EXHIBIT 27
EXECUTIVE STOCK AGREEMENT
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THIS AGREEMENT is made as of January 31, 1995, between The
Coinmach Corporation, a Delaware corporation (the "Company"), ▇▇▇▇▇▇▇
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Prato ("Executive") and Golder, Thoma, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ Fund IV, L.P.
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("GTCR").
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The Company and Executive desire to enter into an agreement
pursuant to which Executive will purchase, and the Company will issue,
750 shares of the Company's Class B Common Stock, par value $0.01 per
share (the "Class B Common Stock"). Certain definitions are set forth
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in paragraph 8 of this Agreement.
Simultaneously with the execution of this Agreement, ▇▇▇▇▇
▇▇▇▇▇▇ ("Tulkop") and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇") are each entering
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into executive stock agreements (the "Other Executive Stock
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Agreements") substantially similar to this Agreement pursuant to which
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Tulkop and ▇▇▇▇▇▇▇▇ will acquire shares of the Company's Class B
Common Stock, and each of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇"), ▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ("▇▇▇▇▇") and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ("▇▇▇▇▇", and together with
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Kerrigan, Blatt, Executive, Tulkop and ▇▇▇▇▇▇▇▇, "Management" and
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individually, a "Manager") are entering into a senior management
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agreement (the "Senior Management Agreements") pursuant to which
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▇▇▇▇▇▇▇▇, ▇▇▇▇▇ and ▇▇▇▇▇ will acquire shares of the Company's Class B
Common Stock.
The execution and delivery of this Agreement by the Company
and Executive is a condition to the purchase of 72,516 shares of the
Company's Class A Common Stock, par value $0.01 per share (the "Class
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A Common Stock"), by GTCR pursuant to a purchase agreement dated as of
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the date hereof (the "Purchase Agreement"). The Class A Common Stock
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and Class B Common Stock are hereinafter collectively referred to as
the "Common Stock". Certain provisions of this Agreement are intended
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for the benefit of, and will be enforceable by, GTCR.
The parties hereto agree as follows:
PART I: PROVISIONS RELATING TO EXECUTIVE STOCK
1. Authorization of the Common Stock. The Company shall
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authorize the issuance to Executive of 750 shares of Class B Common
Stock having the rights set forth in Exhibit A attached hereto.
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2. Acquisition of Stock.
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(a) Purchase and Sale of Executive Stock. Upon execution of
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this Agreement, Executive will purchase, and the Company will sell,
750 shares of Class B Common Stock at a price of $29.167 per share.
The Company will deliver to Executive the certificate representing
such Common Stock, and Executive will deliver to the Company a check
or wire transfer of funds in the aggregate amount of $4,375.05, and a
promissory note in the form of Exhibit B attached hereto in the
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aggregate amount of $17,500.20 (the "Executive Note"). Executive's
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obligations under the Executive Note will be secured by a pledge of
all of the shares of Executive Stock to the Company and in connection
therewith Executive shall enter into a pledge agreement in the form
of Exhibit C attached hereto.
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(b) Section 83(b) Election. Within 30 days after Executive
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purchases any Executive Stock, Executive will make an effective
election with the Internal Revenue Service under Section 83(b) of the
Internal Revenue Code of 1986, as amended, and the regulations
promulgated thereunder, in the form of Exhibit D attached hereto.
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(c) Executive's Representations and Warranties. In
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connection with the issuance of the Executive Stock hereunder,
Executive represents and warrants to the Company that, in each case,
as of the Closing:
(i) The Class B Common Stock to be acquired by Executive
pursuant to this Agreement will be acquired for Executive's own
account and not with a view to, or intention of, distribution
thereof in violation of the Securities Act, or any applicable
state securities laws, and such Class B Common Stock will not be
disposed of in contravention of the Securities Act or any
applicable state securities laws.
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(ii) Executive has been an executive of Super Laundry
Equipment Co., L.P., a New York limited partnership ("Super
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Laundry") which is one of the partnerships to be acquired by the
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Company and its Subsidiaries on the date hereof, and Executive is
now an executive of Super Laundry, is sophisticated in financial
matters and is able to evaluate the risks and benefits of the
investment in such Class B Common Stock.
(iii) Executive is able to bear the economic risk of his
investment in such Class B Common Stock for an indefinite period
of time, and Executive acknowledges that such Class B Common
Stock has not been registered under the Securities Act and,
therefore, cannot be sold unless subsequently registered under
the Securities Act or an exemption from such registration is
available.
