<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 28, 1997
REGISTRATION NO. 333-37881
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------
COINMACH LAUNDRY CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 11-3258015
(I.R.S. EMPLOYER IDENTIFICATION NO.)
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)
55 LUMBER ROAD
ROSLYN, NEW YORK 11576
(516) 484-2300
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
ROBERT M. DOYLE
CHIEF FINANCIAL OFFICER
COINMACH CORPORATION
55 LUMBER ROAD
ROSLYN, NEW YORK 11576
(516) 484-2300
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
RONALD S. BRODY WILLIAM M. HARTNETT
ANDERSON KILL & OLICK, P.C. CAHILL GORDON & REINDEL
1251 AVENUE OF THE AMERICAS 80 PINE STREET
NEW YORK, NEW YORK 10020 NEW YORK, NEW YORK 10005
(212) 278-1000 (212) 701-3000
APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC:
As soon as practicable after the Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
-----------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION
NOVEMBER 28, 1997
3,750,000 SHARES
[LOGO] COINMACH LAUNDRY CORPORATION
- -------
COINMACH COMMON STOCK
- --------
KEEPING AMERICA CLEAN --------
ONE LAUNDRY ROOM AT A TIME
Of the 3,750,000 shares of common stock, par value $.01 per share (the
"Common Stock"), of Coinmach Laundry Corporation ("Coinmach Laundry") offered
hereby (the "Offering"), 2,500,000 shares are being sold by Coinmach Laundry
and 1,250,000 shares are being sold by certain stockholders of Coinmach Laundry
(the "Selling Stockholders"). Coinmach Laundry will not receive any proceeds
from the sale of shares by the Selling Stockholders. Coinmach Laundry's Common
Stock is traded on the Nasdaq National Market under the trading symbol "WDRY."
On November 25, 1997, the last reported sale price of the Common Stock was
$20.75 per share. See "Price Range of Common Stock."
--------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" COMMENCING ON PAGE 9.
--------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE UNDERWRITING PROCEEDS PROCEEDS TO
TO DISCOUNTS AND TO SELLING
PUBLIC COMMISSIONS(1) COMPANY(2) STOCKHOLDERS(3)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share........................ $ $ $ $
- --------------------------------------------------------------------------------
Total(3)......................... $ $ $ $
</TABLE>
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- --------------------------------------------------------------------------------
(1) Coinmach Laundry and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting expenses of the Offering, all of which will be payable by
Coinmach Laundry, estimated at $ .
(3) Certain of the Selling Stockholders and certain other stockholders have
granted the Underwriters a 30-day option to purchase up to 562,500
additional shares of Common Stock solely to cover over-allotments, if any.
To the extent that the option is exercised, the Underwriters will offer the
additional shares at the Price to Public shown above. If the option is
exercised in full, the total Price to Public, Underwriting Discounts and
Commissions, Proceeds to Company, and Proceeds to Selling Stockholders will
be $ , $ , $ , and $ , respectively. See "Underwriting."
--------
The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if delivered to and accepted by them, and subject
to the right of the Underwriters to reject any order in whole or in part. It is
expected that the delivery of the shares of Common Stock will be made at the
offices of BT Alex. Brown Incorporated, Baltimore, Maryland on or about
, 1997.
BT ALEX. BROWN
LEHMAN BROTHERS
RAYMOND JAMES & ASSOCIATES, INC.
WHEAT FIRST BUTCHER SINGER
JEFFERIES & COMPANY, INC.
THE DATE OF THIS PROSPECTUS IS , 1997
<PAGE>
{ART}
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK.
SUCH TRANSACTIONS MAY INCLUDE THE PURCHASE OF SHARES OF COMMON STOCK FOLLOWING
THE OFFERING TO COVER A SYNDICATE SHORT POSITION IN THE COMMON STOCK OR
MAINTAIN THE PRICE OF THE COMMON STOCK, AND THE IMPOSITION OF PENALTY BIDS. FOR
A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS MAY ALSO ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON
STOCK ON THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE 103 OF REGULATION M
UNDER THE SECURITIES EXCHANGE ACT OF 1934. SEE "UNDERWRITING."
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and financial data, including
the consolidated financial statements and related notes thereto, incorporated
by reference herein. As used in this Prospectus, unless the context otherwise
requires, all references to "Coinmach Laundry" herein refer to Coinmach Laundry
Corporation and all references to the "Company" herein refer to Coinmach
Laundry and its consolidated subsidiaries and their respective predecessors and
subsidiaries, in each case as applicable. References to the "Offering" shall
refer to the offering of the Common Stock in the United States by the
underwriters of the Offering (the "Underwriters"). "EBITDA" has the meaning set
forth in footnote (3) on page 8 hereof and "EBITDA margin" has the meaning set
forth in footnote (4) on page 8 hereof. Except as otherwise specified, all
information in this Prospectus assumes no exercise of the Underwriters' over-
allotment option.
THE COMPANY
GENERAL
The Company, established in 1947, is the leading supplier of outsourced coin-
operated laundry equipment services for multi-family housing properties in the
United States. The Company's business involves leasing laundry rooms from
building owners and property management companies, installing and servicing the
laundry equipment and collecting revenues generated from laundry machines. The
Company owns and operates approximately 420,000 coin-operated washers and
dryers in approximately 42,000 locations on routes throughout the United States
and in 151 retail laundromats located throughout Texas.
In January 1995, the Company initiated a strategy of controlled growth
through acquisitions. This strategy was designed to increase the installed
machine base in its then existing operating region as well as to provide the
Company with a strong market presence in new regions. Since January 1995, the
Company has completed six significant acquisitions adding revenues of
approximately $221 million and expanding its national presence from the
Northeast into the Mid-Atlantic, Southeast, South-Central, Midwest and Western
regions of the United States. Accordingly, the Company has grown its installed
base from approximately 54,000 machines to approximately 420,000 machines.
As a result of this strategy of growth, the Company's revenues and EBITDA
have grown from $72.9 million and $13.6 million, respectively, on a historical
basis for the twelve months ended March 31, 1995, to $306.9 million and $97.8
million (before deducting non-cash stock-based compensation charges),
respectively, for the twelve months ended March 28, 1997 (the "1997 fiscal
year"), on a pro forma basis, giving effect to the acquisitions consummated by
the Company since March 30, 1996.
INDUSTRY
The coin-operated laundry equipment services industry is characterized by
stable cash flows generated by long-term, renewable lease contracts with multi-
family property owners and management companies. The industry is highly
fragmented, with many small, private and family-owned route businesses
continuing to operate throughout all major metropolitan areas. According to
information provided by the Multi-housing Laundry Association, the industry
consists of over 280 independent operators. Based upon industry estimates,
management believes there are approximately 3.5 million installed machines in
multi-family housing properties throughout the United States, approximately 2.5
million of which have been outsourced to independent operators such as the
Company and approximately 1.0 million of which continue to be operated by the
owners of such locations.
3
<PAGE>
BUSINESS STRATEGY
The Company's business strategy is to enhance its position as the largest
provider of outsourced coin-operated laundry equipment services in the United
States. Management intends to continue to grow the Company's installed machine
base both internally and through selective acquisitions to achieve benefits of
scale, increase its operating efficiencies and improve its financial
performance. Internal growth is comprised of: (i) adding new customers in
existing regions and securing contracts for additional locations from current
customers; (ii) converting owner-operated facilities to Company managed
facilities; (iii) improving the net contribution per machine through operating
efficiencies and selective price increases; and (iv) pursuing additional growth
opportunities presented by the Company's leading market position and access to
approximately four million individual housing units. The Company's acquisition
strategy is to continue to selectively acquire local, regional and multi-
regional route businesses from independent operators at attractive prices. The
Company is currently evaluating several acquisition opportunities, however,
there can be no assurance that, subsequent to ongoing negotiations and due
diligence reviews, the Company will complete any such acquisitions.
An important element of the Company's business strategy is to continue to
expand its geographic presence to gain additional regional and multi-regional
account opportunities with large multi-family housing property managers and
owners. Management believes that a significant portion of its customer base,
which manages multi-family housing and other residential properties, is
consolidating. Consequently, management believes that opportunities for
outsourcing coin-operated laundry equipment services to professionally managed,
multi-regional, well-capitalized independent operators such as the Company are
increasing.
The Company's business strategy also includes the continued development of
its management information systems (the "Integrated Computer Systems"), which
management believes are the most advanced in the industry. The Integrated
Computer Systems provide real-time operational and competitive data, which in
conjunction with the Company's multi-regional service capabilities, enhance the
Company's operating efficiencies throughout its regions and enable the Company
to deliver superior customer service. The Integrated Computer Systems also
provide the Company with the flexibility to integrate acquisitions on a timely
basis, including key functions such as sales, service, collections and
security. Finally, as the industry leader, the Company works closely with its
equipment vendors to assess ongoing technological changes and implements those
which the Company believes are beneficial to customer service, operating
efficiencies and financial performance.
FINANCIAL CHARACTERISTICS OF THE BUSINESS
The Company's business has the following financial characteristics:
Recurring Revenues. The Company derives a majority of its revenues from
outsourced coin-operated laundry equipment services typically performed under
long-term contracts with landlords, property management companies and owners of
rental apartment buildings, condominiums and cooperatives, university and
institutional housing and other multi-family housing properties. Management
estimates that approximately 90% of its locations are subject to long-term
contracts with initial terms of three to ten years, most of which have
automatic renewal or right of first refusal provisions. During the 1997 fiscal
year, the Company retained approximately 97% of its existing machine base. The
Company believes that its ability to retain its customers and machine base is
attributable to a number of factors, including the Company's national
reputation for superior service, the structure of its contracts and the
strength of its long-term customer relationships.
Diversified Customer Base. The Company provides outsourced coin-operated
laundry equipment services to over 42,000 laundry rooms in its operating
regions, and no one customer accounts for more than 2% of its revenues.
Management estimates that the Company's services are located in multi-family
housing properties containing over four million individual housing units.
4
<PAGE>
Leverageable Cash Flows. Due to the stable, recurring nature of the Company's
revenues and its consistent EBITDA levels, the Company has been able to obtain
debt financing on favorable terms to support its acquisition strategy. This use
of debt financing to support growth is an important component of the Company's
financial strategy, and the Company believes that access to both the public and
private debt markets provides it with a competitive advantage.
Benefits of Scale. By increasing its installed machine base, the Company has
benefited from economies of scale in both operating costs and purchasing power.
The Company is able to leverage its existing infrastructure, including its
sales, service, collections, security and corporate overhead, over a larger
installed machine base than its competition. As a result, the Company has been
able to improve its EBITDA margin as it has increased its size. For the twelve
months ended March 29, 1996, the 1997 fiscal year and the six months ended
September 26, 1997, the Company's EBITDA margins were 28.6%, 30.4% and 31.1%,
respectively. Furthermore, due to its purchasing power, management believes
that the Company is able to purchase equipment on terms more favorable than
those available to smaller industry participants.
Significant Portion of Capital Investment Related to Growth. During the 1997
fiscal year, the Company spent $213.0 million in capital expenditures, of which
$171.5 million, or approximately 80.6%, was used to finance acquisitions as
part of the Company's growth strategy. Of the remaining capital investment,
$12.5 million, or approximately 5.8%, was used for internally generated growth
and $29.1 million, or approximately 13.6%, related to the renewal of the
Company's existing machine base.
5
<PAGE>
THE OFFERING
Common Stock offered by Coinmach Laundry.... 2,500,000 shares
Common Stock offered by the Selling 1,250,000 shares(1)
Stockholders...............................
Common Stock to be outstanding after the
Offering................................... 12,510,255 shares(2)
Common Stock and non-voting common stock,
$.01 par value per share (the "Non-Voting
Common Stock"), to be outstanding after
the Offering...............................
12,990,903 shares(2)
Use of Proceeds............................. Repayment of debt and general
corporate purposes, which may
include certain selected
acquisitions. See "Use of
Proceeds."
Nasdaq National Market Symbol............... WDRY
- --------
(1) Assumes no exercise of the Underwriters' over-allotment option. The Company
will not receive any of the proceeds from the sale of shares sold by the
Selling Stockholders (exclusive of amounts paid in respect of the exercise
of options).
(2) Does not include 1,109,147 shares of Common Stock issuable under the Second
Amended and Restated 1996 Employee Stock Option Plan (the "1996 Stock
Option Plan"), of which 85,500 shares of Common Stock underlie options that
have been granted thereunder and that will be exercisable immediately after
the Offering. Does not include 1,053,460 shares of Common Stock issuable
upon exercise of stock options granted outside of the 1996 Stock Option
Plan (collectively, the "Non-Plan Options"), of which 389,808 shares
underlie options that will be exercisable immediately after the Offering.
Includes approximately 5,977 shares of Common Stock to be issued upon
exercise of certain options held by a Selling Stockholder in connection
with the Offering.
6
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA
(IN THOUSANDS, EXCEPT MACHINE DATA)
The following table presents consolidated summary historical financial data
and unaudited pro forma financial data of the Company for the 1997 fiscal year
and for the six months ended September 26, 1997 and the unaudited summary
historical financial data for the twelve months ended March 29, 1996 (which
consist of the combined operations of the Company's predecessors), and the six
months ended September 27, 1996. The pro forma financial data give effect to:
(i) certain acquisitions, including the Kwik Wash Acquisition, the Reliable
Acquisition, the Appliance Warehouse Acquisition and the National Coin
Acquisition (each, as defined); (ii) the Bond Offering (as defined); and (iii)
the Offering (as defined) (collectively, the "Transactions"), as if the
Transactions occurred at the beginning of the applicable period (or in the case
of Balance Sheet Data, as of the date of such data). The unaudited pro forma
combined financial data are not necessarily indicative of either future results
of operations or results that might have been achieved if the foregoing
transactions had been consummated as of the indicated dates. The financial data
set forth below should be read in conjunction with the Company's consolidated
financial statements and the related notes thereto incorporated by reference
into this Prospectus and under the headings "Unaudited Pro Forma Financial
Data" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" included in Coinmach Laundry's Annual Report on Form 10-
K/A for the year ended March 28, 1997 and Quarterly Reports on Form 10-Q/A for
the quarters ended June 27, 1997 and September 26, 1997, respectively,
incorporated by reference herein.
<TABLE>
<CAPTION>
COMBINED
TWELVE YEAR ENDED SIX MONTHS ENDED
MONTHS -------------------- -----------------------------------------
ENDED PRO FORMA PRO FORMA
MARCH 29, MARCH 28, MARCH 28, SEPTEMBER 27, SEPTEMBER 26, SEPTEMBER 26,
1996(1) 1997 1997 1996 1997 1997
--------- --------- --------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues............... $178,789 $206,852 $306,913 $ 94,446 $149,797 $156,983
Operating, general and
administrative
expenses.............. 127,636 144,059 209,234 65,719 103,227 107,636
Depreciation and amor-
tization.............. 36,635 46,316 71,973 20,192 34,580 35,912
Operating income....... 12,318 14,325 23,554 7,075 11,445 12,890
Interest expense,
net................... 23,817 26,859 40,010 12,142 21,129 21,220
Loss before extraordi-
nary items............ (8,639) (10,227) (13,205) (3,467) (7,779) (6,747)
BALANCE SHEET DATA (AT
END OF PERIOD):
Cash and cash equiva-
lents ................ $ 19,858 $ 14,729 $ 32,529 $ 16,815 $ 26,038
Property and equip-
ment, net............. 82,699 112,116 93,819 130,348 130,348
Contract rights, net... 59,745 180,557 63,217 217,371 217,371
Total assets........... 249,148 472,921 280,276 560,359 573,957
Total debt(2).......... 202,765 345,486 203,909 418,524 375,274
Stockholders' (defi-
cit) equity........... (1,308) 23,563 28,627 16,329 64,052
FINANCIAL RATIOS AND
OTHER DATA (UNAUDITED):
Cash flow from
operating
activities............ $ 24,403 $ 34,732 $ 50,078 $ 15,387 $ 22,386 $ 22,560
Cash used for
investing
activities............ 39,201 196,698 273,884 35,050 91,900 92,824
Cash from financing
activities............ 23,882 156,837 226,891 32,334 71,600 81,573
EBITDA(3).............. 51,153 62,793 97,833 28,727 46,570 49,347
EBITDA margin(4)....... 28.6% 30.4% 31.9% 30.4% 31.1% 31.4%
Capital Expendi-
tures(5)
Growth capital expen-
ditures............. $ -- $ 12,563 $ 12,563 $ 4,400 $ 8,000 $ 8,000
Renewal capital ex-
penditures.......... 27,333 29,025 43,728 13,100 17,600 18,500
Acquisition capital
expenditures(6)..... 11,925 171,455 233,938 17,600 66,300 66,300
-------- -------- -------- -------- -------- --------
Total Capital Expendi-
tures................. 39,258 213,043 290,229 35,100 91,900 92,800
Number of machines
(rounded)............. 220,000 337,000 415,000 247,000 420,000 420,000
</TABLE>
(footnotes on following page)
7
<PAGE>
- --------
(1) The combined historical audited financial data for the twelve months ended
March 29, 1996 consist of the six month transition period ended March 29,
1996 and the six months ended September 29, 1995.
(2) Total debt does not include the premium of $9.875 million recorded on the
issuance by Coinmach Corporation ("Coinmach") of $100 million aggregate
principal amount of its 11 3/4% Series C Senior Notes due 2005 (the "Series
C Notes") in the Bond Offering.
(3) EBITDA represents earnings from continuing operations before deductions for
interest, income taxes, depreciation and amortization. EBITDA for the year
ending March 28, 1997 and the six months ending September 26, 1997 and
September 27, 1996 is before the deduction of stock-based compensation
charges, and EBITDA for the period ended March 29, 1996 is before the
deduction for restructuring costs. EBITDA is used by management and certain
investors as an indication of a company's historical ability to service
debt. Management believes that an increase in EBITDA is an indicator of the
Company's improved ability to service existing debt, to sustain potential
future increases in debt and to satisfy capital requirements. However,
EBITDA is not intended to represent cash flows for the period, nor has it
been presented as an alternative to either (i) operating income (as
determined by generally accepted accounting principles ("GAAP")) as an
indicator of operating performance or (ii) cash flows from operating,
investing and financing activities (as determined by GAAP) as a measure of
liquidity. Given that EBITDA is not a measurement determined in accordance
with GAAP and is thus susceptible to varying calculations, EBITDA as
presented may not be comparable to other similarly titled measures of other
companies. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" included in Coinmach Laundry's Annual Report on
Form 10-K/A for the year ended March 28, 1997 and Quarterly Reports on Form
10-Q/A for the quarters ended June 27, 1997 and September 26, 1997,
respectively, incorporated by reference herein.
(4) EBITDA margin represents EBITDA as a percentage of revenues. Management
believes that EBITDA margin is a useful measure to evaluate the Company's
performance over various sales levels. EBITDA margin should not be
considered as an alternative for measurements determined in accordance with
GAAP.
(5) Capital expenditures represent amounts expended for property and equipment,
for advance rental payments to location owners and for acquisitions.
Acquisition capital expenditures represent the amounts expended to acquire
local, regional and multi-regional route operators, as well as
complementary businesses. Growth capital expenditures represent the amount
of capital expended that reflects a net increase in the installed base of
machines, excluding acquisitions. Renewal capital expenditures represent
the amount of capital expended assuming no net increase in the installed
base of machines.
(6) For the year ended March 28, 1997, includes approximately $16.2 million of
promissory notes issued by Coinmach Laundry related to certain
acquisitions.
8
<PAGE>
RISK FACTORS
This Prospectus and other reports and statements filed by Coinmach Laundry
(collectively, "Commission Filings") from time to time with the Securities and
Exchange Commission (the "Commission") contain or may contain certain forward
looking statements and information that are based on the beliefs of the
Company's management as well as estimates and assumptions made by, and
information currently available to, the Company's management. When used in
Commission Filings, the words "anticipate," "believe," "estimate," "expect,"
"future," "intend," "plan" and similar expressions, as they relate to Coinmach
Laundry or its management, identify forward looking statements. Such
statements reflect the current views of the Company with respect to future
events and are subject to certain risks, uncertainties and assumptions
relating to the Company's operations and results of operations, competitive
factors, shifts in market demand, and other risks and uncertainties,
including, in addition to any uncertainties specifically identified in the
text surrounding such statements, uncertainties with respect to changes or
developments in social, economic, business, industry, market, legal and
regulatory circumstances and conditions and actions taken or omitted to be
taken by third parties, including the Company's stockholders, customers,
suppliers, competitors, legislative, regulatory, judicial and other
governmental authorities. Should one or more of these risks or uncertainties
materialize, or should the underlying assumptions prove incorrect, actual
results may vary significantly from those anticipated, believed, estimated,
expected, intended or planned. The following risk factors should be considered
carefully in addition to the other information contained in this Prospectus
before purchasing the Common Stock offered hereby.
Substantial Indebtedness. The Company will continue to have substantial
indebtedness and debt service requirements after the Offering. As of September
26, 1997, on a pro forma basis after giving effect to the Transactions, the
Company would have had outstanding indebtedness of approximately $375.3
million (excluding the premium on the Series C Notes) and stockholders' equity
of $64.1 million.
The Company's level of indebtedness will have several important effects on
its future operations, including, but not limited to, the following: (i) a
significant portion of the Company's cash flow from operations will be
required to pay interest on its indebtedness and will not be available for
other purposes; (ii) the financial covenants and other restrictions contained
in certain of the agreements governing the Company's indebtedness will require
the Company to meet certain financial tests and will limit its ability to
borrow additional funds, to dispose of assets and to pay dividends; (iii) the
Company's ability to obtain additional financing in the future for working
capital, capital expenditures, acquisitions or general corporate purposes may
be impaired; and (iv) the Company's ability to adapt to changes in the coin-
operated laundry equipment services industry and to economic conditions in
general could be limited. Coinmach Laundry is a holding company that will be
dependent upon its principal operating subsidiary, Coinmach, as its primary
source of revenue subsequent to the Offering. The financial covenants
contained in the agreements governing Coinmach's indebtedness restrict
Coinmach's ability to make dividends, distributions or other payments to
Coinmach Laundry. Additionally, the Company's ability to meet its debt service
obligations and to reduce its total debt will be dependent upon its future
performance, which will be subject to general economic conditions and to
financial, business and other factors affecting the operations of the Company,
many of which are beyond its control. See "Management's Discussion and
Analysis of Financial Condition--Liquidity and Capital Resources."
An inability of the Company to comply with the financial covenants or other
conditions contained in the financing agreements governing its indebtedness
could result in an acceleration of the amounts due thereunder. If the Company
is unable to meet its debt service obligations, it could be required to take
certain actions such as reducing or delaying capital expenditures (including
for acquisitions), selling assets, refinancing or restructuring its
indebtedness, selling additional equity capital or other actions. There is no
assurance that any of such actions could be effected on commercially
reasonable terms, if at all, or on terms permitted under the applicable
financing agreements. See "Management's Discussion and Analysis of Financial
Condition--Liquidity and Capital Resources."
9
<PAGE>
Historical Net Losses. In the past, the Company has experienced net losses.
The Company incurred net losses before extraordinary items of approximately
$10.2 million and $7.8 million for the year ended March 28, 1997 and the six
months ended September 26, 1997, respectively. As of September 26, 1997, the
Company had an accumulated deficit of approximately $37.0 million. No
assurance can be given that net losses will not continue in future periods.
Dependence Upon Lease Renewals. The Company's business is highly dependent
upon the renewal of its lease contracts with property owners and management
companies. The Company has historically focused on obtaining long-term,
renewable lease contracts, and management estimates that approximately 90% of
its locations are subject to long-term leases with initial terms of three to
ten years. There can be no assurance that the Company will be able to renew
its leases as they expire or that new leases will contain the same renewal and
other material terms. See "Business--Operations--Location Leasing."
Risks of Acquisitions and Integration of Acquired Businesses. As part of its
business strategy, the Company will continue to evaluate opportunities to
acquire local, regional and multi-regional route businesses. There can be no
assurance that the Company will find attractive acquisition candidates or
effectively manage the integration of acquired businesses into its existing
business. If the expected operating efficiencies from such transactions do not
materialize, if the Company fails to integrate new businesses into its
existing business, or if the costs of such integration exceed expectations,
the Company's operating results and financial condition would be adversely
affected. Future acquisitions by the Company could result in the incurrence of
debt, the potentially dilutive issuance of equity securities and the
incurrence of contingent liabilities and amortization expenses related to
goodwill and other intangible assets, any of which could adversely affect the
Company's operating results and financial condition.
Capital Requirements. The Company operates in a capital intensive industry
and must continue to make capital expenditures to maintain its operating base.
The Company spent approximately $29.1 million on renewal capital expenditures
for the 1997 fiscal year. While the Company estimates that it will generate
sufficient cash flow from operations to finance anticipated capital
expenditures, there can be no assurance that it will be able to do so.
