Document:

EX-10.3

 

Exhibit
10.3

ALLEGHANY CORPORATION OFFICERS AND DIRECTORS

DEFERRED COMPENSATION PLAN

     Alleghany Corporation Officers and Directors Deferred Compensation Plan (the “Plan”),
effective as of January 1, 2002, provides for unfunded deferred compensation arrangements for
officers and directors of Alleghany Corporation, a Delaware corporation (“Alleghany”), as well as a
savings benefit for officers of Alleghany.

1. Purposes of the Plan.

     The purposes of the Plan are (i) to provide a means to defer a portion of the compensation of
the officers and directors of Alleghany and (ii) to provide a savings benefit for officers of
Alleghany.

2. Administration of the Plan.

     The Plan shall be administered by an officer of Alleghany (the “Plan Administrator”) appointed
by the Board of Directors of Alleghany (the “Board”) to serve as administrator under the direction
of the Board (the “Plan Administrator”). The Board shall have full power and authority to
interpret, construe, administer, and amend the Plan, provided, however, that no amendment to the
Plan shall reduce the benefits to which any Participant (as defined below) may be entitled
hereunder, and the Board’s interpretation and construction thereof and actions taken thereunder
shall be binding on all persons for all purposes.

3. Participation.

     All officers who have completed one year of full-time service and other officers selected by
the Board (“Savings Benefit Participants”) shall participate in the Plan in respect of the savings
benefit described in section 4(b) hereof, and directors (“Director Participants”) and

 

 

officers (“Officer Participants”) of Alleghany shall be eligible to participate in the Plan by deferring
amounts described in section 4(c) hereof. The term “Participants” as used in the Plan shall
include Savings Benefit Participants, Director Participants and Officer Participants collectively.

4. Deferred Compensation.

     (a) Prime Rate Accounts. Alleghany shall establish in respect of each Savings Benefit
Participant a separate book reserve account (“Savings Benefit Prime Rate Account”), and shall
credit to such Savings Benefit Prime Rate Account (or if section 4(e) shall apply, to the Savings
Benefit Common Stock Account described thereunder), for eventual payment on the basis set forth in
section 4(f) hereof, the savings benefit described in section 4(b) below.

     Subject to the limitations set forth in section 4(g) hereof and to such administrative rules
as may be established by the Plan Administrator, each officer or director of Alleghany may from
time to time enter into one or more agreements with Alleghany (“Deferred Compensation Agreements”)
which in the aggregate may provide for the establishment of one or more separate book reserve
accounts “Deferred Compensation Prime Rate Accounts” and for the crediting to such Deferred
Compensation Prime Rate Accounts or if section 4(e) shall apply, to the Deferred Compensation
Common Stock Accounts of Officer Participants described thereunder for eventual payment on the
basis set forth in section 4(g) below, of the items described in
section 4(c) below. Savings Benefit Prime Rate Accounts and Deferred Compensation Prime Rate
Accounts are together referred to herein as “Prime Rate Accounts.”

     (b) Savings Benefit. On the 30th days of March, June, September and December of each
year, Alleghany will credit each Savings Benefit Prime Rate Account (or if section 4(e) shall
apply, the Savings Benefit Common Stock Account described thereunder) with an amount

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equal to 3.75%
of the base annual salary (excluding bonuses, commissions, severance pay, amounts deferred under
this section 4(b) and contributions to employee benefit plans maintained by Alleghany, but
including base annual salary deferred under section 4(c)(1) below) payable to the Savings Benefit
Participant by Alleghany during the quarter then ended.

     (c) Optional Deferral. Deferred Compensation Agreements entered into by Officer
Participants and Director Participants of Alleghany may provide for the deferral of all or any part
of the following (as applicable):

          (1) The base annual salary (determined as provided in section 4(b) above) payable to such person
by Alleghany;

          (2) Directors’ fees payable to such person by Alleghany;

          (3) Entitlements of such person under the Alleghany Corporation Management Incentive Plan or any
similar bonus plan of Alleghany;

          (4) Entitlements of such person under the Alleghany Corporation 2002 Long-Term Incentive Plan, the
Alleghany Corporation 1993 Long-Term Incentive Plan
or any successor long-term incentive plan (collectively, “Long-Term Incentive Plans”); and

          (5) Any cash bonus to which such person may become entitled other than pursuant to a plan referred
to in section 4(c)(3) or section 4(c)(4).

Amounts described in sections 4(c)(1) through 4(c)(5) shall be credited to the specified Deferred
Compensation Prime Rate Account (or if section 4(e) shall apply, to the Deferred Compensation
Common Stock Account described thereunder) in lieu of payment in the ordinary course and as of the
times when they would have been payable in the ordinary course. Entitlements in

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 Common Stock of
Alleghany shall be valued at the mean between the high and low prices thereof on the New York Stock
Exchange Consolidated Tape on the date of crediting.

     (d) Interest. Amounts credited to a Prime Rate Account shall, while held in such Prime
Rate Account, be deemed to earn interest at the prime rate compounded on an annual basis and
credited to the Prime Rate Account on December 31st of each year or, if earlier, on the date of
transfer or payment of amounts out of such Prime Rate Account. The “prime rate” for purposes
hereof shall mean the rate of interest announced by JP Morgan Chase Bank, N.A. as its prime rate at
the close of the last business day of each month, which rate shall be deemed to remain in effect
through the last business day of the next month.