(iv) Executive has had an opportunity to ask questions and
receive answers concerning the terms and conditions of the
offering of such Class B Common Stock and has had full access to
such other information concerning the Company as he has requested.
(v) This Agreement, the Stockholders Agreement and the
Registration Agreement constitute legal, valid and binding
obligations of Executive, enforceable in accordance with their
terms, and the execution, delivery and performance of this
Agreement, the Other Executive Stock Agreements, the Stockholders
Agreement and the Registration Agreement by Executive does not
and will not conflict with, violate or cause a breach of any
agreement, contract or instrument to which Executive is a party
or any law, rule, regulation, judgment, order or decree to which
Executive is subject.
3. Representations and Warranties of the Company. In
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connection with the issuance of the Executive Stock hereunder, the
Company represents to Executive that, in each case, as of the Closing:
(a) Organization and Corporate Power. The Company is a
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corporation duly organized, validly existing and in good standing
under the laws of Delaware. The Company has all requisite corporate
power and authority to carry out the transactions contem-
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plated by this Agreement, the Stockholders Agreement and the Registration
Agreement (the "Investment Agreements"). The copies of the Company's
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Certificate of Incorporation and Bylaws which have been furnished to
Executive's counsel reflect all amendments made thereto at any time prior
to the date of this Agreement and are correct and complete.
(b) Capital Stock and Related Matters.
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(i) As of the Closing and immediately thereafter, the
authorized capital stock of the Company shall consist of 10,000 shares
which will be designated as Preferred Stock and 108,150 shares of Common
Stock, of which 77,350 shares shall be designated as Class A Common
Stock, 15,500 shares shall be designated Class B Common Stock, 7650
shares shall be designated as Class C Common Stock and 7650 shares shall
be designated as Class D Common Stock. As of the Closing, the Company
shall not have outstanding any stock or securities convertible or
exchangeable for any shares of its capital stock or containing any profit
participation features, nor shall it have outstanding any rights or
options to subscribe for or to purchase its capital stock or any stock or
securities convertible into or exchangeable for its capital stock or any
stock appreciation rights or phantom stock plans other than pursuant to
and as contemplated by this Agreement, the Senior Management Agreements,
the Other Executive Stock Agreements, the Purchase Agreement, the
Stockholders Agreement and the Company's Articles of Incorporation. As of
the Closing, the Company shall not be subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire
any shares of its capital stock or any warrants, options or other rights
to acquire its capital stock, except pursuant to this Agreement, the
Senior Management Agreements, the Other Executive Stock Agreements, the
Purchase Agreement and the Stockholders Agreement. As of the Closing, all
of the outstanding shares of the Company's capital stock shall be validly
issued, fully paid and nonassessable.
(ii) There are no statutory or contractual stockholders
preemptive rights or rights of refusal with respect to the issuance of
the Common Stock hereunder, except as provided herein and in the
Stockholders Agreement. The Company has not violated any applicable
federal or state securities laws in connection with the offer, sale or
issuance of any of its capital stock, and the offer, sale and issuance of
the Common Stock pursuant to this
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Agreement do not and will not require registration under the
Securities Act.
(c) Conduct of Business; Liabilities. Other than in the
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course of the negotiation, execution and delivery of this Agreement,
the Senior Management Agreements, the Other Executive Stock
Agreements, the Purchase Agreement and the other agreements
contemplated hereby and thereby, prior to the Closing, the Company has
not (i) conducted any business, (ii) incurred any expenses,
obligations or liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise, whether or not known to the Company and
whether due or to become due and regardless of when asserted), (iii)
owned any assets, or (iv) entered into any contracts or agreements.
4. Vesting of Executive Stock.
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(a) Except as otherwise provided in paragraph 4(b) below,
20% of the Executive Stock will be deemed "Vested Shares" as of the
date of Closing and the remainder of the Executive Stock will become
vested in accordance with the following schedule, if as of each such
date Executive is still employed by the Company or any
of its Subsidiaries:
Cumulative
Anniversary of Percentage of Executive
the Date of Closing Stock Vested
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1st 40
2nd 60
3rd 80
4th 100
Any shares of Executive Stock which do not become Vested Shares
under the foregoing provisions will remain "Unvested Shares."
