EXHIBIT 10.8
SENIOR MANAGEMENT AGREEMENT
THIS SENIOR MANAGEMENT AGREEMENT (this "Agreement") is made as of March 6,
2003, by and among Coinmach Corporation, a Delaware corporation (the "Company"),
Coinmach Holdings, LLC, a Delaware limited liability company ("Holdings"), MCS
Capital, Inc., a Delaware corporation ("MCS"), and Xxxxxxx X. Xxxxxxxx
("Executive").
WHEREAS, the Company, MCS and Executive are parties to a senior management
agreement dated as of January 31, 1995 (as amended from time to time, the
"Existing Employment Agreement");
WHEREAS, the Company, MCS and Executive desire to terminate the Existing
Employment Agreement and enter into this Agreement;
WHEREAS, simultaneously with the execution of this Agreement, each of
Xxxxxxxx Xxxxx and Xxxxxx X. Xxxxx is entering into a senior management
agreement;
WHEREAS, Coinmach Corporation is wholly owned by Coinmach Laundry
Corporation, a Delaware corporation ("Coinmach Laundry");
WHEREAS, Coinmach Laundry is wholly owned by Holdings;
WHEREAS, MCS is the owner of (i) 8,320,914 Common Units of Holdings, of
which 4,539,406 Common Units (the "Carried Common Units") were issued to MCS in
exchange for 4,539,406 shares of common stock of Coinmach Laundry (previously
issued to MCS pursuant to the Equity Participation Agreement), and 3,781,508
Common Units (the "Co-Invest Common Units") were issued to MCS in exchange for
3,781,508 shares of common stock of Coinmach Laundry (previously issued to MCS
in connection with Coinmach Laundry's going-private transaction in July of
2000), and (ii) 3,403.36 Class C Preferred Units (the "Preferred Units").
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
PROVISIONS RELATING TO EXECUTIVE UNITS
1.1 Vesting of Carried Common Units. Carried Common Units which have become
vested, together with all of the Co-Invest Common Units, are referred to herein
as "Vested Common Units" and all other Carried Common Units are referred to
herein as "Unvested Common Units." In addition to any vesting requirements in
respect of the Carried Common Units contained in the Management Contribution
Agreement, immediately prior to the closing of (i) any sale of Holdings' equity
securities which results in any person, or group of related persons, not
affiliated with GTCR owning equity securities of Holdings possessing the power
to
elect (without reference to any special or default voting rights) a majority of
the members of the Holdings Board (a "Change of Control"), or (ii) a sale of all
or substantially all of Holdings' assets, all Unvested Common Units will become
Vested Common Units. In addition, if Executive's employment with the Company is
terminated by the Coinmach Board without Cause, or by Executive for Good Reason,
and in each case no Event of Default has occurred and is continuing, all
Unvested Common Units will become Vested Common Units.
1.2 Put Option.
(a) Upon the consummation of a Qualified Disposition, MCS shall have the
right to require that Holdings repurchase up to 50% of each class of Executive
Units, pursuant to the terms of this Section 1.2(a) (the "Qualified Disposition
Put Option"). The purchase price for each Common Unit pursuant to the Qualified
Disposition Put Option shall be the price per Unit paid to GTCR in connection
with the Qualified Disposition, and the purchase price for each Preferred Unit
pursuant to the Qualified Disposition Put Option shall be the lesser of (i) the
liquidation value of such Unit (plus all accrued and unpaid dividends thereon)
and (ii) the price per Unit of such class paid to GTCR in connection with the
Qualified Disposition. Within 30 days after the date of the Qualified
Disposition, Holdings shall notify MCS of the occurrence of such event and MCS
may elect to exercise the Qualified Disposition Put Option by giving written
notice to Holdings of such election, setting forth the number of Common Units
and/or Preferred Units to be repurchased by Holdings, within 15 days after the
date of delivery of Holdings' notice to MCS. The closing of the repurchase
pursuant to the Qualified Disposition Put Option shall take place on a date
designated by Holdings, but in any event not later than 270 days after the date
of the Qualified Disposition. At such closing, MCS shall deliver to Holdings the
certificates representing the Common Units and/or Preferred Units to be
repurchased by Holdings, and, subject to Section 1.6 hereof, Holdings shall
deliver to MCS the purchase price for such Units by cashier's or certified check
or wire transfer.
(b) Upon the termination of Executive's employment hereunder by (i) the
Coinmach Board without Cause or (ii) Executive for Good Reason, MCS shall have
the right to require that Holdings repurchase all Units of each class of
Executive Units held by MCS pursuant to the terms of this Section 1.2(b) (the
"Termination Put Option"); provided, however, that Holdings shall only be
obligated to repurchase MCS's Executive Units pursuant to the Termination Put
Option at such time as the Holdings' Board, in its good faith judgment,
determines that the Company has sufficient assets to repurchase MCS's Executive
Units without a material negative impact on the Company's working capital or
liquidity (taking into account any reasonably foreseeable acquisitions or
capital expenditures). The purchase price for each Executive Unit pursuant to
the Termination Put Option shall be the Fair Market Value thereof on the Date of
Termination. Within 30 days after the Date of Termination as described in
subsections (i) and (ii) above, MCS may elect to exercise the Termination Put
Option by giving written notice to Holdings of such election, setting forth the
number of Executive Units to be repurchased by Holdings. The closing of the
repurchase pursuant to the Termination Put Option shall take place on a date
designated by Holdings, but in any event not later than 15 days after the date
of receipt of MCS's written notice of election to exercise the Termination Put
Option. At such closing, MCS shall deliver to Holdings the certificates
representing the Executive Units to be repurchased by Holdings, and, subject to
Section 1.6 hereof, Holdings shall deliver to MCS the purchase price for such
Units by cashier's or certified check or wire transfer.
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1.3 Repurchase Option.
(a) In the event Executive violates Section 2.3(a) of this Agreement (a
"Noncompete Breach"), or in the event Executive's employment by the Company and
its Subsidiaries terminates for any reason (a "Termination"), the Executive
Units (whether held by MCS or one or more of MCS's transferees, other than
Holdings or GTCR) will be subject to repurchase by Holdings first, the Other
Senior Managers second and the Investors third pursuant to the terms and
conditions set forth in this Section 1.3 (the "Repurchase Option").