     (e) Common Stock Accounts. Upon the request of an Officer Participant made by written
notice given to the Plan Administrator, Alleghany shall establish in respect of such Officer
Participant a common stock account (“Savings Benefit Common
Stock Account”) to which all or a portion of the amounts described in section 4(b) shall be
credited. A Deferred Compensation Agreement entered into between an Officer Participant and
Alleghany may provide for the establishment of a common stock account (“Deferred Compensation
Common Stock Account”) to which all or a portion of the amounts deferred thereunder shall be
credited; provided, however, that the sum of the amounts credited to an Officer
Participant’s Savings Benefit Common Stock Account and Deferred Compensation Common Stock Account
(including amounts credited thereto in respect of dividend income) may at no time exceed an amount
equal to (x) 30% of the cumulative base annual salary (determined as provided in section 4(b)
above) of such Officer Participant during the period in respect of which the savings benefit
referred to in section 4(b) has been credited for such Officer Participant less (y) the sum of the
original credits actually paid out to such Officer Participant in accordance with the provisions of

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section 4(f) hereof. Savings Benefit Common Stock Accounts and Deferred Compensation Common Stock
Accounts are together referred to herein as “Common Stock Accounts.”

     Amounts credited to a Common Stock Account shall, while held in such Common Stock Account,
reflect the investment experience which the account would have had if the amount so designated had
been invested (without commissions or other transaction expenses) and held in whole or fractional
shares of common stock of Alleghany (“Alleghany Common Stock”) during such period. Common Stock
Accounts shall be adjusted as appropriate to reflect cash and stock dividends, stock splits, and
other similar distributions or transactions which, from time to time, occur with respect to
Alleghany Common Stock during the appropriate period. Dividends and other distributions shall be
automatically credited to the Common Stock Account at their cash value or the fair market
value of any non-cash dividend or other distribution and shall be deemed to purchase Alleghany
Common Stock on the date of payment thereof. Alleghany Common Stock shall be deemed acquired, and
shall be valued for purposes of payout or transfer, at a price per share equal to the mean between
the high and low prices thereof on the applicable date on the New York Stock Exchange Consolidated
Tape.

     Subject to rules which may be established by the Plan Administrator or by the Board, the
designation of the account to which the amounts described in section 4(b) shall be credited, or the
allocation of such amounts between accounts, may from time to time be changed. Subject to the
provisions of section 5(h) hereof and to rules which may be established by the Plan Administrator
or by the Board, an Officer Participant may direct that amounts credited to a Prime Rate Account be
transferred to a Common Stock Account, or that amounts credited to a Common Stock Account be
transferred to a Prime Rate Account, by written notice given to the Plan Administrator. Except as
may otherwise be agreed to by the Plan Administrator, amounts

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transferred as set forth above shall
be paid according to the same payout schedule in effect with respect to such amounts prior to the
transfer.

     (f) Payout of Section 4(b) Amounts. All amounts theretofore credited to a Savings Benefit
Prime Rate Account and/or to an Officer Participant’s Savings Benefit Common Stock Account shall be
paid to the Participant in a lump sum (or in such installments as approved by the chief executive
officer of Alleghany in his sole discretion) at the conclusion of the then current five-year
savings benefit deferral period or, if earlier, upon the date of the Participant’s termination of
employment with Alleghany
or such date or dates after such termination as approved by the chief executive officer of
Alleghany in his sole discretion. The Board may, at its sole option, cause any savings benefit
deferral period to terminate at such earlier time as the Board may, in its sole discretion,
determine, in which event the next succeeding five-year savings benefit deferral period shall
commence on the day following the date the preceding period terminated. The first five-year
savings benefit deferral period commenced on January 2, 1984 and terminated on December 15, 1988.

     Subject to rules which may be established by the Plan Administrator or by the Board, a
Participant may defer payment of all or a portion of the amounts otherwise payable to him
(including as a result of successive deferrals) at the conclusion of each savings benefit deferral
period until completion of the next succeeding savings benefit deferral period or, if earlier,
until the date of the Participant’s termination with Alleghany (or such date or dates after such
termination as approved by the chief executive officer of Alleghany in his sole discretion), by
giving written notice to the Plan Administrator not later than six months prior to the date on
which such amount would otherwise be paid.

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     (g) Payout of Section 4(c) Amounts. Each Deferred Compensation Agreement entered into
between Alleghany and a Participant shall set forth the terms for payment in cash of amounts
attributable to compensation deferred thereunder (a “Payout Schedule”) subject to the following:

          (1) A Payout Schedule may provide for a lump sum payment or for payment in annual installments.

          (2) Payments shall not extend beyond the year in which the Participant attains age 90.

          (3) All payments shall be made in the month of January.

          (4) The amount of each annual installment payment shall be computed by dividing the then
balance of such Deferred Compensation Prime Rate Account and/or Deferred Compensation
Common Stock Account by the number of installments remaining, including the current
installment; provided, however, that a different method of computation may be specified if
agreed to by Alleghany.

          (5) In addition to the normal payout schedule specified with respect to such Deferred
Compensation Prime Rate Account and/or Deferred Compensation Common Stock Account, special
payout schedules may be specified with respect to such account to apply, respectively, in
the event of (i) the Participant’s disability, (ii) his death or (iii) the termination of
his employment or his ceasing to be a director of Alleghany.

          (6) Notwithstanding the foregoing or any provision of any Deferred Compensation Agreement,
whether in effect as of the date hereof or subsequently entered

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into, the Board may at its
sole option direct that payment to a Participant of amounts described in section 4(c) shall
occur at such earlier time as the Board may, in its sole discretion, designate.

     Deferred Compensation Agreements entered into between a Director Participant and Alleghany may
provide in aggregate for payment in accordance with no more than
two Payout Schedules. Deferred Compensation Agreements entered between an Officer Participant
and Alleghany may provide in the aggregate for payment in accordance with no more than two Payout
Schedules applicable to Deferred Compensation Prime Rate Accounts and two Payout Schedules
applicable to Deferred Compensation Common Stock Accounts.

     (h) Beneficiaries. A Savings Benefit Participant may designate a beneficiary to receive
payment of the value of amounts credited to his Savings Benefit Prime Rate Account and/or to his
Savings Benefit Common Stock Account following the Participant’s death by filing a written notice
with the Plan Administrator. In the case of deferral by a Director Participant of amounts
described in section 4(c), a beneficiary for each Deferred Compensation Prime Rate Account
following a different Payout Schedule may be designated in the Deferred Compensation Agreement or
Agreements providing for such deferral. In the case of deferral by an Officer Participant of
amounts described in section 4(c), a beneficiary for each Deferred Compensation Prime Rate Account
or Deferred Compensation Common Stock Account following a different Payout Schedule may be
designated in the Deferred Compensation Agreement or Agreements providing for such deferral. A
Participant may at any time, and from time to time, change beneficiaries by filing a written notice
with the Plan Administrator.