(b) If Executive ceases to be employed by the Company
and its Subsidiaries on any date other than any anniversary date,
the cumulative percentage of Executive Stock to become vested will
be determined on a pro-rata basis according to the number of days
elapsed since the prior anniversary date. Immediately prior to the
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closing of (i) any sale of the Company's equity securities which results in any
person, or group of related persons not affiliated with GTCR, owning equity
securities of the Company possessing the power to elect (without reference to
any special or default voting rights) a majority of the members of the Board or
(ii) a sale of all or substantially all of the Company's assets, all Unvested
Shares will become Vested Shares.
5. Repurchase Option.
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(a) In the event Executive violates Paragraph 10(a) of this Agreement
(a "Noncompete Breach"), or in the event Executive's employment by the Company
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and its Subsidiaries terminates for any reason (a "Termination"), the Executive
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Call Stock (whether held by Executive or one or more of Executive's transferees,
other than the Company or GTCR) will be subject to repurchase by the Company
first, Management second and GTCR third pursuant to the terms and conditions set
forth in this paragraph 5 (the "Repurchase Option").
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(b) If the Repurchase Option becomes exercisable because of a
Noncompete Breach or a Termination resulting from the Company's termination of
Executive's employment for Cause, then, the purchase price for each share of
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Executive Call Stock will be the lower of (a) Executive's Original Cost for such
share or (b) the Fair Market Value of such share. If Executive's employment
terminates other than as described in the preceding sentence, the purchase price
for each (i) Unvested Share shall be Executive's Original Cost for such share,
and (ii) Vested Share shall be the Fair Market Value of such share as of the
date of the related Repurchase Notice or Investor Notice (as hereinafter
defined), as the case may be.
(c) The Company may, at the option of the Board, elect to purchase all
or any portion of the Executive Call Stock from time to time by delivering
written notice (the "Repurchase Notice") to Management, GTCR and the holder or
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holders of such Executive Call Stock from time to time during the 270 days after
the Noncompete Breach or Termination, as the case may be. The Repurchase Notice
will set forth the number of shares of Executive Call Stock, including the
number of Unvested Shares and Vested Shares, to be acquired from the recipient
holder, the aggregate consideration to be paid for such shares and the time and
place for the closing of the transaction.
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(d) If for any reason the Company has not elected to
purchase all of the Executive Call Stock pursuant to the Repurchase
Option, Management shall be entitled to exercise the Repurchase Option
for any or all of the shares of Executive Call Stock, including the
Unvested Shares and the Vested Shares, the Company has not yet elected
to purchase (the "Available Shares"), by giving written notice to the
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Company and the holder(s) of the Available Shares to be repurchased
during the 30 days after the date of delivery to Management of the
Repurchase Notice (the "Management Notice") setting forth the number
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of Available Shares each Manager is willing to purchase. If the
Managers elect to purchase an aggregate number of shares greater than
the number of Available Shares, the Available Shares shall be
allocated among the Managers pro rata based on the number of shares of
Common Stock owned by each Manager. As soon as practicable, and in any
event, within 10 days after the expiration of the 30-day period set
forth above, the Company shall notify the holder(s) of the Available
Shares and GTCR as to the number of shares being purchased from such
holder(s) by Management (the "Supplemental Repurchase Notice"). At the
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time the Company delivers the Supplemental Repurchase Notice to the
holder(s) of the Available Shares, the Company shall also deliver
written notice to each Manager and GTCR setting forth the number of
shares such Manager is entitled to purchase, the aggregate purchase
price and the time and place of the closing of the transaction and, in
the notice to GTCR, a statement of the number, type and purchase price
of Available Shares available for purchase by GTCR.
(e) If for any reason Management has not elected to purchase
any or all of the Available Shares pursuant to paragraph 5(d) above,
GTCR may elect to purchase any or all of the Available Shares not
purchased by Management by giving written notice to the holder(s) of
the Available Shares to be repurchased within 30 days after the date
of delivery to GTCR of the Supplemental Repurchase Notice (the
"Investor Repurchase Notice") setting forth the number of Available
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Shares GTCR is willing to purchase.