(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 Executive Unit will be
the lower of (i) MCS's Original Cost for such Unit and (ii) the Fair Market
Value of such Unit on the Date of Termination. If Executive's employment
terminates other than as described in the preceding sentence, the purchase price
for each (y) Executive Unit (other than an Unvested Common Unit) shall be the
Fair Market Value of such Unit and (z) Unvested Common Unit shall be MCS's
Original Cost for such Unit, in each instance as of the date of the related
Repurchase Notice or Investor Notice (as hereinafter defined), as the case may
be.
(c) Holdings may, at the option of the Holdings Board, elect to purchase
all or any portion of the Executive Units from time to time by delivering
written notice (the "Repurchase Notice") to the Other Senior Managers, the
Investors and the holder or holders of such Executive Units from time to time
during the 180 days after the Noncompete Breach or Termination, as the case may
be. The Repurchase Notice will set forth the number of Executive Units,
including the number of Unvested Common Units and Vested Common Units, to be
acquired from the recipient holder, the aggregate consideration to be paid for
such Units and the time and place for the closing of the transaction.
(d) If for any reason Holdings has not elected to purchase all of the
Executive Units pursuant to the Repurchase Option, the Other Senior Managers
shall be entitled to exercise the Repurchase Option for any or all of the
Executive Units, including the Unvested Common Units and the Vested Common
Units, Holdings has not elected to purchase (the "Available Units"), by giving
written notice to Holdings and the holder(s) of the Available Units to be
repurchased during the 30 days after the date of delivery to the Other Senior
Managers of the Repurchase Notice (the "Management Repurchase Notice") setting
forth the number of Available Units each Other Senior Manager is willing to
purchase. If the Other Senior Managers elect to purchase an aggregate number of
Units greater than the number of Available Units, the Available Units shall be
allocated among the Other Senior Managers pro rata based on the number of Common
Units owned by each Other Senior Manager on a Fully Diluted Basis. As soon as
practicable, and in any event within ten days after the expiration of the 30-day
period set forth above, Holdings shall notify the holder(s) of the Available
Units and the Investors as to the number of Units being purchased from such
holder(s) by the Other Senior Managers (the "Supplemental Management Repurchase
Notice"). At the time Holdings delivers the Supplemental Management Repurchase
Notice to the holder(s) of the Available Units, Holdings shall also deliver
written notice to each Other Senior Manager and the Investors setting forth the
number of Units such Other Senior Manager is entitled to purchase, the aggregate
purchase price and the time and place of the
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closing of the transaction and, in the notice to the Investors, a statement of
the number, type and purchase price of Available Units available for purchase by
the Investors.
(e) If for any reason the Other Senior Managers have elected not to
purchase any or all of the Available Units pursuant to Section 1.3(d) above, the
Investors may elect to purchase any or all of the Available Units not purchased
by the Other Senior Managers by giving written notice to Holdings and the
holder(s) of the Available Units to be repurchased within 30 days after the date
of delivery to the Investors of the Supplemental Management Repurchase Notice
(the "Investor Repurchase Notice") setting forth the number of Available Units
the Investors are willing to purchase. If the Investors elect to purchase an
aggregate number greater than the number of Available Units, the Available Units
shall be allocated among the Investors pro rata based upon the number of Common
Units owned by each Investor on a Fully Diluted Basis. As soon as practicable,
and in any event within ten days after the expiration of the 30-day period set
forth above, Holdings shall notify each holder of Available Units as to the
number of Units being purchased from such holder by the Investors (the
"Supplemental Investor Repurchase Notice"). At the time Holdings delivers the
Supplemental Investor Repurchase Notice to the holder(s) of Available Units,
Holdings shall also deliver written notice to each Investor setting forth the
number of Units such Investor is entitled to purchase, the aggregate purchase
price and the time and place of the closing of the transaction.
(f) Each closing of the purchase of the Executive Units pursuant to the
Repurchase Option shall take place on the date designated by Holdings, the Other
Senior Managers or the Investors in the related Repurchase Notice, Management
Repurchase Notice, or Investor Repurchase Notice, as the case may be, but in any
event not later than 270 days after the date of the Noncompete Breach or
Termination. At such closing, MCS shall deliver to Holdings, the Other Senior
Managers and/or the Investors, certificates representing the Executive Units to
be repurchased by Holdings, the Other Senior Managers and/or the Investors, and
Holdings, the Other Senior Managers, and/or the Investors, as the case may be,
will pay for the Executive Units to be purchased pursuant to the Repurchase
Option, subject to Section 1.6 hereof and the terms below, on the date of the
closing of the Repurchase Option.
(g) Any payment made pursuant to this Section 1.3 shall be payable, at the
option of Holdings, in cash, by check or with Class A Preferred Units; provided,
that if Holdings elects to pay MCS with Class A Preferred Units, upon the
request of Holdings, MCS shall enter into documentation with Holdings with
respect to the issuance of such Class A Preferred Units on terms and conditions
reasonably acceptable to Holdings. In addition, Holdings may pay the total
purchase price for such Units by offsetting amounts outstanding under any bona
fide debts owed by Executive or MCS to Holdings. Holdings, the Other Senior
Managers and the Investors will be entitled to receive customary representations
and warranties from the sellers regarding such sale and to require that all
sellers' signatures be guaranteed.
(h) If within six months following the repurchase of Executive Units
pursuant to the Repurchase Option under this Section 1.3, (i) a Sale of the
Company or a Public Offering occurs and (ii) the amount received by MCS for
Vested Common Units pursuant to the Repurchase Option is less than the amount
that MCS would have received for such Vested Common Units had Holdings not
repurchased such Vested Common Units pursuant to the Repurchase Option and had
MCS disposed of such Vested Common Units (or such other securities into which
such
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Vested Common Units may have been exchanged or converted) pursuant to such Sale
of the Company or Public Offering, then MCS shall be entitled to receive the
benefit of such higher valuation for the Vested Common Units sold under the
Repurchase Option. Subject to Section 1.6 hereof, the excess of (x) the amount
which MCS would have received in such Sale of the Company or Public Offering
assuming the sale of his Vested Common Units purchased by exercise of the
Repurchase Option in connection with such transaction, over (y) the purchase
price of the Vested Common Units paid to MCS under the Repurchase Option (the
"Excess"), shall be paid by Holdings (or any designee of Holdings) to MCS by
wire transfer of immediately available funds (to such account designated in
writing by MCS) promptly upon consummation of any such transaction; provided,
however, if (i) the repurchase of Executive Units under this Section 1.3 was
paid by Holdings with Class A Preferred Units and in connection with a Sale of
the Company the holders of Class A Preferred Units received consideration other
than cash in exchange for such Class A Preferred Units, then Holdings may pay
the Excess to MCS in the same form of consideration which the holders of Class A
Preferred Units received in such Sale of the Company, or (ii) the repurchase of
Executive Units under this Section 1.3 was paid by Holdings with Class A
Preferred Units and in connection with a Public Offering the Class A Preferred
Units were converted into common stock or another form of equity security, then
Holdings may pay the Excess to MCS in the form of common stock or such other
equity security into which the Class A Preferred Units were converted in
connection with such Public Offering; provided, further, if the repurchase of
Executive Units under this Section 1.3 was paid by Holdings with Class A
Preferred Units and at the time of the Sale of the Company or the Public
Offering there were no issued and outstanding Class A Preferred Units other than
Class A Preferred Units held by MCS, then MCS shall be paid the Excess by
Holdings (or any designee of Holdings), at the option of Holdings, by wire
transfer of immediately available funds (to such account designated in writing
by MCS) or in the form of compensation received by the holders of Common Units,
in either case promptly upon consummation of any such transaction.
