<PAGE>
 
                                                                 EXHIBIT 10.76

                          COINMACH LAUNDRY CORPORATION

                           THIRD AMENDED AND RESTATED
                           --------------------------
                        1996 EMPLOYEE STOCK OPTION PLAN
                        -------------------------------

                                   ARTICLE 1

                           IDENTIFICATION OF THE PLAN

          1.1  Title.  The plan described herein shall be known as the Coinmach
               -----                                                           
Laundry Corporation Third Amended and Restated 1996 Employee Stock Option Plan
(the "Plan").
      ----   

          1.2  Purpose.  The purpose of this Plan is (i) to compensate certain
               -------                                                        
officers and employees of Coinmach Laundry Corporation (the "Company") and its
                                                             -------          
Subsidiaries for services rendered by such persons after the date of adoption of
this Plan to the Company or any Subsidiary; (ii) to provide certain officers and
employees of the Company and its Subsidiaries with significant additional
incentive to promote the financial success of the Company; and (iii) to provide
an incentive which may be used to induce able persons to enter into or remain in
the employment of the Company or any Subsidiary.

          1.3  Effective Date.  The Plan shall become effective on July 23, 1996
               --------------                                                   
(the "Effective Date").  The Plan, however, is subject to approval by the
      --------------                                                     
stockholders of the Company.  If stockholder approval is not granted within
twelve (12) months from the date of its adoption by the Board, the Plan shall
thereupon terminate.  Grants of Options may be made prior to stockholder
approval, but any such Options granted shall not be exercisable prior to
stockholder approval and shall terminate without any further action by the
Company if stockholder approval is not given.

          1.4  Defined Terms.  Certain capitalized terms used herein have the
               -------------                                                 
meanings as set forth in Section 10.1 of the Plan.


                                   ARTICLE 2

                           ADMINISTRATION OF THE PLAN

          2.1  Committee's Powers.  This Plan shall be administered by a
               ------------------                                       
committee (the "Committee") composed of persons appointed by the Board of
                ---------                                                
Directors of the Company in accordance with the provisions of Section 2.2. The
Committee shall have full power and authority to prescribe, amend and rescind
rules and procedures governing administration of this Plan.  The Committee shall
have full power and authority (i) to interpret the terms of this Plan, the terms
of the Options and the rules and procedures established by the Committee and
(ii) to determine the meaning of or requirements imposed by or rights of any
person under this Plan, any Option or any rule or procedure established by the
Committee.  Each action of the Committee which is within the scope of the
authority delegated to the Committee by this Plan or by the Board shall be
binding on all persons.

                                      -1-
<PAGE>
 
          2.2  Committee Membership.  The Committee shall be composed of two or
               --------------------                                            
more members of the Board, each of whom is a "disinterested person," as defined
in Securities and Exchange Commission Rule 16b-3, as amended ("Rule 16b-3"), or
any successor rules or government pronouncements.  The Board shall have the
power to determine the number of members which the Committee shall have and to
change the number of membership positions on the Committee from time to time.
The Board shall appoint all members of the Committee.  The Board may from time
to time appoint members to the Committee in substitution for, or in addition to,
members previously appointed and may fill vacancies, however caused, on the
Committee.  Any member of the Committee may be removed from the Committee by the
Board at any time with or without cause.  If at any time no special committee
has been constituted by the Board especially for the purposes of this Plan, then
the members of the Board who are "disinterested persons" as defined in Rule 16b-
3 shall have all powers and rights delegated to the "Committee" under this Plan.
Notwithstanding anything to the contrary in this Section 2.2, the Committee
shall not grant an Option to a Section 16 Holder unless the Committee is
constituted so as to comply with Securities and Exchange Commission Rule 16b-3,
as amended, or any successor rules or government pronouncements.

          2.3  Committee Procedures.  The Committee shall hold its meetings at
               --------------------                                           
such times and places as it may determine.  The Committee may make such rules
and regulations for the conduct of its business as it shall deem advisable.
Unless the Board or the Committee expressly decides to the contrary, a majority
of the members of the Committee shall constitute a quorum and any action taken
by a majority of the Committee members in attendance at a meeting at which a
quorum of Committee members are present shall be deemed an act of the Committee.