Management of Growth. The Company expects to grow through internal growth
and acquisitions. Management expects to expend significant time and effort in
evaluating, completing and integrating such acquisitions. There can be no
assurance that the Company's systems, procedures and controls will be adequate
to support the Company's operations as they expand. Any future growth will
also impose significant added responsibilities on members of senior
management, including the need to identify, recruit and integrate new senior
level managers and executives. There can be no assurance that such additional
management will be identified and retained by the Company. To the extent that
the Company is unable to manage its growth efficiently and effectively, or is
unable to attract and retain additional qualified management, the Company's
financial condition and results of operations could be materially adversely
affected. See "Business--Business Strategy."
Reduced Occupancy Levels. Extended periods of reduced occupancy can
adversely affect the Company's operations. In a period of occupancy decline,
the Company could be faced with reductions in revenues and cash flow from
operations in certain areas. In past periods of occupancy decline, management
designed incentive programs that were successful in maintaining stable profit
margins by
offering owners and management companies financial incentives relating to
increased occupancy levels (and the use of laundry room facilities) in
exchange for certain guaranteed minimum periodic payments. Although the
Company is geographically diversified, there can be no assurance that the
Company will maintain its revenue levels or cash flow from operations in
periods of low occupancy.
Dependence on Key Personnel. The Company's continued success will depend
largely on the efforts and abilities of its executive officers and certain
other key employees, all of whom have
10
<PAGE>
employment agreements with the Company. The Company does not maintain
insurance policies with respect to such employees, and the Company's
operations could be affected adversely if, for any reason, such officers or
key employees do not remain with the Company.
Control by Principal Shareholder. Immediately after the Offering, Golder,
Thoma, Cressey, Rauner Fund IV ("GTCR") will own approximately 27.0% of
Coinmach Laundry's outstanding shares of Common Stock and Non-Voting Common
Stock (before giving effect to shares of Common Stock issuable upon exercise
of options which are currently vested and exercisable). GTCR and certain
holders of Common Stock are parties to a Voting Agreement dated July 23, 1996
(the "Voting Agreement") that gives GTCR the ability, at all times that it
holds at least 20% of the outstanding voting securities of Coinmach Laundry,
to designate for election a majority of the Company's directors and therefore
influence the outcome of substantially all issues submitted to Coinmach
Laundry's stockholders, including mergers, sales of all or substantially all
of the Company's assets and similar fundamental corporate changes.
Competition. The coin-operated laundry equipment services industry is highly
competitive, capital intensive and requires reliable, quality service. The
industry is fragmented nationally, with many small, private and family-owned
businesses operating throughout most major metropolitan areas. Notwithstanding
the fragmentation of the industry, there are currently three companies,
including the Company, with significant operations in multiple regions
throughout the United States. Some of the Company's competitors may possess
greater financial and other resources than the Company. Furthermore, current
and potential competitors may make acquisitions or may establish relationships
among themselves or with third parties to increase their ability to compete
within the industry. Accordingly, it is possible that new competitors may
emerge and rapidly acquire significant market share. If this were to occur,
the business, operating results, financial condition and cash flows of the
Company could be materially adversely affected.
Significant Intangible Assets. Adjusted for the Bond Offering and the
Offering on a pro forma basis, approximately $326.4 million or 56.9% of the
Company's total assets would have been intangible assets, consisting primarily
of contract rights and goodwill as of September 26, 1997. In the event of a
sale or liquidation, there can be no assurance that the value of the Company's
intangible assets would be realized.
Dividend Policy. Coinmach Laundry has not declared or paid any cash
dividends on its capital stock and does not intend to pay cash dividends on
its capital stock in the foreseeable future. Declaration of dividends on the
Common Stock will depend upon, among other things, the Company's results of
operations, financial condition, capital requirements and general business
condition. At the present time, Coinmach Laundry is prohibited by the terms of
the Credit Agreement (as defined) from paying dividends on its capital stock.
See "Dividend Policy."
Environmental Regulation. The Company's business and operations are subject
to federal, state and local environmental laws and regulations that impose
limitations on the discharge of, and establish standards for the handling,
generation, emission, release, discharge, treatment, storage and disposal of,
certain materials, substances and wastes. To the best of management's
knowledge, there are no existing or potential environmental claims against the
Company, nor has the Company received any notification of responsibility for,
or any inquiry or investigation regarding, any disposal, release or threatened
release of any hazardous material, substance or waste generated by the Company
that is likely to have a material adverse effect on the Company's business or
financial condition. However, the Company cannot predict with any certainty
that it will not in the future incur any liability under environmental laws
and regulations that could have a material adverse effect on the Company's
business or financial condition.
Anti-Takeover Provisions. Certain provisions of Coinmach Laundry's Third
Amended and Restated Certificate of Incorporation (the "Third Amended and
Restated Certificate of Incorporation") and the Third Amended and Restated
Bylaws (the "Third Amended and Restated Bylaws") may discourage, delay or make
more difficult a change in control of Coinmach Laundry, or prevent the removal
of incumbent
11
<PAGE>
directors even if some, or a majority, of Coinmach Laundry's stockholders were
to deem such an attempt to be in the best interest of the Company. Among other
things, the Third Amended and Restated Certificate of Incorporation allows the
Board of Directors of Coinmach Laundry (the "Board") to issue shares of
preferred stock in the future and fix the rights, privileges and preferences
of those shares without any further vote or action by the stockholders. The
rights of the holders of Common Stock will be subject to, and may be adversely
affected by, the rights of the holders of any preferred stock that may be
issued in the future. While Coinmach Laundry has no present intention to issue
shares of preferred stock, any such issuance could have the effect of making
it more difficult for a third party to acquire a majority of the outstanding
voting stock of Coinmach Laundry. In addition, Coinmach Laundry is subject to
the anti-takeover provisions of Section 203 of the Delaware General
Corporation Law, which could have the effect of delaying or preventing a
change in control of the Company. See "Description of Capital Stock."
Shares Eligible for Future Sale. Sales of substantial amounts of Common
Stock in the public market following the Offering could adversely affect the
market price of the Common Stock. Of the 12,990,903 shares of Common Stock and
Non-Voting Common Stock that will be issued and outstanding following the
Offering, 6,689,619 shares of Common Stock will be freely tradeable, except
those purchased by "affiliates" of the Company, as such term is defined under
Rule 144 of the Securities Act of 1933, as amended (the "Securities Act"). The
remaining 6,301,284 outstanding shares of Common Stock and Non-Voting Common
Stock are considered "restricted securities" for the purpose of Rule 144 under
the Securities Act. The sale of these restricted securities, together with any
shares purchased in the Offering by affiliates, is limited by lock-up
agreements under which the holders of the restricted shares have agreed that
they will not, without the prior written consent of BT Alex. Brown
Incorporated, offer, sell, contract to sell or otherwise dispose of their
shares for a period of 90 days from the date of this Prospectus. After
expiration of such lock-up agreements, all of the 6,301,284 restricted
securities will be eligible for sale under Rule 144 of the Securities Act. See
"Shares Eligible for Future Sale."
Possible Volatility of Stock Price. Coinmach Laundry's stock price has been
volatile since its initial public offering. Coinmach Laundry believes that
factors such as quarterly fluctuations in results of operations, announcements
of acquisitions by the Company or by its competitors, changes in revenue,
EBITDA or earnings estimates by securities analysts, developments in
litigation affecting the Company, changes in accounting principles or their
application and other factors may cause the market price of Coinmach Laundry's
stock to continue to fluctuate, perhaps substantially. Due to market and
securities analysts' expectations of continued growth, any shortfall in
meeting such expectations may have a rapid and significant adverse effect on
the trading price of the Common Stock. These fluctuations, as well as general
economic, market and other conditions may adversely affect the market price of
the Common Stock in the future. Fluctuations in the market price of the Common
Stock may in turn adversely affect the Company's ability to complete any
targeted acquisitions, its access to capital and financing and its ability to
attract and retain qualified personnel. See "Price Range of Common Stock."
12
<PAGE>
THE COMPANY
The Company, established in 1947, is the leading supplier of outsourced
coin-operated laundry equipment services for multi-family housing properties
in the United States. The Company's business involves leasing laundry rooms
from building owners and property management companies, installing and
servicing the laundry equipment and collecting revenues generated from laundry
machines. The Company owns and operates approximately 420,000 coin-operated
washers and dryers in approximately 42,000 locations on routes throughout the
United States and in 151 retail laundromats located throughout Texas.
The Company is a Delaware corporation with executive offices located at 55
Lumber Road, Roslyn, New York 11576, and its telephone number is (516) 484-
2300.
Acquisitions. In January 1995, the Company initiated a strategy of
controlled growth through acquisitions. This strategy was designed to increase
the installed machine base in its then existing operating region as well as to
provide the Company with a strong market presence in new regions. Since
January 1995, the Company has completed six significant acquisitions adding
revenues of approximately $221 million and expanding its national presence
from the Northeast into the Mid-Atlantic, Southeast, South-Central, Midwest
and Western regions of the United States. Accordingly, the Company has grown
its installed base from approximately 54,000 machines to approximately 420,000
machines.
The acquisitions described below have enabled the Company to increase its
installed machine base, improve its EBITDA margins and expand its geographic
presence through the acquisition of operations in new regions:
<TABLE>
<CAPTION>
APPROXIMATE
HISTORICAL
ANNUAL
DATE ACQUISITION TARGET REVENUES DESCRIPTION OF OPERATIONS
- ----------------- ------------------------ ------------- ---------------------------------
(IN MILLIONS)
<S> <C> <C> <C>
November 30, 1995 Solon Automated $100 Multi-regional operator providing
Services, Inc. Mid-Atlantic, South-Central and
Southeast presence.
April 1, 1996 Allied Laundry Equipment 9 Regional operator providing
Company Midwest presence.
January 8, 1997 Kwik Wash Laundries, 63 Multi-regional operator providing
L.P. expanded South-Central presence
and operations in laundromat
business.
March 14, 1997 Atlanta Washer & Dryer 2 Regional operator providing
Leasing, Inc. expanded presence in Southeast
and operations in the machine
rental market for individual
housing units.
April 23, 1997 Reliable Holding Corp. 31 Regional operator providing
Western presence (California and
northern Mexico).
July 17, 1997 National Coin Laundry 16 Regional operator providing
Holding, Inc. expanded Midwest presence.
</TABLE>
On November 30, 1995, the Company acquired (the "Solon Acquisition") the
capital stock of Solon Automated Services, Inc. ("Solon"), a multi-regional
route operator for $141.5 million. The Solon Acquisition gave the Company an
immediate and significant operating presence in the Mid-Atlantic, South-
Central and Southeast regions.
13
<PAGE>
On April 1, 1996, Coinmach acquired (the "Allied Acquisition") substantially
all of the assets of Allied Laundry Equipment Company ("Allied"), a regional
route operator located in St. Louis, Missouri for $15.5 million in cash. The
Allied Acquisition provided the Company with a larger market presence in the
Mid-West region.
On January 8, 1997, Coinmach acquired (the "Kwik Wash Acquisition") 100% of
the outstanding voting securities of the partners of Kwik Wash Laundries, L.P.
("Kwik Wash") for $125 million in cash and a $15 million promissory note (the
"9 7/8% Promissory Note"). The Kwik Wash Acquisition increased the Company's
presence in the South-Central region by enabling the Company to provide coin-
operated laundry equipment services to multi-family housing properties in
Texas, Louisiana, Arkansas and Oklahoma and to operate 150 retail laundromats
throughout Texas.
On March 14, 1997, Coinmach acquired (the "Appliance Warehouse Acquisition")
substantially all of the assets of Atlanta Washer & Dryer Leasing, Inc.
("Appliance Warehouse"), for approximately $6.3 million in cash and promissory
notes aggregating $1.2 million. The Appliance Warehouse Acquisition increased
the Company's presence in the Southeast region and expanded the Company's
operations into the related machine rental market for individual housing units
providing an additional growth opportunity in a complementary market.
On April 23, 1997, Coinmach completed the acquisition and merger (the
"Reliable Acquisition") of Reliable Holding Corp. ("Reliable") and its
subsidiaries, Reliable Laundry Service Inc., Girard-Hopkins Acquisition Corp.,
Maquilados Automaticas S.A. de C.V., and Automatica S.A. de C.V.
(collectively, the "Reliable Entities") with and into the Company, for $44
million in cash. The Reliable Acquisition provided the Company with a strong
foothold in the California market and an entry into the northern Mexican
market.
On July 17, 1997, Coinmach acquired 100% of the outstanding voting
securities of National Coin Laundry Holding, Inc. ("National Coin"), and
National Laundry Equipment Company, an Ohio corporation ("NLEC"). National
Coin is the parent of National Coin Laundry, Inc., an Ohio corporation ("NCL")
and the assets of Whitmer Vend-O-Mat Laundry Services, Inc. ("Whitmer").
Coinmach acquired (the "National Coin Acquisition") National Coin, NLEC, NCL
and Whitmer (collectively, the "NCL Entities") for an aggregate purchase price
of approximately $19.0 million in cash. The National Coin Acquisition enabled
the Company to further expand its operations in the Mid-Atlantic, Southeast,
South-Central and Midwest regions by providing coin-operated laundry equipment
services to multi-family housing properties in the states of Ohio, Indiana,
Kentucky, Michigan, West Virginia, Pennsylvania, Georgia, Tennessee, Illinois
and Florida, as well as distributing exclusive lines of commercial coin and
non-coin laundry machines and parts, and selling service contracts.
As part of its growth strategy, the Company continues to evaluate additional
acquisition opportunities. There can be no assurance however that, subsequent
to ongoing negotiations and due diligence reviews, the Company will complete
any such acquisitions.
14
<PAGE>
USE OF PROCEEDS
The net proceeds to Coinmach Laundry from the sale of the 2,500,000 shares
of Common Stock offered by it hereby are estimated to be $47.7(1) million,
assuming an offering price of $20.75 per share and after deducting
underwriting discounts and commissions and estimated offering expenses. The
Company intends to use such net proceeds to repay $23.5 million of outstanding
Tranche B indebtedness under the Credit Facility(2) (as defined), to repay $15
million of outstanding indebtedness evidenced by the 9 7/8% Promissory
Note,(3) and for general corporate purposes, which may include certain
selected acquisitions. Although the Company has had preliminary discussions
with respect to several acquisition opportunities, no agreement or
understanding with respect to any specific acquisition has been reached. There
can be no assurance that any such acquisitions will be made. Pending such
uses, the Company intends to invest the net proceeds from the Offering in
short-term, investment-grade, interest-bearing instruments. The Company will
not receive any of the proceeds from the sale of shares of Common Stock by the
Selling Stockholders.
In connection with the Offering, the Company intends to amend and restate
its existing senior credit facility (the "Credit Facility") established with
Bankers Trust Company, as administrative agent, and the other lenders named in
the Credit Agreement dated as of January 8, 1997 (as amended, and
supplemented, the "Credit Agreement"). See "Management's Discussion and
Analysis of Financial Condition--Liquidity and Capital Resources."
- --------
(1) Excludes proceeds to be received from the exercise of options by a Selling
Stockholder in connection with the Offering in an approximate amount of
$.1 million.
(2) The Tranche B term loan bears interest at an annual rate of LIBOR plus
2.75% (8.4375% as of November 10, 1997), matures on June 30, 2004 and was
incurred to finance the Kwik Wash Acquisition.
(3) Indebtedness evidenced by the 9 7/8% Promissory Note matures on June 15,
2004 and was issued by Coinmach Laundry as partial consideration for the
Kwik Wash Acquisition.
PRICE RANGE OF COMMON STOCK
Coinmach Laundry's Common Stock is traded on the Nasdaq National Market
under the symbol "WDRY." The following table sets forth for the periods
indicated, the high and low closing prices for the Common Stock as reported on
the Nasdaq National Market.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
FISCAL 1997
Second Quarter (from July 16, 1996)......................... $20.13 $13.00
Third Quarter............................................... 22.75 17.25
Fourth Quarter.............................................. 20.25 17.00
FISCAL 1998
First Quarter............................................... 22.50 14.75
Second Quarter.............................................. 24.00 20.75
Third Quarter (through November 25, 1997)................... 24.63 20.00
</TABLE>
On November 25, 1997, the last reported sale price of the Common Stock on
the Nasdaq National Market was $20.75 per share. As of November 25, 1997,
there were approximately 33 holders of record of Common Stock, and the number
of beneficial holders of Common Stock was estimated to be in excess of 550.
15
<PAGE>
DIVIDEND POLICY
Coinmach Laundry has not declared or paid any cash dividends on the Common
Stock and does not intend to pay cash dividends on its capital stock in the
foreseeable future. The Company currently intends to retain its earnings to
finance the development and expansion of its business. The decision whether to
apply legally available funds to the payment of dividends on the Common Stock
will be made by the Board from time to time in its discretion, taking into
account, among other things, the Company's results of operations, financial
condition, capital requirements, contractual restrictions, any then existing
or proposed commitments for the use of available funds by the Company, the
Company's obligations with respect to any then outstanding class or series of
its preferred stock and other factors deemed relevant by the Board. At the
present time, the Company is prohibited by the terms of the Credit Agreement
from paying dividends on its capital stock.
At the present time, dividend payments to Coinmach Laundry by its principal
operating subsidiary, Coinmach, are subject to restrictions contained in
certain of Coinmach's outstanding debt and financing agreements. Additionally,
the Company may in the future enter into other agreements or issue debt
securities or preferred stock that restrict the payment of cash dividends. See
"Management's Discussion and Analysis of Financial Condition--Liquidity and
Capital Resources."
16
<PAGE>
DILUTION
The net tangible book value (deficit) of the Company as of September 26,
1997 was approximately ($310.1) million, or ($29.57) per share of Common
Stock. Net tangible book value per share represents the Company's total
tangible assets less its total liabilities, divided by 10,484,926 shares of
Common Stock outstanding. After giving effect to the Bond Offering, and the
Offering at an assumed offering price of $20.75 per share, the pro forma net
tangible book value (deficit) of the Company as of September 26, 1997 would
have been approximately ($262.3) million, or ($20.19) per share. This
adjustment represents an immediate increase in net tangible book value of
$9.38 per share to the existing stockholders and an immediate net tangible
book value dilution of $40.94 per share to the investors purchasing shares of
Common Stock in the Offering. The following table illustrates this dilution on
a per share basis:
<TABLE>
<S> <C> <C>
Assumed public offering price per share...................... $ 20.75
Net tangible book value (deficit) per share at September
26, 1997.................................................. $(29.57)
Increase in net tangible book value per share attributable
to new investors.......................................... 9.38
-------
Pro forma net tangible book value (deficit) per share after
the Offering.............................................. (20.19)
-------
Dilution per share to new investors.......................... $ 40.94
=======
</TABLE>
The following table summarizes, based on the assumptions set forth herein,
as of September 26, 1997, the number of shares of Common Stock and Non-Voting
Common Stock purchased from the Company, the total consideration paid and the
average price per share paid by the existing stockholders and by new
stockholders purchasing shares in the Offering.
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
------------------ -------------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
---------- ------- ------------ ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders...... 10,484,926 80.7% $ 77,408,364 59.8% $ 7.38
New investors.............. 2,505,977 19.3 51,946,126 40.2% 20.73
---------- ----- ------------ -----
Total.................... 12,990,903 100.0% $129,354,490 100.0%
========== ===== ============ =====
</TABLE>
The computations in the tables set forth above exclude: (i) an aggregate of
933,460 shares of Common Stock underlying Non-Plan Options granted by the
Company to MCS Capital, Inc. ("MCS"), an entity beneficially owned by Stephen
R. Kerrigan, and to Robert M. Doyle, Michael E. Stanky, John E. Denson, David
Siegel, R. Daniel Osborne, James N. Chapman and certain other individuals (the
"Options"), of which 329,808 shares underlie options exercisable within sixty
days after November 25, 1997, including up to 10,748 shares of Common Stock
that may be issued upon the exercise of certain options if the Underwriters'
over-allotment option is exercised in full; (ii) an aggregate of 120,000
shares of Common Stock underlying non-qualified stock options (the
"Independent Director Options") granted by the Company to Dr. Arthur B. Laffer
and Stephen G. Cerri, independent directors of the Company, of which 60,000
shares underlie options exercisable within sixty days after November 25, 1997;
and (iii) an aggregate of 1,109,147 shares of Common Stock issuable under the
1996 Stock Option Plan, of which 85,500 shares underlie options exercisable
within sixty days after November 25, 1997.
The computations in the table set forth above include the issuance of 5,977
shares of Common Stock issuable upon the exercise of certain options, at
varying exercise prices, held by a Selling Stockholder in connection with the
Offering.
17
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
September 26, 1997: (i) on an actual basis; (ii) as adjusted to give effect to
the Bond Offering; and (iii) as adjusted, to give effect to the Bond Offering,
the Offering and the application of the net proceeds therefrom. This table
should be read in conjunction with the unaudited pro forma financial data and
the combined and consolidated financial statements of the Company and notes
thereto incorporated by reference in this Prospectus.
<TABLE>
<CAPTION>
SEPTEMBER 26, 1997
--------------------------------
AS ADJUSTED AS FURTHER
FOR THE ADJUSTED
BOND FOR THE
ACTUAL OFFERING OFFERING
-------- ----------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash and cash equivalents..................... $ 16,815 $ 16,815 $ 26,038
======== ======== ========
Long-term debt:
11 3/4% Senior Notes due 2005(1)............ $196,655 $296,655 $296,655
Credit Facility(2).......................... 203,250 98,500 75,000
9 7/8% Promissory Note...................... 15,000 15,000 --
Other long-term debt........................ 3,619 3,619 3,619
-------- -------- --------
Total long-term debt...................... 418,524 413,774 375,274
Stockholders' equity (deficit):
Preferred Stock, $.01 par value: 1,000,000
shares authorized and no shares issued
and outstanding actual; 1,000,000 shares
authorized and no shares issued and
outstanding as adjusted.................. -- -- --
Common Stock, $.01 par value: 15,000,000
shares authorized and 10,004,278 shares
issued and outstanding actual; 15,000,000
shares authorized and 12,510,255 shares
issued and outstanding as adjusted(3).... 100 100 126
Non-Voting Common Stock, $.01 par value:
1,000,000 shares authorized and 480,648
shares issued and outstanding actual and
as adjusted.............................. 5 5 4
Additional paid-in capital.................. 53,705 53,705 101,403
Accumulated deficit......................... (37,042) (37,042) (37,042)
Less receivables from stockholders.......... (439) (439) (439)
-------- -------- --------
Total stockholders' equity................ 16,329 16,329 64,052
-------- -------- --------
Total capitalization.................... $434,853 $430,103 $439,326
======== ======== ========
</TABLE>
- --------
(1) Gross proceeds from the Bond Offering were $109.9 million consisting of
(i) $100 million aggregate principal amount of the Series C Notes and (ii)
$9.9 million premium on the Series C Notes (which premium is not included as
a liability in the presentation above). The issue price represents a 9.94%
yield to maturity.
(2) As of September 26, 1997, on a pro forma basis after giving effect to the
Bond Offering, the Offering and the application of the net proceeds
therefrom, the Company would have had $70.0 million of unused borrowing
capacity under the Credit Facility. Concurrently with the Offering, the
Company intends to amend and restate its Credit Facility. Such amended and
restated Credit Facility is expected to provide for $235 million of
financing consisting of (i) a $35 million working capital revolving credit
facility (undrawn at closing of the Offering), (ii) a $125 million
acquisition revolving credit facility (undrawn at closing of the Offering)
and (iii) a $75 million term loan facility (fully funded at closing of the
Offering). The working capital revolving credit facility and the acquisition
revolving credit facility are expected to have a maturity of six years, and
the term loan facility is expected to have a maturity of seven years. See
"Management's Discussion and Analysis of Financial Condition--Liquidity and
Capital Resources."
(3) Excludes: (i) an aggregate of 933,460 shares of Common Stock issuable upon
exercise of the Options, of which 329,808 shares of Common Stock underlie
options exercisable within sixty days after September 26, 1997; (ii) an
aggregate of 120,000 shares of Common Stock issuable upon exercise of the
Independent Director Options, of which 60,000 shares of Common Stock
underlie options exercisable within sixty days after September 26, 1997;
and (iii) an aggregate of 1,109,147 shares of Common Stock issuable
pursuant to the 1996 Stock Option Plan, of which 85,500 shares of Common
Stock underlie options exercisable within sixty days after September 26,
1997. Includes 5,977 shares of Common Stock issuable upon the exercise of
certain options held by a certain Selling Stockholder, in connection with
the Offering.
