Limited Liability Company Agreement

COINMACH HOLDINGS, LLC


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LIMITED LIABILITY COMPANY AGREEMENT


Dated as of March 6, 2003


THE COMPANY INTERESTS REPRESENTED BY THIS LIMITED LIABILITY COMPANY AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED OR UNDER ANY OTHER APPLICABLE SECURITIES LAWS. SUCH INTERESTS MAY NOT BE SOLD, ASSIGNED, PLEDGED OR OTHERWISE DISPOSED OF AT ANY TIME WITHOUT EFFECTIVE REGISTRATION UNDER SUCH ACT AND LAWS OR EXEMPTION THEREFROM, AND COMPLIANCE WITH THE OTHER SUBSTANTIAL RESTRICTIONS ON TRANSFERABILITY SET FORTH HEREIN.


THE COMPANY INTERESTS REPRESENTED BY THIS LIMITED LIABILITY COMPANY AGREEMENT ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER SPECIFIED IN THE SECURITYHOLDERS AGREEMENT, DATED AS OF MARCH 6,2003, AS AMENDED OR MODIFIED FROM TIME TO TIME, AMONG THE ISSUER (THE "LLC") AND CERTAIN INVESTORS, AND THE LLC RESERVES THE RIGHT TO REFUSE THE TRANSFER OF SUCH INTERESTS UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO ANY TRANSFER. A COPY OF SUCH CONDITIONS SHALL BE FURNISHED BY THE LLC TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE.


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TABLE OF CONTENTS


PAGE
---- ARTICLE I CERTAIN DEFINITIONS .............................................. 1 ARTICLE II ORGANIZATIONAL MATTERS ........................................... 10


2.1 Formation .......................................................... 10
2.2 The Certificate, Etc ............................................... 10
2.3 Name ............................................................... 10
2.4 Purpose ............................................................ 10
2.5 Powers of the LLC .................................................. 11
2.6 Foreign Qualification .............................................. 12
2.7 Principal Office; Registered Office ................................ 12
2.8 Term ............................................................... 13
2.9 No State-Law Partnership ........................................... 13
2.10 No UBTI ............................................................ 13


ARTICLE III UNITS; CAPITAL ACCOUNTS .......................................... 13


3.1 Unitholders ........................................................ 13
3.2 Unitholder Meetings ................................................ 15
3.3 Action of Unitholders by Written Consent or Telephone Conference ... 17
3.4 Issuance of Additional Units and Interests ......................... 18
3.5 Capital Accounts ................................................... 18
3.6 Negative Capital Accounts .......................................... 19
3.7 No Withdrawal ...................................................... 19


ARTICLE IV DISTRIBUTIONS AND ALLOCATIONS .................................... 20


4.1 Distributions ...................................................... 20
4.2 Priority of Class B Preferred Units on Allocations and Redemption .. 22
4.3 Allocations ........................................................ 23
4.4 Special Allocations ................................................ 23
4.5 Tax Allocations .................................................... 24
4.6 Indemnification and Reimbursement for Payments on Behalf of a
Unitholder ......................................................... 24


ARTICLE V BOARD OF MANAGERS; OFFICERS ...................................... 25


5.1 Management by the Board of Managers ................................ 25
5.2 Composition and Election of the Board of Managers .................. 26
5.3 Board Meetings and Actions by Written Consent ...................... 27
5.4 Committees; Delegation of Authority and Duties ..................... 29
5.5 Officers ........................................................... 29


ARTICLE VI GENERAL RIGHTS AND OBLIGATIONS OF UNITHOLDERS .................... 31


6.1 Limitation of Liability ............................................ 31
6.2 Lack of Authority .................................................. 31
6.3 No Right of Partition .............................................. 32
6.4 Unitholders Right to Act ........................................... 32
6.5 Conflicts of Interest .............................................. 32


i


TABLE OF CONTENTS
(continued)


PAGE
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6.6 Transactions Between the LLC and the Unitholders ................... 32