          2.4  Indemnification.  No member of the Committee shall be liable, in
               ---------------                                                 
the absence of bad faith, for any act or omission with respect to his or her
service on the Committee under this Plan.  Service on the Committee shall
constitute service as a director of the Company so that the members of the
Committee shall be entitled to indemnification and reimbursements as directors
of the Company for any action or any failure to act in connection with service
on the Committee to the full extent provided for at any time in the Company's
Certificate of Incorporation and By-Laws, or in any insurance policy or other
agreement intended for the benefit of the Company's directors.


                                   ARTICLE 3

                     EMPLOYEES ELIGIBLE TO RECEIVE OPTIONS

          A person shall be eligible to be granted an Option only if on the
proposed Granting Date for such option such person is a full-time, salaried
employee of the Company or any Subsidiary, excluding non-management directors of
the Company.  A person eligible to be granted an Option is herein called a "Key
                                                                            ---
Employee."
--------  

                                   ARTICLE 4

                                GRANT OF OPTIONS

          4.1  Power to Grant Options.  The Committee shall have the right and
               ----------------------                                         
the power to grant at any time to any Key Employee an option entitling such
person to purchase Common Stock from the Company in such quantity, at such
price, on such terms and subject to such conditions

                                      -2-
<PAGE>
 
consistent with the provisions of this Plan as may be established by the
Committee on or prior to the Granting Date for such option.  Each option to
purchase Common Stock which shall be granted by the Committee pursuant to the
provisions of this Plan is herein called an "Option."
                                             ------  

          4.2  Granting Date.  An Option shall be deemed to have been granted
               -------------                                                 
under this Plan on the date (the "Granting Date") which the Committee designates
                                  -------------                                 
as the Granting Date at the time it approves such Option, provided that the
Committee may not designate a Granting Date with respect to any Option which is
earlier than the date on which the granting of such Option is approved by the
Committee.

          4.3  Option Terms Which The Committee May Determine.  The Committee
               ----------------------------------------------                
shall have the power to determine the Key Employee to whom Options are granted,
the number of Shares subject to each Option, the number of Options awarded to
each Key Employee and the time at which each Option is granted.  Except as
otherwise expressly provided in this Plan, the Committee shall also have the
power to determine, at the time of the grant of each Option, all terms and
conditions governing the rights and obligations of the holder with respect to
such Option, including but not limited to: (a) the purchase price per Share or
the method by which the purchase price per Share will be determined; (b) the
length of the period during which the Option may be exercised and any
limitations on the number of Shares purchasable with the Option at any given
time during such period; (c) the times at which the Option may be exercised; (d)
any conditions precedent to be satisfied before the Option may be exercised,
such as vesting period; (e) any restrictions on resale of any Shares purchased
upon exercise of the Option; and (f) whether the Option will constitute an
Incentive Stock Option.

          4.4  Option Agreement.  No person shall have any rights under any
               ----------------                                            
Option unless and until the Company and the person to whom such Option is
granted have executed and delivered an agreement expressly granting the Option
to such person and containing provisions setting forth the terms of the Option
(an "Option Agreement").
     ----------------   

                                   ARTICLE 5

                                  OPTION TERMS

          5.1  Plan Provisions Control Option Terms.  The terms of this Plan
               ------------------------------------                         
shall govern all the Options.  In the event any provision of any Option
Agreement conflicts with any term in this Plan as constituted on the Granting
Date of such Option, the term in this Plan as constituted on the Granting Date
of the Option shall control.  Except as provided in Article 8, the terms of any
Option may not be changed after the Granting Date of such Option without the
express approval of the Company and the Option Holder.

          5.2  Price Limitation.  Subject to Article 8, the price at which each
               ----------------                                                
Share may be purchased upon the exercise of any Option other than an Incentive
Stock Option shall, at the Option of the Committee, be either (i) greater than
or equal to the Per Share Market Value on the Granting Date for such Option; or
(ii) equal to the average closing price of the Common Stock for the thirty (30)
consecutive trading days immediately preceding such Granting Date.  Subject to
Article 8, the price at which each Share may be purchased upon the exercise of
any Incentive Stock Option may not be less than the Per Share Market Value on
the Granting Date for such Incentive Stock Option.

                                      -3-
<PAGE>
 
          5.3  Term Limitation.  No Incentive Stock Option may be granted under
               ---------------                                                 
this Plan which is exercisable more than ten years after its Granting Date.
This Section 5.3 shall not be deemed to limit the term which the Committee may
specify for any Options granted under the Plan which are not intended to be
Incentive Stock Options.

