithstanding the
foregoing, directors and officers of the Company who are subject to Section
16-b of the Exchange Act are subject to special tax rules relating to the
receipt of shares upon the exercise of Non-Incentive Options. The Company will
be entitled to a deduction in the amount which the holder recognizes as
ordinary income provided that certain conditions are met.
When an employee exercises a Non-Incentive Option by delivering Common
Stock, the employee will generally recognize ordinary income to the extent of
the fair market value of the shares received in excess of the number of shares
of Common Stock tendered on exercise (as well as ordinary income in connection
with the disposition of any Common Stock tendered as a result of a prior
exercise of an Incentive Option for which the holding periods described above
were not met).
The basis and holding period of the number of shares received equal to the
number of shares of Common Stock tendered (assuming no shares failing to meet
the one-year and two-year holding periods described above for stock acquired
on exercise of an Incentive Option are tendered) will be carried over and any
excess shares received will have a new holding period and a fair market value
basis.
The Company will be entitled to a deduction equal to any ordinary income
recognized by the option holder.
The approval of the Option Plan requires the affirmative vote of a majority
of the votes cast at the Annual Meeting by holders of Common Stock entitled to
vote.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE
"FOR" APPROVAL OF THE OPTION PLAN.
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CONFIRMATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Company has selected Ernst & Young LLP as independent public accountants
to audit the books and accounts of the Company for the current fiscal year and
recommends that the stockholders confirm such selection. Ernst & Young LLP
served in that capacity with respect to the fiscal year ended March 28, 1997.
In the event of a negative vote, the Board of Directors will reconsider its
selection. A representative of Ernst & Young LLP is expected to be present at
the Annual Meeting, to have the opportunity to make a statement and to respond
to appropriate questions from stockholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE
"FOR" THE CONFIRMATION OF ERNST & YOUNG LLP AS THE COMPANY'S AUDITORS AND
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS FOR THE CURRENT FISCAL YEAR.
STOCKHOLDER PROPOSALS AND NOMINATIONS
Proposals of stockholders intended to be presented at the 1998 Annual
Meeting of Stockholders of the Company must be received by the Company for
inclusion in the Proxy Statement and form(s) of proxy relating to such Annual
Meeting no later than February 12, 1998. Stockholder proposals should be
directed to the attention of the Secretary of the Company at the address of
the Company set forth on the first page of this Proxy Statement. Timely
receipt of a stockholder's proposal will satisfy only one of several
conditions established by the SEC for inclusion in the Company's proxy
materials.
DISCRETIONARY AUTHORITY
It is not intended to bring before the Annual Meeting any matters except the
election of two Class I Directors, the adoption of the Second Amended and
Restated 1996 Employee Stock Option Plan and the confirmation of the
appointment of Ernst & Young LLP as independent public accountants. Management
is not aware at this time of any other matters to be presented for action. If,
however, any other matters properly come before the Annual Meeting, the
persons named as proxies in the enclosed form of proxy intend to vote in
accordance with their judgment on the matters presented.
By Order of the Board of Directors,
Robert M. Doyle
Secretary
June 13, 1997
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EXHIBIT A
COINMACH LAUNDRY CORPORATION
SECOND AMENDED AND RESTATED
1996 EMPLOYEE STOCK OPTION PLAN
ARTICLE 1
IDENTIFICATION OF THE PLAN
1.1 Title. The plan described herein shall be known as the Coinmach Laundry
Corporation Second Amended and Restated 1996 Employee Stock Option Plan (the
"Plan").
1.2 Purpose. The purpose of this Plan is (i) to compensate certain officers
and employees of Coinmach Laundry Corporation (the "Company") and its
Subsidiaries for services rendered by such persons after the date of adoption
of this Plan to the Company or any Subsidiary; (ii) to provide certain
officers and employees of the Company and its Subsidiaries with significant
additional incentive to promote the financial success of the Company; and
(iii) to provide an incentive which may be used to induce able persons to
enter into or remain in the employment of the Company or any Subsidiary.