ARTICLE VII EXCULPATION AND INDEMNIFICATION .................................. 32


7.1 Exculpation ........................................................ 32
7.2 Right to Indemnification ........................................... 32
7.3 Advance Payment .................................................... 33
7.4 Indemnification of Employees and Agents ............................ 33
7.5 Appearance as a Witness ............................................ 33
7.6 Nonexclusivity of Rights ........................................... 33
7.7 Insurance .......................................................... 34
7.8 Savings Clause ..................................................... 34


ARTICLE VIII BOOKS, RECORDS, ACCOUNTING AND REPORTS ........................... 34


8.1 Records and Accounting ............................................. 34
8.2 Fiscal Year ........................................................ 34
8.3 Transmission of Communications ..................................... 34
8.4 LLC Funds .......................................................... 34


ARTICLE IX TAXES ............................................................ 35


9.1 Tax Returns ........................................................ 35
9.2 Tax Elections ...................................................... 35
9.3 Tax Matters Partner ................................................ 35


ARTICLE X TRANSFER OF LLC INTERESTS ........................................ 35


10.1 Transfers by Unitholders ........................................... 35
10.2 Effect of Assignment ............................................... 36
10.3 Restriction on Transfer ............................................ 36
10.4 Transfer Fees and Expenses ......................................... 36
10.5 Void Transfers ..................................................... 36


ARTICLE XI ADMISSION OF UNITHOLDERS ......................................... 36


11.1 Substituted Unitholders ............................................ 36
11.2 Additional Unitholders ............................................. 37
11.3 Optionholders ...................................................... 37


ARTICLE XII WITHDRAWAL AND RESIGNATION OF UNITHOLDERS ........................ 37


12.1 Withdrawal and Resignation of Unitholders .......................... 37
12.2 Withdrawal of a Unitholder ......................................... 37


ARTICLE XIII DISSOLUTION AND LIQUIDATION ...................................... 37


13.1 Dissolution ........................................................ 37
13.2 Liquidation and Termination ........................................ 38
13.3 Cancellation of Certificate ........................................ 38
13.4 Reasonable Time for Winding Up ..................................... 38
13.5 Return of Capital .................................................. 39


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TABLE OF CONTENTS
(continued)


PAGE
---- ARTICLE XIV VALUATION ........................................................ 39


14.1 Determination ...................................................... 39
14.2 Fair Market Value .................................................. 39


ARTICLE XV GENERAL PROVISIONS ............................................... 40


15.1 Power of Attorney .................................................. 40
15.2 Amendments ......................................................... 40
15.3 Title to LLC Assets ................................................ 40
15.4 Remedies ........................................................... 41
15.5 Successors and Assigns ............................................. 41
15.6 Severability ....................................................... 41
15.7 Incorporation of the LLC ........................................... 41
15.8 Opt-in to Article 8 of the Uniform Commercial Code ................. 41
15.9 Notice to Unitholder of Provisions ................................. 42
15.10 Counterparts ....................................................... 42
15.11 Consent to Jurisdiction ............................................ 42
15.12 Descriptive Headings; Interpretation ............................... 42
15.13 Applicable Law ..................................................... 43
15.14 Addresses and Notices .............................................. 43
15.15 Creditors .......................................................... 43
15.16 Waiver ............................................................. 43
15.17 Further Action ..................................................... 43
15.18 Offset ............................................................. 43
15.19 Entire Agreement ................................................... 43
15.20 Delivery by Facsimile .............................................. 44
15.21 Survival ........................................................... 44


iii


COINMACH HOLDINGS, LLC
LIMITED LIABILITY COMPANY AGREEMENT


This LIMITED LIABILITY COMPANY AGREEMENT (this "Agreement"), dated as of March 6, 2003, is entered into by and among Coinmach Holdings, LLC (the "LLC") and the Unitholders.


NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:


ARTICLE I


CERTAIN DEFINITIONS


Capitalized terms used but not otherwise defined herein shall have the following meanings:


"Additional Unitholder" means a Person admitted to the LLC as a Unitholder pursuant to Section 11.2.


"Additional Securities" shall have the meaning set forth in Section 3.4.