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     (i) Hardship. Notwithstanding anything herein contained to the contrary, upon the request
of a Participant and based on a showing of financial hardship caused by accident or illness, or by
an event beyond the control of the Participant, the Board may, in its sole discretion, vary the
manner and time of making the payments under section 4(g) from those provided for in the
Participant’s Deferred Compensation Agreement.

     (j) Deferred Compensation Agreements. Deferred Compensation Agreements shall be entered
into by the parties:

          (1) No later than June 15th and December 15th with respect to amounts described in sections
4(c)(1) and 4(c)(2) which would otherwise be payable during the next six calendar months;

          (2) With respect to entitlements under the Alleghany Corporation Management Incentive Plan or any
similar bonus plan, no later than December 15th of the year prior to the year during which the
bonus is earned;

          (3) With respect to entitlements under the Long-Term Incentive Plans, (i) in the case of awards of
performance shares, no later than September 1 of the calendar year preceding the year in which the
Participant would otherwise be entitled to payment with respect to such performance shares, and
(ii) in the case of other forms of awards, as the Plan Administrator may designate;

          (4) With respect to any bonus referred to in section 4(c)(5), no less than two weeks prior to the
authorization of such bonus by Alleghany.

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The Plan Administrator may prescribe forms of Deferred Compensation Agreement. Deferred
Compensation Agreements shall be executed on behalf of Alleghany either by the Chairman of
the Board or by the President of Alleghany, except that in the case of a Deferred
Compensation Agreement with the Chairman of the Board such Deferred Compensation Agreement
shall be executed on behalf of Alleghany by the President of Alleghany and in the case of a
Deferred Compensation Agreement with the President such Deferred Compensation Agreement
shall be executed on behalf of Alleghany by the Chairman of the Board of Alleghany.
Subject to the provisions of section 5(h) hereof, Deferred Compensation Agreements may be
amended or modified by agreement of the Participant and Alleghany, including amendments or
modifications to extend or accelerate scheduled payments.

(5) General Provisions.

     This Plan is intended to constitute a plan which is unfunded and is maintained by Alleghany
primarily for the purpose of providing deferred compensation for the directors and officers of
Alleghany, representing a select group of management or highly compensated employees of Alleghany
within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income
Security Act of 1974, as amended. Nothing in the Plan shall create, or be construed to create, a
trust or fiduciary relationship of any kind between Alleghany and a Participant, his designated
beneficiary, or any other person. Any amounts deferred under the Plan shall be construed for all
purposes as a part of the general funds of Alleghany, and any right to receive payments from
Alleghany under the Plan shall be no greater than the right of any unsecured general
creditor. Alleghany may, but need not, purchase any securities or instruments as a means of
hedging its obligations to any Participant under the Plan, but if it does, neither the

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Participant,
his beneficiary nor any other person shall have any interest therein or other right to such
property. All payments hereunder shall be made in cash and no Participant shall be entitled
hereunder to any shares of Alleghany Common Stock.

     (b) The right of any Participant to any amount payable pursuant to this Plan shall not be
assigned, transferred, pledged or encumbered except by the laws of descent and distribution.

     (c) Participation in the Plan shall not be construed as conferring upon any Participant the right
to continue as a director of Alleghany or in the employ of Alleghany as an executive or in any
other capacity.

     (d) The Board may at any time, in its sole discretion, suspend the availability of the Common
Stock Account or impose limitations upon the frequency and amount of transfers to and from the
Common Stock Account.

     (e) No employee benefits to which a Participant would be entitled under any other employee benefit
plan or arrangement maintained by Alleghany for its employees shall be decreased or modified
because of the deferral of salary under the Plan.

     (f) Payment by Alleghany to a Participant or to a Participant’s beneficiary or beneficiaries, as
designated or otherwise determined pursuant to the provisions of the Plan, shall be binding on all
interested parties and on such Participant’s heirs, executors, administrators and assigns, and
shall discharge Alleghany and its directors, officers and
employees from all claims, demands, actions or causes of action of every kind arising out of
or on account of such Participant’s participation in the Plan, known or unknown, for himself, his
heirs, executors, administrators and assigns.

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     (g) Notwithstanding the provisions of sections 4(f) and 4(g) hereof, but subject to section 5(h)
hereof, all amounts described in sections 4(b) and 4(c) hereof and credited to a Participant’s
Prime Rate Account and/or an Officer Participant’s Common Stock Account, together with interest
and/or dividend income accrued thereon, shall become immediately due and payable to such
Participant in the event of the liquidation of Alleghany or in the event that a petition shall be
filed or a case commenced in respect of Alleghany (by Alleghany or by any other person) under Title
11 of the United States Code or any other applicable Federal or state bankruptcy, insolvency or
other similar law, or that any court shall appoint a receiver, liquidator, trustee (or similar
official of Alleghany) or order the winding-up or liquidation of the affairs of Alleghany, and such
case or order shall continue unstayed and in effect for a period of sixty consecutive days.

     (h) Notwithstanding any other provision hereof, the Plan Administrator shall give effect to a
transfer of amounts between a Common Stock Account and a Prime Rate Account only if an Officer
Participant directs such transfer by written notice given to the Plan Administrator during the
period beginning on the third business day and ending on the twelfth business day following the
issuance by Alleghany of a press release setting forth its quarterly or annual summary statement of
sales and earnings (“Common Stock Account Transfer Period”). An amendment or modification of a
Payout Schedule set forth in a Deferred Compensation Agreement providing for deferral of amounts
described in section 4(c) hereof and crediting of such amounts to a Common Stock Account shall
be entered into by Alleghany and an Officer Participant only during a Common Stock Account
Transfer Period. The Plan Administrator may establish other rules in respect of transfers of
amounts to and from Common Stock Accounts and execution of amendments to Deferred Compensation
Agreements providing for crediting of

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amounts to Common Stock Accounts.