          5.4  Transfer Limitations.  No Option granted pursuant to this Plan
               --------------------                                          
shall be transferable other than by will or the laws of descent and distribution
or exercisable during the lifetime of the person to whom the Option is initially
granted by anyone other than the initial grantee.  It shall be a condition
precedent to any transfer of any Option in accordance with the immediately
preceding sentence that the transferee executes and delivers an agreement
acknowledging such Option has been acquired for investment and not for
distribution and is and shall remain subject to this Plan and the Option
Agreement.  The "Holder" of any Option shall mean (i) the initial grantee of
                 ------                                                     
such Option or (ii) any permitted transferee.

          5.5  $100,000 Per Year Limit on Incentive Stock Options.  No Key
               --------------------------------------------------         
Employee may be granted Incentive Stock Options if the value of the Shares
subject to those options which first become exercisable in any given calendar
year (and the value of the Shares subject to any other Incentive Stock Options
issued to the Key Employee under the Plan or any other plan of the Company or
its Subsidiaries which first become exercisable in such year) exceeds $100,000.
For this purpose, the value of Shares shall be determined on the Granting Date.
Any Incentive Stock Options issued in excess of the $100,000 limit shall be
treated as Options that are not Incentive Stock Options.  Incentive Stock
Options shall be taken into account in the order in which they were granted.

          5.6  No Right to Employment Conferred.  Nothing in this Plan or (in
               --------------------------------                              
the absence of an express provision to the contrary) in any Option Agreement (i)
confers any right or obligation on any person to continue in the employ of the
Company or any Subsidiary or (ii) affects or shall affect in any way any
person's right or the right of the Company or any Subsidiary to terminate such
person's employment with the Company or any Subsidiary at any time, for any
reason, with or without cause.

                                   ARTICLE 6

                                OPTION EXERCISE

          6.1  Normal Option Term.  Except as otherwise expressly provided in
               ------------------                                            
Sections 6.3, 6.5 or 6.7 or in the Option Agreement, the right to exercise any
Option shall terminate at the earlier of the following dates:  (i) the
Termination Date of the initial grantee of the Option or (ii) the Expiration
Date of the Option.

          6.2  Exercise Time.  No option granted to a Section 16 Holder shall
               -------------                                                 
become exercisable within six months of the applicable Granting Date, except in
the case of the death or permanent disability of the Holder as provided in
Section 6.5 below.  Notwithstanding the terms of the Option Agreement, if any
Option is issued to a Holder who is not a Section 16 Holder on the Granting Date
and such Holder becomes a Section 16 Holder before such Holder exercises such
Option, then such Option shall not become exercisable within six months of the
applicable Granting Date, except in the case of the death or permanent
disability of the Holder as provided in Section 6.5 below.  Subject to the
preceding two sentences, each Option shall become exercisable at the time

                                      -4-
<PAGE>
 
provided in the Option Agreement, provided that the Committee in its sole
discretion shall have the right (but shall not in any case be obligated) to
permit the exercise of such Option prior to such time.

          6.3  Extension of Exercise Time.  The Committee in its sole discretion
               --------------------------                                       
shall have the right (but shall not in any case be obligated) to permit any
Option to be exercised after the Termination Date of the Holder of such Option.
Notwithstanding the preceding sentence, but subject to Section 6.7, the
Committee shall not have the right to permit the exercise of any Option after
its Expiration Date.