1.4 Restrictions on Transfer.
(a) Transfer of Executive Units. Neither Executive nor MCS shall, directly
or indirectly, transfer, sell, assign, pledge, offer or otherwise dispose of any
interest in any Executive Units (a "Transfer") except pursuant to (i) Section
1.2, Section 1.3, Section 1.4(c), Section 1.4(d) or Section 1.4(e) hereof, (ii)
Section 3(a) (participation rights), Section 3(c) (permitted transfers) and
Section 5 (sale of the company) of the Securityholders Agreement, or (iii) a
Public Sale (clauses (i) through (iii) collectively referred to herein as
"Exempt Transfers"). Prior to effecting any Transfer of Executive Units (other
than (y) to Holdings, to any Other Senior Manager or to the Investors or (z) in
connection with a Public Sale or Sale of the Company), MCS shall obtain from
each transferee their written agreement to be bound by the provisions of Section
1.4 of this Agreement for the benefit of Holdings, the Other Senior Managers and
the Investors.
(b) Sale Notice. Prior to making any Transfer (other than an Exempt
Transfer), MCS will give written notice (the "Sale Notice") to Holdings, the
Other Senior Managers and the Investors. The Sale Notice will disclose in
reasonable detail the number of Units to be transferred and the terms and
conditions of the proposed Transfer and, if known, the identity of the
prospective transferee(s). MCS will not consummate any such Transfer until 90
days after the Sale Notice has been given to Holdings, the Other Senior Managers
and the Investors, unless
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the parties to the Transfer have been fully determined pursuant to this Section
1.4(b), Section 1.4(c) and Section 1.4(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").
(c) First Refusal Rights. Holdings may elect to purchase all (but not less
than all) of the Executive Units 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 MCS, each Other Senior Manager and each Investor within 30
days after the Sale Notice has been given to Holdings. If Holdings has not
elected to purchase all of the Executive Units to be Transferred, the Other
Senior Managers may elect to purchase all (but not less than all) of the
Executive Units 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 MCS,
Holdings and the Investors within 60 days after the Sale Notice has been given
to the Other Senior Managers. The Other Senior Managers' rights hereunder shall
be allocated among the Other Senior Managers pro rata based on the number of
Common Units owned by each Other Senior Manager on a Fully Diluted Basis. If
Holdings and the Other Senior Managers have not elected to purchase all of the
Executive Units to be Transferred, the Investors may elect to purchase all (but
not less than all) of the Executive Units 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 MCS, Holdings and each Other Senior Manager within 90 days
after the Sale Notice has been given to the Investors. If Holdings, the Other
Senior Managers or the Investors do not elect to purchase all of the Executive
Units specified in the Sale Notice, MCS may Transfer the Executive Units
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 Executive Units not
Transferred within such 30-day period will be subject to the provisions of this
Section 1.4(c) upon subsequent Transfer.
(d) Co-Sale Rights. The Investors may elect to participate in the
contemplated Transfer by delivering written notice to MCS within 90 days after
delivery of the Sale Notice to the Investors. If any of the Investors (each a
"Participating Investor") have elected to participate in such Transfer, and any
of the Units specified in the Sale Notice are Common Units, MCS and the
Participating Investors shall be entitled to sell in the contemplated Transfer,
at the same price and on the same terms, a number of Common Units equal to the
product of (x) the quotient determined by dividing the percentage of Common
Units owned by such Person by the aggregate percentage of Common Units owned by
MCS and all Participating Investors and (y) the number of Common Units to be
sold in the contemplated Transfer.
For example, if the Sale Notice contemplated a sale of 100 Common Units by
MCS, and if MCS was at such time the owner of 30% of Holdings' outstanding
Common Units (on a fully-diluted basis) and if one Participating Investor
elects to participate and such Participating Investor owns 20% of Holdings'
outstanding Common Units (on a fully-diluted basis), MCS would be entitled
to sell 60 Common Units ((30% / 50%) x 100 Units) and the Participating
Investor would be entitled to sell 40 Common Units ((20% / 50%) x 100
Units).
If any of the Executive Units specified in the Sale Notice consist of Class C
Preferred Units, MCS and the Participating Investors shall be entitled to sell
in the contemplated Transfer, at the
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same price and on the same terms, a number of Class C Preferred Units equal to
the aggregate number of Class C Preferred Units to be Transferred multiplied by
a fraction, the numerator of which is the Class C Unreturned Capital plus the
Class C Unpaid Yield of all Class C Preferred Units held by such Person and the
denominator of which is the aggregate Class C Unreturned Capital plus the Class
C Unpaid Yield of all Class C Preferred Units held by MCS and the Participating
Investors.
For example, if the Sale Notice contemplated a sale of 100 Class C
Preferred Units by MCS, and if the Class C Unreturned Capital plus the
Class C Unpaid Yield on all Class C Preferred Units held by MCS was at such
time $1,080,000, and if one Participating Investor elects to participate
and the Class C Unreturned Capital plus the Class C Unpaid Yield on all
Class C Preferred Units held by such Participating Investor was at such
time $2,160,000, MCS would be entitled to sell 33 1/3 Class C Preferred
Units ((1,080,000 / 3,240,000) x 100 Units) and the Participating Investor
would be entitled to sell 66 2/3 Class C Preferred Units ((2,160,000 /
3,240,000) x 100 Units).
MCS will use its best efforts to obtain the agreement of the prospective
transferee(s) to the participation of the Investors in the contemplated Transfer
and will not Transfer any Executive Units to the prospective transferee(s) if
such transferee(s) refuse(s) to allow the participation of the Investors.