(f) Each closing of the purchase of the Executive Call Stock
pursuant to the Repurchase Option shall take place on the date
designated by the Company, Management or GTCR in the related
Repurchase Notice, Supplemental Repurchase Notice, or Investor
Repurchase Notice, as the case may be, but in any event not later than
365 days after the date of the Noncompete Breach or Termination. At
such closing, Executive shall deliver to the
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Company, Management and/or GTCR certificates representing the
Executive Stock to be repurchased by the Company, Management and/or
GTCR and the Company, Management and/or GTCR, as the case may be, will
pay for the Executive Call Stock to be purchased pursuant to the
Repurchase Option in the following manner:
(i) In the event that no Event of Default has occurred and
is continuing on the date of the Noncompete Breach or
Termination, payment for the Executive Call Stock to be purchased
shall be made by delivery to Executive of a cashier's or
certified check or wire transfer of funds in the amount of one-
half of the purchase price of the Executive Call Stock on the
date of the closing of the Repurchase Option. Payment for the
remaining one-half of the purchase price shall be made by
delivery of a promissory note of the purchaser, with an aggregate
principal amount equal to one-half of the purchase price of the
Executive Stock to be repurchased, payable in one lump sum
payment on the second anniversary of the date of issuance and
bearing interest at the rate of 8% per annum.
(ii) In the event that an Event of Default has occurred and
is continuing on the date of the Noncompete Breach or
Termination, payment for the Executive Call Stock to be purchased
shall be made by delivery of a promissory note of the purchaser,
with an aggregate principal amount equal to the total purchase
price of the Executive Call Stock to be repurchased, payable in
one lump sum payment on the fifth anniversary of the date of
issuance and bearing interest at the rate of 8% per annum
Any such note issued by the Company pursuant to subparagraphs (i) and
(ii) above shall be junior and subordinated in right of payment to all
indebtedness of the Company (for borrowed money or otherwise). In
addition, the Company may pay the total purchase price for such shares
by offsetting amounts outstanding under any bona fide debts owed by
Executive to the Company. The Company, Management and GTCR will be
entitled to receive customary representations and warranties from the
sellers regarding such sale and to require that all sellers'
signatures be guaranteed.
(g) If within six months following the repurchase of
Executive Call Stock pursuant to paragraph 5(f) above, (i) a Sale
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of the Company or a Public Offering of the Company's Common Stock
registered under the Securities Act occurs and (ii) the valuation of a
share of Common Stock for such transaction (based upon the purchase
price or liquidation proceeds per share of Common Stock or the Public
Offering price per share of Common Stock, but reduced by any
preferential amounts available to any of the classes of Common Stock)
exceeds the amounts per share received by the holder(s) of Executive
Call Stock upon the repurchase of Vested Shares, then such holder(s)
of Executive Call Stock shall be entitled to receive from the Company
the benefit of such higher valuation for the Vested Shares of
Executive Call Stock sold under the Repurchase Option. The excess of
(x) the amount which the holder(s) of Executive Call Stock would have
received in such Sale of the Company or Public Offering assuming the
sale of their Vested Shares of Executive Call Stock purchased by
exercise of the Repurchase Option in connection with such transaction,
over (y) the purchase price of the Vested Shares of Executive Call
Stock paid to Executive under the Repurchase Option, shall be paid by
certified check or cashier's check or wire transfer of funds to each
such holder upon consummation of any such transaction. For purposes of
this paragraph 5(g), "Sale" means the sale of all or substantially all
of the assets of the Company or a sale of the Company's equity
securities which results in any person, or group of related persons,
owning equity securities of the Company possessing the power to elect
(without reference to any special or default voting rights) a majority
of the members of the Board, including any such sale accomplished by
merger or consolidation.
6. Restrictions on Transfer.
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(a) Transfer of Executive Stock. On or prior to the
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Restriction Lapse Date, Executive shall not transfer any interest in
any shares of Executive Stock (a "Transfer"), except pursuant to the
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provisions of paragraph 5 or 6(e) of this Agreement. After the
Restriction Lapse date, Executive shall not Transfer any interest in
any shares of Executive stock except (i) pursuant to the provisions of
paragraph 5 or 6(e) of this Agreement, (ii) in a Public Sale or (iii)
pursuant to the provisions of paragraphs 6(b), 6(c) and 6(d) of this
Agreement. Prior to effecting any Transfer of Executive Stock (other
than to the Company, Management or GTCR), Executive shall obtain from
each transferee their written agreement to be bound by the provisions
of paragraph 6 of this Agreement for the benefit of the Company,
Management and GTCR.