          6.4  Exercise Procedures.  Each Option shall be exercised by written
               -------------------                                            
notice to the Company.  Any Holder of any Option shall be required, as a
condition to such Holder's right to purchase securities with such Option, to
supply the Committee at such person's expense with such evidence,
representations, agreements or assurances (including, but not limited to,
opinions of counsel satisfactory to the Committee) as the Committee may deem
necessary or desirable in order to establish to the satisfaction of the
Committee the right of such person to exercise such Option and of the propriety
of the sale of securities by reason of such exercise under the Securities Act
and any other laws or requirements of any governmental authority specified by
the Committee.  The Company shall not be obligated to sell any Shares subject to
such Option until all evidence, representations, agreements and assurances
required by the Committee have been supplied.  An Option Holder shall not have
any rights as a stockholder with respect to Shares issuable under any Option
until and unless such Shares are sold and delivered to such Option Holder.  The
purchase price of Shares purchased upon the exercise of an Option shall be paid
in full in cash or by check by the Option Holder at the time of the delivery of
such Shares, provided that the Committee may (but need not) permit payment to be
made by (i) delivery to the Company of outstanding Shares, (ii) retention by the
Company of Shares which would otherwise be transferred to the Option Holder upon
exercise of the Option or (iii) any combination of cash, check, the Holder's
delivery of outstanding Shares and retention by the Company of Shares which
would otherwise be transferred to the Option Holder upon exercise of the Option,
and provided further that no portion of the purchase price of Shares purchased
on the exercise of an Incentive Stock Option may be paid by retention of Shares
by the Company.  In the event an Incentive Stock Option is granted, the
Committee may (but need not) permit payment to be made by (i) cash or check or
(ii) delivery to the Company of outstanding Shares.  In the event any Common
Stock is delivered to or retained by the Company to satisfy all or any part of
the purchase price, the part of the purchase price deemed to have been satisfied
by such Common Stock shall be equal to the product derived by multiplying (i)
the Per Share Market Value as of the date of exercise by (ii) the number of
Shares delivered to or retained by the Company.  The number of Shares delivered
to or retained by the Company in satisfaction of the purchase price shall not be
a number which when multiplied by the Per Share Market Value as of the date of
exercise would result in a product greater than the purchase price.  No
fractional Shares shall be delivered to or retained by the Company in
satisfaction of the purchase price.  To the extent such fractional share would
result, the Option Holder shall make up such difference in cash.  With respect
to any exercise of an Option that is permitted to be made by delivery to the
Company of outstanding Shares of Common Stock or retention by the Company of
Shares which would otherwise be transferable to the Option Holder, the Option
Holder shall be required to deposit with the Company an amount in cash
sufficient to allow the Company to satisfy any tax or other withholding
requirements under applicable law.  Any part of the purchase price paid in cash
or by check upon the exercise of any Option shall be added to the general funds
of the Company and may be used for any proper corporate purpose.
Notwithstanding Article 7, unless the Board shall otherwise determine, for each
Share delivered to or retained by the Company as payment of all or part of the
purchase price upon the exercise of any Option, the aggregate number of Shares
subject to this Plan shall be increased by one Share.

                                      -5-
<PAGE>
 
          6.5  Death, Permanent Disability, Retirement  or Termination Without
               ---------------------------------------------------------------
Cause Of Option Holder.
---------------------- 

          (a) Death.  Except as otherwise expressly provided in the Option
              -----                                                       
Agreement, if the Holder of an Option dies while such Option Holder is still
employed by the Company or any Subsidiary, then the right to exercise all
unexpired installments of such Option which have not yet vested or became
exercisable shall be accelerated to the date of death and shall become
exercisable as of the date of death.  Except as otherwise provided in the option
Agreement and subject to Section 6.7, if the Holder of an option dies and such
Option is then exercisable at the date of death (for any reason including
acceleration of vesting pursuant to the preceding sentence), then the Holder's
estate or the person or persons to whom the Holder's rights under the Option
shall pass by reason of the Holder's death shall have the right to exercise the
Option for 90 days after the date of death, and the Option shall expire at the
end of such 90 day period.

          (b) Permanent Disability.  Except as otherwise provided in the Option
              --------------------                                             
Agreement, if the Holder of an option suffers a Permanent Disability while such
Holder is still employed by the Company or any Subsidiary, then the right to
exercise all unexpired installments of such Option which have not yet vested or
became exercisable shall be accelerated to the date of such Permanent Disability
and shall become exercisable as of the date of such Permanent Disability (the
                                                                             
"Permanent Disability Date").  Except as otherwise provided in the Option
--------------------------                                               
Agreement and subject to Section 6.7, if the Holder of an Option suffers a
Permanent Disability and such Option is exercisable at the Permanent Disability
Date (for any reason including acceleration pursuant to the preceding sentence),
then such Holder shall have the right to exercise such Option for one year after
the Permanent Disability Date, and the Option shall expire at the end of such
one year period.