     (i) All amounts deferred under the Plan shall be subject to employment taxes, and all payments
shall be subject to income tax withholding, if applicable. Each Participant shall make
arrangements satisfactory to Alleghany with respect to the collection of such taxes with respect to
all amounts deferred or payable hereunder.

     (j) The Plan is the successor plan to the Alleghany Corporation Deferred Compensation Plan (the
“Old Plan”). Accordingly, effective as of January 1, 2002, each separate book reserve account
maintained by Alleghany pursuant to the Old Plan as of the close of business on December 31, 2001,
for each person who is or was an officer or director (“Old Plan Participants”) shall be transferred
to, and shall become, a separate book reserve account for such Participant under this Plan, and all
amounts to which any such Old Plan Participant was therefore entitled to under the Old Plan shall
instead be paid pursuant to this Plan. Further, each election and beneficiary designation of an
Old Plan Participant in effect under the Old Plan shall be given effect as if made pursuant to this
Plan. Finally, each reference to the Old Plan in any Deferred Compensation Agreement of an Old
Plan Participant shall be deemed to refer to this Plan.

13EX-10.5

 

Exhibit 10.5

EXECUTION COPY

PURCHASE AGREEMENT

     This PURCHASE AGREEMENT, dated as of November 19, 2004, is by and between Coinmach Service
Corp., a Delaware corporation (the “Company”) and Coinmach Holdings, LLC, a Delaware
limited liability company (“Holdings”).

RECITALS

     WHEREAS, Holdings owns certain shares of capital stock of Appliance Warehouse of America,
Inc., a Delaware corporation (“AWA”) and Coinmach Laundry Corporation, a Delaware
corporation (“Laundry Corp.”);

     WHEREAS, upon the terms and subject to the conditions set forth herein, Holdings wishes to
purchase and the Company wishes to sell to Holdings certain shares of the Company’s Class B Common
Stock, par value $0.01 per share (the “Class B Stock”) in exchange for the shares of AWA
and Laundry Corp. stock referenced in the foregoing recital;

     WHEREAS, Holdings and certain holders of Holdings’ Units (the “Unitholders”) are
parties to that certain Redemption Agreement, dated as of November 10, 2004 (the “Redemption
Agreement”), pursuant to which Holdings redeemed (the “Holdings Redemption”) certain of
the Units held by the Unitholders in exchange for certain shares of Laundry Corp. capital stock
(the “Redeemable Laundry Corp. Stock”);

     WHEREAS, concurrently with the consummation of the Initial Closing (as defined below), it is
contemplated that the Company will consummate an initial public offering (the “IPO”) of
income depositary securities (“IDSs”) pursuant to that certain Purchase Agreement (the
“IPO Purchase Agreement”), dated as of November 19, 2004, between the Company, Merrill
Lynch & Co., as representative of the several underwriters parties thereto (the
“Underwriters”), and the other parties thereto;

     WHEREAS, it is contemplated that (i) the Company will contribute a portion of the proceeds of
the IPO to Laundry Corp., (ii) the Company will loan a portion of the proceeds from the IPO to
Laundry Corp.’s subsidiary, Coinmach Corp., a Delaware corporation (“Coinmach Corp.”) and
(iii) Coinmach Corp. will, in turn, distribute a portion of such proceeds to Laundry Corp.;

     WHEREAS, it is contemplated that Laundry Corp. will use all of the proceeds received by it as
a result of the transactions described in the foregoing recital to redeem (the “Laundry Corp.
Redemption”) for cash a portion of the shares of Redeemable Laundry Corp. Stock distributed to
the Unitholders pursuant to the Holdings Redemption;

     WHEREAS, Laundry Corp. will not have sufficient funds to redeem a portion of the shares of
Laundry Corp. Class B1 Preferred Stock and Class B2 Preferred Stock (collectively,
“Laundry Corp. Class B Stock”) distributed to the Unitholders pursuant to the Holdings
Redemption (such unredeemed shares, the “Unredeemed Laundry Corp. Class B Stock”);

 

 

     WHEREAS, pursuant to the Redemption Agreement, all Unredeemed Laundry Corp. Class B Stock will
be contributed back to Holdings and the Units which Holdings redeemed in exchange for such
Unredeemed Laundry Corp. Class B Stock will be reissued to the respective Unitholders; and

     WHEREAS, the Company and Holdings desire that, upon the terms and subject to the conditions
set forth herein, Holdings purchase additional shares of Class B Stock in exchange for the shares
of Unredeemed Laundry Corp. Class B Stock that are contributed back to Holdings in accordance with
the Redemption Agreement, as described in the foregoing recital.

     NOW THEREFORE, in consideration of the mutual covenants set forth herein and for other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:

     1. Purchase and Sale.

          (a) At the Initial Closing, the Company agrees to sell to Holdings and Holdings agrees to
purchase from the Company an aggregate of 17,767,203 shares of Class B Stock (the “Initial
Shares”).

          (b) As consideration for the Initial Shares, at the Initial Closing, Holdings will sell,
transfer and assign to the Company all of its right, title and interest in and to the following
shares of capital stock of AWA and Laundry Corp. (the “Initial Consideration Shares”):

	 	(i)	 	10,000 shares of AWA’s Common Stock, par value
$0.01 per share;
	 
	 	(ii)	 	66,805.83 shares of Laundry Corp.’s Common
Stock, par value $2.50 per share;
	 
	 	(iii)	 	27.1729 shares of Laundry Corp.’s Class B1
Preferred Stock, par value $25.00 per share; and
	 
	 	(iv)	 	1.67486 shares of Laundry Corp.’s Class B2
Preferred Stock, par value $25.00 per share.

