<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
[_]CONFIDENTIAL, FOR USE OF THE
[_]Preliminary Proxy Statement COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X]Definitive Proxy Statement
[_]Definitive Additional Materials
[_]Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
COINMACH LAUNDRY CORPORATION
-----------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
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:
_______________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
_______________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange ActRule 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:
_______________________________________________________________________
(5) Total fee paid:
_______________________________________________________________________
[_]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.: _________________________
(3) Filing Party: _________________________________________________________
(4) Date Filed: ___________________________________________________________
<PAGE>
LOGO
COINMACH LAUNDRY CORPORATION
55 LUMBER ROAD
ROSLYN, NEW YORK 11576
Dear Stockholder:
On behalf of the Board of Directors of Coinmach Laundry Corporation, I
cordially invite you to attend the Annual Meeting of Stockholders which will
be held at The Park Hotel, 2200 Rexford Road, Charlotte, North Carolina on
Tuesday, July 28, 1998 at 1:00 P.M. Eastern Standard Time.
I look forward to greeting you personally. The accompanying Proxy Statement
describes the matters to be acted on at the meeting, and I urge you to read it
carefully.
At the meeting, you will be asked to vote on the matters described in the
accompanying Notice and Annual Meeting and Proxy Statement, which include
election of three directors, the adoption of an employee incentive stock
purchase plan and the appointment of Ernst & Young LLP as the Company's
independent auditors.
It is important that your shares be represented at the meeting regardless of
the number of shares you may hold or whether or not you plan to attend in
person. In order for your vote to be counted, you must sign, date and return
the enclosed proxy card in the envelope provided or attend the meeting in
person. If you do attend the meeting and desire to vote in person, you may do
so even though you have previously sent a proxy. Whether or not you plan to
attend in person, I urge you to sign and return the enclosed proxy card
promptly.
Sincerely,
/s/ Stephen R. Kerrigan
Stephen R. Kerrigan
Chairman of the Board
and Chief Executive Officer
Roslyn, New York
June 19, 1998
<PAGE>
COINMACH LAUNDRY CORPORATION
55 LUMBER ROAD
LOGO ROSLYN, NEW YORK 11576
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 28, 1998
----------------
TO THE STOCKHOLDERS OF COINMACH LAUNDRY CORPORATION:
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Stockholders (the
"Annual Meeting") of Coinmach Laundry Corporation (the "Company") will be held
on Tuesday, July 28, 1998, at 1:00 P.M. Eastern Standard Time, at The Park
Hotel, 2200 Rexford Road, Charlotte, North Carolina for the following
purposes:
(1) To elect three Class II directors of the Company to serve for the
term expiring at the 2001 annual meeting of stockholders of the Company;
(2) To approve the 1998 Employee Stock Purchase Plan;
(3) To confirm the appointment of Ernst & Young LLP as independent
auditors of the Company for the fiscal year commencing April 1, 1998; 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 June
5, 1998 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 Company's offices, located at 521 E. Morehead, Suite 590,
Charlotte, North Carolina.
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 or bank 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 31, 1998 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 19, 1998
<PAGE>
COINMACH LAUNDRY CORPORATION
55 LUMBER ROAD
ROSLYN, NEW YORK 11576
----------------
ANNUAL MEETING OF STOCKHOLDERS
JULY 28, 1998
----------------
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") and management of Coinmach Laundry
Corporation, a Delaware corporation, (the "Company") to be voted at the annual
meeting of stockholders (the "Annual Meeting"), to be held on July 28, 1998 at
1:00 P.M. Eastern Standard Time, at The Park Hotel, 2200 Rexford Road,
Charlotte, North Carolina and at any postponement or adjournment thereof, for
the purposes set forth in the accompanying Notice of Annual Meeting of
Stockholders.
This Proxy Statement and the enclosed form of proxy were first mailed to
stockholders on or about June 19, 1998.
All expenses incident to the solicitation of proxies, including the costs of
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 distributing proxies for a fee of
approximately $850, plus reimbursement of reasonable out-of-pocket expenses.
Solicitation by mail, telephone, telecopier or personally 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 June 5, 1998 as
the record date (the "Record Date") for the determination of the stockholders
entitled to receive notice of, and to vote at, the Annual Meeting or any
adjournment or postponement thereof. The Company has two classes of common
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 12,687,135 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 three 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 be voted upon at 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 II directors of the Company, (ii) the
approval of the 1998 Employee Stock Purchase Plan, and (iii) the confirmation
of the appointment of Ernst & Young LLP as the Company's independent auditors
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 3,008,402 shares of Common Stock (or approximately
23.7% of the outstanding Common Stock entitled to vote at the Annual Meeting),
MCS Capital, Inc. ("MCS"), the holder of 321,869 shares of Common Stock (or
approximately 2.5% of the outstanding Common Stock entitled to vote at the
Annual Meeting), Mitchell Blatt, the holder of 298,845 shares of Common Stock
(or approximately 2.4% of the outstanding Common Stock entitled to vote at the
Annual Meeting), President and Fellows of Harvard College ("Harvard"), the
holder of 100,273 shares of Common Stock (or approximately 0.8% 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 174,104 shares of Common Stock (or approximately 1.4% 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 members of 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).
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth the beneficial ownership of Common Stock as
of May 29, 1998, by (i) each director of the Company; (ii) each executive
officer of the Company named in the Summary Compensation Table
2
<PAGE>
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. As of May 29,
1998, there were 12,687,135 shares of Common Stock outstanding. 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.... 3,008,402 23.7%
6100 Sears Tower
Chicago, IL 60606
Strong Capital Management, Inc.................. 1,530,500/2/ 12.1%
100 Heritage Reserve
Menomonee Falls, WI 53051
Capital Group Companies Inc..................... 1,073,800/3/ 8.5%
333 South Hope Street, 52nd Flr.
Los Angeles, CA 90071
J&W Seligman & Co. Inc.......................... 886,700/4/ 7.0%
100 Park Avenue, 8th Floor
New York, NY 10006
Warburg Pincus Asset Management, Inc. .......... 763,400/5/ 6.0%
466 Lexington Avenue
New York, NY 10017
Palisade Capital Management LLC................. 761,100/6/ 6.0%
One Bridge Plaza, Suite 695
Fort Lee, NJ 07024
OFFICERS AND DIRECTORS
Stephen R. Kerrigan............................. 506,729/7/ 4.0%
Mitchell Blatt.................................. 358,845/8/ 2.8%
Robert M. Doyle................................. 138,601/9/ 1.1%
Michael E. Stanky............................... 107,859/10/ *
John E. Denson.................................. 15,797/11/ *
Bruce V. Rauner................................. 3,008,402/12/ 23.7%
David A. Donnini................................ 3,008,402/13/ 23.7%
James N. Chapman................................ 32,067/14/ *
Arthur B. Laffer................................ 30,000/15/ *
Stephen G. Cerri................................ 30,000/16/ *
All Officers and Directors...................... 4,228,300/17/ 33.3%
as a group (10 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 (the "SEC").