18
<PAGE>
UNAUDITED PRO FORMA FINANCIAL DATA
The following unaudited pro forma combined balance sheet of the Company as
of September 26, 1997, gives effect to the Bond Offering and the Offering and
the application of the proceeds therefrom as if such transactions occurred as
of September 26, 1997. The unaudited pro forma combined statements of
operations of the Company for the 1997 fiscal year and the six month interim
period ended September 26, 1997 give effect to the Transactions, as if such
transactions occurred on March 30, 1996. For information regarding the
Offering, see "Use of Proceeds."
The pro forma adjustments are based upon currently available information as
well as upon certain assumptions that management believes are reasonable. Each
of the acquisitions comprising the Transactions were accounted for as a
purchase with assets recorded at their estimated fair market values.
Management believes that actual fair market value adjustments, if any, will
not differ materially from the preliminary allocation of the purchase price
contained in the pro forma adjustments reflected in the pro forma financial
information.
The unaudited pro forma combined financial statements are not necessarily
indicative of either future results of operations or results that might have
been achieved had the foregoing transactions been consummated as of the
indicated dates. The unaudited pro forma combined financial statements should
be read in conjunction with the notes thereto and the historical consolidated
financial statements of the Company, together with the related notes thereto,
incorporated by reference in this Prospectus.
19
<PAGE>
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
September 26, 1997
(In thousands)
<TABLE>
<CAPTION>
COMPANY PRO FORMA PRO FORMA
HISTORICAL ADJUSTMENTS COMBINED
---------- ----------- ---------
<S> <C> <C> <C>
ASSETS:
Cash and cash equivalents................ $ 16,815 $ 9,223(a) $ 26,038
Receivables, net......................... 8,633 -- 8,633
Inventories and prepaid expenses......... 16,184 -- 16,184
Advance rental payments.................. 47,540 -- 47,540
Property and equipment, net.............. 130,348 -- 130,348
Contract rights, net..................... 217,371 -- 217,371
Goodwill, net............................ 109,027 -- 109,027
Other assets............................. 14,441 4,375(b) 18,816
-------- ---------- --------
Total assets............................. $560,359 $ 13,598 $573,957
======== ========== ========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable and accrued
liabilities............................. $ 46,703 $ (750)(b) $ 45,953
Deferred income taxes.................... 78,803 -- 78,803
11 3/4% Series A/B/C Notes due 2005...... 196,655 100,000(b) 296,655
Premium on 11 3/4% Series C Notes due
2005.................................... -- 9,875(b) 9,875
Credit facility.......................... 203,250 (104,750)(b) 75,000
(23,500)(a)
9 7/8% Promissory Note................... 15,000 (15,000)(a) --
Other long-term debt..................... 3,619 -- 3,619
-------- ---------- --------
544,030 (34,125) 509,905
-------- ---------- --------
Stockholders' equity:
Common stock and capital in excess of par
value................................... 53,810 47,723(a) 101,533
Preferred Stock.......................... -- -- --
Accumulated Deficit...................... (37,042) -- (37,042)
-------- ---------- --------
16,768 47,723 64,491
Receivables from stockholders............ (439) -- (439)
-------- ---------- --------
Total stockholders' equity............... 16,329 47,723 64,052
-------- ---------- --------
Total liabilities and stockholder's
equity.................................. $560,359 $ 13,598 $573,957
======== ========== ========
</TABLE>
- --------
(a) Reflects as set forth in the following table the Offering and the
application of the proceeds therefrom:
<TABLE>
<S> <C> <C>
Gross proceeds from the issuance of 2,500,000 shares of
Common Stock at the offering price of $20.75 per
share.................................................. $51,875
Proceeds from the exercise of 5,977 options to purchase
Common Stock........................................... 71
Deduct transaction fees and expenses:
Transaction fees....................................... $2,723
Expenses............................................... 1,500
------
4,223
-------
Net proceeds from the Offering.......................... 47,723
Application of proceeds to repay indebtedness under
Credit Facility....................................... 23,500
Application of proceeds to repay 9 7/8% Promissory
Note.................................................. 15,000
------
38,500
-------
Net increase to cash and cash equivalents............... $ 9,223
=======
</TABLE>
(b) Reflects issuance of Series C Notes pursuant to the Bond Offering and the
application of the net proceeds therefrom. The Series C Notes were issued
at a premium of $9.875 million. Reflects payment of consent fee,
underwriter fees and accrual of transaction expenses for professional
fees.
20
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
Year Ended March 28, 1997
(In thousands, except per share data)
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
---------------------
COMPANY ACQUIRED PURCHASE PRO FORMA
HISTORICAL BUSINESSES (A) ACCOUNTING OTHER COMBINED
---------- -------------- ------------- ---------- ---------
<S> <C> <C> <C> <C> <C>
REVENUES................ $206,852 $100,061 $ 0 $ 0 $306,913
COSTS AND EXPENSES
Operating, general and
administrative
expenses.............. 144,059 70,429 0 (5,254)(b) 209,234
Depreciation and
amortization.......... 46,316 15,824 (2,070)(c) 71,973
11,506 (d)
397 (e)
Stock based
compensation charge... 2,152 0 0 0 2,152
-------- -------- ---------- ---------- --------
192,527 86,253 9,833 (5,254) 283,359
Operating income........ 14,325 13,808 (9,833) 5,254 23,554
Interest expense, net... 26,859 2,879 0 10,272 (f) 40,010
Other nonoperating
expenses............... 0 472 (626) 0 (154)
-------- -------- ---------- ---------- --------
(Loss) income before
income taxes........... (12,534) 10,457 (9,207) (5,018) (16,302)
-------- -------- ---------- ---------- --------
Provision (benefit) for
income taxes........... (2,307) 280 (1,749)(g) 679 (g) (3,097)
-------- -------- ---------- ---------- --------
(Loss) income before
extraordinary item..... $(10,227) $ 10,177 $ (7,458) $ (5,697) $(13,205)
======== ======== ========== ========== ========
Loss per share before
extraordinary item..... $ (1.11) $ (1.12)
======== ========
</TABLE>
See Accompanying Notes
21
<PAGE>
NOTES TO UNAUDITED PRO FORMA
COMBINED STATEMENTS OF OPERATIONS
Year Ended March 28, 1997
(In thousands)
(a) Represents historical operating results of: (i) Kwik Wash for the period
prior to the Kwik Wash Acquisition; (ii) Appliance Warehouse for the
period prior to the Appliance Warehouse Acquisition; (iii) Reliable for
the year ended June 30, 1996; and (iv) the NCL Entities.
(b) Reflects anticipated cost savings directly related to the Kwik Wash
Acquisition of $3,750, the Reliable Acquisition of $1,014 and the National
Coin Acquisition of $490. Prior to completing an acquisition, the Company
formulates a cost savings program affecting corporate financial and
administrative functions and regional operations which is implemented upon
the completion of each acquisition. The cost savings from the Kwik Wash
Acquisition represents certain identifiable personnel cost savings
relating to the elimination of 83 employees of Kwik Wash for $3,350 and
certain identifiable cost savings for facility and other costs for $400
resulting from the reduction and consolidation of certain regional
operations in Texas and administrative functions in Roslyn, N.Y. pursuant
to the cost savings program. The cost savings from the Reliable
Acquisition represents certain identifiable personnel cost savings
relating to the elimination of 13 employees of Reliable for $881 and
certain other identifiable cost savings for $133 resulting from the
reduction and consolidation of certain regional operations in California
and administrative functions in Roslyn, N.Y. pursuant to the cost savings
program. The cost savings from the National Coin Acquisition represents
certain identifiable personnel cost savings relating to the elimination of
6 employees of the NCL Entities for $205 and certain identifiable cost
savings for facility and other costs for $285 resulting from the reduction
and consolidation of certain regional operations in Ohio and Indiana and
administrative functions in Roslyn, N.Y. pursuant to the cost savings
program. Each of the above-mentioned pro forma personnel and facility cost
savings are derived from actual historical amounts reflected on the
acquired entities' financial statements. Additionally, substantially all
the employees have been terminated and the expected cost savings have
begun to be realized with respect to all of the facilities for which cost
savings have been recorded. If the Company's integration plans had
occurred on March 30, 1996, the Company believes that there would have
been no effect on revenues or expenses other than as presented in the pro
forma statements of operations.
(c) Includes the decrease in depreciation expense of $959 and $1,137 for the
fixed assets of Kwik Wash and the Reliable Entities, respectively,
primarily resulting from extending the lives of laundry equipment and
components from 5 or 7 years to 8 years, to be consistent with the
Company's accounting policy.
(d) Represents the amortization of contract rights and goodwill over 15 years,
related to the Kwik Wash Acquisition, the Reliable Acquisition, the
National Coin Acquisition and the Appliance Warehouse Acquisition.
(e) Represents the amortization of the covenants not to compete over 5 years,
related to the Kwik Wash Acquisition, the National Coin Acquisition and
the Appliance Warehouse Acquisition.
22
<PAGE>
(f) The following table presents a reconciliation of pro forma interest
expense:
<TABLE>
<CAPTION>
YEAR ENDED
MARCH 28, 1997
--------------
<S> <C>
Historical combined interest expense....................... $29,738
-------
Add:
Interest on $130.0 million term loan to finance the Kwik
Wash Acquisition........................................ 7,987
Interest on $15.0 million promissory note to finance the
Kwik Wash Acquisition................................... 1,111
Interest on $44.0 million term loan to finance the
Reliable Acquisition.................................... 3,608
Interest on $16.0 million revolving loan to finance the
National Coin Acquisition............................... 1,312
Interest on $100.0 million Series C Notes at 11.75%...... 11,750
Amortization of deferred financing costs on new debt:
Credit Facility........................................ 129
Senior Notes........................................... 547
Deduct:
Interest of acquired businesses.......................... (2,879)
Interest on $105.5 million term loans repaid by proceeds
of the Bond Offering.................................... (8,651)
Interest on $23.5 million term loans repaid with proceeds
from the Offering....................................... (1,927)
Interest on $15.0 million promissory note repaid with
proceeds from the Offering.............................. (1,481)
Amortization of premium of $9.875 million recorded on the
issuance of the Series C Notes (8 years)................ (1,234)
-------
Pro forma adjustment....................................... 10,272
-------
Pro forma interest expense................................. $40,010
=======
</TABLE>
(g) Represents the income tax impact on purchase accounting adjustments and
other pro forma adjustments.
23
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
Six Months Ended September 26, 1997
(In thousands, except per share data)
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
----------------------------
COMPANY ACQUIRED PURCHASE PRO FORMA
HISTORICAL BUSINESSES (A) ACCOUNTING OTHER COMBINED
---------- -------------- ------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
REVENUES................ $149,797 $7,186 $ 0 $ 0 $156,983
COSTS AND EXPENSES
Operating, general and
administrative
expenses.............. 103,227 5,571 0 (1,162)(b) 107,636
Depreciation and
amortization.......... 34,580 823 489 (c) 0 35,912
84 (d)
(64)(e)
Stock-based
compensation charge... 545 0 0 0 545
-------- ------ --------- ----------- --------
138,352 6,394 509 (1,162) 144,093
-------- ------ --------- ----------- --------
Operating income........ 11,445 792 (509) 1,162 12,890
Interest expense, net... 21,129 153 0 (62)(f) 21,220
-------- ------ --------- ----------- --------
Net (loss) income before
income taxes........... (9,684) 639 (509) 1,224 (8,330)
Provision (benefit) for
income taxes: (1,905) 77 (97)(g) 342 (g) (1,583)
-------- ------ --------- ----------- --------
Net (loss) income....... $ (7,779) $ 562 $(412) $ 882 $ (6,747)
======== ====== ========= =========== ========
Loss per share.......... $ (0.74) $ (0.52)
======== ========
</TABLE>
See Accompanying Notes
24
<PAGE>
NOTES TO UNAUDITED PRO FORMA
COMBINED STATEMENTS OF OPERATIONS
Six Months Ended September 26, 1997
(In thousands)
(a) Represents historical combined operating results of: (i) Reliable for the
period prior to the Reliable Acquisition and (ii) the NCL Entities prior
to the National Coin Acquisition.
(b) Reflects anticipated cost savings directly related to the Kwik Wash
Acquisition of $500, the Reliable Acquisition of $508 and the National
Coin Acquisition of $154. Prior to completing an acquisition, the Company
formulates a cost savings program affecting corporate financial and
administrative functions and regional operations which is implemented upon
the completion of each acquisition. The cost savings from the Kwik Wash
Acquisition represents certain identifiable personnel cost savings
relating to the elimination of 6 employees of Kwik Wash for $230 and
certain identifiable cost savings for facility, professional fees,
insurance and other costs for $270 resulting from the reduction and
consolidation of certain regional operations in Texas and administrative
functions in Roslyn N.Y. pursuant to the cost savings program. The cost
savings from the Reliable Acquisition represents certain identifiable
personnel cost savings relating to the elimination of 13 employees of
Reliable for $441 and certain identifiable cost savings for professional
fees, insurance and other costs for $67 resulting from the reduction and
consolidation of certain regional operations in California and
administrative functions in Roslyn, N.Y. pursuant to the cost savings
program. The cost savings from the National Coin Acquisition represents
certain identifiable personnel cost savings relating to the elimination of
6 employees of the NCL Entities for $85 and certain identifiable cost
savings for professional fees, facility, insurance and other costs for $69
resulting from the reduction and consolidation of certain regional
operations in Ohio and Indiana and administrative functions in Roslyn,
N.Y. pursuant to the cost savings program. Each of the above-mentioned pro
forma personnel and facility cost savings are derived from actual
historical amounts reflected on the acquired entities' financial
statements. Additionally, substantially all the employees have been
terminated and the expected cost savings have begun to be realized with
respect to all of the facilities for which cost savings have been
recorded. If the Company's integration plans had occurred on March 30,
1996, the Company believes that there would have been no effect on
revenues or expenses other than as presented in the pro forma statements
of operations.
(c) Represents the amortization of contract rights and goodwill over 15 years,
related to the Reliable Acquisition and the National Coin Acquisition.
(d) Represents the amortization of the covenant not to compete over 5 years,
related to the National Coin Acquisition.
(e) Represents the decrease in depreciation expense for the fixed assets of
the Reliable Entities primarily resulting from extending the lives of
laundry equipment and components from 5 or 7 years to 8 years, to be
consistent with the Company's accounting policy.
25
<PAGE>
(f) The following table presents a reconciliation of pro forma interest
expense:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
SEPTEMBER 26, 1997
------------------
<S> <C>
Historical combined interest expense................... $21,282
-------
Add:
Interest on $44.0 million term loan to finance the
Reliable Acquisition................................ 150
Interest on $16.0 million revolving loan to finance
the National Coin Acquisition....................... 410
Interest on $100.0 million Series C Notes at 11.75%.. 5,875
Amortization of deferred finance costs on new debt:
Senior Notes....................................... 273
Deduct:
Interest of acquired businesses...................... (153)
Interest on $104.75 million term loans repaid by
proceeds of the Bond Offering....................... (4,295)
Interest on $23.5 million term loan repaid with
proceeds from the Offering.......................... (617)
Interest on $15.0 million promissory note repaid with
proceeds from the Offering.......................... (964)
Amortization of $9.875 million premium recorded on
the issuance of the Series C Notes (8 years)........ (741)
-------
Pro forma adjustment................................... (62)
-------
Pro forma interest expense............................. $21,220
=======
</TABLE>
(g) Represents income tax impact on purchase accounting adjustments and other
pro forma adjustments.
26
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION
GENERAL
The Company's primary financial objective is to increase its EBITDA, which
is a source of funds to service indebtedness and for investment in both
continued internal growth and acquisitions. In the 1997 fiscal year and the
six months ended September 26, 1997, the Company experienced net losses. Such
net losses are attributable in part to significant non-cash charges associated
with the Company's execution of its business strategy, namely, (i) high levels
of depreciation and lease amortization expenses related to the addition of new
machines and customers and (ii) increases in goodwill amortization associated
with acquisitions accounted for under the purchase method of accounting.
The Company is principally engaged in the business of supplying outsourced
coin-operated laundry equipment services to multi-family housing properties.
The Company owns and operates approximately 420,000 coin-operated washers and
dryers in approximately 42,000 multi-family housing properties on routes
throughout the United States and 151 retail laundromats located throughout
Texas.
The Company provides outsourced coin-operated laundry equipment services to
locations by leasing laundry rooms from building owners and property
management companies, typically on a long-term, renewable basis. In return for
the exclusive right to provide these services, most of the Company's contracts
provide for commission payments to the location owners. Commission expense
(also referred to as rent expense), the Company's single largest expense item,
is included in laundry operating expenses and represents payments to location
owners. Commissions may be fixed amounts or percentages of revenues and are
generally paid monthly. Also included in laundry operating expenses are the
cost of servicing and collections in the route business, including, payroll,
parts, vehicles and other related items, the cost of sales associated with
Super Laundry Equipment Corp. ("Super Laundry") and certain expenses related
to the operation of retail laundromats.
In addition to commission payments, many of the Company's leases require the
Company to make advance rental payments to the location owners. These advance
payments are capitalized and amortized over the life of the applicable lease.
Other revenue sources for the Company include: (i) leasing laundry equipment
and other household appliances and electronic items to corporate relocation
entities, individuals, property owners and managers of multi-family housing
properties (approximately $1.5 million for the six months ended September 26,
1997); (ii) operating, maintaining and servicing retail laundromats
(approximately $10.5 million for the six months ended September 26, 1997); and
(iii) constructing complete turnkey retail laundromats, retrofitting existing
retail laundromats, distributing exclusive lines of commercial coin and non-
coin machines and parts, and selling service contracts (approximately $12.3
million for the six months ended September 26, 1997).
LIQUIDITY AND CAPITAL RESOURCES
As the Company has focused on increasing its EBITDA, it has made significant
capital investments, primarily consisting of acquisitions, renewal and growth
capital expenditures. For the twelve months ended March 29, 1996, the 1997
fiscal year and the six months ended September 26, 1997, cash flows used in
investing activities totaled approximately $39.2 million, $196.7 million and
$91.9 million, respectively. These investments have been primarily funded
through cash flows from operations and borrowings under the Credit Facility.
The Company intends to amend and restate the Credit Facility concurrently
with the Offering. The amended and restated Credit Facility is expected to
provide $235 million of financing consisting of (i) a $35 million working
capital revolving credit facility (undrawn at closing of the Offering) bearing
interest at an annual rate of LIBOR plus 1.50%; (ii) a $125 million
acquisition revolving credit facility (undrawn at
27
<PAGE>
closing of the Offering) bearing interest at an annual rate of LIBOR plus
1.50%; and (iii) a $75 million term loan facility (fully funded at closing of
the Offering) bearing interest at an annual rate of LIBOR plus 2.00%. The
working capital revolving credit facility and the acquisition revolving credit
facility are expected to mature in six years, and the term loan facility is
expected to mature in seven years. In addition to certain terms and
provisions, events of default, and customary restrictive covenants and
agreements, the Credit Facility is expected to contain certain covenants
including, but not limited to, a maximum leverage ratio, a minimum
consolidated interest coverage ratio, and limitations on indebtedness, capital
expenditures, advances, investments and loans, mergers and acquisitions,
dividends, stock issuances, transactions with affiliates and Coinmach's
ability to pay dividends. There can be no assurances, however, that the
Company will amend and restate such Credit Facility.
The Company anticipates that it will continue to utilize cash flows from
operations to finance its capital expenditures and working capital needs,
including interest payments on its outstanding indebtedness. Capital
expenditures for the six months ended September 26, 1997 were approximately
$91.9 million. Of such amount, the Company spent approximately $66.3 million
in acquisition and related transaction costs, including the Reliable
Acquisition, and approximately $8.0 million related to the net increase in the
installed base of machines. The balance was used for renewal of the Company's
existing machine base and for general corporate purposes.
During the 1997 fiscal year, the Company spent $213.0 million in capital
expenditures, of which $171.5 million, or approximately 80.6%, was used for
the execution of the Company's acquisition strategy. Of the remaining capital
investment, $12.5 million, or approximately 5.8%, was used for internally
generated growth and $29.1 million, or approximately 13.6%, related primarily
to expenditures for the renewal of the Company's existing machine base. The
full impact on revenues and EBITDA generated from capital expended on
acquisitions and the net increase in the installed base are not expected to be
reflected in the Company's financial results until subsequent reporting
periods. The age of the Company's equipment is evenly distributed over its
machine base, and management estimates that no more than approximately 12% of
its machine base is likely to be replaced in any given year. The Company
anticipates that renewal capital expenditures, which exclude acquisitions and
capital expenditures for internal growth, will be approximately $38.0 million
for the twelve months ending March 31, 1998. While the Company estimates that
it will generate sufficient cash flows from operations to finance anticipated
capital expenditures, there can be no assurances that it will be able to do
so. The Company also relies upon available credit under its existing credit
facility as an additional source of revenue for capital expenditures.
On a pro forma basis, after giving effect to all route acquisitions
consummated through July 1997 as if such transactions occurred at the
beginning of such period, the Company spent $290.2 million on capital
expenditures for the 1997 fiscal year (including approximately $233.9 million
in acquisition and related transaction costs).
The Company's working capital requirements are, and are expected to continue
to be, minimal since a significant portion of the Company's operating expenses
are not paid until after cash is collected from the installed machines. In
connection with certain of the financing agreements governing the Company's
indebtedness, Coinmach is required to make monthly cash interest payments
under the Credit Facility and semi-annual cash interest payments on the Series
B Notes and the Series C Notes.
The Company's depreciation and amortization expenses (aggregating
approximately $46.3 million and $34.6 million for the 1997 fiscal year and the
six months ended September 26, 1997, respectively) have the effect of reducing
net income but not operating cash flow. In accordance with GAAP, a significant
portion of the purchase prices of businesses acquired by the Company is
allocated to "contract rights", which costs are amortized over periods of up
to 15 years.
On October 8, 1997, Coinmach completed the private placement (the "Bond
Offering") of $100 million aggregate principal amount of its Series C Notes on
substantially identical terms as its outstanding
28
<PAGE>
Series B 11 3/4% Senior Notes due 2005 (the "Series B Notes"). The issue price
was 109.875%, representing a 9.94% yield to maturity. Substantially all of the
proceeds of the Bond Offering were used to reduce Coinmach's outstanding
indebtedness under the Credit Facility, including the repayment of all
revolving loan and Tranche A term loan indebtedness.
Management believes that the Company's future operating activities will
generate sufficient cash flow to repay borrowings under the Series B Notes,
the Series C Notes and the Credit Facility or to permit any necessary
refinancings thereof. An inability of the Company, however, to comply with
covenants or other conditions contained in the indenture governing the Series
B Notes (the "Series B Indenture"), the indenture governing the Series C Notes
(the "Series C Indenture") or in the Credit Agreement could result in an
acceleration of all amounts due under the Series B Indenture, the Series C
Indenture and the Credit Agreement. If the Company is unable to meet its debt
service obligations, it could be required to take certain actions such as
reducing or delaying capital expenditures, selling assets, refinancing or
restructuring its indebtedness, selling additional equity capital or other
actions. There is no assurance that any of such actions could be effected on
commercially reasonable terms, if at all, or on terms permitted under the
Credit Agreement, the Series B Indenture or the Series C Indenture.
The Company's ability to incur additional indebtedness to facilitate its
acquisition strategy is limited by the covenants and other restrictions
imposed by the Series B Indenture, the Series C Indenture and the Credit
Agreement, including, without limitation, compliance with certain financial
covenants and maintenance tests and ratios, including debt to equity and fixed
charge coverage ratios. As of November 1, 1997, subject to compliance with the
foregoing covenants, the Company would have had approximately $98.5 million of
availability under its revolving credit facility. The amount of additional
indebtedness the Company is able to incur to further facilitate its
acquisition strategy is dependent upon a number of variables, including,
without limitation, the pro forma effects of the acquisition with respect to
which such additional indebtedness is to be incurred.
INFLATION AND SEASONALITY
In general, the Company's laundry operating expenses and general and
administrative expenses are affected by inflation and the effects of inflation
may be experienced by the Company in future periods. Management believes that
such effects have not been nor will be material to the Company. The Company's
business generally is not seasonal.
FORWARD-LOOKING INFORMATION
This Prospectus contains or may contain certain forward looking statements
and information that are based on the beliefs of the Company's management as
well as estimates and assumptions made by, and information currently available
to, the Company's management. The words "anticipate," "believe," "estimate,"
"expect," "future," "intend," "plan" and similar expressions, as they relate
to the Company or the Company's management, identify forward looking
statements. Such statements reflect the current views of the Company with
respect to future events and are subject to certain risks, uncertainties and
assumptions relating to the Company's operations and results of operations,
competitive factors, shifts in market demand, and other risks and
uncertainties, including, in addition to any uncertainties specifically
identified in the text surrounding such statements, uncertainties with respect
to changes or developments in social, economic, business, industry, market,
legal and regulatory circumstances and conditions and actions taken or omitted
to be taken by third parties, including the Company's stockholders, customers,
suppliers, competitors, legislative, regulatory, judicial and other
governmental authorities. Should one or more of these risks or uncertainties
materialize, or should the underlying assumptions prove incorrect, actual
results may vary significantly from those anticipated, believed, estimated,
expected, intended or planned.