(e) Permitted Transfers. The restrictions contained in this Section 1.4
shall not apply with respect to any Transfer of Executive Units pursuant to
applicable laws of descent and distribution or among (i) Executive or MCS and
(ii) Executive's Family Members; provided that such restrictions will continue
to be applicable to the Executive Units after any such Transfer and the
transferees of such Executive Units have agreed in writing to be bound by the
provisions of this Agreement.
(f) Legend. The certificates representing the Executive Units will bear a
legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE 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 A SENIOR MANAGEMENT AGREEMENT BY AND AMONG COINMACH CORPORATION
("COINMACH"), COINMACH HOLDINGS, LLC, MCS CAPITAL, INC. AND XXXXXXX X.
XXXXXXXX, DATED AS OF MARCH 6, 2003. COINMACH MAY REQUEST A WRITTEN OPINION
OF COUNSEL (FROM COUNSEL ACCEPTABLE TO COINMACH) SATISFACTORY TO COINMACH,
TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED IN CONNECTION WITH SUCH
SALE, PLEDGE OR HYPOTHECATION, OR OTHER TRANSFER. A COPY OF SUCH
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AGREEMENT MAY BE OBTAINED AT COINMACH'S PRINCIPAL PLACE OF BUSINESS WITHOUT
CHARGE."
1.5 Recapitalization Undertaking. Prior to a Public Offering pursuant to
which any holder of Units of common securities of Holdings is given an
opportunity to sell all or any portion of such holder's Units of common
securities of Holdings, Holdings will use its reasonable best efforts, at the
request of MCS, to effect a recapitalization of the Preferred Units into Units
of common securities of Holdings at a price per Unit equal to the price per Unit
at which Units of Holdings' common securities are offered to the public in such
Public Offering.
1.6 Payments. Notwithstanding any other provision to the contrary contained
in this Agreement, payments (including, but not limited to, in the form of
securities) to be made to MCS pursuant to this Agreement shall be made only to
the extent permitted by the financing arrangements of Holdings and its
Subsidiaries in effect at the time such payments are required to be made;
provided, however, such payments shall be made at such time that they are
permitted to be made by such financing arrangements.
1.7 Opinion. In connection with the Transfer of any Executive Units (other
than an Exempt Transfer or in connection with a Sale of the Company), the holder
thereof shall deliver written notice to Holdings describing in reasonable detail
the Transfer or proposed Transfer, which, if requested by Holdings, shall be
accompanied by an opinion of counsel which (to Holdings' reasonable
satisfaction) is knowledgeable in securities law matters to the effect that such
Transfer of Executive Units may be effected without registration of such
Executive Units under the Securities Act. In addition, if the holder of the
Executive Units delivers to Holdings an opinion of counsel that no subsequent
Transfer of such Executive Units shall require registration under the Securities
Act, Holdings shall promptly upon such contemplated Transfer deliver new
certificates for such Executive Units which do not bear the Securities Act
legend set forth in Section 1.4(f) (but which may bear any applicable
contractual restrictions on Transfer).
1.8 Transfers of MCS Stock. Executive shall not, directly or indirectly,
Transfer any interest in any securities of MCS except pursuant to applicable
laws of descent and distribution or among Executive and Executive's Family
Members; provided that such restriction will continue to be applicable to any
securities of MCS after any such Transfer and the transferees of such securities
of MCS have agreed in writing to be bound by the provisions of this Agreement.
ARTICLE II
PROVISIONS RELATING TO EMPLOYMENT
2.1 Employment. The Company agrees to employ Executive, and Executive
accepts such employment, for the period from the date hereof until such
employment is terminated (the "Employment Period").
(a) Duties. During the Employment Period, Executive shall serve as the
Chief Executive Officer and Chairman of the Board of the Company and shall have
the normal duties, responsibilities and authority assigned to him by the
Holdings Board and the Company's by-laws.
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(b) Salary, Bonus and Benefits.
(i) Salary. During the Employment Period, the Company will pay
Executive a base salary (the "Annual Base Salary") as the Holdings Board
may designate from time to time, beginning at the rate of $446,250 per
annum, which amount shall be reviewed and may be increased, but not
decreased, annually by the Holdings Board in its sole discretion.
Executive's Annual Base Salary for any partial year will be prorated based
upon the number of days elapsed in such year.
(ii) Bonus. Executive will be entitled to receive any bonus which the
Holdings Board may grant in its discretion. In addition, upon the
consummation of a Qualified Disposition, Executive will be entitled to a
bonus in an amount equal to 2.0 times the sum of his Annual Base Salary
then in effect plus the amount of the bonus paid to Executive for the most
recently completed fiscal year, payable in a lump sum on the closing of
such Qualified Disposition.
(iii) Benefits. During the Employment Period, Executive will be
entitled to benefits consistent with past practices, as well as to such
other benefits approved by the Holdings Board and made available to the
Company's senior management, in each case, as such benefits may be adjusted
by the Holdings Board from time to time.
(c) Severance. If Executive's employment with the Company is terminated by
the Holdings Board without Cause or by Executive for Good Reason (and not by
reason of Executive's death or disability) and (i) no Event of Default has
occurred and is continuing, Executive shall be entitled to receive severance pay
in an amount equal to 2.0 times the sum of his Annual Base Salary then in effect
plus the amount of the bonus paid to Executive for the most recently completed
fiscal year, payable in 18 equal monthly installments, or (ii) an Event of
Default has occurred and is continuing, Executive shall be entitled to receive
severance pay in an amount equal to his Annual Base Salary then in effect
payable in 12 equal monthly installments, in the case of each of clauses (i) and
(ii) subject to applicable withholding tax requirements, commencing upon the
execution by the Company and Executive of a mutual release of the parties'
respective rights, duties, privileges and obligations hereunder other than those
rights, duties, privileges and obligations which are contemplated to continue
beyond the Employment Period, which release the parties hereby agree to use
their reasonable good faith efforts to secure.
(d) Effect of Termination on Bonuses and Benefits. All of Executive's
rights to fringe benefits and bonuses hereunder (if any) which accrue after the
Date of Termination shall, except as otherwise provided by law, cease upon such
Date of Termination; provided, however, that Executive shall continue to be
entitled to medical benefits consistent with those provided to Executive prior
to the Date of Termination during the period that severance payments are being
made to Executive pursuant to Section 2.1(c) hereof. The Company may offset the
amounts of any outstanding loans, advances or other disbursements made to or on
behalf of Executive by the Company against any amounts the Company owes
Executive hereunder for severance pay, benefits, bonuses or other items.