          (c) Retirement.  Except as otherwise provided in the Option Agreement,
              ----------                                                        
if the Holder of an Option elects to voluntarily retire from the Corporation or
any Subsidiary while such Holder is still employed by the Company or any
Subsidiary, then any installments of such Option which have not yet vested or
                                                                ---          
become exercisable shall remain outstanding for up to three years following the
date of such retirement.  During such three year period, the time period for the
vesting of an Option contained in an Option Agreement will be deemed to continue
to be satisfied during such retirement and counted toward determining whether
any time period has been satisfied for vesting of the Option.  Except as
otherwise provided in the Option Agreement and subject to Section 6.7, if the
Holder of an Option retires and such Option is or becomes exercisable at the
time of or following such retirement, then such Holder shall have the right to
exercise such option for three years after the date of retirement, and the
Option shall expire at the end of such three-year period.  Notwithstanding
anything in this Section 6.5(c) or an Option Agreement to the contrary, if the
Committee determines in the good faith exercise of its judgment that any Holder
who has retired engages in any conduct detrimental to the Company, upon such
determination by the Committee, such Option shall immediately and without
further action on the part of the Company, expire and become unexerciseable.  No
notice of such determination need be given to any Holder in such circumstance.
Notwithstanding the foregoing, the tax treatment available pursuant to Section
422 of the Code upon the exercise of an Incentive Stock Option will not be
available to a holder who exercises any such Option more than three months after
the date of retirement.

          (d) Termination Without Cause.  Except as otherwise provided in the
              -------------------------                                      
Option Agreement, if the Holder of an Option is terminated without Cause and
such Option is currently exercisable at the time of such termination, then such
Holder shall have the right to exercise such

                                      -6-
<PAGE>
 
Option for 30 days after the date of such termination, and the Option shall
expire at the end of such 30 day period.

          6.6  Taxes.  The Company or any Subsidiary shall be entitled, if the
               -----                                                          
Committee deems it necessary or desirable, to withhold from an Option Holder's
salary or other compensation (or to secure payment from the Option Holder in
lieu of withholding) all or any portion of any withholding or other tax due from
the Company or any Subsidiary with respect to any Shares deliverable under such
Holder's Option or the Committee may (but need not) permit payment of such
withholding by the Company's retention of Shares which would otherwise be
transferred to the Option Holder upon exercise of the Option.  In the event any
Common Stock is retained by the Company to satisfy all or any part of the
withholding, the part of the withholding deemed to have been satisfied by such
Common Stock shall be equal to the product derived by multiplying the Per Share
Market Value as of the date of exercise by the number of Shares retained by the
Company.  The number of Shares retained by the Company in satisfaction of
withholding shall not be a number which when multiplied by the Per Share Market
Value as of the date of exercise would result in a product greater than the
withholding amount.  No fractional Shares shall be retained by the Company in
satisfaction of withholding.  Notwithstanding Article 7, unless the Board shall
otherwise determine, for each Share retained by the Company in satisfaction of
all or any part of the withholding amount, the aggregate number of Shares
subject to this Plan shall be increased by one Share.  The Company may defer
delivery under a Holder's Option until indemnified to its satisfaction with
respect to such withholding or other taxes.

          6.7  Securities Law Compliance.  Each Option shall be subject to the
               -------------------------                                      
condition that such Option may not be exercised if and to the extent the
Committee determines that the sale of securities upon exercise of the Option may
violate the Securities Act or any other law or requirement of any governmental
authority.  The Company shall not be deemed by any reason of the granting of any
Option to have any obligation to register the Shares subject to such Option
under the Securities Act or to maintain in effect any registration of such
Shares which may be made at any time under the Securities Act.  An Option shall
not be exercisable if the Committee or the Board determines there is non-public
information material to the decision of the Holder to exercise such Option which
the Company cannot for any reason communicate to such Holder.  Notwithstanding
Sections 6.1, 6.3 and 6.5 and the terms of the Option Agreement, if (i) any
Holder makes a bona fide request to exercise any Option which complies with
Section 6.4, (ii) the Committee or the Board determines such Option cannot be
exercised for a period of time pursuant to this Section 6.7 and (iii) such
Option expires during such period, then the term of such Option shall be
extended until the end of such period; provided, however, that the term of an
Incentive Stock Option cannot be extended beyond ten years after its Granting
Date.