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(b) Sale Notice After the Restriction Lapse Date,
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prior to making any Transfer, Executive will give written notice
(the "Sale Notice") to the company, each manager and GTCR. The
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Sale Notice will disclose in reasonable detail the number of shares
to be transferred and the terms and conditions of the proposed
Transfer and, if known, the identity of the prospective
transferee(s). Executive will not consummate any such Transfer
until 90 days after the Sale Notice has been given to the Company,
Management and GTCR, unless the parties to the Transfer have been
fully determined pursuant to this paragraph 6(b) and paragraphs
6(c) and 6(d) prior to the expiration of such 90-day period. (The
date of the first to occur of such events is referred to herein as
the "Authorization Date.")
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(c) First Refusal Rights. The Company may elect to
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purchase all (but not less than all) of the shares of Executive
Stock to be transferred upon the same terms and conditions as those
set forth in the Sale Notice by delivering a written notice of such
election to Executive, each Manager and GTCR within 30 days after
the Sale Notice has been given to the Company. If the Company has
not elected to purchase all of the Executive Stock to be
transferred, Management may elect to purchase all (but not less
than all) of the Executive Stock to be transferred upon the same
terms and conditions as those set forth in the Sale Notice by
giving written notice of such election to Executive, the Company
and GTCR within 60 days after the Sale Notice has been given to
Management. Management's rights hereunder shall be allocated among
the Managers pro rata based on the number of shares of Common Stock
owned by each Manager. If the Company and Management have not
elected to purchase all of the Executive Stock to be transferred,
GTCR may elect to purchase all (but not less than all) of the
Executive Stock to be transferred upon the same terms and
conditions as those set forth in the Sale Notice by giving written
notice of such election to Executive, the Company and each Manager
within 90 days after the Sale Notice has been given to GTCR. If,
the Company, Management or GTCR do not elect to purchase all of the
shares of Executive Stock specified in the Sale Notice, Executive
may transfer the shares of Executive Stock specified in the Sale
Notice at a price and on terms no more favorable to the
transferee(s) thereof than specified in the Sale Notice during the
30-day period immediately following the Authorization Date. Any
shares of Executive Stock not transferred within such 30-day period
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will be subject to the provisions of this paragraph 6(c) upon subsequent
transfer.
(d) Co-Sale Rights.
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(i) GTCR may elect to participate in the contemplated Transfer
by delivering written notice to Executive within 90 days after
delivery of the Sale Notice to GTCR. If GTCR has elected to
participate in such Transfer, Executive and GTCR shall be entitled
to sell in the contemplated Transfer, on the same terms and at the
price calculated pursuant to subparagraph 6(d)(ii) below, a number
of shares equal to the product of (x) the quotient determined by
dividing the number of shares of Common Stock owned by such person
by the aggregate number of shares of Common Stock owned by Executive
and GTCR and (y) the number of shares to be sold in the contemplated
Transfer.
For example, if the Sale Notice contemplated a sale of 100 shares by
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Executive, and if Executive was at such time the owner of 30% of the
Company's Common Stock (on a fully-diluted basis) and if GTCR elected
to participate and GTCR owned 20% of the Company's Common Stock (on a
fully-diluted basis), Executive would be entitled to sell 60 shares
(30% / 50% x 100 shares) and GTCR would be entitled to sell 40 shares
(20% / 50% x 100 shares).
Executive will use his best efforts to obtain the agreement of the
prospective transferee(s) to the participation of GTCR in the
contemplated transfer and will not transfer any Executive Stock to
the prospective transferee(s) if such transferee(s) refuses to allow
the participation of GTCR.
(ii) The purchase price to be paid by any transferee for shares
of Class B Common and Class A Common transferred in accordance with
this paragraph 6(d) shall be determined as follows: (i) the price
per share to be paid for Class B Common included in such Transfer
shall be equal to the amount per share of Class B Common which such
transferee has agreed to pay to Executive and (ii) the price per
share to be paid for Class A Common included in such Transfer shall
be the price per share described in clause (i) plus the quotient
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(the "Per Share Preference") of (A) the sum of the Unreturned
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Preferred
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Amount and the Unpaid Yield of the Class A Common at such time divided by
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(B) the number of shares of Class A Common then outstanding.
(e) Permitted Transfers. The restrictions contained in this paragraph
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6 shall not apply with respect to any Transfer of Executive Stock pursuant to
applicable laws of descent and distribution or among such Executive and such
Executive's Family Members; provided that such restrictions will continue to be
applicable to the Executive Stock after any such transfer and the transferees of
such Executive Stock have agreed in writing to be bound by the provisions of
this Agreement.
(f) Pledges. Notwithstanding the provisions of this paragraph 6,
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Executive may pledge any shares of Executive Stock to the Company to secure
payment of the Executive Note.