          (c) At the Second Closing, the Company will sell to Holdings, in exchange for each share or
fractional share of Unredeemed Laundry Corp. Class B Stock then held by Holdings (collectively, the
“Subsequent Consideration Shares” and, together with the Initial Consideration Shares, the
“Consideration Shares”), a number of shares (including fractional shares) of Class B Stock
(the “Subsequent Shares” and, together with the Initial Shares, the “Shares”)
having a value that, when combined with the value of all of the Initial Shares issued to Holdings
in the Initial Closing in respect of the shares of Laundry Corp. stock included among the, is equal
to the aggregate value, on the date of the Subsequent Closing, of all of the shares of
Laundry Corp. stock sold, transferred and assigned to the Company hereunder, as determined by
Holdings in good faith.

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     2. Closing.

          (a) The transactions contemplated by Sections 1(a) and 1(b) hereof shall be
consummated on the Closing Date (as defined in the IPO Purchase Agreement) or such other date as
may be agreed upon between Holdings and the Company (the “Initial Closing”). The
transactions contemplated by Section 1(c) hereof, if they are consummated, shall be
consummated promptly following the Unitholders’ contribution of the Subsequent Consideration Shares
to Holdings, in accordance with the Redemption Agreement or on such other date as may be agreed
upon between Holdings and the Company (the “Subsequent Closing”). The Initial Closing and
the Subsequent Closing are each referred to herein as a “Closing” and the date on which a
Closing actually takes place is referred to herein as a “Closing Date”. Each Closing shall
be made at the offices of Mayer, Brown, Rowe & Maw LLP, 1675 Broadway, New York NY 10019.

          (b) At the applicable Closing, delivery of the Shares to be delivered at such Closing shall be
made to Holdings against delivery by Holdings of certificates representing the corresponding
Consideration Shares, duly endorsed in blank or accompanied by duly executed stock powers.

          (c) Unless otherwise agreed, the Company shall deliver all Shares to Holdings in certificated
form, registered in Holdings’ name.

     3. Conditions Precedent.

          (a) Each party’s obligations under this Agreement in respect of each Closing are subject to
the accuracy of the other party’s representations and warranties set forth in Sections 4,
5 and 6, as applicable, as of the date of this Agreement and as of the applicable
Closing Date, to the performance by the other party of its obligations under this Agreement and to
the following additional conditions:

          (i) No injunction, restraining order or other order of any nature by any Government
Authority (as defined below) shall have been issued as of the applicable Closing Date that
would prevent or materially interfere with the consummation of the transactions contemplated
by this Agreement.

          (ii) The transactions contemplated by the IPO Purchase Agreement shall have been
consummated.

          (b) In addition, each party’s obligations under this Agreement in respect of the Subsequent
Closing are subject to the consummation of the Unitholders’ contribution of all Unredeemed Laundry
Corp. Class B Stock to Holdings, in accordance with the Redemption Agreement.

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     4. Representations and Warranties of Holdings.

     Holdings represents and warrants to the Company, as of the date of this Agreement and as of
each Closing Date, as follows:

          (a) Holdings has been duly organized and is validly existing as a limited liability company
and is in good standing under the laws of the State of Delaware.

          (b) Holdings has full power and authority, including all requisite limited liability company
power and authority, to enter into this Agreement and perform its obligations hereunder and
consummate the transactions contemplated hereby.

          (c) This Agreement has been duly authorized, executed and delivered by Holdings and
constitutes a legal, valid, binding and enforceable agreement of Holdings, subject, as to
enforceability, to bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors’ rights generally and to general principles of equity regardless of whether
enforcement is sought in a proceeding in equity or at law.

          (d) Neither the execution, delivery or performance of this Agreement nor the consummation of
any transactions contemplated herein will conflict with, violate, constitute a breach of or a
default (with the passage of time or otherwise) under, require the consent of any person (other
than consents already obtained) under or result in the imposition of a lien on any assets of
Holdings, under or pursuant to (i) Holdings’ Certificate of Formation or that certain Limited
Liability Company Agreement of Holdings, dated as of March 6, 2003 and as amended, amended or
restated or otherwise modified from time to time, or any other organizational document of Holdings,
(ii) any bond, debenture, note or other evidence of indebtedness, indenture, mortgage, deed of
trust, lease or any other agreement or instrument to which Holdings is a party or by which it or
its property is bound, or (iii) any federal, state, local or foreign statute, law (including,
without limitation, common law) or ordinance, or any judgment, decree, rule, regulation or order
(collectively, “Applicable Laws”) of any federal, state, local or other governmental
authority, governmental or regulatory agency or body, court, arbitrator or self-regulatory
organization, domestic or foreign (each, a “Government Authority”).

          (e) Holdings is or will be, on the applicable Closing Date, the record and beneficial owner of
the Consideration Shares and has good and marketable title to the Consideration Shares.

     5. Representations and Warranties of the Company.

     The Company represents and warrants to Holdings, as of the date of this Agreement and as of
each Closing Date, as follows:

          (a) The Company has been duly organized and is validly existing as a corporation and is in
good standing under the laws of the State of Delaware.

          (b) The Company has full power and authority, including all requisite corporate power and
authority, to enter into this Agreement and perform its obligations and consummate the transactions
contemplated hereby.

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          (c) This Agreement has been duly authorized, executed and delivered by the Company and
constitutes a legal, valid, binding and enforceable agreement of the Company, subject, as to
enforceability, to bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors’ rights generally and to general principles of equity regardless of whether
enforcement is sought in a proceeding in equity or at law.