1.3 Effective Date. The Plan shall become effective on July 23, 1996 (the
"Effective Date"). The Plan, however, is subject to approval by the
stockholders of the Company. If stockholder approval is not granted within
twelve (12) months from the date of its adoption by the Board, the Plan shall
thereupon terminate. Grants of Options may be made prior to stockholder
approval, but any such Options granted shall not be exercisable prior to
stockholder approval and shall terminate without any further action by the
Company if stockholder approval is not given.
1.4 Defined Terms. Certain capitalized terms used herein have the meanings
as set forth in Section 10.1 of the Plan.
ARTICLE 2
ADMINISTRATION OF THE PLAN
2.1 Committee's Powers. This Plan shall be administered by a committee (the
"Committee") composed of persons appointed by the Board of Directors of the
Company in accordance with the provisions of Section 2.2. The Committee shall
have full power and authority to prescribe, amend and rescind rules and
procedures governing administration of this Plan. The Committee shall have
full power and authority (i) to interpret the terms of this Plan, the terms of
the Options and the rules and procedures established by the Committee and (ii)
to determine the meaning of or requirements imposed by or rights of any person
under this Plan, any Option or any rule or procedure established by the
Committee. Each action of the Committee which is within the scope of the
authority delegated to the Committee by this Plan or by the Board shall be
binding on all persons.
2.2 Committee Membership. The Committee shall be composed of two or more
members of the Board, each of whom is a "disinterested person," as defined in
Securities and Exchange Commission Rule 16b-3, as amended ("Rule 16b-3"), or
any successor rules or government pronouncements. The Board shall have the
power to determine the number of members which the Committee shall have and to
change the number of membership positions on the Committee from time to time.
The Board shall appoint all members of the Committee. The Board may from time
to time appoint members to the Committee in substitution for, or in addition
to, members previously appointed and may fill vacancies, however caused, on
the Committee. Any member of the Committee may be removed from the Committee
by the Board at any time with or without cause. If at any time no special
committee has been constituted by the Board especially for the purposes of
this Plan, then the members of the Board who are "disinterested persons" as
defined in Rule 16b-3 shall have all powers
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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."
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
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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. 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.
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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.
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
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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 6.7, if the Holder of an option dies and such Option is
then exercisable at the date of death (for any reason including acceleration
of vesting pursuant to the preceding sentence), then the Holder's estate or
the person or persons to whom the Holder's rights under the Option shall pass
by reason of the Holder's death shall have the right to exercise the Option
for 90 days after the date of death, and the Option shall expire at the end of
such 90 day period.
(b) Permanent Disability. Except as otherwise provided in the Option
Agreement, if the Holder of an option suffers a Permanent Disability while
such Holder is still employed by the Company or any Subsidiary, then the right
to exercise all unexpired installments of such Option which have not yet
vested or became exercisable shall be accelerated to the date of such
Permanent Disability and shall become exercisable as of the date of such
Permanent Disability (the "Permanent Disability Date"). Except as otherwise
provided in the Option Agreement and subject to Section 6.7, if the Holder of
an Option suffers a Permanent Disability and such Option is exercisable at the
Permanent Disability Date (for any reason including acceleration pursuant to
the preceding sentence), then such Holder shall have the right to exercise
such Option for one year after the Permanent Disability Date, and the Option
shall expire at the end of such one year period.
(c) Retirement. Except as otherwise provided in the Option Agreement, if the
Holder of an Option elects to voluntarily retire from the Corporation or any
Subsidiary while such Holder is still employed by the Company or any
Subsidiary, then any installments of such Option which have not yet vested or
become exercisable shall remain outstanding for up to three years following
the date of such retirement. During such three year period, the time period
for the vesting of an Option contained in an Option Agreement will be deemed
to continue to be satisfied during such retirement and counted toward
determining whether any time period has been satisfied for vesting of the
Option. Except as otherwise provided in the Option Agreement and subject to
Section 6.7, if the Holder of an Option retires and such Option is or becomes
exercisable at the time of or following such retirement, then such Holder
shall have the right to exercise such option for three years after the date of
retirement, and the Option shall expire at the end of such three-year period.