"Adjusted Capital Account Deficit" means with respect to any Capital Account as of the end of any Taxable Year, the amount by which the balance in such Capital Account is less than zero. For this purpose, such Person's Capital Account balance shall be


(i) reduced for any items described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5), and (6), and


(ii) increased for any amount such Person is obligated to contribute or is treated as being obligated to contribute to the LLC pursuant to Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (relating to partner liabilities to a partnership) or 1.704-2(g)(l) and 1.704-2(i) (relating to Minimum Gain).


"Affiliate" of any particular Person means (i) any other Person controlling, controlled by, or under common control with such particular Person, where "control" means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, by contract, or otherwise, and (ii) if such Person is a partnership, any partner thereof and (iii) without limiting the foregoing and with respect only to GTCR-CLC, any investment fund controlled by GTCR LLC.


"Agreement" means this Limited Liability Company Agreement, as amended or modified from time to time in accordance with the terms hereof.


"Assignee" means a Person to whom an LLC Interest has been transferred in accordance with the terms of this Agreement and the other agreements contemplated hereby, but who has not become a Unitholder pursuant to Article X.
"Board" means the Board of Managers established pursuant to Section 5.2.


"Book Value" means, with respect to any LLC property, the LLC's adjusted basis for federal income tax purposes, adjusted from time to time to reflect the adjustments required or permitted by Treasury Regulation Section 1.704-1(b)(2)(iv)(d)-(g).


"Capital Account" means the capital account maintained for a Unitholder pursuant to Section 3.5.


"Capital Contributions" means any cash, cash equivalents, promissory obligations, or the Fair Market Value of other property that a Unitholder contributes or is deemed to have contributed to the LLC with respect to any Unit pursuant to Sections 3.1 or 3.4, or, with respect to Class A Preferred Units, pursuant to any Equity Participation Agreement.


"Certificate" means the LLC's Certificate of Formation as filed with the Secretary of State of Delaware.


"Change in Ownership" means (i) any sale, transfer, or issuance or series of sales, transfers, and/or issuances of Common Units by the LLC or any holders thereof which results in any Person or group of Persons (as the term "group" is used under the Securities Exchange Act), other than GTCR-CLC, GIC, the TCW/Crescent Purchasers, and their respective Affiliates, owning more than 50% of the Common Units outstanding at the time of such sale, transfer, or issuance or series of sales, transfers, and/or issuances or (ii) the transfer or series of related transfers by GTCR-CLC and its Affiliates (to Persons who are not Affiliates of GTCR-CLC) of interests of Common Units representing more than 50% of the outstanding Common Units as of the last such transfer.


"Class A Preferred Unit" means a Unit representing a fractional part of the interest of a Unitholder in Profits, Losses and Distributions and having the rights and obligations specified with respect to the Class A Preferred Units in this Agreement.


"Class A Unpaid Yield" of any Class A Preferred Unit means, as of any date, an amount equal to the excess, if any, of (a) the aggregate Class A Yield accrued on such Class A Preferred Unit for all periods prior to such date (including partial periods), over (b) the aggregate amount of prior Distributions made by the LLC that constitute payment of Class A Yield on such Class A Preferred Unit.


"Class A Unreturned Capital" of any Class A Preferred Unit means, as of any date, the aggregate Capital Contributions made or deemed to be made in exchange for such Class A Preferred Unit reduced by all Distributions made by the LLC that constitute a return of Class A Unreturned Capital under Section 4.1(a)(ii).


"Class A Yield" means, with respect to each Class A Preferred Unit, the amount accruing on such Class A Preferred Unit on a daily basis from the date of issuance, at the rate of 8% per annum, compounded on the last day of each calendar quarter, on (a) the Class A Unreturned Capital of such Class A Preferred Unit plus (b) as the case may be, the Class A Unpaid Yield thereon for all prior quarterly periods. In calculating the amount of any Distribution to be made during a period, the portion of the Class A Yield with respect to such Class A Preferred Unit for


2 the portion of the quarterly period elapsing before such Distribution is made shall be taken into account in determining the amount of such Distribution.


"Class B Preferred Unit" means a Unit representing a fractional part of the interest of a Unitholder in Profits, Losses and Distributions and having the rights and obligations specified with respect to the Class B Preferred Units in this Agreement.