          (d) Neither the execution, delivery or performance of this Agreement nor the consummation of
any transactions contemplated herein will conflict with, violate, constitute a breach of or a
default (with the passage of time or otherwise) under, require the consent of any person (other
than consents already obtained) under or result in the imposition of a lien on any assets of the
Company, under or pursuant to (i) the Company’s Amended and Restated Certificate of Incorporation
(as amended, amended and restated, or otherwise modified from time to time, its “Certificate of
Incorporation”) or bylaws, or any other organizational document of the Company, (ii) any bond,
debenture, note or other evidence of indebtedness, indenture, mortgage, deed of trust, lease or any
other agreement or instrument to which the Company is a party or by which it or its property is
bound, or (iii) any Applicable Law.

          (e) As of the applicable Closing Date, the Shares to be sold at such Closing will be duly and
validly authorized and, when duly and validly executed in accordance with the Company’s Certificate
of Incorporation and bylaws and issued and delivered to Holdings against delivery of the
Consideration Shares as provided in this Agreement, will be duly and validly issued and
outstanding, fully paid and non-assessable and not issued in violation of, and not subject to, any
pre-emptive or similar rights.

     6. Securities Law Matters; Resale ad Exchange of Shares.

          (a) Holdings acknowledges and understands that the sale of the Shares to Holdings will be made
without registration of the Shares under the Securities Act of 1933, as amended (the
“Securities Act”), in reliance on an exemption therefrom provided under the Securities Act.

          (b) Holdings represents, warrants, acknowledges and covenants to the Company that:

          (i) (A) the Shares are being purchased solely by and for the account of Holdings and
are being acquired for investment purposes only, and are not being purchased for
subdivision, fractionalization, resale or distribution and Holdings has no contract,
undertaking, agreement or arrangement to sell, transfer or pledge to anyone else the Shares
(or any portion thereof), and Holdings has no present plans or intentions to enter into any
such contract, undertaking, agreement or arrangement, (C) Holdings understands and agrees
that the Shares must be held indefinitely by Holdings unless they are subsequently
registered under the Securities Act or a transfer or sale is made pursuant to an exemption
from such registration, including, for example, pursuant to Rule 144 under the Securities
Act, and that the Company has no agreements in respect of registering the Shares under the
Securities Act, and (D) Holdings’ financial condition is such that it is not under any
present necessity or constraint, and does not foresee in the

5

 

future any necessity or constraint, to dispose of these Shares to satisfy any existing
or contemplated debt or undertaking;

          (ii) Holdings understands that all certificates representing the Shares shall be
endorsed as follows:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED FROM TIME TO TIME (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.”

          (iii) Holdings: (A) is aware of the Company’s business affairs and financial condition,
(B) has made an informed and knowledgeable investment decision with respect to its purchase
of the Shares and (C) has such business and financial experience as is required to give it
the capacity to protect its own interests in connection with the purchase of the Shares;

          (iv) Subject to the limitations described elsewhere herein, Holdings will offer and
sell the Shares only: (A) outside the United States to a person other than a “U.S. person”
within the meaning of Regulation S under the Securities Act (“Regulation S”), not
acting for the account or benefit of a “U.S. person,” which is acquiring such Shares in a
transaction meeting the requirements of Regulation S, (B) to institutional investors that
are reasonably believed by it to qualify as Qualified Institutional Buyers as that term is
defined in Rule 144A of the Securities Act (“Rule 144A”) in transactions meeting the
requirements of Rule 144A, (C) in a transaction otherwise exempt from the Securities Act, or
(D) pursuant to a registration under the Securities Act;

          (v) If Holdings consummates a sale or other transfer of the Shares, or any other shares
of the Company’s capital stock issued in respect of the Shares upon exchange, conversion or
redemption thereof or otherwise, on or after the date hereof and such Shares are not then
registered under the Securities Act, prior to such sale or transfer it will have obtained
and delivered to the Company (A) an executed certificate of transfer substantially in the
form attached hereto as Exhibit A for the benefit of the Company from such purchaser
or transferee of the Shares and (B) if requested by the Company, obtained and delivered to
the Company a written opinion of counsel satisfactory to the Company to the effect that such
sale or transfer will not violate or require registration under the Securities Act;

          (vi) Holdings understands that no public market now exists for the Shares and that the
Company has made no assurances that a public market will ever exist for any of the Shares;

6

 

          (vii) Holdings understands and acknowledges that, under certain circumstances, pursuant
to Section 3.2.4 of the Company’s Amended and Restated Certificate of Incorporation, as
amended or otherwise modified from time to time (the “Charter”), transfers of the
Company’s Class B Stock to persons that are not Class B Affiliates (as defined in the
Charter) will result in the loss of certain voting rights of all shares of the Company’s
Class B Stock;

          (viii) In the event Holdings does not comply with any of the terms of resale contained
in this Section 6, “stop transfer” instructions may be noted against the Shares sold
or attempted to be sold by it.

     7. Governing Law.

          This agreement will be governed by the laws of the State of New York..

     8. Survival.

          The representations, warranties and covenants set forth in or made pursuant to Sections
4, 5 and 6 of this Agreement shall survive the Closing Date.

     9. Miscellaneous.

          (a) All notices, demands or other communications to be given or delivered under or by reason
of the provisions of this Agreement will be in writing and will be deemed to have been given when
delivered if delivered personally, sent via a nationally recognized overnight courier, or sent via
facsimile to the recipient, or if sent by certified or registered mail, return receipt requested,
will be deemed to have been given two (2) business days thereafter. Such notices, demands and
other communications will be sent to the applicable address indicated below:

     If to the Company:

Coinmach Service Corp.

303 Sunnyside Blvd., Suite 70

Plainview, NY 11803

Attention: Robert M. Doyle

     If to Holdings:

Coinmach Holdings, LLC

c/o Coinmach Laundry Corporation

521 East Morehead

Charlotte, NC 28202

Attention: Stephen R. Kerrigan

     and, in either case, with copies, which will not constitute notice, to:

7

 

GTCR Fund VII, L.P.

c/o GTCR Golder Rauner, L.L.C.

6100 Sears Tower

Chicago, IL 60606-6402

Attention: David A. Donnini

Kirkland & Ellis LLP

200 East Randolph Drive

Chicago, IL 60601

Attention: Stephen L. Ritchie, P.C.