2.2 Confidential Information. Executive acknowledges that the information,
observations and data obtained by him during the course of his performance
concerning the
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business and affairs of Holdings, its Subsidiaries and Affiliates will be the
property of Holdings and its Subsidiaries. Therefore, Executive agrees that he
will not disclose to any unauthorized person or use for the account of any
Person other than Holdings and its Subsidiaries any such information,
observations or data ("Confidential Information") without the Holdings Board's
written consent, unless and to the extent that the aforementioned matters become
generally known to and available for use by the public other than as a result of
Executive's acts or omissions to act and except as required by law or legal
process. Executive agrees to deliver to the Company at the termination of his
employment, or at any other time the Company or Holdings may request in writing,
all memoranda, notes, plans, records, reports and other documents (and copies
thereof) relating to the business of Holdings or its Subsidiaries, and all
acquisition prospects, lists and contact information which he may then possess
or have under his control. "Confidential Information" shall include, but is not
limited to, information concerning acquisition opportunities in or reasonably
related to Holdings' or its Subsidiaries' business or industry of which
Executive becomes aware during his employment.
2.3 Noncompetition and Nonsolicitation.
(a) Noncompetition. Executive acknowledges that in the course of his
employment with the Company he will become familiar, and during his employment
with the Company prior to the date of this Agreement he has become familiar,
with Holdings', its Subsidiaries', and each of their Affiliates' (collectively,
the "Coinmach Group") trade secrets and with other confidential information
concerning the Coinmach Group, and that his services will be of special, unique
and extraordinary value to the Coinmach Group. Therefore, Executive agrees that,
during the Employment Period and for one year thereafter (the "Noncompete
Period"), he shall not directly or indirectly own, manage, control, participate
in, consult with, assist, render services for, or in any manner engage in any
business competing with, or otherwise substantially similar to, the businesses
of the Coinmach Group as such businesses exist or are in process on the Date of
Termination, (i) within the geographical area included in the 50-mile radius
around each location of a customer of the Coinmach Group or any business which a
member of the Coinmach Group is actively considering acquiring at the time of
Executive's termination or has actively considered acquiring in the last 12
months or (ii) within any State in the United States or any Province in Canada
in which Executive has spent a significant amount of time on behalf of the
Coinmach Group at any time during the twelve-month period prior to the Date of
Termination. The restrictions of this Section 2.3(a) shall not apply to
Executive's ownership interests in not more than three laundromats at any one
time.
(b) Nonsolicitation. During the Noncompete Period, Executive shall not
directly or indirectly through another entity (i) induce or attempt to induce
any employee of the Coinmach Group to leave the employ of the Coinmach Group, or
in any way interfere with the relationship between the Coinmach Group and any
employee thereof, (ii) offer employment to or hire any person who was an
employee of the Coinmach Group at any time during the one-year period prior to
the Date of Termination, or (iii) induce or attempt to induce any customer,
supplier, licensee or other business relation of the Coinmach Group to cease
doing business with the Coinmach Group, or in any way interfere with the
relationship between any such customer, supplier, licensee or business relation
and the Coinmach Group; provided that clauses (i) and (ii) above shall not in
any way prohibit Executive from offering employment to, hiring or employing
Xxxxx X. Xxxxxxx during the Noncompete Period.
10
(c) Enforcement. If, at the time of enforcement of Section 2.2 or Section
2.3 of this Agreement, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum duration, scope and geographical area reasonable under such
circumstances shall be substituted for the stated period, scope and area and
that the court shall be allowed to reduce the restrictions contained herein to
cover the maximum duration, scope and area permitted by law.
(d) Submission to Jurisdiction. Each of the parties hereto (i) submits to
the jurisdiction of any state or federal court sitting in New York, New York in
any action or proceeding arising out of or relating to this Agreement, (ii)
agrees that all claims in respect of such action or proceeding may be heard or
determined in any such court and (iii) agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court. Each
of the parties waives any defense of inconvenient forum to the maintenance of
any action or proceeding so brought and waives any bond, surety or other
security that might be required of any other party with respect thereto. Each
party agrees that a final judgment in any action or proceeding so brought shall
be conclusive and may be enforced by suit on the judgment or in any other manner
provided by law.
(e) Additional Acknowledgments. Executive acknowledges that the provisions
of Section 2.2 and Section 2.3 are in consideration of: (i) employment with the
Company, and (ii) additional good and valuable consideration as set forth in
this Agreement. In addition, Executive agrees and acknowledges that the
restrictions contained in Section 2.2 and this Section 2.3 do not preclude
Executive from earning a livelihood, nor do they unreasonably impose limitations
on Executive's ability to earn a living. In addition, Executive acknowledges (i)
that the business of the Company and its Subsidiaries will be national in scope
and without geographical limitation, (ii) notwithstanding the state of
incorporation or principal office of the Company or any of its Subsidiaries, or
any of their respective executives or employees (including Executive), it is
expected that the Company will have business activities and have valuable
business relationships within its industry throughout the United States, and
(iii) as part of Executive's responsibilities, Executive will be traveling
around the United States in furtherance of the Company's business and its
relationships. Executive agrees and acknowledges that the potential harm to the
Company of the non-enforcement of Section 2.2 and this Section 2.3 outweighs any
potential harm to Executive of its enforcement by injunction or otherwise.
Executive acknowledges that he has carefully read this Agreement and has given
careful consideration to the restraints imposed upon him by this Agreement, and
is in full accord as to their necessity for the reasonable and proper protection
of confidential and proprietary information of the Company now existing or to be
developed in the future. Executive expressly acknowledges and agrees that each
and every restraint imposed by this Agreement is reasonable with respect to
subject matter, time period and geographical area.
ARTICLE III
GENERAL PROVISIONS
3.1 Definitions.
"Affiliate" of a Person means any direct or indirect general or limited
partner or member of such Person, or any employee or owner thereof, or any other
person, entity or investment fund
11
controlling, controlled by or under common control with such Person, and will
include, without limitation, its owners and employees.
"Agreement" has the meaning set forth in the preamble hereto.
"Annual Base Salary" has the meaning set forth in Section 2.1(b)(i) hereto.
"Authorization Date" has the meaning set forth in Section 1.4(b) hereto.
"Available Units" has the meaning set forth in Section 1.3(d) hereto.
"Carried Common Units" has the meaning set forth in the sixth recital
hereto.