29
<PAGE>
BUSINESS
OVERVIEW
The Company, established in 1947, is the leading supplier of outsourced
coin-operated laundry equipment services for multi-family housing properties
in the United States. The Company's business involves leasing laundry rooms
from building owners and property management companies, installing and
servicing the laundry equipment and collecting revenues generated from laundry
machines. The Company owns and operates approximately 420,000 coin-operated
washers and dryers in approximately 42,000 locations on routes throughout the
United States and in 151 retail laundromats located throughout Texas.
In January 1995, the Company initiated a strategy of controlled growth
through acquisitions. This strategy was designed to increase the installed
machine base in its then existing operating region as well as to provide the
Company with a strong market presence in new regions. Since January 1995, the
Company has completed six significant acquisitions adding revenues of
approximately $221 million and expanding its national presence from the
Northeast into the Mid-Atlantic, Southeast, South-Central, Midwest and Western
regions of the United States. Accordingly, the Company has grown its installed
base from approximately 54,000 machines to approximately 420,000 machines.
As a result of this strategy of growth, the Company's revenues and EBITDA
have grown from $72.9 million and $13.6 million, respectively, on a historical
basis for the twelve months ended March 31, 1995, to $306.9 million and $97.8
million (before deducting non-cash stock based compensation charges),
respectively, for the 1997 fiscal year, on a pro forma basis, giving effect to
the acquisitions consummated by the Company since March 30, 1996.
BUSINESS STRATEGY
The Company's business strategy is to enhance its position as the largest
provider of outsourced coin-operated laundry equipment services in the United
States. Management intends to continue to grow the Company's installed machine
base both internally and through selective acquisitions to achieve benefits of
scale, increase its operating efficiencies and improve its financial
performance. Internal growth is comprised of: (i) adding new customers in
existing regions and securing contracts for additional locations from current
customers; (ii) converting owner-operated facilities to Company managed
facilities; (iii) improving the net contribution per machine through operating
efficiencies and selective price increases; and (iv) pursuing additional
growth opportunities presented by the Company's leading market position and
access to approximately four million individual housing units. The Company's
acquisition strategy is to continue to selectively acquire local, regional and
multi-regional route businesses from independent operators at attractive
prices. The Company is currently evaluating several acquisition opportunities,
however, there can be no assurance that, subsequent to ongoing negotiations
and due diligence reviews, the Company will complete any such acquisitions.
An important element of the Company's business strategy is to continue to
expand its geographic presence to gain additional regional and multi-regional
account opportunities with large multi-family housing property managers and
owners. Management believes that a significant portion of its customer base,
which manages multi-family housing and other residential properties, is
consolidating. Consequently, management believes that opportunities for
outsourcing coin-operated laundry equipment services to professionally
managed, multi-regional, well-capitalized independent operators such as the
Company are increasing.
The Company's business strategy also includes the continued development of
the Integrated Computer Systems which management believes are the most
advanced in the industry. The Integrated Computer Systems provide real-time
operational and competitive data, which in conjunction with the Company's
multi-regional service capabilities, enhance the Company's operating
efficiencies throughout
30
<PAGE>
its regions and enable the Company to deliver superior customer service. The
Integrated Computer systems also provide the Company with the flexibility to
integrate acquisitions on a timely basis, including key functions such as
sales, service, collections and security. Finally, as the industry leader, the
Company works closely with its equipment vendors to assess ongoing
technological changes and implements those which the Company believes are
beneficial to operating efficiencies and financial performance.
GROWTH STRATEGY
The Company's growth strategy is to increase operating cash flow and
profitability through a combination of internal expansion and acquisitions.
Internal Expansion. Internal expansion is comprised of: (i) increasing the
installed machine base by adding new customers and increasing the number of
locations with existing customers; (ii) converting owner-operated facilities
to Company managed facilities; (iii) improving the net contribution per
machine through operating efficiencies and selective price increases; and (iv)
pursuing additional growth opportunities presented by its leading market
position and access to approximately four million individual housing units.
New Customers and Locations. The Company's sales and marketing efforts
focus on two areas of expansion within its existing operating regions. The
Company's primary means of internal expansion is by marketing the Company's
products and services to building managers and property owners whose leases
with other laundry equipment services providers are near expiration. The
Company's Integrated Computer Systems track information on the lease
expirations of its competitors. The Company believes that its leading
market position and expanding geographic presence, primarily achieved
through acquisitions, enhances its ability to gain new customers and
additional locations from its existing customers.
Conversions. Management believes that there are approximately 1.0 million
machines installed in locations which continue to be managed by owner-
operators. Building owners or managers can forgo significant cash outlays
by contracting with the Company to purchase, service and maintain laundry
equipment. Accordingly, the Company pursues building owners and managers
who will contract with the Company to outsource their coin-operated laundry
facilities. The Company offers a full range of services from the design,
construction and installation of new laundry facilities to the
refurbishment of existing facilities. Management believes these services
provide a competitive advantage in securing new customers.
Operating Efficiencies and Price Increases. The Company focuses on
improving its net contribution per machine through achieving operating
efficiencies and selective price increases. Due to factors beyond the
Company's control, however, there can be no assurance that such efficiency
or price increases will occur.
Other Growth Opportunities. While management intends to continue its
focus on increasing its installed machine base, management believes that
its leading market position and its access to over four million housing
units provides the Company with additional growth and diversification
opportunities. These opportunities include laundry equipment rental as well
as other route based facilities management services. In addition, the
Company is discussing the formation of strategic alliances with vendors of
products complimentary to its customer base. See "--Other Operations."
Management believes that its strategy of growth within its existing
operating regions will result in additional economies of scale and operating
efficiencies associated with an expanded machine base. Such growth, however,
will be dependent upon a number of factors beyond the Company's control, such
as the Company's ability to secure new contracts from owner-operators on
commercially favorable terms and competitive forces that may reduce the number
of opportunities to secure new locations or to effect price increases.
31
<PAGE>
Acquisitions. The Company intends to continue to capitalize on opportunities
within the fragmented coin-operated laundry equipment services industry
through selective acquisitions of additional route businesses. It has been the
Company's experience that there are numerous private, family-owned businesses
that often lack the financial resources to provide advance rental payments,
install new equipment, make laundry room improvements or otherwise compete
effectively with larger independent operators such as the Company to secure
new or existing contracts. Consequently, such independent operators,
especially those which are undergoing generational ownership changes,
represent potential acquisition opportunities for the Company. See "The
Company--Acquisitions."
Management believes the Company is well positioned to capitalize on
acquisition opportunities due to its operating efficiencies, its access to
capital resources, and senior management's extensive experience and
relationships in the industry. The Company evaluates potential acquisitions
based on the size of the business (in terms of revenues and machine base), the
geographic concentration of the business, market penetration, service history,
customer relations, existing contract terms and potential operating
efficiencies and cost savings. The Company considers three types of
acquisition candidates: (i) small, local route operators; (ii) regional route
operators; and (iii) large, multi-regional route operators.
Local route operators. The purchase of small, local operators (businesses
operating within one of the Company's existing regions) results in
eliminating most of the target's existing cost structure through the
complete absorption of its machine base into the Company's operations. The
Company's experience has been that the acquisition of local route operators
has increased operating leverage within its operating regions. In many
instances, the Company is able to acquire routes adjacent to its existing
areas of operation without incurring significant incremental operating
costs.
Regional route operators. The Company's acquisition of regional route
operators provides opportunities to improve its cash flow by eliminating
duplicative corporate and administrative functions, reducing capital
expenditures through improved purchasing power and implementing the
Company's Integrated Computer Systems. Since April 1, 1996, the Company has
completed the Allied Acquisition, the Reliable Acquisition and the National
Coin Acquisition. The Allied Acquisition has been substantially integrated
and, in addition to improving the Company's cash flow, has allowed the
Company to establish a larger market presence in the Mid-West. Management
expects to integrate substantially all of the operations formerly conducted
by the Reliable Entities and the NCL Entities into the Company's operations
during 1997 and to achieve targeted cost savings as a result of such
integration.
Multi-regional route operators. Management believes that the acquisition
of a large, multi-regional route operator results in a number of operating
efficiencies, including significant cost savings through the elimination of
duplicative financial and administrative functions and related fixed costs.
In addition, the increased volume of equipment purchases usually results in
reduced per unit capital expenditures. As is the case with all
acquisitions, the Company's Integrated Computer Systems are utilized to
provide further operating efficiencies and related cost savings. Kwik Wash
is an example of a multi-regional acquisition which enabled the Company to
substantially increase its operating base, add several experienced regional
managers, penetrate new markets and, along with the aforementioned regional
acquisitions, become the largest industry participant.
As part of the Company's growth strategy, the Company continues to evaluate
acquisition opportunities. There can be no assurance however that, subsequent
to ongoing negotiations and due diligence reviews, the Company will complete
any such acquisitions.
FINANCIAL CHARACTERISTICS OF THE BUSINESS
The Company's business has the following financial characteristics:
Recurring Revenues. The Company derives a majority of its revenues from
outsourced coin-operated laundry equipment services typically performed under
long-term contracts with landlords,
32
<PAGE>
property management companies and owners of rental apartment buildings,
condominiums and cooperatives, university and institutional housing and other
multi-family housing properties. Management estimates that approximately 90%
of its locations are subject to long-term contracts with initial terms of
three to ten years, most of which have automatic renewal or right of first
refusal provisions. During the 1997 fiscal year, the Company retained
approximately 97% of its existing machine base. The Company believes that its
ability to retain its customers and machine base is attributable to a number
of factors, including the Company's national reputation for superior service,
the structure of its contracts and the strength of its long-term customer
relationships.
Diversified Customer Base. The Company provides outsourced coin-operated
laundry equipment services to over 42,000 laundry rooms in its operating
regions, and no one customer accounts for more than 2% of its revenues.
Management estimates that the Company's services are located in multi-family
housing properties containing over four million individual housing units.
Leverageable Cash Flows. Due to the stable, recurring nature of the
Company's revenues and its consistent EBITDA levels, the Company has been able
to obtain debt financing on favorable terms to support its acquisition
strategy. This use of debt financing to support growth is an important
component of the Company's financial strategy, and the Company believes that
access to both the public and private debt markets provides it with a
competitive advantage.
Benefits of Scale. By increasing its installed machine base, the Company has
benefited from economies of scale in both operating costs and purchasing
power. The Company is able to leverage its existing infrastructure, including
its sales, service, collections, security and corporate overhead, over a
larger installed machine base than its competition. As a result, the Company
has been able to improve its EBITDA margin as it has increased its size. For
the twelve months ended March 29, 1996, the 1997 fiscal year and the six
months ended September 26, 1997, the Company's EBITDA margins were 28.6%,
30.4% and 31.1%, respectively. Furthermore, due to its purchasing power,
management believes that the Company is able to purchase equipment on terms
more favorable than those available to smaller industry participants.
Significant Portion of Capital Investment Related to Growth. During the 1997
fiscal year, the Company spent $213.0 million in capital expenditures, of
which $171.5, or approximately 80.6%, was used to finance acquisitions as part
of the Company's growth strategy. Of the remaining capital investment, $12.5
million, or approximately 5.8%, was used for internally generated growth and
$29.1 million, or approximately 13.6%, related to the renewal of the Company's
existing machine base.
INDUSTRY
The coin-operated laundry equipment services industry is characterized by
stable cash flows generated by long-term, renewable lease contracts with
multi-family housing property owners and management companies. The industry is
highly fragmented, with many small, private and family-owned route businesses
continuing to operate throughout all major metropolitan areas. According to
information provided by the Multi-housing Laundry Association, the industry
consists of over 280 independent operators. Based upon industry estimates,
management believes there are approximately 3.5 million installed machines in
multi-family properties throughout the United States, approximately 2.5
million of which have been outsourced to independent operators such as the
Company and approximately 1.0 million of which continue to be operated by the
owners of such locations.
The industry is highly capital intensive and customers require prompt and
reliable service. The majority of capital costs are incurred upon procurement
of new leases. Initial costs include replacing or repairing existing washers
and dryers, refurbishing laundry rooms and making advance rental payments to
secure long-term, renewable leases. After the initial expenditures, ongoing
working capital requirements are minimal, since machines operate throughout
the term of the contract under which they are installed if serviced properly,
and variable costs are paid out of revenues collected from the machines.
33
<PAGE>
Historically, the industry has been characterized by stable demand and has
proven to be resistant to changing market conditions and general economic
cycles. Management believes that the industry's consistent and predictable
revenue and cash flow from operations are primarily due to: (i) the long-term
nature of location leases; (ii) the stable demand for laundry services; and
(iii) minimal ongoing working capital requirements.
OPERATIONS
The principal aspects of the Company's operations include: (i) sales and
marketing; (ii) location leasing; (iii) service; (iv) information management;
(v) remanufacturing and (vi) collection security.
Sales and Marketing. The Company markets its products and services through a
sales staff with an average industry experience of over ten years. The
principal responsibility of the sales staff is to solicit and negotiate lease
arrangements with building owners and managers. All sales personnel are paid
commissions that comprise 50% or more of their annual compensation. Selling
commissions are based on a percentage of a location's annualized earnings
before interest and taxes. Sales personnel must be proficient with the
application of sophisticated financial analyses which calculate minimum
returns on investment to achieve the Company's targeted goals in securing
location contracts and renewals. Management believes that its sales staff is
among the most competent and effective in the industry.
The Company's marketing strategy emphasizes service excellence offered by
its experienced, highly skilled personnel and its quality equipment that
maximizes efficiency and revenue and minimizes machine down-time.
Additionally, the Integrated Computer Systems monitor performance, repairs and
maintenance, as well as the profitability of locations on a daily basis. The
Company's sales staff targets potential new and renewal lease locations by
utilizing its Integrated Computer Systems' extensive database that provides
information on the Company's, as well as its competitors' locations. All sales
activity, from sale entries to data on service and installation, is recorded
and monitored daily on a custom-designed, computerized sales planner.
No single customer represents more than 2% of the Company's revenues or
installed machine base. In addition, the Company's ten largest customers taken
together account for less than 10% of the Company's revenues.
Location Leasing. The Company's leases provide the Company the exclusive
right to operate and service the laundry equipment, including repairs and
maintenance. The Company typically sets pricing for the use of the machines on
location, and the property owner or property manager maintains the premises
and provides utilities such as gas, electricity and water.
In return for the exclusive right to provide laundry equipment services,
most of the Company's leases provide for monthly commission payments to the
location owners. Under the majority of leases, these commissions are based on
a percentage of the cash collected from the laundry machines. Many of the
Company's leases require the Company to make advance rental payments to the
location owner in addition to commissions. The Company's leases typically
include provisions that allow for unrestricted price increases, a right of
first refusal (an opportunity to match competitive bids at the expiration of
the lease term) and termination rights if the Company does not receive minimum
net revenues from a lease. The Company has some flexibility in negotiating its
leases and, subject to regional competitive factors, may vary the terms and
conditions of a lease, including commission rates and advance rental payments.
The Company evaluates each lease opportunity through its Integrated Computer
Systems which are designed to achieve certain targeted levels of return on
investment.
Management estimates that approximately 90% of its locations are under long-
term leases with initial terms of three to ten years. Of the remaining
locations not subject to long term leases, the Company
34
<PAGE>
believes that it has retained a majority of such customers through long-
standing relationships and intends to continue to service such customers.
Approximately 42% of the Company's leases renew automatically, and the Company
has a right of first refusal on termination in approximately 40% of its
leases. The Company's automatic renewal clause typically provides that, if the
building owner fails to take any action prior to the end of the original lease
term or any renewal term, the lease will automatically renew on substantially
similar terms. As of September 26, 1997, the Company's leases have an average
remaining life to maturity of approximately 50 months (without giving effect
to automatic renewals).
Service. The Company's employees deliver, install, service and collect from
coin-operated washers and dryers in laundry facilities at its leased
locations.
The Company's fleet of 352 radio-equipped service vehicles allows the quick
dispatch of service technicians in response to both computer-generated (for
preventive maintenance) and customer-generated service calls. On a daily
basis, the Company receives and responds to approximately 2,200 service calls.
Management estimates that less than 1% of the Company's machines are out of
service on any given day. The ability to reduce machine down time, especially
during peak usage, serves to enhance revenue and improve the Company's
reputation with its customers.
In a business that emphasizes prompt and efficient service, management
believes that the Company's Integrated Computer Systems provide a significant
competitive advantage in terms of responding promptly to customer needs.
Computer-generated service calls for preventive maintenance are based on
previous service history, repeat service call analysis and monitoring of
service areas. These operations coordinate the Company's radio-equipped
service vehicles that allow the Company to address customer needs quickly and
efficiently.
Information Management. Management believes that the Company's Integrated
Computer Systems serve three major functions: (i) tracking the service cycle
of equipment; (ii) monitoring revenues and costs by location, customer and
salesperson; and (iii) providing information on competitor's lease renewal
schedules.
The Integrated Computer Systems provide speed and accuracy throughout the
entire service cycle by integrating the functions of service call entry,
dispatching service personnel, parts and equipment purchasing, installation,
distribution and collection. In addition to coordinating all aspects of the
service cycle, the Company's Integrated Computer Systems track contract
performance which indicate unreported machine failure or pilferage and provide
data to forecast future equipment failures.
Data on machine performance is used by the sales staff to forecast revenue
by location. Management is able to obtain daily, monthly, quarterly and annual
reports on location performance, coin collection, service and sales activity
by salesperson.
The Integrated Computer Systems also provide the sales staff with an
extensive database essential to the Company's marketing strategy to obtain new
business through competitive bidding or owner-operator conversion
opportunities.
Management also believes that the Integrated Computer Systems enhance the
Company's ability to successfully integrate acquired businesses into its
existing operations. It has been the experience of the Company's management
that regional or muti-regional acquisitions can be integrated within 90 to 120
days, while a local acquisition can be integrated almost immediately.
Remanufacturing. The Company's remanufacturing operations provide
approximately one-third of its annual machine installation requirements. The
Company rebuilds and reinstalls a portion of its machines at approximately
one-third the cost of acquiring new machines. Remanufactured machines are
restored to virtually new condition with the same estimated average life and
service requirements as new
35
<PAGE>
machines. Machines that can no longer be remanufactured are added to the
Company's inventory of spare parts.
The Company maintains four regional remanufacturing facilities which provide
for consistent machine quality and efficient operations and are strategically
located to service each of its operating regions.
Collection Security. Management believes that it provides the highest level
of collection security control in the laundry equipment services industry. The
Company utilizes numerous precautionary procedures with respect to cash
collection, including frequent alteration of collection patterns, extensive
monitoring of collections and other control mechanisms. The Company enforces
stringent employee standards and screening procedures with prospective
employees. Employees responsible for or who have access to the collection of
funds are tested randomly and frequently. Additionally, the Company's security
department performs trend and variance analyses of daily collections by
location. Security personnel monitor locations, conduct investigations, and
implement additional security procedures as necessary.
COMPETITION
The coin-operated laundry equipment services industry is highly competitive,
capital intensive and requires reliable, quality service. Despite the overall
fragmentation of the industry, there are currently three companies, including
the Company, with significant operations in multiple regions throughout the
United States. The other large multiple region operators are Web Service
Company, Inc. and Macke Laundry Service, L.P.
OTHER OPERATIONS
In addition to supplying outsourced coin-operated laundry equipment
services, the Company has expanded its breadth of operations to other, related
lines of business:
Individual Housing Units. Through the acquisition of Appliance Warehouse,
the Company entered the business of renting laundry equipment and other
household appliances and electronic items to individuals. With access to
approximately four million individual housing units, the Company believes its
new business line represents an opportunity for growth in a new market segment
which is complementary to its core business.
Laundromat Construction. Super Laundry, a wholly owned subsidiary of
Coinmach, is a laundromat construction and equipment distribution company.
Super Laundry's business consists of constructing complete turnkey laundromat
retail stores, retrofitting existing laundromat retail stores, distributing
exclusive lines of commercial coin and non-coin operated machines and parts,
and selling service contracts. Super Laundry's customers generally enter into
sales contracts pursuant to which Super Laundry constructs and equips a
complete laundromat operation, including location identification,
construction, plumbing, electrical wiring and all required permits.
Retail Laundromat Operations. The Company operates 151 retail laundromats
located throughout Texas, 150 of which were acquired in the Kwik Wash
Acquisition. The operation of the retail laundromats involves leasing store
locations in desired geographic areas, maintaining an appropriate mix of
washers and dryers at each store location and servicing such washers and
dryers at such locations. The Company is also responsible for maintaining the
premises at each laundromat and paying for utilities and related expenses.
FACILITIES
As of November 1, 1997, the Company leases 39 offices throughout its
operating regions serving various operational purposes, including sales and
service activities, collections and warehousing. The Company presently
maintains its headquarters in Roslyn, New York, leasing approximately 40,000
square feet pursuant to a five year lease terminating April 30, 2001. The
Company's Roslyn facility is used for general
36
<PAGE>
corporate purposes, as well as for remanufacturing and warehouse space for the
Northeast operating region. The Company has an option to purchase the Roslyn
facility, which it presently does not intend to exercise.
EMPLOYEES
As of November 1, 1997, the Company employed approximately 1,450 full-time
employees (including 334 laundromat attendants in the Company's retail
laundromats in Texas). Approximately 140 hourly workers in the Northeast
region are represented by Local 966, affiliated with the International
Brotherhood of Teamsters (the "Union"). Management believes that the Company
has maintained a good relationship with the Union employees and has never
experienced a work stoppage since its inception.
LEGAL PROCEEDINGS
The Company and its predecessors have been named as defendants in a number
of legal actions arising in the ordinary course of its business. Although the
amount of any liability that could arise with respect to these actions can not
be accurately predicted, management believes that any such liability,
individually or in the aggregate, will not have a material adverse effect on
the Company.
37
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of Coinmach Laundry are:
<TABLE>
<CAPTION>
NAME AGE TITLE
---- --- -----
<S> <C> <C>
Stephen R. Kerrigan........... 44 Chairman of the Board and Chief Executive
Officer, Director
Mitchell Blatt................ 46 President, Chief Operating Officer,
Director
Robert M. Doyle............... 40 Chief Financial Officer, Senior Vice
President, Treasurer, Secretary
John E. Denson................ 60 Senior Vice President--Corporate
Development
Michael E. Stanky............. 46 Senior Vice President
Bruce V. Rauner............... 41 Director
David A. Donnini.............. 32 Director
James N. Chapman.............. 35 Director
Dr. Arthur B. Laffer.......... 57 Director
Stephen G. Cerri.............. 61 Director
</TABLE>
BACKGROUND AND EXPERIENCE
Mr. Kerrigan has been Chief Executive Officer of Coinmach Laundry since
April 1996 and of Coinmach since November 1995. Mr. Kerrigan was President and
Treasurer of Solon and Coinmach Laundry from April 1995 to April 1996, and
Chief Executive Officer of The Coinmach Corporation ("TCC"), a predecessor of
Coinmach, from January 1995 to November 1995. Mr. Kerrigan has been a director
and Chairman of the Board of Coinmach Laundry since April 1995 and of Coinmach
since November 1995. Mr. Kerrigan was a director of TCC from January 1995 to
November 1995 and a director of Solon from April 1995 to November 1995. Mr.
Kerrigan served as Vice President and Chief Financial Officer of TCC's
predecessor, Coinmach Industries from 1987 to 1994. Mr. Kerrigan was an
executive officer of CIC, which filed a voluntary petition for reorganization
under Chapter 11 of the United States Bankruptcy Code in 1993.
Mr. Blatt has been President and Chief Operating Officer of Coinmach Laundry
since April 1996 and of Coinmach since November 1995. Mr. Blatt was the
President and Chief Operating Officer of TCC from January 1995 to November
1995. Mr. Blatt has been a director of Coinmach Laundry and Coinmach since
November 1995. Mr. Blatt joined TCC as Vice President-General Manager in 1982
and was Vice President and Chief Operating Officer from January 1988 to
February 1994. Mr. Blatt was an executive officer of CIC, which filed a
voluntary petition for reorganization under Chapter 11 of the United States
Bankruptcy Code in 1993.
Mr. Doyle has been Chief Financial Officer, Senior Vice President, Treasurer
and Secretary of Coinmach Laundry since April 1996 and of Coinmach since
November 1995. Mr. Doyle has been a director of Coinmach since November 1995.