- --------
*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 June 5, 1998 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.
3
<PAGE>
/2/ Based on a report on Schedule 13G filed by Strong Capital Management, Inc.
("Strong") with the SEC on March 10, 1998. Strong has sole voting power as
to 1,104,050 shares and sole investment power as to 1,530,500 shares.
/3/ Based on a report on Schedule 13G filed by Capital Group Companies Inc.
("Capital") with the SEC on February 11, 1998. Capital has sole voting
power as to 551,700 shares and sole investment power as to 1,073,800
shares. Capital has disclaimed beneficial ownership of all shares pursuant
to Rule 13d-4 of the Securities Exchange Act of 1934, as amended.
/4/ Based on an amendment to a report on Schedule 13G filed by J&W Seligman &
Co. Inc. ("Seligman") with the SEC on February 12, 1998. Seligman has
shared voting power as to 886,700 shares and shared investment power as to
886,700 shares. William C. Morris, as the owner of a majority of the
outstanding voting securities of Seligman, may be deemed to beneficially
own the shares reported to be owned by Seligman.
/5/ Based on a report on Form 13F filed by Warburg Pincus Asset Management,
Inc. ("Warburg") with the SEC on April 13, 1998. Warburg has sole voting
power as to 377,000 shares, shared voting power as to 336,600 shares and
no voting power as to 49,800 shares.
/6/ Based on a report on Schedule 13G filed by Palisade Capital Management LLC
("Palisade") with the SEC on January 16, 1998.
/7/ The shares are owned beneficially by MCS Capital Inc. ("MCS"), a
corporation controlled by Mr. Kerrigan. Includes shares underlying options
held by MCS to purchase an aggregate of 184,860 shares of Common Stock at
an exercise price of $11.90 per share, all of which options are currently
exercisable. Does not include shares underlying options held by MCS to
purchase an aggregate of 123,238 shares of Common Stock at an exercise
price of $11.90 per share, none of which options are currently exercisable
nor become exercisable within the next 60 days.
/8/ Includes shares underlying options to purchase an aggregate of 40,000
shares of Common Stock at an exercise price of $14.00 per share and 20,000
shares of Common Stock at an exercise price of $11.90 per share, all of
which options are currently exercisable. Does not include shares
underlying options to purchase an aggregate of 80,000 shares of Common
Stock at an exercise price of $11.90 per share and 60,000 shares of Common
Stock at an exercise price of $14.00 per share, none of which options are
currently exercisable nor become exercisable within the next 60 days.
/9/ Includes shares underlying options to purchase an aggregate of 63,134
shares of Common Stock at an exercise price of $11.90 per share, all of
which options are currently exercisable. Does not include shares
underlying options to purchase an aggregate of 108,756 shares of Common
Stock at an exercise price of $11.90 per share, all of which options are
not currently exercisable nor become exercisable within the next 60
days.
/10/Includes shares underlying options to purchase an aggregate of 62,113 shares
of Common Stock at an exercise price of $11.90 per share, 20,000 shares of
Common Stock at an exercise price of $14.00 per share and 2,000 shares of
Common Stock at an exercise price of approximately $22.31 per share, all of
which options are currently exercisable. Does not include shares underlying
options to purchase an aggregate of 41,408 shares of Common Stock at an
exercise price of $11.90 per share, 30,000 shares of Common Stock at an
exercise price of $14.00 per share and 8,000 shares of Common Stock at an
exercise price of approximately $22.31 per share, none of which options are
currently exercisable nor become exercisable within the next 60 days.
/11/Represents shares underlying options to purchase an aggregate of 14,797
shares of Common Stock at an exercise price of $11.90 per share and 1,000
shares of Common Stock at an exercise price of approximately $22.31 per
share, all of which options are currently exercisable. Does not include
shares underlying options to purchase an aggregate of 11,502 shares of
Common Stock at an exercise price of $11.90 per share and 4,000 shares of
Common Stock at an exercise price of approximately $22.31 per share, none of
which options are currently exercisable nor become exercisable within the
next 60 days.
/12/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.
/13/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.
/14/Includes shares underlying options to purchase an aggregate of 17,254 shares
of Common Stock at an exercise price of $11.90 per share and 6,252 shares of
Common Stock at an exercise price of approximately $22.31 per share, all of
which options are currently exercisable. Does not include shares underlying
options to purchase an aggregate of 11,502 shares of Common Stock at an
exercise price of $11.90 per share and 24,992 shares of Common Stock at an
exercise price of approximately $22.31 per share, none of which options are
currently exercisable nor become exercisable within the next 60 days.
/15/Represents shares underlying options to purchase an aggregate of 30,000
shares of Common Stock at an exercise price of $14.00 per share, all of
which options are currently exercisable. Does not include shares underlying
options to purchase an aggregate of 30,000 shares of Common Stock at an
exercise price of $14.00 per share, none of which options are currently
exercisable nor become exercisable within the next 60 days.
/16/Represents shares underlying options to purchase an aggregate of 30,000
shares of Common Stock at an exercise price of $14.00 per share, all of
which options are currently exercisable. Does not include shares underlying
options to purchase an aggregate of 30,000 shares of Common Stock at an
exercise price of $14.00 per share, none of which options are currently
exercisable nor become exercisable within the next 60 days.
/17/In calculating the shares beneficially owned by executive officers and
directors as a group, 3,008,402 shares of Common Stock owned by GTCR and
included in the beneficial ownership amounts of each of Messrs. Rauner and
Donnini are included only once. In calculating the percentage of shares
beneficially owned by executive officers and directors as a group, the
shares of Common Stock underlying all options which are currently
exercisable or become exercisable within the next 60 days are deemed
outstanding.
4
<PAGE>
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 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 based on 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 31, 1998, all filing requirements applicable to its officers,
directors, and ten percent stockholders were complied with.
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, three directors are to be elected in Class II to hold
office until the 2001 annual meeting of stockholders or until their successors
are elected and qualified. The persons designated as nominees for election as
directors in Class II are Dr. Arthur B. Laffer, Stephen G. Cerri and James N.
Chapman. 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" THE PROPOSAL TO ELECT THE NOMINEES AS CLASS II DIRECTORS OF THE COMPANY.