                                   ARTICLE 7

                           SHARES SUBJECT TO THE PLAN

          Except as provided in Sections 6.4 and 6.6 and Article 8, an aggregate
of 1,109,147 Shares of Common Stock shall be subject to this Plan.  Except as
provided in Sections 6.4 and 6.6 and Article 8, the Options shall be limited so
that the sum of the following shall not as of any given time exceed 1,109,147
Shares:  (i) all Shares subject to Options outstanding under this Plan at the
given time and (ii) all Shares which shall have been sold by the Company by
reason of the exercise at or prior to the given time of any of the Options.  The
Common Stock issued under the Plan may be

                                      -7-
<PAGE>
 
either authorized and unissued shares, shares reacquired and held in the
treasury of the Corporation, or both, all as from time to time determined by the
Board.  In the event any Option shall expire or be terminated before it is fully
exercised, then all Shares formerly subject to such Option as to which such
Option was not exercised shall be available for any Option subsequently granted
in accordance with the provisions of this Plan.  Notwithstanding anything
contained in this Plan, the maximum aggregate number of Shares subject to
Options that may be granted to any one Key Employee in any one calendar year
shall not exceed 400,000 Shares.


                                   ARTICLE 8

                     ADJUSTMENTS TO REFLECT ORGANIC CHANGES

          The Board shall appropriately and proportionately adjust the number
and kind of Shares subject to outstanding Options, the price for which Shares
may be purchased upon the exercise of outstanding Options, and the number and
kind of Shares available for options subsequently granted under this Plan to
reflect any stock dividend, stock split, combination or exchange of shares,
merger, consolidation or other change in the capitalization of the Company which
the Board determines to be similar, in its substantive effect upon this Plan or
the Options, to any of the changes expressly indicated in this sentence.  The
Board may (but shall not be required to) make any appropriate adjustment to the
number and kind of Shares subject to outstanding Options, the price for which
Shares may be purchased upon the exercise of outstanding Options, and the number
and kind of Shares available for Options subsequently granted under this Plan to
reflect any spin-off, spin-out or other distribution of assets to stockholders
or any acquisition of the Company's stock or assets or other change which the
Board determines to be similar, in its substantive effect upon this Plan or the
Options, to any of the changes expressly indicated in this sentence.  The
Committee shall have the power to determine the amount of the adjustment to be
made in each case described in the preceding two sentences, but no adjustment
approved by the Committee shall be effective until and unless it is approved by
the Board.  In the event of any reorganization, reclassification, consolidation,
merger or sale of all or substantially all of the Company's assets which is
effected in such a way that holders of Common Stock are entitled to receive
(either directly or upon subsequent liquidation) stock, securities or assets
with respect to or in exchange for Common Stock, the Board may (but shall not be
required to) substitute the per share amount of such stock, securities or assets
for Shares upon any subsequent exercise of any Option.  If any fractional Share
becomes subject to any Option as a result of any change made under this Article
8, then (i) such Option may not be exercised with respect to such fractional
Share until and unless such Option is exercised as to all other Shares subject
to such option and (ii) if such Option is exercised with respect to such
fractional Share, the Company shall have the right to deliver to the Holder in
lieu of such fractional Share cash in an amount equal to the product derived by
multiplying the fraction representing the portion of a full Share represented by
such fractional Share times the Per Share Market Value on the exercise date of
the Option with respect to such fractional Share established as prescribed in
this Plan.


                                   ARTICLE 9

                     AMENDMENT AND TERMINATION OF THE PLAN

          9.1  Amendment.  Except as provided in the following two sentences,
               ---------                                                     
the Board shall have complete power and authority to amend this Plan at any time
and no approval by the

                                      -8-
<PAGE>
 
Company's stockholders or by any other person, committee or other entity of any
kind shall be required to make any amendment approved by the Board effective.
The Board shall not, without the affirmative approval of the Company's
stockholders, amend the Plan in any manner which would cause any outstanding
Incentive Stock Options to no longer qualify as Incentive Stock Options or which
would cause the Plan not to satisfy the requirements relating to performance
based compensation under (S) 162(m) of the Code.  If any Section 16 Holder holds
any Option, the Board shall not, without the affirmative vote of the holders of
a majority of the securities of the Company present, or represented, and
entitled to vote at a meeting duly held in accordance with applicable law, make
any amendment to this Plan which materially (i) increases the benefits accruing
to participants under the Plan, (ii) increases the number of shares of Common
Stock which may be issued under the Plan or (iii) modifies the requirements as
to eligibility for participation in the Plan.  No termination or amendment of
this Plan may, without the consent of the Holder of any Option prior to
termination or the adoption of such amendment, materially and adversely affect
the rights of such Holder under such Option.