Mr. Doyle served as Vice President, Treasurer and Secretary of TCC from
January 1995 to November 1995. Mr. Doyle joined TCC in 1987 as Controller. In
1988, Mr. Doyle became Director of Accounting, and was promoted in 1989 to
Vice President and Controller. Mr. Doyle was an executive officer of CIC which
filed a voluntary petition for reorganization under Chapter 11 of the United
States Bankruptcy Code in 1993.
Mr. Denson has been Senior Vice President of Coinmach Laundry since April
1996 and of Coinmach since November 1995. Mr. Denson was Senior Vice
President, Finance of Solon from June 1987 to November 1995. Mr. Denson served
as an officer of Solon under various titles since 1973, and served as a
director and Co-Chief Executive Officer of Solon from November 1994 to April
1995.
38
<PAGE>
Mr. Stanky has been Senior Vice President of Coinmach Laundry since April
1996 and of Coinmach since November 1995. Mr. Stanky was a Senior Vice
President of Solon from July 1995 to November 1995. Mr. Stanky served Solon in
various capacities since 1976, and in 1985 was promoted to Area Vice President
responsible for Solon's South-Central Region. Mr. Stanky served as a Co-Chief
Executive Officer of Solon from November 1994 to April 1995.
Mr. Rauner has been a director of Coinmach Laundry since April 1995. Mr.
Rauner was a director of Coinmach from November 1995 to November 1996 and a
director of TCC from January 1995 to November 1995. Mr. Rauner has been a
Principal of GTCR since 1981. Mr. Rauner serves as a director of COREStaff,
Inc., Esquire Communications Ltd., Lason Systems, Inc., and Polymer Group,
Inc.
Mr. Donnini has been a director of Coinmach Laundry since April 1995. Mr.
Donnini was a director of Coinmach from November 1995 to November 1996 and a
director of TCC from January 1995 to November 1995. Mr. Donnini has been a
Principal of GTCR since 1993. From 1991 to 1993, Mr. Donnini was an Associate
with GTCR. Mr. Donnini serves as a director of Polymer Group, Inc.,
International Computer Graphics, Inc., U.S. Aggregates, Inc., Keystone Group
Holdings, Inc., Dickson Media, Inc. and Cherrydale Farms, Inc.
Mr. Chapman has been a director of Coinmach Laundry since April 1995. Mr.
Chapman is presently Vice President--Investment Banking with The Renco Group,
Inc., a financial services company. Mr. Chapman was a Principal of Fieldstone
Private Capital Group, L.P., a private holding company, from its inception in
1990 to May 1996. Mr. Chapman was a director of Coinmach from November 1995 to
November 1996 and a director of TCC from January 1995 to November 1995.
Dr. Laffer has been a director of Coinmach Laundry since September 1996. Dr.
Laffer is a director of Mastec, Inc., Nicholas Applegate Mutual Funds,
Nicholas Applegate Growth Equity Funds, Casmyn, Inc. and United States Filter
Corporation. Dr. Laffer has been Chairman and Chief Executive Officer of A.B.
Laffer, V.A. Canto & Associates, an economic consulting firm, since 1979,
Chief Executive Officer of Calport Asset Management, Inc., a money management
firm, since 1992 and Chief Executive Officer of Laffer Advisors, Inc., a
registered broker-dealer and investment advisor since 1985.
Mr. Cerri has been a director of Coinmach Laundry since September 1996. Mr.
Cerri has been Chairman and Chief Executive Officer of Alinabal Holdings
Corporation, manufacturer of electro-mechanical and mechanical products, since
November 1987 and a consultant with Capstone Management Resources, Inc., a
firm which provides consulting services to clientele involved in leverage
transactions.
The Board consists of seven members and is divided into three classes of
directors. Each class of directors is elected to serve for a term of three
years, so that the term of office of approximately one-third of the directors
will expire each year. At each annual meeting of stockholders, successors to
the class of directors whose term expires at such meeting will be elected to
serve for three-year terms or until their successors are duly elected and
qualified. All executive officers serve at the discretion of the Board. There
are no family relationships between any of the directors or executive officers
of the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On October 9, 1997, Coinmach paid Mr. Chapman $200,000 for financial
advisory services rendered in connection with the Bond Offering.
39
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth information known to Coinmach Laundry with
respect to the beneficial ownership of the Common Stock as of November 25,
1997, and as adjusted to reflect the sale of Common Stock offered hereby, by:
(i) each person or entity who is known by Coinmach Laundry to own beneficially
more than 5% of the Common Stock; (ii) each of Coinmach Laundry's directors;
(iii) the current executive officers of Coinmach Laundry; (iv) all current
directors and executive officers as a group; and (v) each Selling Stockholder.
Except as indicated in the footnotes to the table, the persons and entities
named in the table have sole voting and investment power with respect to all
shares of Common Stock which they respectively beneficially own.
<TABLE>
<CAPTION>
SHARES SHARES
BENEFICIALLY BENEFICIALLY
OWNED PRIOR TO OWNED AFTER
OFFERING(1) OFFERING(1)
--------------------- -----------------
NUMBER OF
SHARES
BEING
NAME AND ADDRESS NUMBER PERCENT OFFERED(2)(3) NUMBER PERCENT
---------------- --------- ------- ------------- --------- -------
<S> <C> <C> <C> <C> <C>
DIRECTORS, OFFICERS AND
5% STOCKHOLDERS
Golder, Thoma, Cressey,
Rauner, Fund IV,
L.P. ................. 4,556,114(4) 45.5% 1,183,618 3,372,496 27.0%
6100 Sears Tower
Chicago, IL 60606
MCS Capital, Inc. ...... 566,010(5) 5.7% -- 566,010 4.5%
c/o Coinmach
Corporation
521 East Morehead,
Suite 590
Charlotte, NC 28202
Bruce J. Rauner......... 4,556,114(4) 45.5% 1,183,618 3,372,496 27.0%
David A. Donnini........ 4,556,114(4) 45.5% 1,183,618 3,372,496 27.0%
Stephen R. Kerrigan..... 566,010(5) 5.7% -- 566,010 4.5%
Mitchell Blatt.......... 456,313(6) 4.6% -- 456,313 3.6%
Robert M. Doyle......... 157,964(7) 1.6% -- 157,964 1.3%
Michael E. Stanky....... 108,284(8) 1.1% -- 108,284 *
John E. Denson.......... 11,503(9) * -- 11,503 *
James N. Chapman........ 30,386(10) * 7,894 22,492 *
Arthur B. Laffer........ 30,000(11) * -- 30,000 *
Stephen G. Cerri........ 30,000(11) * -- 30,000 *
All Officers and
Directors as a group
(10 persons)........... 5,946,574(12) 59.4% 1,191,512 4,755,062 38.0%
--------- ---- --------- --------- ----
OTHER SELLING
STOCKHOLDERS
President and Fellows of
Harvard College........ 151,860 1.5% 39,451 112,409 *
Michael Marrus.......... 25,974(13) * 6,748 19,226 *
S.A. Spencer and Mary M.
Spencer................ 24,297 * 6,312 17,985 *
Ronald S. Brody......... 23,006(14) * 5,977 17,029 *
</TABLE>
- --------
* Percentage of shares beneficially owned does not exceed 1% of Common Stock
outstanding.
(1) Share percentage ownership is rounded to nearest tenth of 1% and reflects
the effect of dilution as a result of outstanding options to the extent
such options are, or within 60 days will become, exercisable. Shares of
Common Stock underlying any option which was exercisable on November 25,
1997 or becomes exercisable within the next 60 days ("Presently
Exercisable Options") are deemed outstanding only for purposes of
computing the share ownership and share ownership percentage of the holder
of such option. The number of shares of Common Stock deemed outstanding
prior to this Offering includes 10,004,278 shares of Common Stock
outstanding as of November 25, 1997 and such shares of Common Stock
issuable pursuant to Presently Exercisable Options held by the respective
person or group as set forth below. The number of shares of Common Stock
deemed outstanding after this Offering is comprised of the sum of: (i) the
outstanding shares of Common Stock immediately prior to the Offering in an
amount equal to 10,004,278 (which includes 1,244,023 shares of Common
Stock to be sold by Selling Stockholders in the Offering); (ii) 2,500,000
shares of Common Stock being offered for sale by the Company in the
Offering and (iii) 5,977 shares of Common Stock to be issued to a Selling
Stockholder upon the exercise of options in connection with the Offering.
Beneficial ownership is determined in accordance with the rules of the
Commission that deem shares to be beneficially owned by any person who has
or shares voting or investment power with respect to such
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<PAGE>
shares. Presently Exercisable Options are deemed to be outstanding and to
be beneficially owned by the person or group holding such options for the
purpose of computing the percentage ownership of such person or group, but
are not treated as outstanding for the purpose of computing the percentage
ownership of any other person or group.
(2) Does not include 562,500 shares of Common Stock to be sold in the
Offering by Selling Stockholders and certain other stockholders of
Coinmach Laundry if the Underwriters' over-allotment option is exercised
in full, of which 21,343 shares of Common Stock would be sold by certain
members of management not named in the table above.
(3) If the Underwriters' over-allotment option is exercised in full, GTCR,
Mr. Chapman, President and Fellows of Harvard College, Mr. Marrus, S.A.
Spencer and Mary M. Spencer and Mr. Brody will sell an additional
266,213, 1,775, 8,873, 1,518, 1,420 and 1,344 shares of Common Stock in
the Offering, respectively. If the Underwriters' over-allotment option is
exercised in full, MCS, Mr. Blatt, Mr. Doyle, Mr. Stanky and Mr. Denson
will sell 113,202, 91,263, 31,593, 21,657 and 2,301 shares of Common
Stock in the Offering, respectively.
(4) Such shares are held by GTCR, of which GTCR IV, L.P. ("GTCR IV"), is the
general partner. Mr. Rauner and Mr. Donnini are principals of Golder,
Thoma, Cressey, Rauner, Inc., the general partner of GTCR IV. Mr. Rauner
and Mr. Donnini each disclaim beneficial ownership of such shares.
(5) Such shares are owned beneficially by MCS, a corporation controlled by
Mr. Kerrigan. Includes shares underlying Presently Exercisable Options
held by MCS to purchase an aggregate of 123,241 shares of Common Stock at
an exercisable price of $11.90 per share. Does not include shares
underlying options held by MCS to purchase an aggregate of 184,857 shares
of Common Stock at an exercise price of $11.90 per share, which options
are not Presently Exercisable Options.
(6) Includes shares underlying Presently Exercisable Options to purchase an
aggregate of 20,000 shares of Common Stock at an exercise price of $11.90
per share and 40,000 shares of Common Stock at an exercise price of
$14.00 per share. Does not include shares underlying options to purchase
an aggregate of 80,000 shares of Common Stock at an exercise price of
$11.90 per share and 60,000 shares of Common Stock at an exercise price
of $14.00 per share, which options are not Presently Exercisable Options.
(7) Includes shares underlying Presently Exercisable Options to purchase an
aggregate of 48,756 shares of Common Stock at an exercise price of $11.90
per share. Does not include shares underlying options to purchase an
aggregate of 123,134 shares of Common Stock at an exercise price of
$11.90 per share, which options are not Presently Exercisable Options.
(8) Includes shares underlying Presently Exercisable Options to purchase an
aggregate of 41,409 shares of Common Stock at an exercise price of $11.90
per share. Does not include shares underlying options to purchase an
aggregate of 62,112 shares of Common Stock at an exercise price of $11.90
per share, which options are not Presently Exercisable Options.
(9) Represents shares underlying Presently Exercisable Options to purchase an
aggregate of 11,503 shares of Common Stock at an exercisable price of
$11.90 per share. Does not include shares underlying options to purchase
an aggregate of 17,253 shares of Common Stock at an exercise price of
$11.90 per share, which options are not Presently Exercisable Options.
(10) Includes shares underlying Presently Exercisable Options to purchase an
aggregate of 11,503 shares of Common Stock at an exercise price of $11.90
per share. Does not include shares underlying options to purchase an
aggregate of 17,253 shares of Common Stock at an exercise price of $11.90
per share, which options are not Presently Exercisable Options.
(11) Represents shares underlying Presently Exercisable Options to purchase an
aggregate of 30,000 shares of Common Stock at an exercise price of $14.00
per share. Does not include shares underlying options to purchase an
aggregate of 30,000 shares of Common Stock at an exercise price of $14.00
per share, which options are not Presently Exercisable Options.
(12) In calculating the shares beneficially owned by executive officers and
directors as a group, (i) 4,556,114 shares of Common Stock owned by GTCR
and included in the beneficial ownership amounts of each of Messrs.
Rauner and Donnini, and (ii) 566,010 shares of Common Stock owned by MCS
and included in the beneficial ownership amount of Mr. Kerrigan, in each
case as set forth in the table above, are included only once. In
calculating the percentage of shares owned by executive officers and
directors as a group, the shares of Common Stock underlying all options
which are beneficially owned by executive officers and directors and
which are Presently Exercisable Options are deemed outstanding.
(13) Includes shares underlying Presently Exercisable Options to purchase an
aggregate of 11,503 shares of Common Stock at an exercise price of $11.90
per share. Does not include shares underlying options to purchase an
aggregate of 17,253 shares of Common Stock at an exercise price of $11.90
per share, which options are not Presently Exercisable Options.
(14) Represents shares underlying Presently Exercisable Options to purchase an
aggregate of 23,006 shares of Common Stock at an exercise price of $11.90
per share. Does not include shares underlying options to purchase an
aggregate of 34,506 shares of Common Stock at an exercise price of $11.90
per share, which options are not Presently Exercisable Options.
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
The following statements are brief summaries of certain provisions relating
to Coinmach Laundry's capital stock and are qualified in their entirety by
reference to the provisions of Coinmach Laundry's Third Amended and Restated
Certificate of Incorporation and Third Amended and Restated Bylaws, each of
which have been filed with the Commission.
Coinmach Laundry's authorized capital stock consists of 15,000,000 shares of
Common Stock, 1,000,000 shares of Class B Common Stock, par value $.01 per
share ("Non-Voting Common Stock") and 1,000,000 shares of preferred stock, par
value $.01 per share ("Preferred Stock"). As of November 25, 1997, there were
10,004,278 shares of Common Stock, 480,648 shares of Non-Voting Common Stock
and no shares of Preferred Stock outstanding. Upon consummation of the
Offering, there will be 12,990,903 shares of Common Stock and Non-Voting
Common Stock outstanding.
DESCRIPTION OF COMMON STOCK
Holders of Common Stock are entitled to one vote per share in the election
of directors and on all other matters submitted to a vote of stockholders and
do not have cumulative voting rights. Holders of a majority of the shares of
Common Stock voting for the election of directors therefore can elect all of
the directors of the Company.
Shares of Common Stock are not redeemable, and holders thereof have no
preemptive or conversion rights nor do holders have any subscription rights to
purchase any securities of the Company. There are no redemption or sinking
fund provisions applicable to the Common Stock. All shares of Common Stock are
fully paid and non-assessable and all shares of Common Stock to be offered by
the Company hereby, when issued, will be fully paid and non-assessable.
In the event of liquidation, dissolution or winding up of Coinmach Laundry,
the holders of Common Stock are entitled to receive, after payment of Coinmach
Laundry's debts and liabilities, the remaining assets of Coinmach Laundry on a
ratable basis. This right, however, is subject to: (i) any prior liquidation
rights of Preferred Stock then outstanding (to the extent such rights are
designated by the Board) and (ii) any rights of holders of Preferred Stock to
share ratably with holders of Common Stock in all assets remaining after
payment of liabilities and liquidation preferences (to the extent such rights
are designated by the Board).
The Common Stock is listed for quotation on The Nasdaq National Market under
the trading symbol "WDRY." The transfer agent and registrar for the Common
Stock is The Bank of New York.
DESCRIPTION OF NON-VOTING COMMON STOCK
Except as required by applicable law, the holders of Non-Voting Common Stock
are not entitled to vote in the election of directors or on any other matters
submitted to a vote of stockholders. Except for (i) restrictions on voting,
(ii) the manner in which dividends are paid, and (iii) the ability to convert
Non-Voting Common Stock into Common Stock, the Non-Voting Common Stock is
identical to the Common Stock.
PAYMENT OF DIVIDENDS ON COMMON STOCK AND NON-VOTING COMMON STOCK
Subject to the prior rights of the holders of any Preferred Stock, the
holders of outstanding shares of Common Stock and Non-Voting Common Stock are
entitled to receive dividends out of assets legally available therefor at such
times and in such amounts as the Board may from time to time determine.
DESCRIPTION OF PREFERRED STOCK
In accordance with the provisions of the Company's Third Amended and
Restated Certificate of Incorporation, the Board may, without further action
by Coinmach Laundry's stockholders, from time to
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<PAGE>
time, direct the issuance of shares of Preferred Stock in one or more series
and may, at the time of issuance, determine the rights, preferences and
limitations of each series. Satisfaction of any dividend preferences of
outstanding shares of preferred stock would reduce the amount of funds
available for the payment of dividends on shares of Common Stock and Non-
Voting Common Stock. Holders of shares of Preferred Stock may be entitled to
receive a preference payment in the event of any liquidation, dissolution or
winding-up of Coinmach Laundry before any distribution is made to the holders
of shares of Common Stock and Non-Voting Common Stock. Under certain
circumstances, the issuance of shares of Preferred Stock may render more
difficult or tend to discourage or delay a merger, tender offer or proxy
contest, the assumption of control by a holder of a large block of Coinmach
Laundry's securities or the removal of incumbent management. The Board,
without stockholder approval, may issue shares of Preferred Stock with voting
and/or conversion rights which could adversely affect the holders of Common
Stock and Non-Voting Common Stock.
CERTAIN PROVISIONS OF THE THIRD AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION AND THIRD AMENDED AND RESTATED BYLAWS
The Third Amended and Restated Certificate of Incorporation and the Third
Amended and Restated Bylaws contain provisions that could discourage a change
in control of Coinmach Laundry. These provisions are intended to enhance the
likelihood of continuity and stability in the composition of the Board and in
the policies formulated by the Board and to discourage certain types of
transactions which may involve an actual or threatened change of control of
the Company. The provisions are designed to reduce the vulnerability of the
Company to an unsolicited takeover proposal that does not contemplate the
acquisition of all its outstanding shares or an unsolicited proposal for the
restructuring or sale of all or part of the Company.
The Third Amended and Restated Certificate of Incorporation provides that
the Board be divided into three classes, with each class serving for three
years, and one class being elected each year. A majority of the remaining
directors then in office, though less than a quorum, or the sole remaining
director, will be empowered to fill any vacancy on the Board which arises
during the term of a director. The provision for a classified Board may be
amended, altered or repealed only upon the affirmative vote of the holders of
at least 80% of the outstanding shares of the voting stock of Coinmach
Laundry. The classification of the Board may discourage a third party from
making a tender offer or otherwise attempting to gain control of the Company
and may have the effect of maintaining the incumbency of the Board. Since the
Board has the power to retain and discharge officers of Coinmach Laundry,
these provisions could also make it more difficult for existing stockholders
or another party to effect a change in management.
The Third Amended and Restated Certificate of Incorporation requires that
any action required or permitted to be taken by Coinmach Laundry's
stockholders must be effected at a duly called annual or special meeting of
stockholders and may not be effected in lieu thereof by written consent unless
a majority of the Board approves the use of such written consent with respect
to the taking of such action. This provision makes it difficult for
stockholders to initiate or effect an action by written consent, and thereby
effect an action opposed by the Board. Additionally, the Third Amended and
Restated Certificate of Incorporation requires that special meetings of the
stockholders of Coinmach Laundry be called by the Chairman of the Board, the
president or the Board pursuant to a resolution adopted by the affirmative
vote of at least two members of the Board then in office.
The Third Amended and Restated Bylaws provides that stockholders seeking to
bring business before or to nominate directors at any annual meeting of
stockholders must provide timely notice thereof in writing. To be timely, a
stockholder's notice must be delivered to, or mailed and received at, the
principal executive offices of the Company not less than 60 days nor more than
90 days prior to such meeting or, if less than 70 days' notice was given for
the meeting, within 10 days following the date on which such
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<PAGE>
notice was given. The Third Amended and Restated Bylaws also specifies certain
requirements for a stockholder's notice to be in proper written form. These
provisions restrict the ability of stockholders to bring matters before the
stockholders or to make nominations for directors at meetings of stockholders.
The Third Amended and Restated Certificate of Incorporation further provides
that the Board, by a majority vote, may adopt, alter, amend or repeal
provisions of the Third Amended and Restated Bylaws. However, stockholders may
only adopt, alter, amend or repeal provisions of the Third Amended and
Restated Bylaws by a vote of 66 2/3% or more of the outstanding Common Stock,
except for certain provisions which shall require a vote of 75% or more of the
outstanding Common Stock.
CERTAIN STATUTORY PROVISIONS
Coinmach Laundry is subject to Section 203 of the Delaware General
Corporation Law, which prohibits certain transactions between a Delaware
corporation and an "interested stockholder," which is defined as a person who,
together with any affiliates and/or associates of such person, beneficially
owns, directly or indirectly, 15 percent or more of the outstanding voting
shares of a Delaware corporation. This provisions prohibits certain business
combinations (defined broadly to include mergers, consolidations, sales or
other dispositions of assets having an aggregate value in excess of 10 percent
of the consolidated assets of the corporation, and certain transactions that
would increase the interested stockholder's proportionate share ownership in
the corporation) between an interested stockholder and a corporation for a
period of three years after the date the interested stockholder acquired its
stock, unless: (i) the business combination or the transaction resulting in
the person becoming an interested stockholder is approved by the corporation's
board of directors prior to the date the interested stockholder acquired
shares; (ii) the interested stockholder acquired at least 85 percent of the
voting stock of the corporation in the transaction in which it became an
interested stockholder; or (iii) the business combination is approved by a
majority of the board of directors and by the affirmative vote of two-thirds
of the votes entitled to be cast by disinterested stockholders at an annual or
special meeting. The statute could prohibit or delay mergers or other takeover
or change in control attempts with respect to the Company and, accordingly,
may discourage attempts to acquire the Company. See "Risk Factors--Anti-
Takeover Considerations."
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SHARES ELIGIBLE FOR FUTURE SALE
Upon the closing of the Offering, there will be 12,510,255 shares of Common
Stock and 480,648 shares of Non-Voting Common Stock outstanding prior to
giving effect to the exercise of the options granted by the Company and not
exercised in connection with the Offering. The 3,750,000 shares of Common
Stock sold in the Offering will be freely tradeable without restriction or
further registration under the Securities Act, unless held by an "affiliate"
of the Company as that term is defined in Rule 144 under the Securities Act,
which shares will be subject to the resale limitations of Rule 144. Of the
outstanding shares of Common Stock and Non-Voting Common Stock, 6,301,284 will
not have been registered under the Securities Act and may not be sold unless
they are registered or unless an exemption from registration is available such
as the exemption provided by Rule 144 or, to the extent applicable, Rule 701.
All of such unregistered shares would be eligible for sale on expiration of a
90 day lock-up period (the "Lock-up Period"), subject to certain volume and
other resale limitations under Rule 144.
In general, under Rule 144 as currently in effect, a stockholder (or
stockholders whose shares are aggregated) who has beneficially owned shares
constituting "restricted securities" (generally defined as securities acquired
from the Company or an affiliate of the Company in a non-public transaction)
for at least one year is entitled to sell within any three-month period a
number of shares that does not exceed the greater of (i) one percent of then
outstanding Common Stock and Non-Voting Common Stock (129,909 shares of Common
Stock immediately after the Offering without giving effect to additional
shares issued pursuant to the Underwriters' over-allotment option) or (ii) the
average weekly reported trading volume in the Common Stock during the four
calendar weeks preceding the date on which notice of such sale is filed
pursuant to Rule 144. Sales under Rule 144 are also subject to certain
provisions regarding the manner of sale, notice requirements and the
availability of current public information about the Company. A stockholder
(or stockholders whose shares are aggregated) who is not an affiliate of the
Company for at least 90 days prior to a sale and who has beneficially owned
"restricted securities" for at least two years is entitled to sell such shares
under Rule 144 without regard to the limitations described above.
In general, under Rule 701 under the Securities Act, as currently in effect,
any employee, officer, or director of or consultant to the Company who
purchased his or her shares pursuant to a written compensatory plan or
contract is entitled to rely on the resale provisions of Rule 701. Such
provisions permit nonaffiliates to sell their Rule 701 shares without having
to comply with the public information, holding period, volume limitation, or
notice provisions of Rules 144 and permit affiliates to sell their Rule 701
shares without having to comply with the Rule 144 holding period restrictions.
Coinmach Laundry its executive officers and directors, and GTCR have agreed
not to offer, sell, contract to sell or otherwise dispose of any shares of
Common Stock or rights to acquire such shares or securities convertible into
or exchangeable for Common Stock other than sales contemplated hereby or
issued or to be issued pursuant to employee stock option plans or in
connection with other employee incentive compensation arrangements or
agreements, in each case in effect on the date of this Prospectus, for a
period of 90 days after the date of this Prospectus, without the prior written
consent of BT Alex. Brown, as representative of the Underwriters.