<TABLE>
<CAPTION>
NAME, PRINCIPAL OCCUPATION FOR THE PAST DIRECTOR
FIVE YEARS, DIRECTORSHIPS AGE SINCE
--------------------------------------- --- --------
CLASS II DIRECTOR NOMINEES FOR
TERM EXPIRING IN 2001
<S> <C> <C>
DR. ARTHUR B. LAFFER. Dr. Laffer has been a director of the Company 57 1996
since September 1996. Dr. Laffer is a director of Mastec, Inc., Nicholas
Applegate Mutual Funds, Nicholas Applegate Growth Equity Funds and
United States Filter Corporation. Dr. Laffer has been Chairman and Chief
Executive Officer of Laffer 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 subsidiary of Laffer Associates, and a registered
broker-dealer and investment advisor since 1985.
STEPHEN G. CERRI. Mr. Cerri has been a director of the Company since 63 1996
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.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
NAME, PRINCIPAL OCCUPATION FOR THE PAST DIRECTOR
FIVE YEARS, DIRECTORSHIPS AGE SINCE
--------------------------------------- --- --------
<S> <C> <C>
JAMES N. CHAPMAN. Mr. Chapman has been a director of the Company since 36 1995
April 1995. Mr. Chapman is presently a Vice President-Investment Banking
with The Renco Group, Inc., a private holding company. Mr. Chapman was a
Principal of Fieldstone Private Capital Group, L.P., a financial
services company, from its inception in 1990 to May 1996. Mr. Chapman
was a director of Coinmach Corporation, a wholly-owned subsidiary of the
Company ("Coinmach") from November 1995 to November 1996 and a director
of The Coinmach Corporation ("TCC") TCC, from January 1995 to November
1995.
INCUMBENT CLASS I DIRECTORS WHOSE
TERMS EXPIRE IN 2000
STEPHEN R. KERRIGAN. Mr. Kerrigan has been Chief Executive Officer of 45 1995
the Company since April 1996 and of 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 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 and thereafter emerged from bankruptcy in 1994.
DAVID A. DONNINI. Mr. Donnini has been a director of the Company since 33 1995
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 also serves as a
director of Polymer Group, Inc.
INCUMBENT CLASS III DIRECTORS
WHOSE TERMS EXPIRE IN 1999
MITCHELL BLATT. Mr. Blatt has been President and Chief Operating Officer 46 1995
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.
</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.
6
<PAGE>
<TABLE>
<CAPTION>
NAME, PRINCIPAL OCCUPATION FOR THE PAST DIRECTOR
FIVE YEARS, DIRECTORSHIPS AGE SINCE
--------------------------------------- --- --------
<S> <C> <C>
BRUCE V. RAUNER. Mr. Rauner has been a director of the Company since 42 1995
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 Metamor Worldwide, Inc.,
Esquire Communications Ltd., Lason Systems, Inc., Polymer Group, Inc.,
Province Healthcare Company and Dynacare Corp.
</TABLE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
Committees of the Board
The Board has three standing committees: (i) an Audit Committee, (ii) a
Compensation Committee, and (iii) a Plan Administration and Compensation
Committee. During the past fiscal year, the Board established three temporary
additional committees, a Pricing Committee, a Special Review Committee and a
Special Transactions Committee, for the specific purposes described below. 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 committee will
also administer the 1998 Employee Stock Purchase Plan if adopted by the
stockholders of the Company at the Annual Meeting. The members of the Plan
Administration and Compensation Committee are Messrs. Donnini and Rauner.
Temporary Special Committees.
The Pricing Committee was established by the Board in October 1997 prior to
consummation of the Company's secondary offering in December 1997 of in excess
of 4 million shares of Common Stock at an offering price of $19.75 per share
(the "Secondary Offering") for purposes of approving the timing and the final
terms and conditions of the offering of Common Stock. The members of the
Pricing Committee were Messrs. Kerrigan and Donnini.
The Special Review Committee was established by the Board in May 1997 as a
sub-committee of the Compensation Committee to review certain specific issues
relating to the historical and current compensation of certain members of
senior management of the Company. The Special Review Committee made certain
recommendations to the Compensation Committee resulting in grants of certain
stock options to Messrs. Blatt and Doyle and amendments to certain option
agreements between the Company and each of MCS
7
<PAGE>
(an entity controlled by Mr. Kerrigan) and Messrs. Doyle and Blatt providing
for immediate vesting of all outstanding stock options granted under such
agreements upon a "change of control" of the Company. See "EXECUTIVE
COMPENSATION-Employment Agreements-Change in Control Arrangements-Stock
Options". The members of the Special Review Committee were Messrs. Donnini and
Rauner.
The Special Transactions Committee was established by the Board in June 1997
for the purpose of (i) engaging a financial advisor to entertain proposals and
advise the Board regarding possible investments in the Company and (ii)
reviewing and evaluating any such potential transactions and making a
recommendation with respect thereto to the Board. After having evaluated such
potential transactions and having determined not to pursue any such
transactions, the Special Transaction Committee was disbanded. The members of
the Special Transaction Committee were Messrs. Donnini and Chapman.
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. Each of Messrs. Cerri and Laffer, upon becoming directors of
the Company, were granted options to purchase 60,000 shares of Common Stock at
exercise prices equal to the fair market value of Common Stock on the date of
grant, which options vest in four equal annual installments commencing on the
date of grant. The Company paid Mr. Chapman, a director of the Company,
certain fees during the past fiscal year for general financial advisory and
investment banking services. See "CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS-Management and Consulting Services".
ATTENDANCE AT BOARD OF DIRECTORS MEETINGS
During the fiscal year ended March 31, 1998, the Board of Directors of the
Company held two regularly scheduled meetings. The Compensation Committee met
or took action by unanimous written consent twice during the past fiscal year.
The Plan Administration and Compensation Committee met or took action by
unanimous written consent six times during the past fiscal year. Each of the
Audit Committee, Special Review Committee, Pricing Committee and Special
Transaction Committee met once during the past 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.
EXECUTIVE OFFICERS
The following table sets forth certain information regarding the executive
officers of the Company:
<TABLE>
<CAPTION>
NAME AGE TITLE
---- --- -----
<S> <C> <C>
Stephen R. Kerrigan..... 45 Chairman of the Board, Chief Executive Officer, Director
Mitchell Blatt.......... 46 President, Chief Operating Officer, Director
Robert M. Doyle......... 41 Chief Financial Officer, Senior Vice President, Treasurer, Secretary
John E. Denson.......... 60 Senior Vice President-Corporate Development
Michael E. Stanky....... 46 Senior 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.
8
<PAGE>
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.