          9.2  Termination.  The Board shall have the right and the power to
               -----------                                                  
terminate this Plan at any time, provided that no Incentive Stock Options may be
granted after the tenth anniversary of the adoption of this Plan.  No Option
shall be granted under this Plan after the termination of this Plan, but the
termination of this Plan shall not have any other effect.  Any Option
outstanding at the time of the termination of this Plan may be exercised after
termination of this Plan at any time prior to the Expiration Date of such Option
to the same extent such Option would have been exercisable had this Plan not
terminated.


                                   ARTICLE 10

                  DEFINITIONS AND OTHER PROVISIONS OF THE PLAN

          10.1 Definitions.  Each term defined in this Section 10.1 has the
               -----------                                                 
meaning indicated in this Section 10.1 whenever such term is used in this Plan:

          "Board of Director" and "Board" both mean the Board of Directors of
           -----------------       -----                                     
the Company as constituted at the time the term is applied.

          "Cause" means (i) the willful refusal to follow directions given by
           -----                                                             
the Board, (ii) commission of any act involving moral turpitude or any act which
brings or could bring the Company into disrepute or materially damages its
relations with its customers, suppliers, licensors or financing sources, (iii)
the violation of any statutory or common law duty of loyalty to the Company or
(iv) a good faith determination by a majority of the Board that continued
employment is not in the best interests of the Company.

          "Common Stock" means the issued or issuable class A common stock, par
           ------------                                                        
value $.01 per share, of the Company.

          "Code" means the Internal Revenue Code of 1986, as amended.
           ----                                                      

          "Committee" has the meaning such term is given in Section 2.1 of this
           ---------                                                           
Plan.

                                      -9-
<PAGE>
 
          "Company" as applied as of any given time shall mean Coinmach Laundry
           -------                                                             
Corporation, a Delaware corporation, except that if prior to the given time any
corporation or other entity has acquired all or a substantial part of the assets
of the Company (as herein defined) and has agreed to assume the obligations of
the Company under this Plan, or is the survivor in a merger or consolidation to
which the Company was a party, such corporation or other entity shall be deemed
to be the Company at the given time.

          "Expiration Date" as applied to any option means the date specified in
           ---------------                                                      
the Option Agreement between the Company and the Holder as the expiration date
of such Option.  If no expiration date is specified in the Option Agreement
relating to any Option, then the Expiration Date of such option shall be the day
prior to the tenth anniversary of the Granting Date of such Option.
Notwithstanding the preceding sentences, if the person to whom any Incentive
Stock Option is granted owns, on the Granting Date of such Option, stock
possessing more than ten percent of the total combined voting power of all
classes of stock of the Company (or of any parent or Subsidiary of the Company
in existence on the Granting Date of such Option), and if no expiration date is
specified in the Option Agreement relating to such Option, then the Expiration
Date of such Option shall be the day prior to the fifth anniversary of the
Granting Date of such Option.

          "Granting Date" has the meaning such term is given in Section 4.2 of
           -------------                                                      
this Plan.

          "Holder" has the meaning such term is given in Section 5.4 of this
           ------                                                           
Plan.

          "Incentive Stock Option" means an incentive stock option, as defined
           ----------------------                                             
in Code Section 422, which is granted pursuant to this Plan.

          "Key Employee" has the meaning such term is given in Article 3 of this
           ------------                                                         
Plan.

          "Option" has the meaning such term is given in Section 4.1 of this
           ------                                                           
Plan.

          "Option Agreement" has the meaning such term is given  in Section 4.4
           ----------------                                                    
of this Plan.

          "Permanent Disability" shall mean a physical or mental disability
           --------------------                                            
suffered by an initial grantee of an Option which the Committee determines in
its sole discretion will permanently prevent such initial grantee from working
for the Company in the same or a substantially similar position as such initial
grantee occupied prior to suffering such disability.

          "Permanent Disability Date" has the meaning such term  is given in
           -------------------------                                        
Section 6.5 of this Plan.

          "Per Share Market Value" on any given date shall be the fair market
           ----------------------                                            
value of one Share as of the close of business on the given date determined in
such manner as shall be prescribed in good faith by the Committee; provided,
                                                                   -------- 
that as long as the Shares are traded on a national securities exchange or
national automated quotation system (such as the Nasdaq National Market), the
Per Share Market Value shall be the reported closing price of the Shares on such
date.

          "Plan" has the meaning such term is given in Section 1.1 of this Plan.
           ----                                                                 

                                      -10-
<PAGE>
 
          "Section 16 Holder" refers to any person who, with respect to the
           -----------------                                               
Company, is subject to Section 16 of the Securities Exchange Act of 1934, as
amended, at any time or any law or statute which succeeds Section 16.