Notwithstanding anything in this Section 6.5(c) or an Option Agreement to the
contrary, if the Committee determines in the good faith exercise of its
judgment that any Holder who has retired engages in any conduct detrimental to
the Company, upon such determination by the Committee, such Option shall
immediately and without further action on the part of the Company, expire and
become unexerciseable. No notice of such determination need be given to any
Holder in such circumstance. Notwithstanding the foregoing, the tax treatment
available pursuant to Section 422 of the Code upon the exercise of an
Incentive Stock Option will not be available to a holder who exercises any
such Option more than three months after the date of retirement.
(d) Termination Without Cause. Except as otherwise provided in the Option
Agreement, if the Holder of an Option is terminated without Cause and such
Option is currently exercisable at the time of such termination, then such
Holder shall have the right to exercise such Option for 30 days after the date
of such termination, and the Option shall expire at the end of such 30 day
period.
6.6 Taxes. The Company or any Subsidiary shall be entitled, if the Committee
deems it necessary or desirable, to withhold from an Option Holder's salary or
other compensation (or to secure payment from the Option Holder in lieu of
withholding) all or any portion of any withholding or other tax due from the
Company
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or any Subsidiary with respect to any Shares deliverable under such Holder's
Option or the Committee may (but need not) permit payment of such withholding
by the Company's retention of Shares which would otherwise be transferred to
the Option Holder upon exercise of the Option. In the event any Common Stock
is retained by the Company to satisfy all or any part of the withholding, the
part of the withholding deemed to have been satisfied by such Common Stock
shall be equal to the product derived by multiplying the Per Share Market
Value as of the date of exercise by the number of Shares retained by the
Company. The number of Shares retained by the Company in satisfaction of
withholding shall not be a number which when multiplied by the Per Share
Market Value as of the date of exercise would result in a product greater than
the withholding amount. No fractional Shares shall be retained by the Company
in satisfaction of withholding. Notwithstanding Article 7, unless the Board
shall otherwise determine, for each Share retained by the Company in
satisfaction of all or any part of the withholding amount, the aggregate
number of Shares subject to this Plan shall be increased by one Share. The
Company may defer delivery under a Holder's Option until indemnified to its
satisfaction with respect to such withholding or other taxes.
6.7 Securities Law Compliance. Each Option shall be subject to the condition
that such Option may not be exercised if and to the extent the Committee
determines that the sale of securities upon exercise of the Option may violate
the Securities Act or any other law or requirement of any governmental
authority. The Company shall not be deemed by any reason of the granting of
any Option to have any obligation to register the Shares subject to such
Option under the Securities Act or to maintain in effect any registration of
such Shares which may be made at any time under the Securities Act. An Option
shall not be exercisable if the Committee or the Board determines there is
non-public information material to the decision of the Holder to exercise such
Option which the Company cannot for any reason communicate to such Holder.
Notwithstanding Sections 6.1, 6.3 and 6.5 and the terms of the Option
Agreement, if (i) any Holder makes a bona fide request to exercise any Option
which complies with Section 6.4, (ii) the Committee or the Board determines
such Option cannot be exercised for a period of time pursuant to this Section
6.7 and (iii) such Option expires during such period, then the term of such
Option shall be extended until the end of such period; provided, however, that
the term of an Incentive Stock Option cannot be extended beyond ten years
after its Granting Date.