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 (collectively, the "Named Executive
Officers") for all services rendered in all capacities for the fiscal years
ended March 29, 1996, March 28, 1997 and March 31, 1998. 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. In March 1998, the Company changed its fiscal year end from the 52 or
53 week period ending on the last Friday of March to the twelve consecutive
months ending March 31.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------- ------------
COMMON STOCK
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND FISCAL SALARY BONUS COMPENSATION OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)
------------------ ------ ------- ------- ------------ ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Stephen R. Kerrigan 1998 350,000 400,000 83,870/1/ -- 1,929/7/
Chief Executive 1997 330,841 400,000 97,161/2/ 308,098/3/ 1,875/7/
Officer 1996 290,000 91,250 -- -- 2,140/8/
Mitchell Blatt 1998 268,530 280,000 62,680/4/ 100,000 2,073/7/
President, Chief 1997 238,942 112,000 59,673/5/ 100,000 1,875/7/
Operating Officer 1996 215,000 91,250 -- -- 2,122/8/
Robert M. Doyle 1998 169,438 175,000 -- 100,000 2,030/7/
Chief Financial 1997 149,997 62,500 -- 71,890 1,875/7/
Officer 1996 110,577 25,000 -- -- 1,334/8/
John E. Denson 1998 125,000 30,000 68,768/6/ -- 1,586/7/
Senior Vice 1997 125,859 25,000 -- 28,756 1,149/7/
President 1996 125,300 -- -- -- 1,083/9/
Michael E. Stanky 1998 164,793 175,000 -- -- 2,145/7/
Senior Vice 1997 150,500 37,500 -- 153,521 1,188/7/
President 1996 141,425 -- -- -- 1,253/9/
</TABLE>
- --------
/1/ Includes $45,393 in forgiven indebtedness; $3,750 in interest, calculated at
a rate of 7.5% per annum on a loan made by the Company to Mr. Kerrigan;
$26,593 for reimbursement of certain out-of-pocket relocation expenses;
$3,643 in automobile allowances; $3,335 in club membership fees; and $1,156
in life insurance premiums paid by the Company on behalf of Mr. Kerrigan.
/2/ Includes $45,109 in forgiven indebtedness; $3,750 in interest, calculated at
a rate of 7.5% per annum, on a loan made by the Company to Mr. Kerrigan;
$40,385 for reimbursement of certain out-of-pocket relocation expenses;
$4,554 in automobile allowances; $2,424 in club membership fees; and $939 in
life insurance premiums paid by the Company on behalf of Mr. Kerrigan.
9
<PAGE>
/3/ Options are held by MCS, a corporation controlled by Mr. Kerrigan.
/4/ Includes $45,393 in forgiven indebtedness, $3,687 in automobile allowances;
$12,700 in club membership fees; and $900 in life insurance premiums paid by
the Company on behalf of Mr. Blatt.
/5/ Includes $45,109 in forgiven indebtedness; $4,231 in automobile allowances;
$9,600 in club membership fees; and $733 in life insurance premiums paid by
the Company on behalf of Mr. Blatt.
/6/ Includes $1,520 in imputed interest, calculated at a rate of 9.5% per annum,
on an interest free loan made by the Company to Mr. Denson; $48,691 for
reimbursement of certain out-of-pocket relocation expenses; $796 in
automobile allowances; $984 in life insurance premiums paid by the Company
on behalf of Mr. Denson; and $16,757 in net proceeds from the exercise of
2,457 options and sale of 2,457 underlying shares of Common Stock in the
Secondary Offering in December 1997 (equal to the difference between the
applicable exercise price of such options and the sale price of the
underlying shares of Common Stock, net of commissions).
/7/ Represents matching contributions made by the Company to the Profit Sharing
Plan.
/8/ Represents matching contributions made by TCC to the Profit Sharing Plan.
/9/ Represents matching contributions made by Solon to the Solon Retirement
Savings Plan.
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 (after giving
effect to base salary increases thereunder) provide for annual base salaries
of $350,000, $300,000 and $175,000 for each of Messrs. Kerrigan, Blatt and
Doyle, respectively, which amounts are reviewed annually by the Board. During
the past fiscal year, the Compensation Committee approved increases in annual
base salaries for each of Messrs. Blatt and Doyle to $300,000 and $175,000,
respectively. 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. During the past fiscal year, the Compensation Committee approved an
increase in Mr. Denson's annual base salary to $125,000. 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 which provided 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. During the past fiscal year, the Compensation
Committee approved an increase in Mr. Stanky's annual base salary to
$175,000.
Change in Control Arrangements-Stock Options. In the event of a "change of
control" of the Company, all outstanding stock options granted to MCS (an
entity controlled by Mr. Kerrigan) and Messrs. Doyle and Blatt
10
<PAGE>
will become exercisable in full. Pursuant to the applicable stock option
agreements, a "change in control" shall occur when (i) the Company at any time
ceases to own directly 100% of the capital stock of Coinmach, (ii) any
"person" or "group" (as such terms are used in Section 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended), excluding Golder, Thoma,
Cressey, Rauner, Inc. or any entity controlled thereby, is or becomes the
"beneficial owner" (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange
Act), directly or indirectly, of a greater percentage of Common Stock than is
owned by GTCR at such time, (iii) the Board ceases to consist of a majority of
the directors of the Company on January 8, 1997 and such other directors
(collectively, the "Continuing Directors") whose nomination for election to
the Board is recommended by the then Continuing Directors, or (iv) the Company
or Coinmach (or any successor of the Company or Coinmach by merger or other
business combination) at any time sells all or substantially all of its
assets.
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 ($10,000 in 1998). 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
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 31, 1998 to the Named Executive Officers appearing in the Summary
Compensation Table above: Mr. Kerrigan $1,929; Mr. Doyle $2,030; Mr. Blatt
$2,073; Mr. Denson $2,030; and Mr. Stanky $2,145.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning grants of
stock options approved by the Plan Administration and Compensation Committee
and made during the fiscal year ended March 31, 1998 to each of the Named
Executive Officers.
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL POTENTIAL REALIZABLE VALUE
OPTIONS MARKET AT ASSUMED ANNUAL RATES OF
NUMBER GRANTED TO EXERCISE PRICE PER SHARE PRICE APPRECIATION
OF EMPLOYEES PRICE SHARE ON FOR OPTION TERM ($)/1/
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>
Mitchell Blatt.......... 100,000/2/ 36.0% 11.90 21.75 9/05/07 935,000 1,090,452 2,441,239
President, Chief
Operating Officer
Robert M. Doyle......... 100,000/2/ 36.0% 11.90 21.75 9/05/07 935,000 1,090,452 2,441,239
Chief Financial Officer
</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/ 20,000 shares underlying such options are immediately exercisable, and the
remaining shares underlying such options become exercisable in four equal
annual installments commencing on September 5, 1998.