Pursuant to the Company Registration Agreement, the pre-initial public
offering stockholders of Coinmach Laundry, who will hold in the aggregate
6,301,284 shares of Common Stock following the Offering, are entitled to
certain registration rights (such shares of Common Stock are hereinafter
referred to as the "Registrable Securities"). At any time following the
Offering, GTCR may request registration of all or a portion of the Registrable
Securities it holds on Form S-1 (a "Long-Form Registration") and may request
registration on Form S-2 or S-3 ("Short-Form Registration"), if available.
GTCR is entitled to request up to four Long-Form Registrations and an
unlimited number of Short-Form Registrations. Coinmach Laundry is responsible
for all registration expenses in connection with all such registrations.
Additionally, if Coinmach Laundry proposes to register any of its Common Stock
under the Securities Act, whether for
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its own account or otherwise, all holders of Registrable Securities are
entitled to notice of such registration and, subject to certain priority
provisions, are entitled to include their Registrable Securities in such
registration. The registration expenses of the holders of Registrable
Securities would be paid by Coinmach Laundry in all such registrations. Each
holder of Registrable Securities has agreed not to effect any public sale or
distribution of such securities during the Lock-up Period.
No prediction can be made as to the effect, if any, that future sales of
shares of Common Stock, or the availability of shares for future sale, to the
public will have on the market price of the Common Stock prevailing from time
to time. Sales of substantial amounts of Common Stock in the public market,
whether such shares are presently outstanding or subsequently issued, or the
perception that such sales could occur, could adversely affect prevailing
market prices for the Common Stock and could impair the Company's ability to
raise capital in the future through an offering of equity securities. Coinmach
Laundry cannot predict when or how many of such additional shares of Common
Stock may be offered for sale or sold to the public in the future. See "Risk
Factors--Shares Eligible for Future Sale."
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UNDERWRITING
Subject to the terms and conditions of the underwriting agreement (the
"Underwriting Agreement"), the underwriters named below (the "Underwriters"),
through their representatives (collectively, the "Representatives") BT Alex.
Brown Incorporated ("BT Alex. Brown"), Lehman Brothers Inc. ("Lehman
Brothers"), Raymond James & Associates, Inc., Wheat, First Securities, Inc.
and Jefferies & Company, Inc. ("Jefferies"), have severally agreed to purchase
from Coinmach Laundry and the Selling Stockholders the following respective
numbers of shares of Common Stock at the public offering price less the
underwriting discounts and commissions set forth on the cover page of this
Prospectus:
<TABLE>
<CAPTION>
NUMBER
UNDERWRITERS OF SHARES
------------ ---------
<S> <C>
BT Alex. Brown Incorporated...........................................
Lehman Brothers Inc...................................................
Raymond James & Associates, Inc.......................................
Wheat, First Securities, Inc..........................................
Jefferies & Company, Inc..............................................
---------
Total................................................................. 3,750,000
=========
</TABLE>
The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent and that the Underwriters will
purchase all shares of the Common Stock offered hereby (other than those
subject to the over-allotment option described below) if any of such shares
are purchased.
Coinmach Laundry has been advised by the Representatives that the
Underwriters propose to offer the shares of Common Stock to the public at the
public offering price set forth on the cover page of this Prospectus and to
certain dealers at such price less a concession not in excess of $ per
share. The Underwriters may allow, and such dealers may reallow, a concession
not in excess of $ per share to certain other dealers. After the public
offering, the offering price and other selling terms may be changed by the
Representatives.
Certain of the Selling Stockholders and certain other stockholders (if and
when the over-allotment option described herein is exercised, the "Additional
Selling Stockholders") have granted to the Underwriters an option, exercisable
by the Representatives not later than 30 days after the date of this
Prospectus, to purchase up to 562,500 additional shares of Common Stock at the
public offering price less the underwriting discounts and commissions set
forth on the cover page of this Prospectus. To the extent that the
Underwriters exercise such option, each of the Underwriters will have a firm
commitment to purchase approximately the same percentage thereof that the
number of shares of Common Stock to be purchased by it shown in the above
table bears to 3,750,000 and such Selling Stockholders and Additional Selling
Stockholders will be obligated, pursuant to the option, to sell such shares to
the Underwriters. The Underwriters may exercise such option only to cover
over-allotments made in connection with the sale of Common Stock offered
hereby. If purchased, the Underwriters will offer such additional shares on
the same terms as those on which the 3,750,000 shares are being offered.
Coinmach Laundry and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act.
Coinmach Laundry's directors and executive officers, and GTCR have agreed
not to offer, sell or otherwise dispose of the shares of Common Stock held by
them immediately prior to completion of this
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Offering for a period of 90 days after the commencement of this Offering
without the prior written consent of BT Alex. Brown except to the extent being
sold in this Offering. Coinmach Laundry has entered into a similar agreement,
except that it may issue, and grant options to purchase, shares of Common
Stock under its current stock option and purchase plans and pursuant to other
currently outstanding options. BT Alex. Brown, at any time and without notice,
may release all or any part of the shares from these restrictions.
The Representatives have advised Coinmach Laundry that the Underwriters do
not intend to confirm sales to any account over which they exercise
discretionary authority.
The Underwriters have advised Coinmach Laundry that, pursuant to Regulation
M under the Securities Act, certain persons participating in this Offering may
engage in transactions, including stabilizing bids, syndicate covering
transactions or the imposition of penalty bids, which may have the effect of
stabilizing or maintaining the market price of the Common Stock at a level
above that which might otherwise prevail in the open market. A "stabilizing
bid" is a bid for or the purchase of the Common Stock on behalf of the
Underwriters for the purpose of fixing or maintaining the price of the Common
Stock. A "syndicate covering transaction" is the bid for or the purchase of
the Common Stock on behalf of the Underwriters to reduce a short position
incurred by the Underwriters in connection with this offering. A "penalty bid"
is an arrangement permitting the Underwriters to reclaim the selling
concession otherwise accruing to an Underwriter or dealer in connection with
this offering if the Common Stock originally sold by such Underwriter or
dealer is purchased by the Underwriters in a syndicate covering transaction
and has therefore not been effectively placed by such Underwriter or dealer.
The Underwriters have advised Coinmach Laundry that such transactions may be
effected on the Nasdaq National Market or otherwise and, if commenced, may be
discontinued at any time.
As permitted by Rule 103 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), Underwriters or prospective Underwriters that
are market markers ("passive market makers") in the Common Stock may make bids
for or purchases of Common Stock on the Nasdaq National Market until such
time, if any, when a stabilizing bid for such securities has been made. Rule
103 generally provides that: (i) a passive market maker's net daily purchases
of the Common Stock may not exceed 30% of its average daily trading volume in
such securities for the two full consecutive calendar months (or any 60
consecutive days ending within the 10 days) immediately preceding the filing
date of the registration statement of which this Prospectus forms a part; (ii)
a passive market maker may not effect transactions or display bids for the
Common Stock at a price that exceeds the highest independent bid for the
Common Stock by persons who are not passive market makers; and (iii) bids made
by passive market makers must be identified as such.
No action has been or will be taken in any jurisdiction by the Selling
Stockholders, the Company, or the Representatives that would permit an
offering to the general public of the shares of Common Stock offered by this
Prospectus in any jurisdiction other than the United States.
From time to time, certain of the Representatives have provided investment
banking services to the Company, for which they have received customary
underwriting fees. Lehman Brothers acted as a Representative in the Company's
Initial Public Offering in July 1996. An affiliate of BT Alex. Brown acts as
administrative agent and an affiliate of Lehman Brothers acts as documentation
agent, in each case for the Credit Facility. Jefferies and BT Alex. Brown
acted as Initial Purchasers in the Company's recent Bond Offering, and
Jefferies has provided and expects to continue to provide certain general
financial advisory services to the Company.
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<PAGE>
LEGAL MATTERS
The validity of the shares of Common Stock offered by this Prospectus and
certain legal matters in connection with the Offering for Coinmach Laundry and
for the Selling Stockholders will be passed upon by Anderson Kill & Olick,
P.C., New York, New York. Certain legal matters in connection with the Offering
will be passed upon for the Underwriters by Cahill Gordon & Reindel (a
partnership including a professional corporation), New York, New York. A member
of Anderson Kill & Olick, P.C. holds options to purchase 57,512 shares of
Common Stock, of which 34,506 shares underlie options that are not Presently
Exercisable Options, and is a Selling Stockholder in the Offering. See
"Principal and Selling Stockholders".
EXPERTS
The consolidated financial statements of Coinmach Laundry and subsidiaries
appearing in Coinmach Laundry's Amendment No. 2 on Form 10-K/A to its Annual
Report on Form 10-K for the year ended March 28, 1997, have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
included therein and incorporated herein by reference; the consolidated
financial statements of Coinmach and subsidiaries (formerly Solon, which was
combined with TCC and subsidiaries, a company under common control, beginning
April 5, 1995) as of September 29, 1995, and for the period from April 5, 1995
to September 29, 1995 and from October 1, 1994 to April 4, 1995, appearing in
Coinmach Laundry's Amendment No. 2 on Form 10-K/A to its Annual Report on Form
10-K for the year ended March 28, 1997, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference; and the combined financial statements of Kwik
Wash Laundries, Inc. and KWL, Inc. appearing in Coinmach Laundry's Amendment
No. 3 on Form 8-K/A to its Current Report on Form 8-K dated January 8, 1997,
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon included therein and incorporated herein by reference.
Such financial statements referred to above are incorporated herein by
reference in reliance upon such reports given upon the authority of such firm
as experts in accounting and auditing.
The consolidated statements of operations, stockholders' deficiency and cash
flows of CIC I Acquisition Corp. for the year ended December 31, 1994, the
consolidated statements of operations and accumulated deficit and cash flows of
CIC I Acquisition Corp. for the month ended January 31, 1995, and the
consolidated statements of operations and accumulated deficit and cash flows of
The Coinmach Corporation for the two months ended March 31, 1995, incorporated
by reference in this Prospectus and Registration Statement, have been audited
by KPMG Peat Marwick LLP, independent certified public accountants, as
indicated in their reports thereon, which are incorporated by reference herein,
and have been so incorporated in reliance upon such reports given upon the
authority of said firm as experts in accounting and auditing.
The financial statements of Solon as of September 30, 1994, and for the
fiscal year then ended, included and incorporated by reference in this
Prospectus and Registration Statement have been audited by Arthur Andersen LLP,
independent public accountants, as stated in their report thereon which are
included and incorporated by reference herein, and have been so included and
incorporated in reliance upon such report given upon the authority of such firm
as experts in accounting and auditing.
49
<PAGE>
AVAILABLE INFORMATION
Coinmach Laundry is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information
with the Commission. Such reports, proxy statements and other information may
be inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and
at its Regional Offices located at, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511 and Seven World Trade Center, 13th Floor, New
York, New York 10048. Copies of such material may also be obtained by mail
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Common Stock is listed for
trading on The Nasdaq National Market, and reports, proxy statements and other
information concerning the Company are on file for inspection at the offices
of The Nasdaq National Market, 1735 K Street, N.W., Washington, D.C. 20006.
Such material may also be accessed electronically by means of the Commission's
home page on the Internet at http://www.sec.gov.
Coinmach Laundry has filed with the Commission a Registration Statement on
Form S-3 under the Securities Act of 1933, as amended, with respect to the
Common Stock offered hereby (the "Registration Statement"). This Prospectus
does not contain all of the information included in the Registration Statement
and the exhibits thereto. Statements contained in this Prospectus as to the
contents of any contract or other document referred to herein and filed as an
exhibit to the Registration Statement are not necessarily complete and, in
each instance, reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference. For further
information with respect to Coinmach Laundry and its subsidiaries and the
Common Stock, reference is hereby made to the Registration Statement and the
exhibits thereto which may be obtained from the Commission in the manner set
forth above.
50
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Coinmach Laundry with the Commission are
hereby incorporated by reference in and made a part of this Prospectus:
(1) Annual Report on Form 10-K for the fiscal year ended March 28, 1997;
(2) Amendment No. 1 on Form 10-K/A to Annual Report on Form 10-K for the
fiscal year ended March 28, 1997;
(3) Quarterly Report on Form 10-Q for the fiscal quarter ended June 27,
1997;
(4) Amendment No. 1 on Form 10-Q/A to Quarterly Report on Form 10-Q for the
fiscal quarter ended June 27, 1997;
(5) Quarterly Report on Form 10-Q for the fiscal quarter ended September
26, 1997;
(6) Amendment No. 1 on Form 10-Q/A to Quarterly Report on Form 10-Q for the
fiscal quarter ended September 26, 1997;
(7) Amendment No. 3 on Form 8-K/A to Current Report on Form 8-K dated
January 8, 1997;
(8) Current Report on Form 8-K dated October 8, 1997;
(9) Amendment No. 1 on Form 8-K/A to Current Report on Form 8-K dated
October 8, 1997;
(10) Current Report on Form 8-K dated October 14, 1997; and
(11) Proxy Statement dated June 13, 1997, for the 1997 Annual Meeting of
Stockholders.
All documents filed by Coinmach Laundry with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date
of this Prospectus and prior to the termination of the Offering shall be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained
herein or in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
Coinmach Laundry will furnish without charge, to each person to whom this
Prospectus is delivered, upon written or oral request of such person,
including any beneficial owner, a copy of any and all of the information that
has been incorporated by reference into the Registration Statement of which
this Prospectus is a part but which has not been delivered with this
Prospectus (not including exhibits to the information that is incorporated by
reference unless such exhibits are specifically incorporated by reference into
the information that the Registration Statement incorporates by reference);
such requests should be directed to Coinmach Laundry Corporation, 55 Lumber
Road, Roslyn, New York 11576, Attention: Robert M. Doyle.
51
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PRO-
SPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDERS
OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF ANY OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY
PERSON OR BY ANYONE IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT IN-
FORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE
HEREOF.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary......................................................... 3
Risk Factors............................................................... 9
The Company................................................................ 13
Use of Proceeds............................................................ 15
Price Range of Common Stock................................................ 15
Dividend Policy............................................................ 16
Dilution................................................................... 17
Capitalization............................................................. 18
Unaudited Pro Forma Financial Data......................................... 19
Management's Discussion and Analysis of Financial Condition................ 27
Business................................................................... 30
Management................................................................. 38
Certain Relationships and Related Transactions............................. 39
Principal and Selling Stockholders......................................... 40
Description of Capital Stock............................................... 42
Shares Eligible for Future Sale............................................ 45
Underwriting............................................................... 47
Legal Matters.............................................................. 49
Experts.................................................................... 49
Available Information...................................................... 50
Incorporation of Certain Information by Reference.......................... 51
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3,750,000 SHARES
[LOGO]
--------
COINMACH
--------
KEEPING AMERICA CLEAN
ONE LAUNDRY ROOM AT A TIME
COMMON STOCK
-----------
PROSPECTUS
-----------
BT ALEX. BROWN
LEHMAN BROTHERS
RAYMOND JAMES & ASSOCIATES, INC.
WHEAT FIRST BUTCHER SINGER
JEFFERIES & COMPANY, INC.
, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses payable by the Company (other
than underwriting discounts and commissions) in connection with the sale of
the Common Stock being registered. All of such expenses, other than the filing
fees for the Commission and the NASD, are estimates.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee................ *
National Association of Securities Dealers fee..................... *
Blue sky fees and expenses (including attorneys' fees and
expenses)......................................................... *
Printing and engraving expenses.................................... *
Transfer agent's fees and expenses................................. *
Accounting fees and expenses....................................... *
Legal fees and expenses............................................ *
Miscellaneous fees and expenses.................................... *
----
Total............................................................ *
====
</TABLE>
- --------
* To be filed by Amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Third Amended and Restated Bylaws provide that the Company
shall indemnify and hold harmless, to the fullest extent which it is empowered
to do so unless prohibited from doing so by the Delaware General Corporation
Law, as it exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the corporation to
provide broader indemnification rights than said law permitted the corporation
to provide prior to such amendment), any person who was or is a party or is
threatened to be made a party to or is otherwise involved (including
involvement as a witness) in any action, suit, or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he or
she was a director or officer of the Company, or while a director or officer
of the Company, is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust, or other enterprise, including service with respect to an employee
benefit plan, against all expenses, liabilities, damages, actions, cost of
attachment or similar bonds, claims and losses (including without limitation
costs of investigating, preparing or defending any such claim or action and
attorney's fees and disbursements, judgments, fines, or penalties and amounts
paid in settlement) and any expenses of establishing a right to
indemnification reasonably incurred or suffered by such person in connection
therewith and that such indemnification shall continue as to any such person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of such person's heirs, executors and administrators; and that the
Company may, by action of its board of directors, provide indemnification to
employees and agents of the Company with the same scope and effect as
indemnification of directors and officers.
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation) by reason of the fact
that he is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him
in connection with such action, suit or proceeding if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interest of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful; and
further that a corporation may indemnify such person against expenses
(including
II-1
<PAGE>
attorneys' fees) actually and reasonably incurred by him in connection with
the defense or settlement of such action or suit if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that
the Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability
but in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper. To the extent that a director, officer,
employee or agent of a corporation has been successful on the merits or
otherwise in defense of any such action, suit or proceeding, or in defense of
any claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
The Third Amended and Restated Bylaws further provide that the Company shall
indemnify any such person seeking indemnification in connection with a
proceeding initiated by such person only if such proceeding was authorized by
the board of directors of the Company, except that it shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition where
the required undertaking, if any, has been tendered to the Company) that the
claimant has not met the standards of conduct (as set forth above) which make
it permissible under the Delaware General Corporation Law for the Company to
indemnify the claimant for the amount claimed, but the burden of such defense
shall be on the Company.
The Third Amended and Restated Bylaws further provide that the right to
indemnification shall be a contract right and shall include the right to be
paid by the Company for the expenses incurred in defending any such proceeding
in advance of its final disposition unless otherwise determined by the board
of directors of the Company in the specific case upon receipt of an
undertaking by or on behalf of the director or officer to repay such amount if
it shall ultimately be determined that he or she is not entitled to be
indemnified by the Company; and that such expenses incurred by other employees
and agents may be so paid upon such terms and conditions, if any, as the board
of directors of the Company deems appropriate. The rights conferred in the
Third Amended and Restated Bylaws to indemnification and the payment of
expenses incurred in defending a proceeding in advance of its final
disposition are not exclusive of any other right which any person may have or
hereafter acquire under any statute, provision of the certificate of
incorporation, by-law, agreement, vote of stockholders or disinterested
directors or otherwise.
Section 102 of the Delaware General Corporation Law allows a corporation to
eliminate or limit the personal liability of a director of a corporation to
the corporation or to any of its stockholders for monetary damage for a breach
of fiduciary duty as a director, except in the case where the director (i)
breaches his duty of loyalty to the corporation or its stockholders, (ii)
fails to act in good faith, engages in intentional misconduct or knowingly
violates a law, (iii) authorizes the payment of a dividend or approves a stock
purchase or redemption in violation of Section 174 of the Delaware General
Corporation Law or (iv) obtains an improper personal benefit. Article Eleven
of the Company's Third Amended and Restated Certificate of Incorporation
includes a provision which eliminates directors' personal liability to the
fullest extent permitted under the Delaware General Corporation Law.
The Company has purchased director and officer liability insurance for its
directors and officers.
II-2
<PAGE>
ITEM 16. EXHIBITS
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
1.1 Form of Underwriting Agreement
4.1 Third Amended and Restated Certificate of Incorporation of Coinmach
Laundry (incorporated by reference from exhibit number 3.1 to
Coinmach's Form 10-Q for the quarterly period ended September 27,
1996, File number 1-11907 file number 333-00620)
4.2 Third Amended and Restated Bylaws of Coinmach Laundry (incorporated by
reference from exhibit number 3.1 to Coinmach's Form 10-Q for the
quarterly period ended September 27, 1996, file number 1-11907)
5.1 Form of Opinion and Consent of Anderson Kill & Olick, P.C. regarding
the validity of the Common Stock
10.1 Asset Purchase Agreement dated July 17, 1997 by and among Whitmer
Vend-O-Mat Laundry Services, Inc., Stephen P. Close, Kimberly A.
Close, Ruth D. Close, Kimberly A. Close, Ruth D. Close and Stephen P.
Close, as trustees of the Alvin D. Close Trust, SPC Management, Inc.
and Coinmach (incorporated by reference from exhibit number 10.57 to
Coinmach's Form 10-Q for the quarterly period ended September 26,
1997)
10.2 Stock Purchase Agreement dated July 17, 1997 by and among Kimberly A.
Close, Stephen P. Close, Ruth D. Close, Kimberly A. Close, Ruth D.
Close and Stephen P. Close, as trustees of the Alvin D. Close Trust,
National Coin Laundry Holding, Inc., National Coin Laundry Inc.,
National Laundry Equipment Company and Coinmach (incorporated by
reference from exhibit number 10.56 to Coinmach's Form 10-Q for the
quarterly period ended September 26, 1997)
10.3 Second Amendment and Waiver dated as of October 7, 1997 to the Credit
Agreement dated as of January 8, 1997, as amended, among Coinmach,
Coinmach Laundry, the Banks party thereto, Bankers Trust Company, as
Administrative Agent, First Union National Bank of North Carolina, as
Syndication Agent and Lehman Commercial Paper, Inc., as Documentation
Agent (incorporated by reference from exhibit number 10.4 to
Coinmach's Form 8-K/A Amendment No. 1 dated October 8, 1997)
10.4 Amended and Restated Employment Agreement between John E. Denson and
Coinmach, dated September 5, 1996
11.1* Computation of Loss per Share
23.1 Consent of Ernst & Young LLP
23.2 Consent of Ernst & Young LLP
23.3 Consent of Ernst & Young LLP
23.4 Consent of Arthur Andersen LLP
23.5 Consent of KPMG Peat Marwick LLP
23.6 Consent of Anderson Kill & Olick, P.C. (Included in Exhibit 5.1)
</TABLE>
- --------
* Previously filed as an exhibit to Amendment No. 1 to Form S-3
ITEM 17. UNDERTAKINGS.
The Company (or the "Registrant") hereby undertakes that:
(1) for purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective; and
II-3
<PAGE>
(2) for the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933, as amended, and, is therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933, as amended, and will be
governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF ROSLYN, STATE OF NEW YORK ON NOVEMBER 28, 1997.
COINMACH LAUNDRY CORPORATION
/s/ Stephen R. Kerrigan
By: _________________________________
STEPHEN R. KERRIGAN CHIEF
EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES
INDICATED ON NOVEMBER 28, 1997.
SIGNATURE TITLE
Chairman of the Board of Directors
/s/ Stephen R. Kerrigan and Chief Executive Officer
- ------------------------------------- (Principal Executive Officer)
STEPHEN R. KERRIGAN
/s/ Mitchell Blatt Director, President and Chief
- ------------------------------------- Operating Officer
MITCHELL BLATT
/s/ Robert M. Doyle Chief Financial Officer and Senior
- ------------------------------------- Vice President (Principal Financial
ROBERT M. DOYLE and Accounting Officer)
/s/ John E. Denson Senior Vice President
- -------------------------------------
JOHN E. DENSON
/s/ Michael E. Stanky Senior Vice President
- -------------------------------------
MICHAEL E. STANKY
/s/ David A. Donnini Director
- -------------------------------------
DAVID A. DONNINI
II-5
<PAGE>
Director
/s/ James N. Chapman
- -------------------------------------
JAMES N. CHAPMAN
Director
/s/ Bruce V. Rauner
- -------------------------------------
BRUCE V. RAUNER
Director
/s/ Arthur B. Laffer
- -------------------------------------
ARTHUR B. LAFFER
Director
/s/ Stephen G. Cerri
- -------------------------------------
STEPHEN G. CERRI
II-6
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
------- ----------- ----------
<C> <S> <C>
1.1 Form of Underwriting Agreement...........................
4.1 Third Amended and Restated Certificate of Incorporation
of Coinmach Laundry (incorporated by reference from
exhibit number 3.1 to Coinmach's Form 10-Q for the
quarterly period ended September 27, 1996, file number 1-
11907)...................................................
4.2 Third Amended and Restated Bylaws of Coinmach Laundry
(incorporated by reference from exhibit number 3.1 to
Coinmach's Form 10-Q for the quarterly period ended
September 27, 1996, file number 1-11907).................
5.1 Form of Opinion and Consent of Anderson Kill & Olick,
P.C. regarding the validity of the Common Stock..........
10.1 Asset Purchase Agreement dated July 17, 1997 by and among
Whitmer Vend-O-Mat Laundry Services, Inc., Stephen P.