"Class B Unpaid Yield" of any Class B Preferred Unit means, as of any date, an amount equal to the excess, if any, of (a) the aggregate Class B Yield accrued on such Class B Preferred Unit for all periods prior to such date (including partial periods), over (b) the aggregate amount of prior Distributions made by the LLC that constitute payment of Class B Yield on such Class B Preferred Unit.


"Class B Unreturned Capital" of any Class B Preferred Unit means, as of any date, the aggregate Capital Contributions made or deemed to be made in exchange for such Class B Preferred Unit reduced by all Distributions made by the LLC that constitute a return of Class B Unreturned Capital under Section 4.1(a)(iv).


"Class B Yield" means, with respect to each Class B Preferred Unit, the amount accruing on such Class B Preferred Unit on a daily basis from the date of issuance, at the rate of 12.5% per annum from July 5, 2000 until November 15, 2002 and thereafter at the rate of 14% per annum, compounded on the last day of each calendar quarter, on (a) the Class B Unreturned Capital of such Class B Preferred Unit plus (b) as the case may be, the Class B Unpaid Yield thereon for all prior quarterly periods. In calculating the amount of any Distribution to be made during a period, the portion of the Class B Yield with respect to such Class B Preferred Unit for the portion of the quarterly period elapsing before such Distribution is made shall be taken into account in determining the amount of such Distribution. The yield on each Class B Preferred Unit issued on March 6,2003 shall be deemed to begin accruing on July 5, 2000 despite its later issuance.


"Class C Preferred Unit" means a Unit representing a fractional part of the interest of a Unitholder in Profits, Losses and Distributions and having the rights and obligations specified with respect to the Class C Preferred Units in this Agreement.


"Class C Unpaid Yield" of any Class C Preferred Unit means, as of any date, an amount equal to the excess, if any, of (a) the aggregate Class C Yield accrued on such Class C Preferred Unit for all periods prior to such date (including partial periods), over (b) the aggregate amount of prior Distributions made by the LLC that constitute payment of Class C Yield on such Class C Preferred Unit.


"Class C Unreturned Capital" of any Class C Preferred Unit means, as of any date, the aggregate Capital Contributions made or deemed to be made in exchange for such Class C Preferred Unit reduced by all Distributions made by the LLC that constitute a return of Class C Unreturned Capital under Section 4.1(a)(vi).


"Class C Yield" means, with respect to each Class C Preferred Unit, the amount accruing on such Class C Preferred Unit on a daily basis from the date of issuance, at the rate of 8% per annum, compounded on the last day of each calendar quarter, on (a) the Class C Unreturned


3 Capital of such Class C Preferred Unit plus (b) as the case may be, the Class C Unpaid Yield thereon for all prior quarterly periods. In calculating the amount of any Distribution to be made during a period, the portion of the Class C Yield with respect to such Class C Preferred Unit for the portion of the quarterly period elapsing before such Distribution is made shall be taken into account in determining the amount of such Distribution. The yield on each Class C Preferred Unit issued on March 6, 2003 shall be deemed to begin accruing on the Original Purchase Date despite its later issuance.


"Coinmach Class A Preferred Stock" means the Class A Preferred Stock of Coinmach Laundry Corporation, a Delaware corporation.


"Coinmach Operating" means Coinmach Operating Corporation, a Delaware corporation.


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


"Co-Investor Contribution Agreement" means the Co-Investor Contribution Agreement, dated as of March 5,2003 among the LLC, GIC and the TCW/Crescent Purchasers.


"Common Unit" means a Unit representing a fractional part of the interest of a Unitholder in Profits, Losses and Distributions and having the rights and obligations specified with respect to the Common Units in this Agreement; provided that in the event of any Distributions upon a "Common Unit" which has not vested in accordance with the terms and conditions set forth in the Equity Participation Agreements or other agreement pursuant to which such Unit was issued (to the extent such agreement provides for vesting), such Distribution shall be placed in escrow with a national commercial bank of recognized standing and released to the holder of such Unit at the time such Unit is vested; and provided, further, that if the employment with the Company and its Subsidiaries of the holder of such "Common Unit" is terminated for any reason prior to the time that such Common Unit becomes vested, any prior Distribution attributable to such unvested Common Units shall be released from the escrow to the Company immediately upon such termination.