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 31, 1998. With the exception of Mr. Denson (who exercised
2,457 options and sold 2,457 shares of Common Stock in the Secondary Offering
in December 1997), none of such officers who owned options to purchase Common
Stock during the fiscal year ended March 31, 1998 exercised any of such
options during such period.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR END AT FISCAL YEAR END
(#) ($)/1/
--------------------------------- -------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------- -------------- ----------- -------------
<S> <C> <C> <C> <C>
Stephen R. Kerrigan..... 123,241/2/ 184,857/2/ 1,136,898 1,705,306
Chief Executive Officer
Mitchell Blatt.......... 20,000/3/ 80,000/3/ 184,500 738,000
President, Chief
Operating Officer 40,000/4/ 60,000/4/ 285,000 427,500
Robert M. Doyle......... 28,756/2/ 43,134/2/ 265,274 397,911
Chief Financial Officer 20,000/3/ 80,000/3/ 184,500 738,000
John E. Denson.......... 9,046/2/ 17,253/2/ 83,449 159,159
Senior Vice President
Michael E. Stanky....... 41,409/2/ 62,112/2/ 381,998 572,983
Senior Vice President 20,000/4/ 30,000/4/ 142,500 213,750
</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
31, 1998 was $21.125. The exercise price per share of options granted on
July 23, 1996 (the "July Options") and options granted on September 5, 1997
(the "September Options") is $11.90. The exercise price per share of options
granted on August 8, 1996 is $14.00.
/2/ These options were granted on July 23, 1996 and are exercisable at an
exercise price of $11.90 per share.
/3/ These options were granted on September 5, 1997 and are exercisable at an
exercise price of $11.90 per share.
/4/ These options were granted on August 8, 1996 and are exercisable at an
exercise price of $14.00 per share.
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors, none of the members of
which is employed by the Company, reviews, evaluates and approves the
structure and implementation of the Company's compensation system for
executive officers. The Compensation Committee also determines the form and
amount of compensation for the chief executive and other executive officers.
Dr. Laffer and Messrs. Cerri and Kerrigan served on the Compensation Committee
until November 1, 1996, at which time the Compensation Committee was
reconstituted at the direction of the Board of Directors and is presently
comprised of Dr. Laffer and Messrs. Cerri and Donnini. The Board also
maintains a Plan Administration and Compensation Committee consisting of
Messrs. Donnini and Rauner, each of whom qualify as an "outside director" for
purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended,
which is authorized to take action with respect to stock option grants under
the Option Plan and, if adopted at the Annual Meeting, the 1998 Employee Stock
Purchase Plan.
THE EXECUTIVE COMPENSATION PROGRAM
The executive compensation program is a performance and rewards compensation
system consisting of base salaries and incentives (annual and long-term) that
pay executives for the achievement of levels of performance designed to
increase the stockholder value of the Company. The system also enables the
Company to hire, retain and motivate high-quality executives who meet the
immediate business challenges and improve the performance of the Company and
is designed to pay base salaries and provide total compensation opportunities
which reward each executive for such executive's contributions to the
Company's successes.
12
<PAGE>
While the Compensation Committee may rely upon quantitative measures or
other measurable objective criteria, such as earnings or other indicia of
financial performance, in reaching compensation determinations, the
Compensation Committee evaluates executive performance and reaches
compensation decisions based upon a subjective and careful analysis of each
executive's specific contributions to the Company as well as the
recommendations of the Company's chief executive officer.
The Company does not require its officers to own any amount of Common Stock,
nor does the Company maintain a stock retention policy for officers. However,
it is the Compensation Committee's belief that the substantial voluntary stock
ownership position of the Company's executive officers is an extremely strong
indication of the alignment of the Company's officers' interest with that of
the Company's stockholders.
BASE SALARIES
In determining the base salaries of executive officers, the Compensation
Committee takes into consideration the level of responsibility and experience
of each executive officer and the knowledge and skill required. Each year, the
executive's performance is evaluated and any base salary adjustment is based
on an evaluation of the individual's performance and contribution. Each year,
the chief executive officer makes recommendations with respect to salary
adjustments for all executive officers, which recommendations are reviewed,
modified where appropriate and approved or rejected by the Compensation
Committee. During the past fiscal year, the Compensation Committee approved
increases in annual base salaries for each of Messrs. Blatt, Doyle, Stanky and
Denson to $300,000, $175,000, $175,000 and $125,000, respectively.
ANNUAL INCENTIVES
The Compensation Committee grants bonuses to executive officers in
recognition of their efforts to position the Company to achieve future growth.
For example, in October 1997, the Company successfully completed its issuance
of $100 million of 11 3/4% Senior Notes due 2005, and also the refinancing of
its existing credit facility. In December 1997, the Company successfully
completed the Secondary Offering. Additionally, since the beginning of the
last fiscal year, the Company successfully consummated the acquisition of a
significant number of laundry equipment service operators, which acquisitions
contributed to the increase of the Company's installed-machine base by
approximately 97% and to the increase in the Company's pro forma revenues by
approximately 87%. After reviewing individual performances, the chief
executive officer makes recommendations with respect to bonuses and other
incentive awards. These recommendations are reviewed and, to the extent
determined appropriate, approved by the Compensation Committee. Annual
incentive awards in respect of performance during the past fiscal year have
not yet been determined by the Compensation Committee.
LONG-TERM INCENTIVES
At the time of the Secondary Offering, the Board determined that it would be
appropriate to begin granting stock options to executive officers and certain
key employees. Stock option grants under the Option Plan were made to provide
performance-based incentives that reward executives as stockholder value
increases. This long-term incentive opportunity is also intended to promote a
sense of ownership on the part of executives and key employees and to
establish alignment with stockholders. Other than certain stock option grants
made to Messrs. Cerri, Laffer, Blatt and Doyle, all of the stock options
granted outside of the 1996 Stock Option Plan were granted at an exercise
price equal to 85% of the fair market value of Common Stock on the date of
grant and vest in five equal annual installments commencing on the date of
grant. At March 31, 1998, all stock option grants made to Messrs. Cerri and
Laffer and under the 1996 Stock Option Plan were granted at an exercise price
equal to the fair market value of Common Stock on the date of grant and vest
in equal annual installments over a four or five year period commencing on the
date of grant.
COMPENSATION ARRANGEMENTS
From time to time, the Company enters into employment contracts or other
compensation arrangements with executives. Currently, the Company has
employment agreements with Messrs. Kerrigan, Blatt, Doyle, Stanky and Denson
and certain other key employees. The employment agreements with Messrs. Stanky
and Denson were negotiated in connection with the Company's acquisition of
Solon in April 1995. The terms of all such agreements are summarized under the
heading "EXECUTIVE COMPENSATION-Employment Contracts."
13
<PAGE>
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Total compensation (consisting of base salary, annual incentive and long-
term incentives) for Stephen R. Kerrigan, the chairman and chief executive
officer of the Company, is based on a variety of factors discussed below. A
significant factor taken into account by the Compensation Committee in
determining Mr. Kerrigan's compensation was Mr. Kerrigan's performance as
chief executive officer and his contribution to the Company and its
stockholders.
Mr. Kerrigan's compensation remained constant during the past fiscal year.