7. Additional Restrictions on Transfer of Executive Stock.
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(a) Legend. The certificates representing the Executive Stock will
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bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE
ORIGINALLY ISSUED AS OF JANUARY 31, 1995, HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN
EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO
ADDITIONAL RESTRICTIONS ON TRANSFER, CERTAIN REPURCHASE
OPTIONS AND CERTAIN OTHER AGREEMENTS SET FORTH IN AN
EXECUTIVE STOCK AGREEMENT BETWEEN THE COMPANY, AN EXECUTIVE
OF THE COMPANY, AND A CERTAIN INVESTOR, DATED AS OF JANUARY
31, 1995. A COPY OF SUCH AGREEMENT MAY BE OBTAINED BY THE
HOLDER HEREOF AT THE ISSUER'S PRINCIPAL PLACE OF BUSINESS
WITHOUT CHARGE."
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(b) Opinion of Counsel. No holder of Executive Stock may sell,
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transfer or dispose of any Executive Stock (except pursuant to an
effective registration statement under the Securities Act) without first
delivering to the Company an opinion of counsel (reasonably acceptable in
form and substance to the Company) that (i) neither registration nor
qualification under the Securities Act and applicable state securities
laws is required in connection with such transfer or (ii) all such
applicable registration and qualification requirements have been
satisfied.
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PART II: GENERAL PROVISIONS
8. Definitions.
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"Acquisition Agreement" means the agreement by and among the
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Company, CIC, the stockholders of CIC and the Subsidiary, dated as of
January 31, 1995.
"Cause" means (i) a material breach of any agreement with the
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Company, its Subsidiaries or its stockholders by Executive (after notice
and reasonable opportunity to cure), (ii) a breach of Executive's duty of
loyalty to the Company or any of its Subsidiaries or any act of
dishonesty, gross negligence, willful misconduct or fraud with respect to
the Company or any of its Subsidiaries or any of their stockholders,
customers or suppliers, (iii) the commission by Executive of a felony, a
crime involving moral turpitude or other act or omission tending to cause
harm to the standing and reputation of, or otherwise bring public
disgrace or disrepute to, the Company or any of its Subsidiaries, (iv)
Executive's continued failure or refusal to perform any material duty to
the Company or any of its Subsidiaries which is normally attached to his
position (after notice and reasonable opportunity to cure) or (v)
Executive's gross negligence or willful misconduct in performing those
duties which are normally attached to his position (after notice and
reasonable opportunity to cure). For purposes of this Agreement,
"Executive's duty of loyalty to the Company or any of its Subsidiaries"
shall include the Executive's fiduciary obligation to place the interests
of the Company and its Subsidiaries ahead of his personal interests and
thereby not knowingly profit personally at the expense of the Company or
any of its Subsidiaries, and shall also include specifically the
affirmative obligation to disclose promptly to the Board any known
conflicts of interest Executive may have with respect to the Company and
its Subsidiaries, and the negative obligations not to usurp corporate
opportunities of the Company or any of its Subsidiaries, not to engage in
any "conflict-of-interest" transactions with the Company or its
Subsidiaries (without the approval of the board directors), and not to
compete directly with the Company or its Subsidiaries (without the
approval of the Board).
"Event of Default" means Event of Default as defined in the
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Credit Agreement, dated as of the date hereof, among Coinmach
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Industries Co., Super Laundry Equipment Co., L.P., ▇▇▇▇▇▇ Financial, Inc.,
▇▇▇▇▇▇▇ National Life Insurance Company and ▇▇▇▇▇▇▇ National Life Insurance
Company of Michigan and any similar term in any replacement for, refinancing of,
or modification or amendment to, such Credit Agreement.
"Executive Call Stock" means at any time (i) all equity securities of
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the Company then held by Executive or a Family Member, (ii) all equity
securities of the Company which at any time have been held by Executive (whether
or not then held by Executive), and (iii) all equity securities of the Company
issued or issuable directly or indirectly with respect to any equity securities
described in clause (i) or (ii) above in connection with a combination of
shares, dividend, recapitalization, merger, consolidation, reorganization or
otherwise; provided that any equity securities which had been Executive Call
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Stock and which have been transferred in accordance with the terms of this
Agreement will not be Executive Call Stock at any subsequent time unless held at
the time of determination by Executive or a Family Member.