"Cause" means (i) a material breach by Executive of any agreement with any
member of the Coinmach Group (after notice and reasonable opportunity to cure),
(ii) a breach of Executive's duty of loyalty to any member of the Coinmach Group
or any of its Subsidiaries or any act of dishonesty, gross negligence, willful
misconduct or fraud with respect to any member of the Coinmach Group or any of
their securityholders, 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, any member of the Coinmach Group, (iv) Executive's
continued failure or refusal to perform any material duty to any member of the
Coinmach Group which is normally attached to his position (after notice and
reasonable opportunity to cure), (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) or (vi) any breach of
Section 2.2 or Section 2.3 of this Agreement. For purposes of this Agreement,
"Executive's duty of loyalty to any member of the Coinmach Group" shall include
Executive's fiduciary obligation to place the interests of any member of the
Coinmach Group ahead of his personal interests and thereby not knowingly profit
personally at the expense of any member of the Coinmach Group, and shall also
include specifically the affirmative obligation to disclose promptly to the
Holdings Board any known conflicts of interest Executive may have with respect
to any member of the Coinmach Group, and the negative obligations not to usurp
corporate opportunities of any member of the Coinmach Group, not to engage in
any "conflict-of-interest" transactions with any member of the Coinmach Group
(without the approval of the Holdings Board), and not to compete directly with
any member of the Coinmach Group (without the approval of the Holdings Board).
"Change of Control" has the meaning set forth in Section 1.1 hereto.
"Class C Preferred Units" has the meaning set forth in the LLC Agreement.
"Class C Unpaid Yield" has the meaning set forth in the LLC Agreement.
"Class C Unreturned Capital" has the meaning set forth in the LLC
Agreement.
"Co-Invest Common Units" has the meaning set forth in the sixth recital
hereto.
"Coinmach Board" means the Board of Directors of the Company.
12
"Coinmach Group" has the meaning set forth in Section 2.3(a) hereto.
"Coinmach Laundry" has the meaning set forth in the fourth recital hereto.
"Common Units" means Units having the rights and obligations of Common
Units set forth in the LLC Agreement.
"Company" has the meaning set forth in the preamble hereto.
"Confidential Information" has the meaning set forth in Section 2.2 hereto.
"Date of Termination" means the first day occurring on or after the date
hereof on which Executive ceases to be an Employee of Holdings or any Subsidiary
of Holdings, regardless of the reason for such cessation, provided that
Executive's cessation as an Employee shall not be deemed to occur by reason of a
transfer of Executive between Holdings and a Subsidiary of Holdings or between
two Subsidiaries of Holdings; and provided further that Executive's cessation as
an Employee shall not be deemed to occur by Executive's being on a leave of
absence from Holdings or a Subsidiary of Holdings approved by Executive's
employer. If, as a result of a sale or other transaction, the Subsidiary of
Holdings for whom Executive is employed ceases to be a Subsidiary of Holdings
(and the entity for whom Executive is employed is or becomes an entity that is
separate from Holdings), and Executive is not, at the end of the 30-day period
following the transaction, an Employee of Holdings or an entity that is then a
Subsidiary of Holdings, then the occurrence of such transaction shall be treated
as Executive's Date of Termination caused by Executive being discharged by the
entity for whom Executive is employed.
"Employee" means any person, including officers and directors, employed by
Holdings or any Subsidiary of Holdings.
"Employment Period" has the meaning set forth in Section 2.1 hereto.
"Excess" has the meaning set forth in Section 1.3(h) hereto.
"Executive" has the meaning set forth in the preamble hereto.
"Executive Units" means, at any time, (i) all Common Units and Preferred
Units then held by MCS, Executive or a Family Member, and (ii) all equity
securities of the Company issued or issuable directly or indirectly with respect
to such Units in connection with a combination of Units, dividend,
recapitalization, merger, consolidation, reorganization or otherwise. In
addition, Executive Units shall continue to be Executive Units in the hands of
any holder (except to the extent such holder is the Company, any Investor or a
transferee in a Public Sale consummated in accordance with this Agreement or the
Securityholders Agreement), and except as otherwise provided herein, each such
holder of Executive Units shall succeed to all rights and obligations
attributable to Executive or MCS, as the case may be, as a holder of Executive
Units hereunder.
"Exempt Transfers" has the meaning set forth in Section 1.4(a) hereto.
13
"Existing Employment Agreement" has the meaning set forth in the first
recital hereto.
"Event of Default" has the respective meanings set forth in the Company's
(i) Credit Agreement, dated as of January 25, 2002, and (ii) Indenture dated as
of January 25, 2002, as each such agreement may be further amended, modified or
replaced, from time to time.
"Fair Market Value". For purposes of determining the "Fair Market Value" of
any Executive Unit as of any date, the following rules shall apply:
(i) If, at that time, the principal market for the Executive Unit is a
national securities exchange or the Nasdaq stock market, then the "Fair
Market Value" shall be the mean between the lowest and highest reported
sale prices of such Executive Unit on that date on the principal exchange
or market on which such Executive Unit is then listed or admitted to
trading;
(ii) If, at that time, the sale prices are not available or the
principal market for the Executive Unit is not a national securities
exchange and such Executive Unit is not quoted on the Nasdaq stock market,
then the "Fair Market Value" shall be the average between the highest bid
and lowest asked prices for such Executive Unit on such day as reported on
the Nasdaq OTC Bulletin Board Service or by the National Quotation Bureau,
Incorporated or a comparable service;
(iii) If the day is not a business day, and as a result, paragraphs
(i) and (ii) next above are inapplicable, the "Fair Market Value" of the
Executive Unit shall be determined as of the next earlier business day; and
(iv) If, in accordance with rules established by the Holdings Board, a
determination of "Fair Market Value" is required as of any date and, as of
that date, paragraphs (i) and (ii) next above are inapplicable for reasons
other than those specified in paragraph (iii) next above, then the "Fair
Market Value" as of that date shall be determined by the Holdings Board in
its reasonable discretion or by such other Person designated by the
Holdings Board;
provided, however, that notwithstanding any other paragraph in this definition
to the contrary, the Fair Market Value for any Preferred Unit shall be no more
than the unpaid yield and unreturned capital of such Unit.
"Family Members" means Executive's spouse and/or lineal descendants, a
trust for the sole benefit of Executive and/or Executive's spouse or lineal
descendants or upon Executive's death, Executive's estate.