In May 1997 of the past fiscal year, the Compensation Committee determined to
award Mr. Kerrigan annual incentive compensation in the form of a bonus of
$400,000 based on Mr. Kerrigan's effective leadership and significant
strategic accomplishments and on its assessment of Mr. Kerrigan's individual
performance and contribution during the fiscal year ended March 28, 1997. The
Compensation Committee has not yet determined the amount of any change in base
salary, annual bonus or long term incentive compensation to be paid to Mr.
Kerrigan for his performance and contributions during the past fiscal year.
IMPACT OF SECTION 162(M) OF THE CODE
The Committee notes that Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code") limits, in certain circumstances, the
deductibility of certain compensation, including stock-based compensation, in
excess of $1 million paid to top executives by public companies. None of the
compensation paid to the executive officers named in the Summary Compensation
Table exceeded the threshold for deductibility under Section 162(m). See
"EXECUTIVE COMPENSATION-Summary Compensation Table" above. The Compensation
Committee reviews the potential effect of Section 162(m) periodically and
evaluates its effect on compensation paid to the Company's executive officers.
The Compensation Committee
David A. Donnini
Dr. Arthur B. Laffer
Mr. Stephen G. Cerri
14
<PAGE>
STOCK PERFORMANCE GRAPH
The graph below compares the cumulative total stockholder return of the
Company from July 23, 1996 through March 31, 1998 (the last day that the
Nasdaq National Market was open during the Company's 1998 fiscal year) with
the cumulative total return of the NASDAQ Composite Index and the Russell 2000
Index for the same periods. The graph assumes the investment of $100 in shares
of Common Stock, the NASDAQ Composite Index and the Russell 2000 Index on July
23, 1996, the date of the initial public offering of the Company, and the
reinvestment of all distributions and dividends.
COMPARISON OF CUMULATIVE TOTAL RETURN OF COINMACH LAUNDRY
CORPORATION, NASDAQ COMPOSITE INDEX AND RUSSELL 2000 INDEX
LINE GRAPH
<TABLE>
<CAPTION>
JULY SEPT. DEC. MAR. JUNE SEPT. DEC. MAR.
23, 30, 31, 27, 27, 26, 26, 31,
1996 1996 1996 1997 1997 1997 1997 1998
---- ----- ---- ---- ---- ----- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Coinmach Laundry Corporation.......... $100 $144 $124 $121 $184 $176 $175 $151
NASDAQ Composite Index................ $100 $111 $116 $114 $130 $152 $141 $165
Russell 2000 Index.................... $100 $107 $112 $108 $123 $141 $135 $149
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended March 31, 1998, the Compensation Committee was
comprised of Dr. Laffer and Messrs. Cerri and Donnini. None of Dr. Laffer or
Messrs. Cerri and Donnini have been an employee or officer of the Company or
any of its subsidiaries. Mr. Donnini is principal of Golder, Thoma, Cressey,
Rauner, Inc., the general partner of GTCR.
15
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
MANAGEMENT AND CONSULTING SERVICES
During the last fiscal year, the Company paid Mr. Chapman, a director of the
Company, $120,000 in 12 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 $200,000 in October 1997 for services
provided in connection with the Company's issuance of $100 million 11 3/4%
Senior Notes due 2005.
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, 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 the priority among holders of
securities with respect to the number of shares to be registered pursuant to
any demand or piggyback registration and indemnification by the Company of the
holders of Registrable Securities.
CERTAIN LOANS TO MEMBERS OF MANAGEMENT
As of May 29, 1998, Mr. Kerrigan (directly and indirectly through MCS, an
entity controlled by Mr. Kerrigan) and Mr. Blatt owed the Company $606,074 and
$131,074, respectively, plus interest accrued thereon. During the last 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
$172,620, respectively, plus interest accrued thereon. The indebtedness of
each of MCS and Mr. Blatt is evidenced by (i) two promissory notes dated
January 31, 1995 in the original principal amount of $140,000; (ii) two
promissory notes dated July 26, 1995 in the original amount of $52,370; and
(iii) two promissory notes dated 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, 1998,
respectively. During the last fiscal year, the Company forgave the repayment
of approximately $45,393 by each of MCS and Mr. Blatt, which amounts represent
the aggregate amount of the second 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")
provided 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. During the last fiscal year,
the Board determined to extend the Kerrigan loan an additional five years
providing for repayment of outstanding principal and interest in equal annual
installments ending July 2006. 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 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 (as defined in the Kerrigan Loan) (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.
16
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PROPOSAL TO ADOPT THE 1998 EMPLOYEE STOCK PURCHASE PLAN
The 1998 Employee Stock Purchase Plan is being submitted for approval by the
stockholders of the Company.
At a regular meeting on May 4, 1998, the Board approved the 1998 Employee
Stock Purchase Plan (the "Employee Stock Purchase Plan"), subject to
stockholder approval. If approved by the stockholders of the Company at the
Annual Meeting, the Employee Stock Purchase Plan is intended to become
effective during the fiscal year ending March 31, 1999 or such later date as
determined by the Board of Directors. A copy of the Employee Stock Purchase
Plan is attached as Exhibit A to this Proxy Statement. Set forth below is a
summary of the principal terms of the Employee Stock Purchase 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 Employee Stock Purchase Plan.
The Employee Stock Purchase Plan will be administered by the Plan
Administration and Compensation Committee. The Plan Administration and
Compensation Committee, subject to the provisions of the Employee Stock
Purchase Plan, has the power to construe the Employee Stock Purchase Plan, to
determine all questions thereunder, and to adopt and amend such rules and
regulations for administration of the Employee Stock Purchase Plan as it may
deem appropriate. The Board may, from time to time, adopt amendments to the
Employee Stock Purchase Plan without the approval of the Company's
stockholders, so long as any amendment does not increase the total number of
shares to be offered under the Employee Stock Purchase Plan or provide for
participation by employees of any entity other than the Company or any
subsidiary of the Company. The Board may not adopt any amendment to the
Employee Stock Purchase Plan which would affect the Employee Stock Purchase
Plan's qualification under the Code or cause Rule 16b-3 to be inapplicable to
the Employee Stock Purchase Plan.
DESCRIPTION OF THE EMPLOYEE STOCK PURCHASE PLAN
The Employee Stock Purchase Plan is intended to provide an incentive to, and
to encourage stock ownership by, all eligible employees of the Company and
designated subsidiaries so that they may share in the growth of the Company by
acquiring or increasing their proprietary interest in the Company. The
Employee Stock Purchase Plan is designed to encourage eligible employees to
remain in the employ of the Company. Under the Employee Stock Purchase Plan,
eligible participating employees (each a "Participant") may authorize the
Company to deduct amounts from their base salary, which amounts are used to
purchase Common Stock through the exercise of stock options. No directors of
the Company will be eligible to participate in the Employee Stock Purchase
Plan unless they are also full-time salaried employees of the Company or one
of its designated subsidiaries.