          "Securities Act" at any given time shall consist of: (i) the
           --------------                                             
Securities Act of 1933 as constituted at the given time; (ii) any other law or
laws promulgated prior to the given time by the United States Government which
are in effect at the given time and which regulate or govern any matters at any
time regulated or governed by the Securities Act of 1933; (iii) all regulations,
rules, registration forms and other governmental pronouncements issued under the
laws specified in clauses (i) and (ii) of this sentence which are in effect at
the given time; and (iv) all interpretations by any governmental agency or
authority of the things specified in clause (i), (ii) or (iii) of this sentence
which are in effect at the given time.  Whenever any provision of this Plan
requires that any action be taken in compliance with any provision of the
Securities Act, such provision shall be deemed to require compliance with the
Securities Act as constituted at the time such action takes place.

          "Share" means a share of Common Stock.
           -----                                

          "Subsidiary" means any corporation in which the Company owns, directly
           ----------                                                           
or indirectly, 50% or more of the total combined voting power of all classes of
securities of such corporation.

          "Termination Date" as applied to the initial grantee of any Option
           ----------------                                                 
means, except as otherwise provided in the Option Agreement, the first date on
which such initial grantee is not employed by either the Company or any
Subsidiary for any reason (including, but not limited to, voluntary termination
or termination for Cause) other than as a result of the death, Permanent
Disability, retirement or termination without Cause of such Holder, in which
case the provisions set forth in Section 6 shall apply.  The Committee may
specify in the original terms of an Option (or if not so specified, shall
determine) whether an authorized leave of absence or absence on military or
government service or absence for any other reason shall constitute a
termination of employment with the Company or any Subsidiary for the purposes of
this Plan.

          10.2 Headings.  Section headings used in this Plan are for convenience
               --------                                                         
only, do not constitute a part of this Plan and shall not be deemed to limit,
characterize or affect in any way any provisions of this Plan.  All provisions
in this Plan shall be construed as if no headings had been used in this Plan.

          10.3 Severability.
               ------------ 

          (a) General.  Whenever possible, each provision in this Plan and in
              -------                                                        
every Option at any time granted under this Plan shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Plan or any Option at any time granted under this Plan is held to be
prohibited by or invalid under applicable law, then (i) such provision shall be
deemed amended to accomplish the objectives of the provision as originally
written to the fullest extent permitted by law and (ii) all other provisions of
this Plan and every option at any time granted under this Plan shall remain in
full force and effect.

          (b) Incentive Stock Options.  Whenever possible, each provision in
              -----------------------                                       
this Plan and in every option at any time granted under this Plan which is
evidenced by an Option Agreement which expressly states such Option is intended
to constitute an Incentive Stock Option under Code

                                      -11-
<PAGE>
 
Section 422 (an "intended ISO") shall be interpreted in such manner as to
                 ------------                                            
entitle such intended ISO to the tax treatment afforded by the Code to Options
which do constitute Incentive Stock Options under Code Section 422, but if any
provision of this Plan or any intended ISO at any time granted under this Plan
is held to be contrary to the requirements necessary to entitle such intended
ISO to the tax treatment afforded by the Code to Options which do constitute
Incentive Stock Options under Code Section 422, then (i) such provision shall be
deemed to have contained from the outset such language as shall be necessary to
entitle such intended ISO to the tax treatment afforded by the Code to Options
which do constitute Incentive Stock Options under Code Section 422, and (ii) all
other provisions of this Plan and such intended ISO shall remain in full force
and effect.  If any Option Agreement covering an intended ISO granted under this
Plan does not explicitly include any terms required to entitle such intended ISO
to the tax treatment afforded by the Code to Options which do constitute
Incentive Stock Options under Code Section 422, then all such terms shall be
deemed implicit in the intention to afford such treatment to such Option and
such Option shall be deemed to have been granted subject to all such terms.

          10.4 No Strict Construction.  No rule of strict construction shall be
               ----------------------                                          
applied against the Company, the Committee or any other person in the
interpretation of any of the terms of this Plan, any Option or any rule or
procedure established by the Committee.

          10.5 Choice of Law.  This Plan and all documents contemplated hereby,
               -------------                                                   
and all remedies in connection therewith and all questions or transactions
relating thereto, shall be construed in accordance with and governed by the
internal laws of the State of Delaware.

                                      -12-