"Executive Stock" means the shares of the Company's Class B Common
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Stock purchased hereunder.
"Fair Market Value" of each share of Common Stock constituting
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Executive Stock at the time of valuation means Fair Market Value as defined in
the Stockholders Agreement, except that Operating Cash Flow will be determined
based upon the twelve (12) month period ending on the fiscal quarter end
immediately preceding the date of Termination or of the Noncompete Breach, as
the case may be.
"Family Members" means Executive's spouse and/or lineal descendants, a
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trust for the sole benefit of Executive and/or Executive's spouse or lineal
descendants or upon Executive's death, Executive's estate.
"IRC" means the Internal Revenue Code of 1986, as amended, and any
---
reference to any particular IRC section shall be interpreted to include any
revision of or successor to that section regardless of how numbered or
classified.
- 15 -
"Original Cost" of each share of Class B Common Stock
-------------
purchased hereunder will be equal to $29.167 (as proportionately
adjusted for all subsequent stock splits, stock dividends and other
recapitalizations).
"Public Offering" means the sale in an underwritten public
---------------
offering registered under the Securities Act (other than on Form S-8
or a similar or successor form) of shares of the Company's Common
Stock approved by the Board.
"Public Sale" means any sale pursuant to a registered Public
-----------
Offering under the Securities Act or any sale to the public pursuant
to Rule 144 promulgated under the Securities Act effected through a
broker, dealer or market maker.
"Registration Agreement" means the Registration Agreement
----------------------
dated as of the date hereof among the Company, the Investors (as
defined in that Agreement) and Executive.
"Restriction Lapse Date" means the earlier of (i) the fifth
----------------------
anniversary of the date of this Agreement and (ii) the date of the
closing of any Public Offering.
"Securities Act" means the Securities Act of 1933, as
--------------
amended from time to time.
"Securities Exchange Act" means the Securities Exchange Act
-----------------------
of 1934, as amended from time to time.
"Stockholders Agreement" means the Stockholders Agreement
-----------------------
dated as of the date hereof among the Company, the Investors (as
defined in that Agreement) and Executive.
"Subsidiary" means, with respect to any Person, any
----------
corporation, partnership, association or other business entity of
which (i) if a corporation, a majority of the total voting power of
shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of
that Person or a combination thereof, or (ii) if a partnership,
association or other business entity, a majority of the partnership or
other similar ownership interest thereof is at the time owned or
- 16 -
controlled, directly or indirectly, by any Person or one or more Subsidiaries of
that Person or a combination thereof. For purposes hereof, a Person or Persons
shall be deemed to have a majority ownership interest in a partnership,
association or other business entity if such Person or Persons shall be
allocated a majority of partnership, association or other business entity gains
or losses or shall be or control the managing director or general partner of
such partnership, association or other business entity.
"Transfer" means to sell, transfer, assign, pledge or otherwise
--------
dispose of (whether with or without consideration and whether voluntarily or
involuntarily or by operation of law).
"Unreturned Preferred Amount" means the "Unreturned Preferred Amount"
---------------------------
as defined in the Company's Certificate of Incorporation.
"Unpaid Yield" means the "Unpaid Yield" as defined in the Company's
------------
Certificate of Incorporation.
9. Notices. Any notice provided for in this Agreement must be in
-------
writing and must be either personally delivered, mailed by first class mail
(postage prepaid and return receipt requested) or sent by reputable overnight
courier service (charges prepaid) to each person at the address set forth below:
If to the Company:
-----------------
The Coinmach Corporation
▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: President
With a copy (which will constitute notice to the Company) to:
------------------------------------------------------------
▇▇▇▇▇▇▇▇ Kill ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
- 17 -
If to the Executive:
-------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇
c/o The Coinmach Corporation
▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
With a copy (which will not constitute notice to Executive) to:
--------------------------------------------------------------
▇▇▇▇▇▇▇▇ Kill ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
If to GTCR:
----------
Golder, Thoma, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ Fund IV, L.P.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
with a copy (which will not constitute notice to GTCR) to:
---------------------------------------------------------
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
or such other address or to the attention of such other person as
the recipient party shall have specified by prior written notice to
the sending party. Any notice under this Agreement will be deemed
to have been given when so delivered or sent or, if mailed, five
days after deposit in the U.S. mail.
10. General Provisions.
------------------
(a) Transfers in Violation of Agreement. Any Transfer
------------------------------------
or attempted Transfer of any Executive Stock in violation of any
provision of this Agreement shall be void, and the Company shall
not record such Transfer on its books or treat any purported
- 18 -
transferee of such Executive Stock as the owner of such stock for any
purpose.