The Employee Stock Purchase Plan provides that the Company may issue up to
1,000,000 shares of Common Stock pursuant to the exercise of non-transferable
options granted to Participants. The Common Stock subject to the options under
the Employee Stock Purchase Plan includes shares of the Company's authorized
but unissued Common Stock, or previously issued shares acquired by the Company
and held in its treasury. Option holders are generally protected against
dilution in the event of certain capital changes such as a recapitalization,
stock split, merger, reorganization, combination, liquidation, stock dividend
or similar transactions.
The Employee Stock Purchase Plan may be terminated at any time by the
Company's Board of Directors. Any such termination, however, will not affect
options then outstanding under the Employee Stock Purchase Plan. If at any
time shares of Common Stock reserved for issuance under the Employee Stock
Purchase Plan remain available for purchase but not in sufficient number to
satisfy all then unfilled purchase requirements, the available shares will be
apportioned among Participants pro rata, in as uniform a manner as shall be
practicable and as the Board shall determine to be equitable. Upon termination
of the Employee Stock Purchase Plan, all payroll deductions not used to
purchase Common Stock will be refunded to Participants without interest.
All employees are eligible to participate in the Employee Stock Purchase
Plan; provided, however, that the Plan Administration and Compensation
Committee may exclude from eligibility any employee (i) who has been employed
by the Company or its designated subsidiaries for less than two full years
prior to the first business
17
<PAGE>
day of an Offering Period (defined below), (ii) whose customary employment
with the Company or its designated subsidiaries is for (A) not more than five
months in any calendar year or (B) 20 hours or less per week, or (iii) meets
the criteria of Highly Compensated Employees (as defined in Section 414(q) of
the Code). Participants may not be granted an option under the Employee Stock
Purchase Plan if after the granting of the option such Participant would be
treated as owning 5% or more of the total combined voting power or value of
all classes of stock of the Company and its subsidiaries.
An eligible employee electing to participate in the Employee Stock Purchase
Plan must deliver to the Company, at least 30 business days before the
beginning date of the next succeeding Offering Period, a subscription
agreement authorizing an amount (a whole percentage not more than 10% of the
eligible employee's base compensation) to be deducted by the Company from the
Participant's salary and authorizing the purchase of shares of Common Stock
for the Participant in each Offering Period in accordance with the terms of
the Employee Stock Purchase Plan. Unless a Participant files a new
authorization or withdraws from the Employee Stock Purchase Plan, the
deductions and purchases under the authorization the Participant has on file
under the Employee Stock Purchase Plan will continue from the initial Offering
Period to succeeding Offering Periods as long as the Employee Stock Purchase
Plan remains in effect. Any election by a Participant to increase or decrease
the authorized deduction from compensation during an Offering Period, will
become effective in the next succeeding Offering Period, provided that the
Participant delivers to the Company a replacement subscription agreement at
least fifteen (15) business days prior to the end of the then current Offering
Period. A Participant may withdraw from the Employee Stock Purchase Plan, in
whole but not in part, at any time prior to the last business day of each
Offering Period by delivering a withdrawal notice to the Company, in which
event the Company will refund the entire balance of the Participant's
deductions not previously used to purchase Common Stock under the Employee
Stock Purchase Plan. In no event may any Participant have payroll deductions
made for any Offering Period which would result in aggregate deductions in
excess of $15,000 for the calendar year containing such Offering Period.
An "Offering Period" is a period of approximately three months commencing on
or after the first day of each calendar quarter that is a Trading Day and
terminating on or prior to the last day of each calendar quarter that is a
Trading Day. A "Trading Day" is any day on which national stock exchanges and
the Nasdaq National Market are open for trading.
On the first Trading Day of each Offering Period, the Company will grant to
each Participant an option to purchase shares of Common Stock of the Company.
On the last Trading Day of the Offering Period, the Participant will be deemed
to have exercised this option at the option price (as described below) to the
extent of such Participant's accumulated payroll deduction, on the condition
that the Participant remains eligible to participate in the Employee Stock
Purchase Plan throughout the Offering Period. Furthermore, no Participant may
be granted an option which permits the Participant to purchase shares of
Common Stock under the Employee Stock Purchase Plan, together with all other
employee stock purchase plans of the Company and any subsidiary corporations
which qualify under Section 423 of the Code, in an amount which exceeds
$25,000 based upon the fair market value of such stock (determined on the
respective date(s) of grant) for each calendar year in which the option is
outstanding. At the end of each Offering Period, any excess accumulation of
payroll deductions which equals or exceeds the option price in such Offering
Period will be promptly refunded to the Participant without interest. Under
the terms of the Employee Stock Purchase Plan, the option price is an amount
equal to the lesser of (i) 85% of the fair market value of the Common Stock on
the first business day of the Offering Period, or (ii) 85% of the fair market
value of the Common Stock on the last business day of the Offering Period;
provided, however, that the Plan Administration and Compensation Committee may
designate a higher option price in an amount which is not more than the
greater of (i) 100% of the fair market value of one share of Common Stock on
the first business day of the Offering Period, or (ii) 100% of the fair market
value of one share of Common Stock on the last business day of the Offering
Period. The Company will accumulate and hold for the Participant's account the
amounts deducted from such Participant's pay. No interest will be paid on
these amounts.
If a Participant is not a participant in the Employee Stock Purchase Plan on
the last day of the Offering Period, the Participant generally is not entitled
to exercise his option. A Participant's rights under the Employee
18
<PAGE>
Stock Purchase Plan generally terminate upon voluntary withdrawal from the
Employee Stock Purchase Plan at any time, or when such Participant's ceases
employment because of retirement, resignation, discharge (whether or not for
cause), death, change of status or any other reason.
A Participant's rights under the Employee Stock Purchase Plan are the
Participant's alone and may not be transferred to, assigned to, or availed of
by, any other person. Any option granted to a Participant may be exercised
during the Participant's lifetime and only by the Participant. A Participant
may designate a beneficiary who is to receive either (i) shares of Common
Stock and cash, if any, from the Participant's account under the Plan in the
event of the death of the Participant subsequent to the exercise of an option
but prior to the delivery of such shares or cash to the Participant, or (ii)
cash from the Participant's account in the event of the death of the
Participant prior to the exercise of an option. Participants who are deemed
"insiders" for purposes of Section 16 of the Exchange Act are required to
retain any shares acquired upon the exercise of any options under the Employee
Stock Purchase Plan for a six month period after the exercise thereof.
All payroll deductions held by the Company may be used for any corporate
purposes of the Company, and the Company will not be obligated to segregate
such payroll deductions unless the Plan Administration and Compensation
Committee, with respect to any Offering Period, specifically so provides.