ARTICLE 7
SHARES SUBJECT TO THE PLAN
Except as provided in Sections 6.4 and 6.6 and Article 8, an aggregate of
1,109,147 Shares of Common Stock shall be subject to this Plan. Except as
provided in Sections 6.4 and 6.6 and Article 8, the Options shall be limited
so that the sum of the following shall not as of any given time exceed
1,109,147 Shares: (i) all Shares subject to Options outstanding under this
Plan at the given time and (ii) all Shares which shall have been sold by the
Company by reason of the exercise at or prior to the given time of any of the
Options. The Common Stock issued under the Plan may be either authorized and
unissued shares, shares reacquired and held in the treasury of the
Corporation, or both, all as from time to time determined by the Board. In the
event any Option shall expire or be terminated before it is fully exercised,
then all Shares formerly subject to such Option as to which such Option was
not exercised shall be available for any Option subsequently granted in
accordance with the provisions of this Plan. Notwithstanding anything
contained in this Plan, the maximum aggregate number of Shares subject to
Options that may be granted to any one Key Employee in any one calendar year
shall not exceed 400,000 Shares.
ARTICLE 8
ADJUSTMENTS TO REFLECT ORGANIC CHANGES
The Board shall appropriately and proportionately adjust the number and kind
of Shares subject to outstanding Options, the price for which Shares may be
purchased upon the exercise of outstanding Options, and the number and kind of
Shares available for options subsequently granted under this Plan to reflect
any stock dividend, stock split, combination or exchange of shares, merger,
consolidation or other change in the capitalization of the Company which the
Board determines to be similar, in its substantive effect upon this Plan
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or the Options, to any of the changes expressly indicated in this sentence.
The Board may (but shall not be required to) make any appropriate adjustment
to the number and kind of Shares subject to outstanding Options, the price for
which Shares may be purchased upon the exercise of outstanding Options, and
the number and kind of Shares available for Options subsequently granted under
this Plan to reflect any spin-off, spin-out or other distribution of assets to
stockholders or any acquisition of the Company's stock or assets or other
change which the Board determines to be similar, in its substantive effect
upon this Plan or the Options, to any of the changes expressly indicated in
this sentence. The Committee shall have the power to determine the amount of
the adjustment to be made in each case described in the preceding two
sentences, but no adjustment approved by the Committee shall be effective
until and unless it is approved by the Board. In the event of any
reorganization, reclassification, consolidation, merger or sale of all or
substantially all of the Company's assets which is effected in such a way that
holders of Common Stock are entitled to receive (either directly or upon
subsequent liquidation) stock, securities or assets with respect to or in
exchange for Common Stock, the Board may (but shall not be required to)
substitute the per share amount of such stock, securities or assets for Shares
upon any subsequent exercise of any Option. If any fractional Share becomes
subject to any Option as a result of any change made under this Article 8,
then (i) such Option may not be exercised with respect to such fractional
Share until and unless such Option is exercised as to all other Shares subject
to such option and (ii) if such Option is exercised with respect to such
fractional Share, the Company shall have the right to deliver to the Holder in
lieu of such fractional Share cash in an amount equal to the product derived
by multiplying the fraction representing the portion of a full Share
represented by such fractional Share times the Per Share Market Value on the
exercise date of the Option with respect to such fractional Share established
as prescribed in this Plan.
ARTICLE 9
AMENDMENT AND TERMINATION OF THE PLAN
9.1 Amendment. Except as provided in the following two sentences, the Board
shall have complete power and authority to amend this Plan at any time and no
approval by the Company's stockholders or by any other person, committee or
other entity of any kind shall be required to make any amendment approved by
the Board effective. The Board shall not, without the affirmative approval of
the Company's stockholders, amend the Plan in any manner which would cause any
outstanding Incentive Stock Options to no longer qualify as Incentive Stock
Options or which would cause the Plan not to satisfy the requirements relating
to performance based compensation under (S) 162(m) of the Code. If any Section
16 Holder holds any Option, the Board shall not, without the affirmative vote
of the holders of a majority of the securities of the Company present, or
represented, and entitled to vote at a meeting duly held in accordance with
applicable law, make any amendment to this Plan which materially (i) increases
the benefits accruing to participants under the Plan, (ii) increases the
number of shares of Common Stock which may be issued under the Plan or (iii)
modifies the requirements as to eligibility for participation in the Plan. No
termination or amendment of this Plan may, without the consent of the Holder
of any Option prior to termination or the adoption of such amendment,
materially and adversely affect the rights of such Holder under such Option.