(b) Severability. Whenever possible, each provision of this
------------
Agreement will be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement is
held to be invalid, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability will not affect any other provision or
any other jurisdiction, but this agreement will be reformed, construed
and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision had never been contained herein.
(c) Complete Agreement. This Agreement, those documents
-------------------
expressly referred to herein and other documents of even date herewith
(i) embody the complete agreement and understanding among the parties
and (ii) supersede and preempt any prior summaries of terms and
conditions, understandings, agreements or representations by or among
the parties, written or oral, which may have related to the subject
matter hereof in any way.
(d) Counterparts. This Agreement may be executed in separate
------------
counterparts, each of which is deemed to be an original and all of
which taken together constitute one and the same agreement.
(e) Successors and Assigns. Except as otherwise provided
----------------------
herein, this Agreement shall bind Executive and the Company and their
respective successors and permitted assigns and inure to the benefit
of and be enforceable by Executive, the Company, GTCR and their
respective successors and permitted assigns (including in each case
subsequent holders of Executive Stock); provided that Executive may
--------
not assign any of his rights under any other provision of Part I of
this Agreement except as part of a Transfer of Executive Stock in
accordance with paragraphs 5 or 6.
(f) Choice of Law. The corporate law of the State of
-------------
Delaware will govern all questions concerning the relative rights of
the Company and its stockholders. All other questions concerning the
construction, validity and interpretation of this Agreement and the
exhibits hereto will be governed by and construed in accordance with
the internal laws of the State of Illinois,
- 19 -
without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Illinois or any other
jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Illinois.
(g) Remedies. Each of the parties to this Agreement will be
--------
entitled to enforce its rights under this Agreement specifically, to
recover damages and costs (including attorney's fees) caused by any
breach of any provision of this Agreement and to exercise all other
rights existing in its favor. The parties hereto agree and acknowledge
that money damages may not be an adequate remedy for any breach of the
provisions of this Agreement and, except as otherwise provided in
paragraph 10(d), that any party may in its sole discretion apply to
any court of law or equity of competent jurisdiction (without posting
any bond or deposit) for specific performance and/or other injunctive
relief in order to enforce or prevent any violations of the provisions
of this Agreement.
(h) Amendment and Waiver. Except as otherwise expressly
--------------------
provided herein, the provisions of this Agreement may be amended or
modified only by written agreement of the Company, Executive and GTCR.
No other course of dealing between the parties or third-party
beneficiaries hereof or any delay in exercising any rights hereunder
shall operate as a waiver of any rights of any such holders.
(i) Survival of Representations and Warranties. All
------------------------------------------
representations and warranties contained herein or made in writing by
any party in connection herewith shall survive the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby, regardless of any investigation made by Executive
or on his behalf or by the Company or on its behalf.
(j) Business Days. If any time period for giving notice or
-------------
taking action hereunder expires on a day which is a Saturday, Sunday
or holiday in the state in which the Company's chief executive office
is located, the time period shall be automatically extended to the
business day immediately following such Saturday, Sunday or holiday.
(k) Descriptive Headings; Interpretation. The descriptive
-------------------------------------
headings of this Agreement are inserted for convenience only
- 20 -
and do not constitute a Section of this Agreement. The use of the word
"including" in this Agreement shall be by way of example rather than
by limitation.
* * * * *
- 21 -
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first written above.
THE COINMACH CORPORATION
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------
Its Vice President
--------------------------
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
FUND IV, L.P.
By: GTCR IV, L.P.
Its: General Partner
By: ▇▇▇▇▇▇, ▇▇▇▇▇▇, Cressey,
Rauner, Inc.
Its: General Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
Its: Principal
EXECUTIVE
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇
- 22 -
CONSENT
-------
The undersigned spouse of Executive hereby acknowledges that
I have read the foregoing Executive Stock Agreement and that I
understand its contents. I am aware that the Agreement provides for
the repurchase of my spouse's shares of Common Stock under certain
circumstances and imposes other restrictions on the transfer of such
Common Stock. I agree that my spouse's interest in the common stock
subject to this Agreement and any interest I may have in such Common
Stock shall be irrevocably bound by this Agreement and further that
my community or marital property interest, if any, shall be similarly
bound by this Agreement.
/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Spouses's Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Witness