Individual payroll deduction accounts will be maintained for each
Participant. Statements of payroll deduction account will be given to all
Participants at least annually, within such time as the Plan Administration
and Compensation Committee may reasonably determine, which statements will set
forth the purchase price, the number of shares purchased and the remaining
cash balance, if any, in such Participant's payroll deduction account.
Shares will not be issued with respect to any option granted under the
Employee Stock Purchase Plan unless the exercise of such option and the
issuance and delivery of shares of Common Stock pursuant thereto comply with
all applicable provisions of law, domestic or foreign, and the requirements of
any stock exchange upon which the Common Stock may then be listed, and will be
further subject to the approval of counsel for the Company with respect to
such compliance.
FEDERAL INCOME TAX CONSEQUENCES
The following general rules are currently applicable for United States
Federal income tax purposes to Participants who receive grants of options for
Common Stock and purchase shares of Common Stock pursuant to the Employee
Stock Purchase Plan:
1. The amounts deducted from a Participant's pay under the Employee Stock
Purchase Plan will be included in the Participant's compensation
subject to Federal income tax. Subject to certain requirements no
additional income will be recognized by the Participant either at the
time the options are granted pursuant to the Employee Stock Purchase
Plan or at the time the Participant purchases shares of Common Stock
pursuant to the Employee Stock Purchase Plan.
2. If the Participant disposes of shares of Common Stock more than two
years after the first business day of the Offering Period in which
the Participant acquired the shares, then upon such disposition the
Participant will recognize ordinary income in an amount equal to the
lesser of:
(a) the excess, if any, of the fair market value of the shares on the
date of disposition over the amount the employee paid for the shares,
or
(b) the excess of the fair market value of the shares on the first
business day of the Offering Period over the option price determined as
if the option was exercised on the first business day of the Offering
Period.
In addition, the Participant generally will recognize a capital gain or loss
in an amount equal to the difference between the amount realized upon the sale
of shares and the Participant's basis in the shares (i.e., the amount the
employee paid for the shares plus the amount, if any, taxed as ordinary
income). If the Participant's holding period for the shares exceeds one year,
such gain or loss will be a long-term capital gain or loss.
3. If the Participant disposes of shares of Common Stock within two
years after the first business day of the Offering Period in which
the Participant acquired the shares, then upon disposition the
Participant will recognize ordinary income in an amount equal to the
excess of the fair market value
19
<PAGE>
of the shares on the last business day of the applicable Offering
Period over the amount the Participant paid for the shares.
In addition, the Participant generally will recognize a capital gain or loss
in an amount equal to the difference between the amount realized upon the sale
of the shares and the Participant's basis in the shares (i.e., the amount the
Participant paid for the shares plus the amount, if any, taxed to the
Participant as ordinary income). If the Participant's holding period for the
shares is more than one year, such gain or loss will be a long-term capital
gain or loss.
4. If the two-year holding period is satisfied, the Company will not
receive any deduction for Federal income tax purposes with respect to
the options or the shares of Common Stock issued upon their exercise.
If the two-year holding period is not satisfied, the Company generally
will be entitled to a deduction in an amount equal to the amount which
is considered ordinary income to the Participant, subject to general
limitations on the deductibility of compensation.
The approval of the Employee Stock Purchase Plan requires the affirmative
vote of a majority of the outstanding shares of Common Stock of the Company
represented in person or by proxy at the Annual Meeting and entitled to vote.
The Employee Stock Purchase Plan is being submitted for stockholder approval in
order to comply with the conditions of Rule 16b-3 as well as the requirements
of Section 423 of the Code.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE
"FOR" APPROVAL OF THE EMPLOYEE STOCK PURCHASE PLAN.
CONFIRMATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Company has selected Ernst & Young LLP as independent auditors 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 31, 1998.
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 INDEPENDENT
AUDITORS FOR THE FISCAL YEAR ENDING MARCH 31, 1999.
STOCKHOLDER PROPOSALS AND NOMINATIONS
Proposals of stockholders intended to be presented at the 1999 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 17, 1999. 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 applicable federal securities laws for inclusion in the Company's proxy
materials.
DISCRETIONARY AUTHORITY
It is not intended to bring before the Annual Meeting any matters except (i)
the election of three Class II Directors, (ii) the adoption of the Employee
Stock Purchase Plan and (iii) the confirmation of the appointment of Ernst &
Young LLP as independent auditors. 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 19, 1998
20
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LOGO
--------
COINMACH
--------
Keep America Clean
One Laundry Room At A Time
<PAGE>
COINMACH LAUNDRY CORPORATION
CLASS A COMMON STOCK
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE 1998 ANNUAL MEETING OF STOCKHOLDERS - July 28, 1998
The undersigned hereby appoints Stephen R. Kerrigan and Robert M. Doyle,
or any one or more of them, each with full power of substitution, the proxy or
proxies for and in the name of the undersigned, to vote the shares of Class A
Common Stock, par value $.01 per share, of Coinmach Laundry Corporation, a
Delaware corporation (the "Corporation"), that the undersigned would be entitled
to vote if personally present at the 1998 Annual Meeting of Stockholders of the
Corporation to be held at The Park Hotel, 2200 Rexford Road, Charlotte, North
Carolina, on Tuesday, July 28, 1998 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 ANY SUCH SPECIFICATION, THE PROXY WILL
BE VOTED "FOR" THE ELECTION OF DIRECTORS, "FOR" APPROVAL OF THE ADOPTION OF THE
1998 EMPLOYEE STOCK PURCHASE 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, NY 10203-0415
<PAGE>
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The Board of Directors of COINMACH LAUNDRY CORPORATION recommends a vote FOR
Proposals 1, 2 and 3.
<S> <C> <C> <C>
1. Election of Directors: FOR all nominees WITHHOLD AUTHORITY to vote FOR all nominees except
listed below [ ] for all nominees listed below [ ] as noted below [ ]
Nominees: Dr. Arthur B. Laffer, Stephen G. Cerri and James N. Chapman
INSTRUCTIONS: To withhold authority to vote for any nominee, mark the "FOR all nominees except as listed below"
box and write the name/s of that/those nominee/s in space provided below.)
Exception/s: ______________________________________________ In his discretion, either of the Proxies is authorized
to vote and otherwise represent the shares upon such
2. Approval of the adoption of the 1998 Employee other business as may properly come before the meeting or
Stock Purchase Plan any adjournment(s) or postponement(s) thereof.
FOR [ ] AGAINST [ ] ABSTAIN [ ] [ ] Mark here if you plan to attend the meeting.
3. Ratification of appointment of Ernst & Young LLP Change of address and/or
as the Corporation's independent auditors for the Comments Mark Here [ ]
the year ending March 31, 1999
FOR [ ] AGAINST [ ] ABSTAIN [ ]
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:___________________________________________, 1998
_________________________________________________
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.)
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