Close, Kimberly A. Close, Ruth D. Close, Kimberly A.
Close, Ruth D. Close and Stephen P. Close, as trustees of
the Alvin D. Close Trust, SPC Management, Inc. and
Coinmach (incorporated by reference from exhibit number
10.57 to Coinmach's Form 10-Q for the quarterly period
ended September 26, 1997)................................
10.2 Stock Purchase Agreement dated July 17, 1997 by and among
Kimberly A. CLose, Stephen P. Close, Ruth D. Close,
Kimberly A. Close, Ruth D. Close and Stephen P. Close, as
trustees of the Alvin D. Close Trust, National Coin
Laundry Holding, Inc., National Coin Laundry, Inc.,
National Laundry Equipment Company and Coinmach
(incorporated by reference from exhibit number 10.56 to
Coinmach's Form 10-Q for the quarterly period ended
September 26, 1997)......................................
10.3 Second Amendment and Waiver dated as of October 7, 1997
to the Credit Agreement dated as of January 8, 1997, as
amended, among Coinmach, Coinmach Laundry, the Banks
party thereto, Bankers Trust Company, as Administrative
Agent, First Union National Bank of North Carolina, as
Syndication Agent and Lehman Commercial Paper, Inc., as
Documentation Agent (incorporated by reference from
exhibit number 10.4 to Coinmach's Form 8-K/A Amendment
No. 1 dated October 8, 1997).............................
10.4 Amended and Restated Employment Agreement between John E.
Denson and Coinmach, dated September 5, 1996.............
11.1* Computation of Loss per Share............................
23.1 Consent of Ernst & Young LLP.............................
23.2 Consent of Ernst & Young LLP.............................
23.3 Consent of Ernst & Young LLP.............................
23.4 Consent of Arthur Andersen LLP...........................
23.5 Consent of KPMG Peat Marwick LLP.........................
23.6 Consent of Anderson Kill & Olick, P.C. (Included in
Exhibit 5.1).............................................
</TABLE>
- --------
* Previously filed as an exhibit to Amendment No. 1 to Form S-3.
<PAGE>
EXHIBIT 1.1
COINMACH LAUNDRY CORPORATION
3,750,000 SHARES
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
DRAFT OF UNDERWRITING AGREEMENT
-------------------------------
November [ ], 1997
BT Alex. Brown Incorporated
Lehman Brothers Inc.
Raymond James & Associates, Inc.
Wheat, First Securities, Inc.
Jeffries & Company, Inc.
As Representatives of the
Several Underwriters
c/o BT Alex. Brown Incorporated
One Bankers Trust Plaza
130 Liberty Street
New York, New York 10006
Ladies and Gentlemen:
Coinmach Laundry Corporation (the "Company"), a Delaware corporation,
-------
and the persons named in Schedule I annexed hereto (each a "Selling
-------
Stockholder"), hereby confirm their agreement with you, as set forth below.
1. The Securities. Subject to the terms and conditions herein
---------------
contained, the Company proposes to issue and sell to the underwriters named in
Schedule II hereto (the "Underwriters"), for whom you are acting as
------------
representatives (the "Representatives"), an aggregate of 2,500,000 shares of
---------------
common stock, par value $.01 per share, of the Company (the "Common Stock"), and
------------
the Selling Stockholders, severally, propose to sell to the Underwriters an
aggregate of 1,250,000 shares of Common Stock in the respective amounts set
forth opposite their respective names in Schedule I (the aggregate of such
3,750,000 shares of Common Stock is hereinafter referred to as the "Firm
----
Securities"). In addition, solely for the purpose of covering over-allotments,
- ----------
certain Selling Stockholders propose to grant
<PAGE>
-2-
to the Underwriters the option, exercisable by the Representatives of the
Underwriters, to purchase from the Company up to an additional 562,500 shares of
Common Stock in the respective amounts set forth opposite their respective names
in Schedule I hereto (the aggregate of such 562,500 shares of Common Stock is
hereinafter referred to as the "Additional Securities") as set forth below. The
---------------------
Firm Securities and the Additional Securities that may be sold to the
Underwriters are hereinafter collectively referred to as the "Securities."
----------
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (File No. 333- ) and a
----------
related preliminary prospectus for the registration of the Securities under the
Securities Act of 1933, as amended (the "Act"), and has filed such amendments
---
thereto, if any, as may have been required prior to the date hereof.
As used in this Agreement, the term "Registration Statement" means
----------------------
such registration statement, as amended at the time when it was or is declared
effective, including all financial statements and schedules and exhibits thereto
and including any information omitted therefrom pursuant to Rule 430A under the
Rules and Regulations ("Rule 430A"), if applicable, and included in the
---------
Prospectus (as hereinafter defined); the term "Preliminary Prospectus" means
----------------------
each prospectus relating to the Securities as filed with such registration
statement or any amendment thereto (including the prospectus, if any, included
in such registration statement or any amendment thereto at the time it was or is
declared effective if declared effective prior to the execution and delivery of
this Agreement); and the term "Prospectus" means the prospectus relating to the
----------
Securities as first filed with respect to such registration statement with the
Commission pursuant to Rule 430A and Rule 424(b) under the Rules and Regulations
("Rule 424(b)"), if required, or, if no prospectus is required to be filed
-----------
pursuant to Rule 430A or Rule 424(b), such term means the prospectus included in
such registration statement at the time it became or becomes effective; provided
--------
that if a revised Prospectus shall be provided to the Underwriters by the
Company and the Selling Stockholders for use in connection with the offering and
sale of the Securities that differs from the prospectus on file at the
Commission at the time such registration statement becomes effective or as first
filed under Rule 430A and Rule 424(b), the term "Prospectus" shall refer to the
----------
revised prospectus from and after the time it is first provided to the
Underwriters for such use. If the Company has filed an abbreviated registration
statement to register additional securities pursuant to Rule 462(b) under the
Act (the
<PAGE>
-3-
"Rule 462 Registration Statement") then any reference herein to "Registration
-------------------------------
Statement" shall be deemed to include such Rule 462 Registration Statement. All
references in this Agreement to the Registration Statement, Preliminary
Prospectus and Prospectus and to financial statements and schedules and other
information that is "contained," "included," "set forth," "described in" or
"stated" therein (and all other references of like import) shall be deemed to
mean and include all such financial statements and schedules and other
information that is or is deemed to be incorporated by reference therein; and
all references in this Agreement to amendments or supplements to the
Registration Statement, the Preliminary Prospectus or the Prospectus shall be
deemed to mean and include the filing of any document under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), that is or is deemed to
------------
be incorporated by reference therein.
2. Representations and Warranties of the Company. The Company
---------------------------------------------
represents and warrants to, and agrees with, each Underwriter that:
(a) The registration statement originally filed with the Commission
with respect to the Securities, including the form of prospectus, together
with all amendments thereto, has been prepared by the Company in conformity
in all material respects with the requirements of the Act and the rules and
regulations (the "Rules and Regulations") of the Commission thereunder and
---------------------
the Company meets all the requirements for filing on Form S-3. The
Registration Statement at the time it was or will be declared effective and
at the Closing Date (as hereinafter defined) complies and will comply in
all material respects with the requirements of the Act and the Rules and
Regulations.
(b) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus nor instituted any proceeding for
such purpose. When the Registration Statement or any amendment thereto was
or is declared effective and on the Closing Date (as hereinafter defined),
it did not or will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein not misleading. The Prospectus, and any
amendments or supplements thereto on the date first filed with the
Commission pursuant to Rule 424(b) (or if not filed, on the date first
provided to the Underwriters in connection with the offering and sale of
the Securities) and on the Closing Date, (i) complied and will comply in
<PAGE>
-4-
all material respects with the requirements of the Act and the Rules and
Regulations, and (ii) did not and will not contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The foregoing
provisions of this paragraph (b) do not apply to statements or omissions in
the Registration Statement or any amendment thereto or the Prospectus or
any amendment or supplement thereto made in reliance upon and in conformity
with written information with respect to the Underwriters furnished to the
Company through the Representatives specifically for use therein.
(c) The documents incorporated or deemed to be incorporated by
reference in the Prospectus, at the time they were or hereafter are filed
with the Commission, complied and will comply in all material respects with
the requirements of the Exchange Act and the rules and regulations (the
"Exchange Act Regulations") of the Commission thereunder, and when read
-------------------------
together with the other information in the Prospectus, at the time the
Registration Statement and any amendments thereto became or become
effective and at the Closing Date, did not and will not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
(d) The Company and each of its Subsidiaries (the "Subsidiaries") have
------------
been duly incorporated and are validly existing as corporations in good
standing under the laws of their respective jurisdictions of incorporation,
are duly qualified to do business and are in good standing as foreign
corporations in each jurisdiction in which their respective ownership or
lease of property or the conduct of their respective business requires such
qualification, except where the failure to be so qualified would not be
reasonably expected to have a material adverse effect on the consolidated
financial position, stockholders' equity, results of operations, business
or business prospects of the Company and its Subsidiaries, taken as a whole
(a "Material Adverse Effect"), and have all power and authority necessary
-----------------------
to own or hold their respective properties and to conduct the businesses in
which they are engaged; and none of the Subsidiaries of the Company (other
than Coinmach Corporation, a Delaware corporation and a wholly owned
Subsidi-
<PAGE>
-5-
ary of the Company) is a "significant Subsidiary," as such term is defined
in Rule 405 of the Rules and Regulations.
(e) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and non-
assessable and conform in all material respects to the description thereof
contained in the Prospectus; and all of the issued shares of capital stock
of each Subsidiary of the Company have been duly and validly authorized and
issued and are fully paid and non-assessable and are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims, except as disclosed in the Prospectus.
(f) Neither the Company nor any of its Subsidiaries (i) is in
violation of its charter or by-laws, (ii) is in default in any material
respect, and, to the actual knowledge of Stephen R. Kerrigan, Mitchell
Blatt, Robert M. Doyle or John E. Denson (the "Officers"), no event has
--------
occurred that, with notice or lapse of time or both, would constitute such
a default, in the due performance or observance of any term, covenant or
condition contained in any material indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which it is a party or
by which it is bound or to which any of its properties or assets is subject
or (iii) is in violation in any material respect of any law, ordinance,
governmental rule, regulation or court decree to which it or its property
or assets may be subject or has failed to obtain any material license,
permit, certificate, franchise or other governmental authorization or
permit necessary to the ownership of its property or to the conduct of its
business.
(g) The shares of the Common Stock to be sold by the Company and the
Selling Stockholders to the Underwriters hereunder have been duly and
validly authorized and, when issued and delivered against payment therefor
as provided herein, will be duly and validly issued, fully paid and non-
assessable, and will conform to the description thereof contained in the
Prospectus.
(h) The Company has all requisite corporate power and authority to
execute and deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby.
<PAGE>
-6-
(i) This Agreement has been duly authorized, executed and delivered by
the Company.
(j) The execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby will
not conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any material indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries is bound or to which any of the property
or assets of the Company or any of its Subsidiaries is subject, nor will
such actions result in any violation of the provisions of the charter or
by-laws of the Company or any of its Subsidiaries or any statute or any
order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or any of its Subsidiaries or any of
their properties or assets; and except for the registration of the Common
Stock under the Securities Act and such consents, approvals,
authorizations, registrations or qualifications as may be required under
the Exchange Act and applicable state securities or "Blue Sky" laws in
connection with the purchase and distribution of the Common Stock by the
Underwriters, no consent, approval, authorization or order of, or filing or
registration with, any such court or governmental agency or body is
required for the execution, delivery and performance of this Agreement by
the Company and the consummation of the transactions contemplated hereby.
(k) The financial statements (including the related notes and
supporting schedules) filed as part of the Registration Statement or
included in the Prospectus present fairly the financial condition and
results of operations of the entities purported to be shown thereby, at the
dates and for the periods indicated, and have been prepared in conformity
with generally accepted accounting principles ("GAAP") applied on a
----
consistent basis throughout the periods involved. The pro forma financial
statements and other pro forma financial information (including the notes
thereto) included in the Registration Statement and the Prospectus (i)
present fairly the information shown therein, (ii) have been prepared in
accordance with the applicable requirements of Rule 11-02 of the Rules and
Regulations, (iii) have been prepared in accordance with the Commission's
rules and guidelines with respect to pro forma financial statements and
(iv) have been properly compiled
<PAGE>
-7-
on the basis described therein and the assumptions used in the preparation
of the pro forma financial statements and other pro forma financial
information (including the notes thereto) and included in the Registration
Statement and the Prospectus are reasonable and the adjustments used
therein are appropriate to give effect to the transactions or circumstances
referred to therein.
(l) Ernst & Young, LLP ("E&Y"), who have certified certain financial
---
statements of the Company, whose report appears in the Prospectus and who
have delivered an initial letter referred to in Section 9(g) hereof, are
independent public accountants as required by the Act and the Rules and
Regulations.
(m) The statistical and market-related data included in the Prospectus
are based on or derived from sources that the Company and the Subsidiaries
believe to be reliable and accurate.
(n) Since the date as of which information is given in the Prospectus
through the date hereof, and except as may otherwise be disclosed in the
Prospectus, the Company has not (i) issued or granted any securities, (ii)
incurred any liability or obligation, direct or contingent, other than
liabilities and obligations that were incurred in the ordinary course of
business and consistent with past practice, (iii) entered into any
transaction not in the ordinary course of business and consistent with past
practice or (iv) declared or paid any dividend on its capital stock.
(o) Except as disclosed in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its
Subsidiaries is a party or of which any property or assets of the Company
or any of its Subsidiaries is the subject that, if determined adversely to
the Company or any of its Subsidiaries, might have a Material Adverse
Effect; and to the actual knowledge of the Officers, no such proceedings
are threatened by governmental authorities or by others.
(p) Except as disclosed in the Prospectus, no labor disturbance by the
employees of the Company exists or, to the actual knowledge of the
Officers, is imminent that might reasonably be expected to have a Material
Adverse Effect.
<PAGE>
-8-
(q) The Company is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income Security
Act of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"); no "reportable event" (as defined in
-----
ERISA) has occurred with respect to any "pension plan" (as defined in
ERISA) for which the Company would have any liability; the Company has not
incurred and does not expect to incur liability under (i) Title IV of ERISA
with respect to termination of, or withdrawal from, any "pension plan" or
(ii) Section 412 or 4971 of the Internal Revenue Code of 1986, as amended,
including the regulations and published interpretations thereunder (the
"Code"); and each "pension plan" for which the Company would have any
-----
liability that is intended to be qualified under Section 401(a) of the Code
is so qualified in all material respects and nothing has occurred, whether
by action or by failure to act, which would cause the loss of such
qualification.
(r) Neither the Company nor any of its Subsidiaries, nor any director
or officer, nor to the knowledge of any of the Officers, any agent,
employee or other person authorized to act on behalf of the Company or any
of its Subsidiaries, has used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expense relating to
political activity; made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds;
violated or is in violation of any provision of the Foreign Corrupt
Practices Act of 1977; or made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment.
(s) The Company (i) makes and keeps accurate books and records in all
material respects and (ii) maintains internal accounting controls that
provide reasonable assurance that (A) material transactions are executed in
accordance with management's authorization and (B) material transactions
are recorded as necessary to permit preparation of its financial statements
and to maintain accountability for its assets.
(t) Except as described in the Registration Statement or the exhibits
thereto or in the Prospectus, there are no contracts, agreements or
understandings between the Company and any person granting such person the
right (other than rights that have been waived or satisfied) to require the
Company to file a registration statement under the Act with respect to any
securities of the Company owned or to be
<PAGE>
-9-
owned by such person or to require the Company to include such securities
in the securities registered pursuant to the Registration Statement or in
any securities being registered pursuant to any other registration
statement filed by the Company under the Act.
(u) Except as described in the Registration Statement or the
Prospectus, the Company has not sold or issued any shares of Common Stock
during the six-month period preceding the date of the Prospectus, including
any sales pursuant to Rule 144A under, or Regulation D or S of, the Act.
(v) Neither the Company nor any of its Subsidiaries has sustained,
since the date of the latest audited financial statements included in the
Prospectus, any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or
from any labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Prospectus; and, since
such date, to the actual knowledge of the Officers, there has not been any
change in the capital stock or long-term debt of the Company or any of its
Subsidiaries or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of
operations of the Company and its Subsidiaries, otherwise than as set forth
or contemplated in the Prospectus.
(w) (i) Neither the Company nor any of its Subsidiaries owns any real
property other than [ ]; (ii) the Company and
each of its Subsidiaries have marketable title to all personal property
owned by them, in each case free and clear of all liens, encumbrances and
defects, except as are described in the Prospectus or such as do not
materially interfere with the use made and proposed to be made (as
described in the Prospectus) of such property by the Company and its
Subsidiaries; and (iii) all real property and buildings held under lease by
the Company and its Subsidiaries are held by them under valid, subsisting
and enforceable leases, except where the failure to so hold real property
and buildings under valid, subsisting and enforceable leases would not be
reasonably expected to result in a Material Adverse Effect.
(x) Except as described in the Prospectus, the Company and each of its
Subsidiaries carry, or are covered by,
<PAGE>
-10-
insurance in such amounts and covering such risks as is, in the reasonable
judgment of the Company, adequate for the conduct of their respective
businesses and the value of their respective properties.
(y) The Company and each of its Subsidiaries own or possess adequate
rights to use all material patents, patent applications, trademarks,
service marks, trade names, trademark registrations, service mark
registrations, copyrights and licenses necessary for the conduct of their
respective businesses and the Officers have no reason to believe that the
conduct of their respective businesses will conflict with, and have not
received any notice of any claim of conflict with, any such rights of
others.
(z) Neither the Company nor any Subsidiary is an "investment company"
within the meaning of such term under the Investment Company Act of 1940
and the rules and regulations of the Commission thereunder.
(aa) None of the Company, the Subsidiaries or an agent acting on their
behalf has taken or will take any action that might cause this Agreement or
the sale of the Securities to violate Regulation G, T, U or X of the Board
of Governors of the Federal Reserve System.
(bb) Neither the Company nor any of its officers or directors or
affiliates (as defined in the Rules and Regulations) has taken or will
take, directly or indirectly, any action designed to stabilize or
manipulate the price of any security of the Company, or that has
constituted or that might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the Company,
to facilitate the sale or resale of any of the Securities in violation of
the Exchange Act or any applicable rules of the Nasdaq National Market
System.
(cc) The Company has filed, or properly been granted an extension for
filing, all federal, state and local income and franchise tax returns
required to be filed through the date hereof and has paid all taxes due
thereon, and no tax deficiency has been determined that has had (nor do the
Officers have any actual knowledge of any tax deficiency that might
reasonably be expected to have) a Material Adverse Effect.
(dd) There has been no storage, disposal, generation, manufacture,
refinement, transportation, handling or treat-
<PAGE>
-11-
ment of toxic wastes, medical wastes, hazardous wastes or hazardous
substances by the Company or any of its Subsidiaries (or, to the actual
knowledge of the Officers, any of their predecessors in interest) at, upon
or from any of the property now or previously owned or leased by the
Company or its Subsidiaries in violation of any applicable law, ordinance,
rule, regulation, order, judgment, decree or permit or that would require
remedial action under any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit, except for any violation or remedial
action that would not be reasonably likely to have, singularly or in the
aggregate with all such violations and remedial actions, a Material Adverse
Effect; there has been no material spill, discharge, leak, emission,
injection, escape, dumping or release of any kind onto such property or
into the environment surrounding such property of any toxic wastes, medical
wastes, solid wastes, hazardous wastes or hazardous substances due to or
caused by the Company or any of its Subsidiaries or with respect to which
the Officers have actual knowledge, except for any such spill, discharge,
leak, emission, injection, escape, dumping or release that would not be
reasonably likely to have, singularly or in the aggregate with all such
spills, discharges, leaks, emissions, injections, escapes, dumpings and
releases, a Material Adverse Effect; and the terms "hazardous wastes,"
"toxic wastes," "hazardous substances" and "medical wastes" shall have the
meanings specified in any applicable local, state, federal and foreign laws
or regulations with respect to environmental protection.
3. Representations and Warranties of the Selling Stockholders. Each
----------------------------------------------------------
Selling Stockholder severally represents and warrants to each Underwriter and
the Company that:
(a) Such Selling Stockholder has full right, power and authority to
enter into this Agreement and to sell, assign, transfer and deliver the
Securities to be sold by such Selling Stockholder hereunder. This
Agreement and the Power of Attorney attached hereto as Exhibit A have been
duly executed and delivered by such Selling Stockholder.
(b) Such Selling Stockholder will convey good and valid title to the
Common Stock to be delivered by such Selling Stockholder hereunder, free
and clear of all liens, encumbrances, equities and claims whatsoever.
Certificates in negotiable form for the aggregate number of Securities to
be sold by such Selling Stockholder have been placed in
<PAGE>
-12-
custody, under a custody agreement with the Company as custodian, in the
form attached hereto as Exhibit B.
(c) The information with respect to such Selling Stockholder included
in the Registration Statement and the Prospectus under the caption
"Principal and Selling Stockholders" and "Underwriting" does not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading.
(d) No consent, approval, authorization or order of any court or
governmental agency or body is required for the consummation by such
Selling Stockholder of the transactions contemplated herein, except such as
may have been obtained under the Act or otherwise and such as may be
required under state securities or the "Blue Sky" laws.
(e) The performance of this Agreement and the consummation of the
transactions contemplated hereby will not conflict with or result in a
breach or violation of any of the terms and provisions of or constitute a
default under or result in the creation or imposition of any lien, charge,
or encumbrance upon the assets or properties of such Selling Stockholder,
pursuant to any indenture, mortgage, deed of trust, voting trust agreement,
loan agreement, letter of credit agreement, bond, debenture, note agreement
or other evidence of indebtedness, lease, contract or other agreement or
instrument to which such Selling Stockholder is a party or under any
statute or under any order, rule or regulation applicable to such Selling
Stockholder or of any court or other governmental body.
(f) The Registration Statement, the Prospectus or any post-effective
amendment or supplement thereto will (when they become effective or are
filed with the Commission, as the case may be) conform in all material
respects to the requirements of the Act and the Rules and Regulations and
will not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading.
(g) Such Selling Stockholder has not taken and will not take, directly
or indirectly, any action designed to, or which has constituted, or which
might reasonably be expected to cause or result in, the stabilization or
manipulation of the price of the Common Stock of the Company and,
<PAGE>
-13-
other than as permitted by the Act or the Exchange Act, such Selling
Stockholder will not distribute any prospectus or other offering material
in connection with the offering of the Shares.
(h) Such Selling Stockholder (a) has no reason to believe that the
representations and warranties of the Company contained in Section 2 above
are not true and correct, (b) is familiar with the Preliminary Prospectus
and the Prospectus and (c) has no knowledge of any material fact, condition
or information not disclosed in the Preliminary Prospectus and the
Prospectus that could reasonable be expected to have a Material Adverse
Effect. The sale of the Securities by such Selling Stockholder pursuant
hereto is not prompted by any information concerning the Company or the
Subsidiaries which is not set forth in the Registration Statement.
4. Purchase, Sale and Delivery of the Securities.
---------------------------------------------
(a) On the basis of the representations, warranties, agreements and
covenants herein contained and subject to the terms and conditions herein set
forth, the Company agrees to issue and sell and each of the Selling Stockholders
agree, severally and not jointly, to sell to each of the Underwriters, and each
of the Underwriters agrees, severally and not jointly, to purchase from the
Company and each of the Selling Stockholders, at a purchase price of $[ ]
per share, the number of Firm Securities (to be adjusted by you so as to
eliminate fractional shares) determined by multiplying the aggregate number of
Firm Securities to be issued and sold by the Company or sold by each of the
Selling Stockholders, as set forth opposite their respective names in Schedule I
hereto by a fraction, the numerator of which is the aggregate number of Firm
Securities to be purchased by such Underwriter as set forth opposite the name of
such Underwriter in Schedule II hereto and the denominator of which is the
aggregate number of Firm Securities to be purchased by all of the Underwriters
from the Company and all the Selling Stockholders hereunder (subject to
adjustment by you to eliminate fractions). The Representatives shall release
the Firm Securities for public sale promptly after this Agreement becomes
effective. The Representatives may from time to time change the public offering
price and other terms of the offering after the initial public offering to such
extent as they may determine.