9.2 Termination. The Board shall have the right and the power to terminate
this Plan at any time, provided that no Incentive Stock Options may be granted
after the tenth anniversary of the adoption of this Plan. No Option shall be
granted under this Plan after the termination of this Plan, but the
termination of this Plan shall not have any other effect. Any Option
outstanding at the time of the termination of this Plan may be exercised after
termination of this Plan at any time prior to the Expiration Date of such
Option to the same extent such Option would have been exercisable had this
Plan not terminated.
ARTICLE 10
DEFINITIONS AND OTHER PROVISIONS OF THE PLAN
10.1 Definitions. Each term defined in this Section 10.1 has the meaning
indicated in this Section 10.1 whenever such term is used in this Plan:
"Board of Director" and "Board" both mean the Board of Directors of the
Company as constituted at the time the term is applied.
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"Cause" means (i) the willful refusal to follow directions given by the
Board, (ii) commission of any act involving moral turpitude or any act which
brings or could bring the Company into disrepute or materially damages its
relations with its customers, suppliers, licensors or financing sources, (iii)
the violation of any statutory or common law duty of loyalty to the Company or
(iv) a good faith determination by a majority of the Board that continued
employment is not in the best interests of the Company.
"Common Stock" means the issued or issuable class A common stock, par value
$.01 per share, of the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" has the meaning such term is given in Section 2.1 of this Plan.
"Company" as applied as of any given time shall mean Coinmach Laundry
Corporation, a Delaware corporation, except that if prior to the given time
any corporation or other entity has acquired all or a substantial part of the
assets of the Company (as herein defined) and has agreed to assume the
obligations of the Company under this Plan, or is the survivor in a merger or
consolidation to which the Company was a party, such corporation or other
entity shall be deemed to be the Company at the given time.
"Expiration Date" as applied to any option means the date specified in the
Option Agreement between the Company and the Holder as the expiration date of
such Option. If no expiration date is specified in the Option Agreement
relating to any Option, then the Expiration Date of such option shall be the
day prior to the tenth anniversary of the Granting Date of such Option.
Notwithstanding the preceding sentences, if the person to whom any Incentive
Stock Option is granted owns, on the Granting Date of such Option, stock
possessing more than ten percent of the total combined voting power of all
classes of stock of the Company (or of any parent or Subsidiary of the Company
in existence on the Granting Date of such Option), and if no expiration date
is specified in the Option Agreement relating to such Option, then the
Expiration Date of such Option shall be the day prior to the fifth anniversary
of the Granting Date of such Option.
"Granting Date" has the meaning such term is given in Section 4.2 of this
Plan.
"Holder" has the meaning such term is given in Section 5.4 of this Plan.
"Incentive Stock Option" means an incentive stock option, as defined in Code
Section 422, which is granted pursuant to this Plan.
"Key Employee" has the meaning such term is given in Article 3 of this Plan.
"Option" has the meaning such term is given in Section 4.1 of this Plan.
"Option Agreement" has the meaning such term is given in Section 4.4 of this
Plan.
"Permanent Disability" shall mean a physical or mental disability suffered
by an initial grantee of an Option which the Committee determines in its sole
discretion will permanently prevent such initial grantee from working for the
Company in the same or a substantially similar position as such initial
grantee occupied prior to suffering such disability.
"Permanent Disability Date" has the meaning such term is given in Section
6.5 of this Plan.
"Per Share Market Value" on any given date shall be the fair market value of
one Share as of the close of business on the given date determined in such
manner as shall be prescribed in good faith by the Committee; provided, that
as long as the Shares are traded on a national securities exchange or national
automated quotation system (such as the Nasdaq National Market), the Per Share
Market Value shall be the reported closing price of the Shares on such date.
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"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 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
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granted under this Plan does not explicitly include any terms required to
entitle such intended ISO to the tax treatment afforded by the Code to Options
which do constitute Incentive Stock Options under Code Section 422, then all
such terms shall be deemed implicit in the intention to afford such treatment
to such Option and such Option shall be deemed to have been granted subject to
all such terms.