Mayer, Brown, Rowe & Maw LLP

1675 Broadway

New York, NY 10019

Attention: Ronald S. Brody, Esq.

or, in any such case, 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. Each party shall be
entitled to rely conclusively upon any notice received, or the failure to receive any notice, from
any other party with respect to rights and obligations under this Agreement.

          (b) This Agreement has been and is made solely for the benefit of and shall be binding upon
the Company and Holdings and their respective successors and assigns and no other person shall
acquire or have any right under or by virtue of this Agreement.

          (c) This Agreement may be signed in various counterparts which together shall constitute one
and the same instrument.

          (d) The headings in this Agreement are for convenience of reference only and shall not limit
or otherwise affect the meaning hereof.

          (e) If any term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full force and effect and
shall in no way be affected, impaired or invalidated, and the parties hereto shall use their best
efforts to find and employ an alternative means to achieve the same or substantially the same
result as that contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.

          (f) This Agreement may be amended, modified or supplemented, and waivers or consents to
departures from the provisions hereof may be given, provided that the same are in writing and
signed by the Company and Holdings.

[Signature page follows]

8

 

     IN WITNESS WHEREOF, the undersigned have executed and delivered this Purchase Agreement as of
the date first above written.

	 	 	 	 	 	 	 
	 	 	COINMACH SERVICE CORP.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Robert M. Doyle	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Robert M. Doyle	 	 
	 

	 	 	 	Title: Chief Financial Officer	 	 
	 
	 	 	 	 	 	 
	 	 	COINMACH HOLDINGS, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Robert M. Doyle	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Robert M. Doyle	 	 
	 

	 	 	 	Title: Chief Financial Officer	 	 

 

 

EXHIBIT A

CERTIFICATE OF TRANSFER

	 	 	 	 	 
	 

	 	[Date]
	 	 

Coinmach Service Corp.

303 Sunnyside Blvd., Suite 70

Plainview, NY 11803

Attention: Robert M. Doyle

Dear Sirs:

     In connection with the purchase or other acquisition by the undersigned of [___] shares of the
[Describe Offered Securities] (the “Offered Securities”) of Coinmach Service Corp. (the “Company”),
the undersigned hereby makes the following representations, warranties and covenants to and for the
benefit of the Company:

     1. (A) the purchase or other acquisition by the undersigned of the Offered
Securities has not been registered under the United States Securities Act of 1933, as amended (the
“Securities Act”) by reason of the reliance on an exemption from registration requirements under
the Securities Act, (B) the Offered Securities have been acquired solely by and for the undersigned
and have been acquired for investment purposes only, and are not being purchased or otherwise
acquired for subdivision, fractionalization, resale or distribution and the undersigned has no
contract, undertaking, agreement or arrangement to sell, transfer or pledge to anyone else the
Offered Securities (or any portion thereof) which the undersigned has purchased or otherwise
acquired, and the undersigned has no present plans or intentions to enter into any such contract,
undertaking, agreement or arrangement, (C) the undersigned understands and agrees that the Offered
Securities being sold or otherwise transferred to the undersigned must be held indefinitely by the
undersigned unless they are subsequently registered under the Securities Act or a transfer or sale
is made pursuant to an exemption from such registration, including, for example, pursuant to Rule
144 under the Securities Act, and that the Company has no agreements in respect of registering the
Offered Securities under the Securities Act, and (D) the undersigned’s financial condition is such
that the undersigned is not under any present necessity or constraint, and does not foresee in the
future any necessity or constraint, to dispose of these Offered Securities to satisfy any existing
or contemplated debt or undertaking;

     2. the undersigned understands that all certificates representing the Offered Securities shall
be endorsed as follows:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
FROM TIME TO TIME (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.”

 

 

     3. the undersigned: (A) is aware of the Company’s business affairs and financial condition,
(B) has made an informed and knowledgeable investment decision with respect to its purchase or
other acquisition of the Offered Securities and (C) has such business and financial experience as
is required to give it the capacity to protect its own interests in connection with the purchase or
other acquisition of the Offered Securities;

     4. the undersigned: (A) has not and will not solicit offers for, or offer or resell, the
Offered Securities by means of any general solicitation or general advertising within the meaning
of Rule 502(c) under Regulation D under the Securities Act, and (B) has not engaged and will not
engage in any directed selling efforts with respect to any Offered Securities sold pursuant to
Regulation S under the Securities Act (“Regulation S”);

     5. subject to the limitations described elsewhere herein, the undersigned will offer and sell
the Offered Securities only: (A) outside the United States to a person other than a “U.S. person”
within the meaning of Regulation S, not acting for the account or benefit of a “U.S. person,” which
is acquiring Offered Securities in a transaction meeting the requirements of Regulation S, (B) to
institutional investors that are reasonably believed by it to qualify as Qualified Institutional
Buyers as that term is defined in Rule 144A of the Securities Act (“Rule 144A”) in transactions
meeting the requirements of Rule 144A, (C) in a transaction otherwise exempt from the Securities
Act, or (D) pursuant to a registration under the Securities Act;

     6. if the undersigned consummates a sale or other transfer of the Offered Securities on or
after the date hereof, prior to such sale or transfer it will have obtained and delivered to the
Company an executed certificate of transfer substantially in the form of this Certificate of
Transfer or in such other form as may be required pursuant to that certain Amended and Restated
Securityholders Agreement, dated as of November 24, 2004, by and among Coinmach Holdings, LLC and
the other parties thereto, as amended, amended and restated or otherwise modified from time to
time, if the undersigned is a party thereto (the “Certificate of Transfer”) for the benefit of the
Company from each purchaser or transferee of the Offered Securities (each, a “Subsequent Buyer”);

     7. the undersigned understands that no public market now exists for the Offered Securities and
that the Company has made no assurances that a public market will ever exist for any of the Offered
Securities;