"Common Unitholder" means a holder of Common Units.


"Contribution Agreements" mean, collectively, the Co-Investor Contribution Agreement, the Employee Contribution Agreements, the Jefferies Contribution Agreement, the GTCR-LLC Contribution Agreement and the Management Contribution Agreement.


"Delaware Act" means the Delaware Limited Liability Company Act, 6 Del.L. Section 18-101, et seq., as it may be amended from time to time, and any successor to the Delaware Act.


"Distribution" means each distribution made by the LLC to a Unitholder, whether in cash, property or securities of the LLC and whether by liquidating distribution, redemption, repurchase, or otherwise; provided that any recapitalization or exchange or conversion of securities of the LLC (including any exchange of Units for Class A Preferred Units), redemption of securities of the LLC pursuant to any Equity Participation Agreement and any subdivision (by Unit split or otherwise) or any combination (by reverse Unit split or otherwise) of any outstanding Units shall not be deemed a Distribution.


4
"Employee Contribution Agreements" mean the Employee Contribution Agreements, each dated as of December 6, 2002 between Coinmach Holdings, LLC and each of the individuals listed on the Schedule of Employees attached thereto.


"Equity Participation Agreements" means, collectively, those Equity Participation Agreements entered into between the LLC, and each of the employees of Coinmach Operating that have acquired Equity Securities of the LLC, and any other agreements for the sale of Equity Securities between the LLC and any employees of the LLC or its Subsidiaries which are designated as "Equity Participation Agreements" by the Board.


"Equity Securities" means (i) Units or other equity interests in the LLC or a corporate successor (including other classes or groups thereof having such relative rights, powers, and duties as may from time to time be established by the Board, including rights, powers, and/or duties senior to existing classes and groups of Units and other equity interests in the LLC), (ii) obligations, evidences of indebtedness, or other securities or interests convertible or exchangeable into Units or other equity interests in the LLC or a corporate successor, and (iii) warrants, options, or other rights to purchase or otherwise acquire Units or other equity interests in the LLC or a corporate successor.


"Event of Withdrawal" means the death, retirement, resignation, expulsion, bankruptcy or dissolution of a Unitholder or the occurrence of any other event that terminates the continued membership of a Unitholder in the LLC.


"Family Group" means a Unitholder's spouse and descendants (whether natural or adopted), and any trust, family limited partnership, limited liability company or other entity wholly owned, directly or indirectly, by such Unitholder or such Unitholder's spouse and/or descendants that is and remains solely for the benefit of such Unitholder and/or such Unitholder's spouse and/or descendants and any retirement plan for such Unitholder.


"Fair Market Value" means, with respect to any asset or equity interest, its fair market value determined according to Article XlV.


"Fiscal Quarter" means each calendar quarter ending March 31, June 30, September 30, and December 31.


"Fiscal Year" means the LLC's annual accounting period established pursuant to Section 8.2.


"Fundamental Change" means (a) any sale or transfer of more than 50% of the assets of the LLC and its Subsidiaries on a consolidated basis (measured either by book value in accordance with generally accepted accounting principles consistently applied or by fair market value determined in the reasonable good faith judgement of the LLC's Board) in any transaction or series of transactions (other than in the ordinary course of business) and (b) any merger or consolidation to which the LLC is a party, except for a merger in which the LLC is the surviving company, the terms of each class of the Preferred Units are not changed, and the Preferred Units are not exchanged for cash, securities, or other property, and after giving effect to such merger, the holders of the LLC's outstanding Common Units possessing a majority of the voting power (under ordinary circumstances) to elect a majority of the Board immediately prior to the merger


5 shall continue to own the LLC's outstanding Common Units possessing the voting power (under ordinary circumstances) to elect a majority of the Board.


"GIC" means Filbert Investment Pte Ltd.


"Governmental Entity" means the United States of America or any other nation, any state or other political subdivision thereof, or any entity exercising executive, legislative, judicial, regulatory or administrative functions of government or any agency or department or subdivision of any governmental authority, including the United States federal go ...