10.4 No Strict Construction. No rule of strict construction shall be applied
against the Company, the Committee or any other person in the interpretation
of any of the terms of this Plan, any Option or any rule or procedure
established by the Committee.
10.5 Choice of Law. This Plan and all documents contemplated hereby, and all
remedies in connection therewith and all questions or transactions relating
thereto, shall be construed in accordance with and governed by the internal
laws of the State of Delaware.
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LOGO
COINMACH
<PAGE>
COINMACH LAUNDRY CORPORATION
CLASS A COMMON STOCK
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE 1997 ANNUAL MEETING OF STOCKHOLDERS - July 9, 1997
The undersigned hereby appoints Robert M. Doyle, with full power of
substitution, proxy for and in the name of the undersigned, to vote all Class A
Common Stock, par value $.01 per share, of Coinmach Laundry Corporation, a
Delaware corporation, that the undersigned would be entitled to vote if
personally present at the 1997 Annual Meeting of Stockholders to be held at The
Park Hotel, 2200 Rexford Road, Charlotte, North Carolina, on Wednesday, July 9,
1997 at 1:00 p.m., local time, and at any adjournment thereof, upon the matters
described in the accompanying Notice of Annual Meeting of Stockholders and Proxy
Statement, receipt of which is hereby acknowledged, subject to any direction
indicated on the reverse side of this card, and upon any other business that may
properly come before the meeting or any adjournment thereof; hereby revoking any
proxy heretofore executed by the undersigned to vote at said meeting.
THIS PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS OF COINMACH LAUNDRY
CORPORATION AND WILL BE VOTED IN ACCORDANCE WITH THE STOCKHOLDER'S
SPECIFICATIONS HEREON. IN THE ABSENCE OF SUCH SPECIFICATION, THE PROXY WILL BE
VOTED "FOR" THE ELECTION OF DIRECTORS, "FOR" APPROVAL OF THE ADOPTION OF THE
SECOND AMENDED AND RESTATED 1996 EMPLOYEE STOCK OPTION PLAN AND "FOR" THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE.
COINMACH LAUNDRY CORPORATION
P.O. BOX 11415
NEW YORK, N.Y. 10203-0415
<PAGE>
The Board of Directors of COINMACH LAUNDRY CORPORATION recommends a vote FOR
Proposals 1,2 and 3.
1. Election of Directors
FOR both nominees [X] WITHHOLD AUTHORITY [X] FOR both nominees [X]
listed below to vote for both except as noted
nominees listed below below
Nominees: Stephen R. Kerrigan and David A. Donnini
INSTRUCTIONS: To withhold authority to vote for either nominee, mark the "FOR
both nominees except as noted below" box and write that nominee's name in the
space provided below.
Exception: _____________________________________
2. Approval of the adoption of the Second Amended and Restated 1996 Employee
Stock Option Plan
FOR [X] AGAINST [X] ABSTAIN [X]
3. Ratification of appointment of Ernst & Young LLP as the Corporation's
independent auditors for the year ending March 27, 1998
FOR [X] AGAINST [X] ABSTAIN [X]
In his discretion, the Proxy is authorized to vote and otherwise represent the
shares upon such other business as may properly come before the meeting or any
adjournment(s) or postponements(s) thereof.
[X] Mark here if you plan to attend the meeting.
Change of Address and/or Comments Mark Here [X]
NOTE: Please date and sign this proxy exactly as your name appears hereon. In
case of joint owners, each joint owner should sign. When signing in a fiduciary
or representative capacity, please give your full title. If the proxy is
submitted by a corporation or partnership it should be executed in the full
corporation or partnership name by a duly authorized person.
Dated: _________________________, 1997
______________________________________
Signature
______________________________________
Signature
Votes must be indicated in black or blue ink. For each proposal, mark "X" in
only one box.
(Please sign, date and return this proxy promptly in the enclosed postage
prepaid envelope.)