"Fully Diluted Basis" means, without duplication, (i) all Common Units
outstanding at the time of determination plus (ii) all Common Units issuable
upon conversion of any convertible securities or the exercise of any option,
warrant or similar right, whether or not such conversion, right or option,
warrant or similar right is then exercisable.
"Good Reason" means (i) a material breach of Sections 1.2 or 2.1(b) which
is not cured within thirty days after the Holdings Board's receipt of written
notice from Executive of non-
14
compliance; (ii) a material diminution of Executive's duties under this
Agreement, including but not limited to the assignment to Executive of duties
inconsistent with Executive's position, duties or responsibilities as in effect
after the date of execution of this Agreement; or (iii) Executive's own physical
or mental disability. For purposes of this Agreement, "disability" shall mean
Executive's inability to perform his duties hereunder in a competent manner on
account of illness or other physical or mental incapacity, if such illness or
other physical or mental incapacity continues for a period of more than three
consecutive months, or an aggregate of six months in any twelve-month period
during the term hereof.
"GTCR" means GTCR-CLC, LLC or any Affiliate thereof.
"Holdings" has the meaning set forth in the preamble hereto.
"Holdings Board" means the Board of Directors of Holdings.
"Investor Repurchase Notice" has the meaning set forth in Section 1.3(e)
hereto.
"Investors" means, collectively, GTCR, Filbert Investment Pte Ltd, the
TCW/Crescent Purchasers, and each of their transferees.
"LLC Agreement" means the Limited Liability Company Agreement, by and among
the Company and its members, dated as of the date hereof.
"Management Contribution Agreement" means that certain Contribution
Agreement, dated on or prior to the date hereof, by and among Holdings,
Executive and MCS.
"Management Repurchase Notice" has the meaning set forth in Section 1.3(d)
hereto.
"MCS" has the meaning set forth in the preamble hereto.
"Noncompete Breach" has the meaning set forth in Section 1.3(a) hereto.
"Noncompete Period" has the meaning set forth in Section 2.3(a) hereto.
"Original Cost" means, (i) with respect to each Common Unit, $.10 per Unit,
and (ii) with respect to each Preferred Unit, $1,000 per Unit (in each case as
proportionately adjusted for all subsequent securities splits, dividends and
other recapitalizations).
"Other Senior Managers" means Xxxxxxxx Xxxxx, Xxxxxx X. Xxxxx and Xxxxxxx
X. Xxxxxx.
"Participating Investor" has the meaning set forth in Section 1.4(d)
hereto.
"Person" means an individual, a partnership, a limited liability company, a
corporation, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization and a governmental entity or any department, agency
or political subdivision thereof.
"Preferred Units" has the meaning set forth in the sixth recital hereto.
15
"Public Offering" means a sale in an underwritten public offering
registered under the Securities Act (other than on Form S-8 or a similar or
successor form) of Common Units (or other shares of equity interests into which
such Common Units may be exchanged or converted) approved by the Holdings Board.
"Public Sale" means (i) any sale pursuant to a Public Offering or (ii) any
sale to the public pursuant to Rule 144 promulgated under the Securities Act
effected through a broker, dealer or market maker (other than pursuant to Rule
144(k) prior to a Public Offering).
"Qualified Disposition" means a Sale of the Company in which the aggregate
consideration (including the fair market value of any notes or other evidence of
indebtedness) received by GTCR at the closing of such Sale of the Company is
equal to or greater than 300% of the aggregate amount invested in Holdings and
its Subsidiaries by GTCR on or after July 3, 2000 through the date of such
closing.
"Qualified Disposition Put Option" has the meaning set forth in Section
1.2(a) hereto.
"Repurchase Notice" has the meaning set forth in Section 1.3(c) hereto.
"Repurchase Option" has the meaning set forth in Section 1.3(a) hereto.
"Sale Notice" has the meaning set forth in Section 1.4(b) hereto.
"Sale of the Company" means any transaction or series of transactions
pursuant to which any Person or group of related Persons in the aggregate
acquire(s) (i) equity securities of Holdings possessing the voting power (other
than voting rights accruing only in the event of a default, breach or event of
noncompliance) to elect a majority of the Holdings Board (whether by merger,
consolidation, reorganization, combination or sale or Transfer of Holdings'
equity or otherwise) or (ii) all or substantially all of Holdings' assets
determined on a consolidated basis; provided that a Public Offering shall not
constitute a Sale of the Company.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
"Securityholders Agreement" means the Securityholders Agreement, dated as
of the date hereof, among the Company and certain of its securityholders.
"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 securities 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 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.
16
Reference to any "Subsidiary" of the Company shall be given effect only at such
times as the Company has one or more Subsidiaries.
"Supplemental Investor Repurchase Notice" has the meaning set forth in
Section 1.3(e) hereto.
"Supplemental Management Repurchase Notice" has the meaning set forth in
Section 1.3(d) hereto.
"Taxes" has the meaning set forth in Section 3.3(k) hereto.
"TCW/Crescent Purchasers" means, collectively, TCW/Crescent Mezzanine
Partners II, L.P., a Delaware limited partnership, TCW/Crescent Mezzanine Trust
II, a Delaware business trust, TCW Leverage Income Trust, L.P., a Delaware
limited partnership, and TCW Leveraged Income Trust II, L.P., a Delaware limited
partnership, any of their Affiliates or any holder of Units for whom Trust
Company of the West or any Affiliate of Trust Company of the West acts as an
Account Manager (each individually a "TCW/Crescent Purchaser").
"Termination" has the meaning set forth in Section 1.3(a) hereto.
"Termination Put Option" has the meaning set forth in Section 1.2(b)
hereto.
"Transfer" has the meaning set forth in Section 1.4(a) hereto.
"Units" has the meaning set forth in the LLC Agreement.
"Unvested Common Units" has the meaning set forth in Section 1.1 hereto.
"Vested Common Units" has the meaning set forth in Section 1.1 hereto.
3.2 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 the recipient at the address below indicated 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:
If to the Company, to:
Coinmach Corporation
000 Xxxx Xxxxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Chief Executive Officer
17
with copies, which will not constitute notice to the
Company, to:
GTCR Fund VII, L.P.
c/o GTCR Xxxxxx Xxxxxx, L.L.C.
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxx
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, P.C.
Mayer, Brown, Xxxx & Maw
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxx
If to Holdings, to:
Coinmach Holdings, LLC
x/x Xxxxxxxx Xxxxxxx Corporation
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx
with copies, which will not constitute notice to Holdings,
to:
GTCR-CLC, LLC
c/o GTCR Xxxxxx Xxxxxx, L.L.C.