     8. the undersigned has the legal capacity, power and authority to, and has taken all corporate
action necessary to, enter into and perform all of its obligations under this Certificate of
Transfer;

     9. the execution, delivery and performance by the undersigned of this Certificate of Transfer
and each transaction contemplated by this Certificate of Transfer as being performed by it will not
violate a provision of its charter, articles of organization, bylaws, constitution or other
constituent or organizational documents or any other agreement or document which is binding on it
or its assets;

     10. in acquiring the Offered Securities, the undersigned has acquired all of the outstanding
securities of the Company (other than short-term paper) owned or beneficially owned by the
transferor, or, if that is not the case, the undersigned will promptly notify the Company of that
fact prior to acquiring the Offered Securities and will assist the Company as needed or requested
for the Company to determine that the acquisition of the Offered Securities by the undersigned
would not require the Company to register as an investment company under the United States
Investment Company Act of 1940, as amended (the “Investment Company Act”);

 

 

     11. (A) if the undersigned is a natural person, he or she has acquired the Offered
Securities solely for his or her own benefit, except that the undersigned may have acquired the
Offered Securities jointly with his or her spouse; or (B) if the undersigned is not a natural
person, (i) it was not formed for the purpose of investing in the Company or to permit the Company
to avoid classification as an investment company under the Investment Company Act; (ii) not more
than 40% of its assets will be invested in interests of the Company; (iii) it (as opposed to its
equity owners or beneficial owners) is not making this investment with a principal purpose of
enabling the Company to avoid “publicly traded” partnership status under the United States Internal
Revenue Code of 1986, as may be amended from time to time; (iv) it is not an “investment company”
within the meaning of the Investment Company Act and it also would not be an investment company but
for the exceptions to the definitions of investment company provided by Sections 3(c)(1) or 3(c)(7)
thereof; (v) the holders of equity or beneficial interests in it are not able to decide
individually whether to participate, or the extent of their participation in the undersigned’s
investment in the Company; (vi) it is not a “defined contribution plan” within the meaning of the
United States Employee Retirement Income Security Act of 1974, as amended, which allows
participants to determine whether or how much will be invested in investments on their behalf; and
(vii) no persons other than the undersigned will have a beneficial interest in the interests of the
Company being acquired pursuant to this Certificate of Transfer (other than as a shareholder,
partner or other beneficial owner of an equity interest in the undersigned); or (C) if neither
subclause (A) nor (B) is true as of the date of transfer, the undersigned will promptly notify the
Company of that fact prior to acquiring the Offered Securities and will assist the Company as
needed or requested for the Company to determine that the acquisition of the Offered Securities by
the undersigned would not require the Company to register as an investment company under the
Investment Company Act;

     12. (A) to the best knowledge of the undersigned, the acquisition of the Offered Securities by
it would not require the Company to register as an investment company under the Investment Company
Act; (B) at the time of acquiring the Offered Securities, the undersigned agrees to provide
promptly, at the request of the Company, written certifications, representations and warranties,
financial statements and incorporation and operating documents that would, in the sole discretion
of the Company, provide reasonable assurances to the Company that the beneficial ownership of the
Offered Securities by the undersigned would not require the Company to register as an investment
company under the Investment Company Act, and (C) the undersigned understands and acknowledges that
the Company will, and it authorizes the Company to, rely on the representations, warranties,
agreements and statements contained herein when determining not to register as an investment
company under the Investment Company Act;

     13. the undersigned agrees that (A) it will offer and sell, or otherwise dispose of, the
Offered Securities only in a transaction that it reasonably believes would not require the Company
to register as an investment company, and any sale or other disposition that would require the
Company to register as an investment company shall be void ab initio; and (B) for so long as it
holds outstanding securities of the Company, not to do any act, or fail to do any act, that would
cause a reasonable person to believe that the Company might be required to register as an
investment company under the Investment Company Act;

     14. this Certificate of Transfer has been duly and validly authorized, executed and delivered
by the undersigned and constitutes a valid and binding obligation enforceable in accordance with
its terms, subject to any necessary stamping and registration and to customary insolvency and other
qualifications with regard to the meaning of “enforceable”; and

     [Insert for transfers of Coinmach Service Corp. Class B Common Stock: 15. the undersigned
understands and acknowledges that, under certain circumstances, pursuant to Section 3.2.4 of the
Company’s Amended and Restated Certificate of Incorporation, as amended or otherwise modified from
time to time (the “Charter”), transfers of the Company’s Class B Common Stock to persons that are

 

 

not Class B Affiliates (as defined in the Charter) will result in the loss of certain voting
rights of all shares of the Company’s Class B Common Stock.]

     The undersigned understands and agrees that this Certificate of Transfer must be executed by
the undersigned and delivered to the Company prior to consummation of the purchase or other
acquisition of Offered Securities by it and is intended, without limiting any other right or remedy
in law or equity available to the Company, to inure to the benefit of the Company and provide the
Company with a contractual right to take action against the undersigned to enforce this Certificate
of Transfer and obtain damages in the event of any breach of the representations, warranties and
covenants contained herein. The Company may prohibit and implement “stop transfer” instructions
against the purchase or other acquisition by the undersigned if, in the Company’s sole discretion,
this Certificate of Transfer is improperly executed or delivered or the Company has reasonable
knowledge that the representations and warranties contained herein and made by the undersigned are
inaccurate in any respect. Prior to its purchase or acquisition of the Offered Securities, the
undersigned agrees that it must provide the Company with an opportunity to request, and if the
Company so requests, must obtain and deliver to the Company, a written opinion of counsel
satisfactory to the Company to the effect that the purchase or other acquisition of the Offered
Securities by the undersigned will not violate or require registration under the Securities Act.

	 	 	 	 	 
	 

	 	Very truly yours,
	 	 
	 
	 	 	 	 
	 

	 	[                                        ]	 	 
	 
	 	 	 	 
	 

	 	By:                                        	 	 
	 

	 	Name:	 	 
	 

	 	Title:

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