Xxxxx Xxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxxx
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, P.C.
Mayer, Brown, Xxxx & Maw
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
18
If to Executive or MCS, to:
Xxxxxxx X. Xxxxxxxx
c/o Coinmach Corporation
000 Xxxx Xxxxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Any notice to an Investor shall be sent to the address for such Investor as set
forth in the current records of the Company and a copy of such notice shall be
sent to GTCR and to Xxxxxxxx & Xxxxx at their respective addresses set forth
above. 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.
3.3 General Provisions.
(a) Transfers in Violation of Agreement. Any Transfer or attempted Transfer
of any Executive Units 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 transferee of such Executive Units as the owner of such equity 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, (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, and (iii) terminate and cancel any
employment, severance, securities option bonus or other employee benefit, loan,
tax or other indemnity agreement among Executive and his Affiliates, on one
hand, and the Company and its Affiliates, on the other hand, including, without
limitation, the Existing Employment Agreement.
(d) Counterparts. This Agreement may be executed in separate counterparts
(including by means of telecopied signature pages), 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 MCS, Executive and the Company and their respective
successors and permitted assigns and inure to the benefit of and be enforceable
by MCS, Executive, the Company, GTCR, the Investors and each of their respective
successors and permitted assigns (including in each case subsequent holders of
Executive Units); provided that MCS may not assign any of its rights under any
provision of Article I of this Agreement except as part of a Transfer of
Executive
19
Units in accordance with (i) Section 1.3 and Section 1.4 of this Agreement, and
(ii) Section 3(a) (participation rights) and Section 3(c) (permitted transfers)
of the Securityholders Agreement.
(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
securityholders. 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 Delaware, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Delaware.
(g) Remedies. Each of the parties to this Agreement (including the
Investors) 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 Section 2.3(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 and Executive. 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 Upon Termination. Notwithstanding a Termination, this
Agreement (excluding Sections 2.1(a) and (b)) shall survive and continue in full
force and effect in accordance with its terms.
(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) Indemnification and Reimbursement of Payments on Behalf of
Executive/MCS. The Company and its Subsidiaries shall be entitled to deduct or
withhold from any amounts owing from the Company or any of its Subsidiaries to
Executive or MCS, as the case may be, any federal, state, local or foreign
withholding taxes, excise taxes, or employment taxes ("Taxes") imposed with
respect to Executive's compensation or other payments from the Company or any of
its Subsidiaries or MCS's ownership interest in the Company, including, without
limitation, wages, bonuses, dividends, the receipt or exercise of equity options
and/or the receipt or vesting of restricted equity. In the event the Company or
its Subsidiaries does not make such deductions or withholdings, Executive or
MCS, as the case may by, shall indemnify the Company and its Subsidiaries for
any amounts paid with respect to any such Taxes.
20
(l) Deemed Transfer of Executive Units. If the Company (and/or the
Investors and/or any other Person acquiring securities) shall make available, at
the time and place and in the amount and form provided in this Agreement, the
consideration for the Executive Units to be repurchased in accordance with the
provisions of this Agreement, then from and after such time, the Person from
whom such Units are to be repurchased shall no longer have any rights as a
holder of such Units (other than the right to receive payment of such
consideration in accordance with this Agreement), and such Units shall be deemed
purchased in accordance with the applicable provisions hereof and the Company
(and/or the Investors and/or any other Person acquiring securities) shall be
deemed the owner and holder of such Units, whether or not the certificates
therefor have been delivered as required by this Agreement.
(m) Rights Granted to GTCR and Other Investors and Their Affiliates. Any
rights granted to GTCR and other Investors and their Affiliates hereunder may
also be exercised (in whole or in part) by any Affiliate thereof.
(n) Third-Party Beneficiaries. Certain provisions of this Agreement are
entered into for the benefit of and shall be enforceable by the Investors as
provided herein.
(o) Descriptive Headings; Interpretation. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a paragraph 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 Senior Management
Agreement on the date first written above.
COINMACH CORPORATION
By: /S/ XXXX X. XXXXXX
---------------------------
Name: Xxxx X. Xxxxxx
Title: Senior Vice President
COINMACH HOLDINGS, LLC
By: /S/ XXXX X. XXXXXX
---------------------------
Name: Xxxx X. Xxxxxx
Title: Senior Vice President
MCS CAPITAL, INC.
By: /S/ XXXXXXX X. XXXXXXXX
---------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Its:
EXECUTIVE:
/S/ XXXXXXX X. XXXXXXXX
-------------------------------------
Xxxxxxx X. Xxxxxxxx
CONSENT
The undersigned spouse of Executive hereby acknowledges that I have read
the foregoing Agreement (the "SMA") and that I understand its contents. I am
aware that the SMA provides for the repurchase of the Executive Units under
certain circumstances and imposes other restrictions on the transfer of such
Executive Units. I agree that MCS's, my and my spouse's interest in the
Executive Units are subject to:
(i) the SMA,
(ii) the Limited Liability Company Agreement, dated as of March 6, 2003, by
and among Coinmach Holdings, LLC ("Holdings") and certain of its members (the
"LLC Agreement"),
(iii) the Securityholders Agreement, dated as of March 6, 2003, by and
among Holdings and the other parties thereto (the "Securityholders Agreement"),
(iv) the Registration Agreement, dated as of March 6, 2003, by and among
Holdings and the other parties thereto (the "Registration Agreement"),
(v) the Management Contribution Agreement, dated as of March 5, 2003, by
and between Holdings and MCS Capital, Inc. (the "Contribution Agreement")
(vi) the Amended and Restated Promissory Note, dated as of March 6, 2003,
by MCS Capital, Inc. in favor of Coinmach Laundry Corporation (the "Promissory
Note"); and
(vii) the Amended and Restated Security Agreement, dated as of March 6,
2003, by and between MCS Capital, Inc. and Coinmach Laundry Corporation (the
"Security Agreement", and collectively with the SMA, the LLC Agreement, the
Securityholders Agreement, the Registration Agreement, the Contribution
Agreement and the Promissory Note, the "Operative Agreements").
I further agree that any interest I may have, directly or indirectly, in
such Executive Units shall be irrevocably bound by the Operative Agreements and
that my community or marital property interest, if any, shall be similarly bound
by the Operative Agreements.
/S/ XXXXXXX X. XXXXXXXX
--------------------------
Xxxxxxx X. Xxxxxxxx
WITNESS:
/S/ XXXXXX X. XXXXX
-----------------------
Name: Xxxxxx X. Xxxxx