In addition, upon written notice from you to the Selling Stockholders
not more than 30 days from the date hereof, the Underwriters may purchase from
time to time all or less than all
<PAGE>
-14-
of the Additional Securities at the purchase price per share to be paid for the
Firm Securities. The Selling Stockholders agree to sell to the Underwriters such
Additional Securities and the Underwriters agree, severally and not jointly, to
purchase such Additional Securities. Such Additional Securities shall be
purchased for the account of each Underwriter in the same proportion as the
number of shares of Firm Securities set forth opposite such Underwriter's name
bears to the total number of shares of Firm Securities (subject to adjustment by
you to eliminate fractions) and may be purchased by the Underwriters only for
the purpose of covering over-allotments made in connection with the offering of
the Firm Securities. This option may be exercised at any time on or before the
thirtieth day following the date hereof, by written notice to the Selling
Stockholders. Such notice shall set forth the aggregate number of Additional
Securities as to which the option is being exercised, and the date and time when
the Additional Securities are to be delivered (such date and time being herein
referred to as an "Option Closing Date"); provided, however, that no Option
------------------- -------- -------
Closing Date shall be earlier than the Closing Date (as defined below) nor
earlier than the second business day after the date on which notice of the
exercise of the option shall have been given nor later than the eighth business
day after the date on which notice of the option shall have been given. At any
Option Closing Date, the Underwriters will purchase from each Selling
Stockholder the number of Additional Securities (to be adjusted by you so as to
eliminate fractional shares) determined by multiplying the aggregate number of
Additional Securities to be sold by each of the Selling Stockholders, as set
forth opposite their respective names in Schedule I hereto by a fraction, the
numerator of which is the aggregate number of Additional Securities to be
purchased by the Underwriters on such Option Closing Date and the denominator of
which is the aggregate number of Additional Securities. No Additional Securities
shall be sold or delivered unless the Firm Securities previously have been, or
simultaneously are, sold and delivered. The right to purchase the Additional
Securities or any portion thereof may be surrendered and terminated at any time
upon notice by you to the Selling Stockholders.
(b) Certificates in negotiable form for the total number of Securities
to be sold hereunder by the Selling Stockholders have been placed in custody
with the Company, as custodian (the "Custodian") pursuant to the Custody
---------
Agreements executed by the Selling Stockholders for delivery of all Securities.
Each Selling Stockholder specifically agrees that the Securities represented by
the certificates held in custody for such Selling Stockholder under the Custody
Agreement are subject to the interest of the Underwriters hereunder, and that
the ar-
<PAGE>
-15-
rangements made by such Selling Stockholder for such custody are to that extent
irrevocable, and that the obligations of such Selling Stockholder hereunder
shall not be terminable by any act or deed of the Selling Stockholder (or by any
other person, or entity, including the Company, the Custodian or the
Underwriters) or by operation of law or by the occurrence of any other event or
events, except as set forth in the Custody Agreement. If any such event should
occur prior to the delivery to the Underwriters of the Securities hereunder,
certificates for the Securities shall be delivered by the Custodian in
accordance with the terms and conditions of this Agreement as if such event had
not occurred. The Custodian is authorized to receive and acknowledge receipt of
the proceeds of the sale of the Securities held by it against the delivery of
such Securities.
(c) Certificates in definitive form for the Securities that each
Underwriter has agreed to purchase hereunder, and in such denomination or
denominations and registered in such name or names as such Underwriter requests
upon notice to the Selling Stockholders at least 48 hours prior to the Closing
Date or Option Closing Date, as the case may be, shall be delivered by or on
behalf of the Selling Stockholders to the Underwriters, against payment by or on
behalf of such Underwriter of the purchase price therefor by wire transfer of
same day funds, or such other payment procedures agreed to by the parties, to
the account designated by each Selling Stockholder. Such delivery of and
payment for the Securities shall be made at the offices of Cahill Gordon &
Reindel, 80 Pine Street, New York, New York 10005, at 9:00 A.M., New York time,
on the Closing Date or Option Closing Date, as the case may be, or at such other
place, time or date as you, the Company and the Selling Stockholders may agree
upon, such time and date of delivery against payment being herein referred to as
the "Closing Date" or "Option Closing Date", as the case may be. The Selling
Stockholders will make such certificates for the Securities available for
checking and packaging by the Underwriters at the offices of BT Alex. Brown
Incorporated in New York, New York at least 24 hours prior to the Closing Date
or Option Closing Date, as the case may be.
5. Offering by the Underwriters. After the Registration Statement
----------------------------
becomes effective, the Underwriters propose to offer for sale to the public the
Securities at the price and upon the terms set forth in the Prospectus relating
to the Securities.
6. Covenants of the Company. The Company covenants and agrees with
------------------------
the Underwriters:
<PAGE>
-16-
(a) To prepare the Prospectus in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b) under
the Act not later than the Commission's close of business on the second
business day following the execution and delivery of this Agreement or, if
applicable, such earlier time as may be required by Rule 430A(a)(3) under
the Act; to make no further amendment or any supplement to the Registration
Statement or to the Prospectus except as permitted herein; to advise the
Representatives, promptly after it receives notice thereof, of the time
when any amendment to the Registration Statement has been filed or becomes
effective or any supplement to the Prospectus or any amended Prospectus has
been filed and to furnish the Representatives with copies thereof; to
advise the Representatives, promptly after it receives notice thereof, of
the issuance by the Commission of any stop order or of any order preventing
or suspending the use of any Preliminary Prospectus or the Prospectus, of
the suspension of the qualification of the Common Stock for offering or
sale in any jurisdiction, of the initiation or threatening of any
proceeding for any such purpose, or of any request by the Commission for
the amending or supplementing of the Registration Statement or the
Prospectus or for additional information; and, in the event of the issuance
of any stop order or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or suspending any such
qualification, to use promptly all commercially reasonable efforts to
obtain its withdrawal.
(b) To deliver promptly to the Representatives such number of the
following documents as the Representatives shall reasonably request: (i)
conformed copies of the Registration Statement as originally filed with the
Commission and each amendment thereto (in each case excluding exhibits
other than this Agreement) and (ii) each Preliminary Prospectus, the
Prospectus and any amended or supplemented Prospectus; and, if the delivery
of a prospectus is required at any time after the Effective Time in
connection with the offering or sale of the Securities or any other
securities relating thereto and if at such time any events shall have
occurred as a result of which, in the reasonable judgment of Cahill Gordon
& Reindel, outside counsel for the Underwriters, the Prospectus as then
amended or supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made when such Prospectus is delivered, not misleading, or, if for any
other reason it
<PAGE>
-17-
shall be necessary to amend or supplement the Prospectus in order to comply
with the Act, to notify the Representatives and, upon their request, to
prepare and furnish without charge to each Underwriter and to any dealer in
securities as many copies as the Representatives may from time to time
reasonably request of an amended or supplemented Prospectus that will
correct such statement or omission or effect such compliance.
(c) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Company or the reasonable
judgment of the Representatives, be required by the Act or requested by the
Commission.
(d) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus or any Prospectus
pursuant to Rule 424 of the Rules and Regulations, to furnish a copy
thereof to the Representatives and counsel for the Underwriters a
reasonable amount of time prior to such proposed filing and not to file any
such amendment or supplement to which the Representatives or counsel for
the Underwriters shall reasonably object.
(e) To furnish promptly to each of the Representatives and to counsel
for the Underwriters a signed copy of the Registration Statement as
originally filed with the Commission, and each amendment thereto filed with
the Commission, including all consents and exhibits filed therewith.
(f) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Common Stock for
offering and sale under the securities or "Blue Sky" laws of such
jurisdictions as the Representatives may request and to comply with such
laws so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution
of the Securities; provided that in connection therewith the Company shall
not be required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction.
(g) As soon as practicable after the Effective Date, to make generally
available to the Company's securityholders and to deliver to the
Representatives an earnings statement of the Company and its Subsidiaries
(which need
<PAGE>
-18-
not be audited) complying with Section 11(a) of the Act and the Rules and
Regulations (including, at the option of the Company, Rule 158).
(h) For a period of five years following the Effective Date, to
furnish to the Representatives copies of all materials furnished by the
Company to its stockholders and all public reports and all reports and
financial statements furnished to or filed by the Company with the
Commission or to the principal national securities exchange upon which the
Common Stock may be listed pursuant to requirements of or agreements with
such exchange or the Commission pursuant to the Exchange Act or any rule or
regulation of the Commission thereunder.
(i) Prior to the Closing Date and any Option Closing Date, as the case
may be, to furnish to the Representatives, as soon as they have been
prepared and are available, a copy of any unaudited interim consolidated
financial statements of the Company and any pro forma information for any
period subsequent to the period covered by its most recent financial
statements included in the Registration Statement and the Prospectus.
(j) To file with the Nasdaq National Market System all documents and
notices required by the Nasdaq National Market System of companies that
have issued securities that are traded in the over-the-counter market and
quotations for which are reported by the Nasdaq National Market System.
(k) That the Company will not at any time, directly or indirectly,
take any action designed, or that might reasonably be expected, to cause or
result in, or that will constitute, stabilization or manipulation of the
price of the shares of Common Stock to facilitate the sale or resale of any
of the Securities in violation of the Exchange Act or any applicable rules
of the Nasdaq National Market System.
(l) To take such steps as shall be reasonably necessary to ensure that
neither the Company nor any Subsidiary shall become an "investment company"
within the meaning of such term under the Investment Company Act of 1940
and the rules and regulations of the Commission thereunder.
<PAGE>
-19-
(m) To apply the net proceeds from the sale of the Common Stock being
sold by the Company as set forth in the Prospectus.
(n) During a period of 90 days from the date hereof (the "Lock-up
-------
Period"), the Company will not, without the Representatives' prior written
------
consent, offer, sell, contract to sell or otherwise dispose of, directly or
indirectly, any shares of Common Stock or any interests therein, or any
securities convertible into, or exchangeable for, shares of Common Stock or
rights to acquire the same except for Securities issued pursuant to this
Agreement.
7. Covenants of Selling Stockholders. Each Selling Stockholder
---------------------------------
agrees with the several Underwriters as follows:
(a) Such Selling Stockholder will cooperate to the extent necessary to
cause the Registration Statement or any post-effective amendment thereto to
become effective at the earliest possible time.
(b) Such Selling Stockholder will use such Selling Stockholder's
reasonable best efforts to do or perform all things required to be done or
performed by it prior to the Closing Date to satisfy all conditions
precedent to the delivery of the Securities.
(c) During the Lock-up Period such Selling Stockholder will not,
without the Representatives' prior written consent, offer, sell, contract
to sell or otherwise dispose of, directly or indirectly, any shares of
Common Stock or any interests therein, or any securities convertible into,
or exchangeable for, shares of Common Stock or rights to acquire the same
except for Securities sold pursuant to this Agreement.
(d) Such Selling Stockholder will not take, directly or indirectly,
any action designed to or that might reasonably be expected to cause or
result in stabilization or manipulation of the price of the Common Stock to
facilitate the sale or resale of the Securities in violation of the
Exchange Act or any applicable rules of the Nasdaq National Market System.
(e) Each Selling Stockholder agrees to notify the Representatives
promptly of any information that comes to such Selling Stockholder's
attention that would cause such
<PAGE>
-20-
Selling Stockholder to have reason to believe that his or its
representations, warranties and statements in this Agreement are not
accurate in all material respects.
(f) Except as herein contemplated with respect to the Securities to be
included in the Registration Statement, each Selling Stockholder agrees to
waive any registration rights to which such Selling Stockholder may be
entitled in connection with the public offering herein contemplated.
8. Expenses. The Company agrees to pay all costs and expenses
--------
incident to the performance of its obligations under this Agreement, whether or
not the transactions contemplated herein are consummated or this Agreement is
terminated, as provided in this Section 8 including all costs and expenses
incident to (i) the printing or other production of documents with respect to
the transactions, including any costs of printing the registration statement
originally filed with respect to the Securities and any amendment thereto and
the Registration Statement, any Preliminary Prospectus and the Prospectus and
any amendment or supplement thereto, (ii) the printing (or reproduction) and
delivery of this Agreement, the Securities, any Blue Sky Memoranda and all other
documents and agreements printed (or reproduced) and delivered in connection
with the offering of the Securities, (iii) all arrangements relating to the
delivery to the Underwriters of copies of the foregoing documents, (iv) the fees
and disbursements of the counsel, the accountants and any other experts or
advisors retained by the Company or its Subsidiaries, (v) preparation (including
printing), issuance and delivery to the Underwriters of certificates evidencing
the Securities, (vi) the qualification of the Securities in the United States
and Canada under state securities and "Blue Sky" laws, including filing fees and
reasonable fees and disbursements of counsel for the Underwriters relating
thereto, (vii) the filing fees of the Commission and the National Association of
Securities Dealers, Inc. relating to the Securities, (viii) expenses of the
Company and its Subsidiaries in connection with any meetings with prospective
investors in the Securities, (ix) advertising relating to the offering of the
Securities (other than as shall have been specifically approved in writing by
the Underwriters to be paid by the Underwriters) and (x) the fees and expenses
incurred in connection with the quotation of the Securities on the Nasdaq
National Market System. Each Selling Stockholder shall pay the costs and
expenses incident to the performance by it of its obligations hereunder and in
connection with the offer, sale and delivery of the Securities to be sold by it,
including any stock transfer taxes payable upon the sale of such Securities to
the Underwriters, the fees and expenses of
<PAGE>
-21-
any counsel retained by it and the underwriting discounts and commissions
payable to the Underwriters.
If the sale of the Securities provided for herein is not consummated
because any condition to the obligations of the Underwriters set forth in
Section 9 hereof is not satisfied, because this Agreement is terminated pursuant
to Section 12 hereof or because of any failure, refusal or inability on the part
of the Company, any of the Company's Subsidiaries or any Selling Stockholder to
perform all obligations and satisfy all conditions on their respective parts to
be performed or satisfied hereunder (other than solely by reason of a default by
the Underwriters of its obligations hereunder after all conditions hereunder
have been satisfied in accordance herewith), the Company will promptly reimburse
the Underwriters upon demand for all reasonable out-of-pocket expenses
(including reasonable fees and disbursements of counsel for the Underwriters)
that shall have been incurred by the Underwriters in connection with the
proposed purchase and sale of the Securities not so delivered.
9. Conditions of the Underwriters' Obligations. The obligation of
-------------------------------------------
the Underwriters to purchase and pay for the Firm Securities on the Closing Date
and the Additional Securities on each Option Closing Date shall be subject to
the following additional conditions:
(a) The Prospectus shall have been timely filed with the Commission in
accordance with Section 6(a); no stop order suspending the effectiveness of
the Registration Statement or any part thereof shall have been issued and
no proceeding for that purpose shall have been initiated or threatened by
the Commission; and any request of the Commission for inclusion of
additional information in the Registration Statement or the Prospectus or
otherwise shall have been complied with.
(b) No Underwriter shall have discovered and disclosed to the Company
or to the Selling Stockholder on or prior to the Closing Date and each
Option Closing Date, as the case may be, that the Registration Statement or
the Prospectus or any amendment or supplement thereto contains an untrue
statement of a fact that in the reasonable opinion of Cahill Gordon &
Reindel, counsel for the Underwriters, is material or omits to state a fact
that in the reasonable opinion of such counsel, is material and is required
to be stated therein or is necessary to make the statements therein not
misleading.
<PAGE>
-22-
(c) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the Common Stock, the
Registration Statement and the Prospectus, and all other legal matters
relating to this Agreement and the transactions contemplated hereby shall
be reasonably satisfactory in all material respects to counsel for the
Underwriters, and the Company shall have furnished to such counsel all
documents and information that they may reasonably request to enable them
to pass upon such matters.
(d) Anderson Kill & Olick, P.C., as counsel to the Company, shall have
furnished to the Representatives its written opinion, addressed to the
Underwriters and dated the Closing Date and each Option Closing Date, as
the case may be, in form and substance reasonably satisfactory to the
Representatives, to the effect that:
(i) The Company and each of the Subsidiaries have been duly
incorporated and are validly existing and in good standing under the
laws of their respective jurisdictions of incorporation, and have the
corporate power and authority to own or hold their respective
properties and to conduct the businesses in which they are currently
engaged and as described in the Prospectus.
(ii) All of the outstanding capital stock of the Company has been
duly and validly authorized and issued, is fully paid and non-
assessable and conforms to the description thereof contained in the
Prospectus. With respect to the shares of Common Stock being
delivered pursuant to this Agreement, such Common Stock has been duly
and validly authorized and, upon receipt of payment therefor, shall be
duly issued, fully paid and non-assessable. The Common Stock conforms
to the description thereof contained in the Prospectus. All of the
outstanding capital stock of each Subsidiary has been duly and validly
authorized and issued and is fully paid, nonassessable and, to such
counsel's knowledge, is owned by the Company free and clear of all
liens, encumbrances, equities or claims, except for any liens,
encumbrances, equities or claims (a) of Bankers Trust Company
("BTCo.") under the Credit Agreement, or (b) which may be described in
the Prospectus. The Common Stock has been duly authorized for
quotation on the Nasdaq National Market.
<PAGE>
-23-
(iii) Except as may be described in the Prospectus, (a) there
are no preemptive or other rights in the Company's certificate of
incorporation or bylaws to subscribe for or to purchase, nor any
restriction upon the voting or transfer of, any shares of Common Stock
and (b) to such counsel's knowledge, there are no preemptive or other
rights to subscribe for or to purchase, nor any restriction upon the
voting or transfer of, any shares of Common Stock in any other
agreement or instrument.
(iv) To such counsel's knowledge, neither the Company nor any of
the Subsidiaries owns any real property other than [ ].
To such counsel's knowledge, the Company and each of the Subsidiaries
have marketable title to all personal property owned by them, free and
clear of all liens, encumbrances and defects, except (A) liens arising
under that certain Credit Agreement, dated as of [ ],
between the Company, Coinmach Corporation and the Lenders party
thereto, (B) purchase money liens arising in the ordinary course of
business, and (C) such liens, encumbrances and defects that do not
materially interfere with the use made and proposed to be made, as
described in the Registration Statement, of such personal property by
the Company or any Subsidiary. To such counsel's knowledge, all real
property and buildings held under lease by the Company and the
Subsidiaries are held by them under valid, subsisting and enforceable
leases, except (A) laundry room or location leases entered into by the
Company or any of the Subsidiaries, (B) any real property or buildings
the failure to so hold which would not be reasonably expected to
result in a Material Adverse Effect, and (C) to the extent that such
validity or enforceability may be limited by (1) bankruptcy,
insolvency, fraudulent conveyance, preferential transfer,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to or affecting creditors' rights and remedies
generally; (2) general principles of equity (whether such
enforceability is considered in a proceeding in equity or at law), and
by the discretion of the court before which any proceeding therefor
may be brought, including, without limitation, (x) the possible
unavailability of specific performance, injunctive relief or any other
equitable remedy, and (y) concepts of materiality, reasonableness,
good faith and fair dealing.
<PAGE>
-24-
(v) To such counsel's knowledge and other than as set forth in
the Prospectus, there are no legal or governmental proceedings pending
to which the Company or any of the Subsidiaries is a party or of which
any property or assets of the Company or any of the Subsidiaries is
the subject that, if determined adversely to the Company or any of the
Subsidiaries, might reasonably be expected to have a Material Adverse
Effect; and, to such counsel's knowledge, no such proceedings are
threatened by governmental authorities or by others except as
disclosed in the Prospectus.
(vi) The Registration Statement was declared effective under the
Act; the Prospectus was filed with the Securities and Exchange
Commission pursuant to subparagraph (1) of Rule 424(b) of the rules
and regulations promulgated under the Securities Act (the "Rules and
---------
Regulations"); and, to our knowledge, no stop order suspending the
-----------
effectiveness of the Registration Statement has been issued and, to
our knowledge, no proceeding for that purpose is pending.
(vii) The Registration Statement and the Prospectus and any
further amendments or supplements thereto made by the Company prior to
the CLOSING DATE (other than the financial statements and related
schedules therein, as to which financial statements and related
schedules no opinion need be expressed) comply as to form in all
material respects with the requirements of the Act and the Rules and
Regulations.
(viii) To such counsel's knowledge, there are no contracts or
other documents that are required to be described in the Prospectus or
filed as exhibits to the Registration Statement by the Act or by the
Rules and Regulations that have not been described in the Prospectus
or filed as exhibits to the Registration Statement.
(ix) The Company has full corporate power and authority to enter
into this Agreement and this Agreement has been duly authorized,
executed and delivered by the Company.
(x) The issuance and sale of the shares of Common Stock being
delivered on the Closing Date and each Option Closing Date, as the
case may be, by the
<PAGE>
-25-
Company and the Selling Stockholders and the compliance by the Company
and the Selling Stockholders with the provisions of the Underwriting
Agreement will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument, in each such case known to us and to which the Company
or any of the Subsidiaries is a party or to which any of the property
or assets of the Company or of any of the Subsidiaries is subject,
except for any such conflicts, breaches, violations or defaults that
would not reasonably be expected to result in a Material Adverse
Effect, nor will such actions result in (i) any violation of the
provisions of the Second Amended and Restated Certificate of
Incorporation of the Company or the Second Amended and Restated By-
laws of the Company or the charter or by-laws of any of the
Subsidiaries, or (ii) to our knowledge, any violation of any statute
or any order, rule or regulation of any court or governmental agency
or body having jurisdiction over the Company or any of the
Subsidiaries or any of their properties or assets and which could
reasonably be expected to result in a Material Adverse Effect. Except
for the registration of the Common Stock under the Act and such
consents, approvals, authorizations, registrations or qualifications
as may be required under or by the Exchange Act, as amended, the Act,
the National Association of Securities Dealers, Inc., the Nasdaq
National Market and applicable state securities laws in connection
with the purchase and distribution of the Common Stock by the
Underwriters, no consent, approval, authorization or order of, or
filing or registration with, any such court or governmental agency or
body is required for the execution, delivery and performance of the
Underwriting Agreement by the Company and the consummation of the
transactions contemplated thereby.
(xi) To our knowledge and except as may be described in the
Registration Statement, there are no contracts, agreements or
understandings between the Company or any of the Subsidiaries and any
person granting such person the right (other than rights that have
been waived or satisfied) to require the Company to file a
registration statement under the Securities Act with respect to any
securities of the Company
<PAGE>
-26-
owned or to be owned by such person or to require the Company to
include such securities in the securities registered pursuant to the
Registration Statement.
(xii) The Company is not an "investment company" as defined in
Section 3(a) of the Investment Company Act.
Such counsel shall also state that such counsel has participated in
conferences with officers and other representatives of the Company,
representatives of the independent public accountants for the Company, and
representatives of you and your counsel, at which the contents of the
Registration Statement and Prospectus and related matters were discussed and,
although we did not independently verify, we are not passing upon, and do not
assume any responsibility for, the accuracy, completeness or fairness of the
statements contained in the Registration Statement and Prospectus (except for
the statements made in the Registration Statement under the caption "Description
of Capital Stock" and "Shares Eligible for Future Resale" insofar as such
statements relate to the Common Stock and concern legal matters), on the basis
of the foregoing (relying as to materiality to a large extent upon the
statements of officers and other representatives of the Company) no facts have
come to our attention that cause us to believe that (i) the Registration
Statement, as of the date and time as of which the Registration Statement is
declared effective by the Commission, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, and (ii) the
Prospectus, as of its date and as of the date hereof, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; it being understood
that we are not commenting on and express no opinion with respect to the
financial statements and related notes thereto, schedules or other financial or
statistical data included in or omitted from the Registration Statement, the
Prospectus or any amendments or supplements thereto.
In rendering such opinion, such counsel may rely as to all matters of
law other than the law of the United States or of the State of New York and
the corporate law of the State of Delaware upon opinions of counsel
satisfactory to you, in which case the opinion shall state that they have
no reason to believe that you and they are not entitled so to rely.
<PAGE>
-27-
(e) The Selling Stockholders shall have furnished to you the opinion
of Anderson Kill & Olick, P.C., counsel for the Selling Stockholders, or of
such other counsel to the Selling Stockholders as shall be satisfactory to
Cahill Gordon & Reindel, counsel for the Underwriters, dated the Closing
Date and each Option Closing Date, as the case may be, to the effect that:
(i) This Agreement, the Powers of Attorney and the Custody
Agreement have been duly executed and delivered by the Selling
Stockholders.
(ii) The Selling Stockholders have the power and authority to
sell, transfer and deliver in the manner provided in this Agreement
the Securities being sold by the Selling Stockholders hereunder.
(iii) The delivery by the Selling Stockholders to the several
Underwriters of certificates for the Securities being sold hereunder
by the Selling Stockholders against payment therefor as provided
herein, assuming the Representatives purchased the Securities in good
faith without knowledge of any adverse claim, will pass good and valid
title to such Securities to the several Underwriters, free and clear
of all liens, encumbrances, equities and claims whatsoever.
(f) The Representatives shall have received from Cahill Gordon &
Reindel, counsel for the Underwriters, such opinion or opinions, dated the
Closing Date and each Option Closing Date, as the case may be, with respect
to the issuance and sale of the Common Stock, the Registration Statement,
the Prospectus and other related matters as the Representatives may
reasonably require, and the Company shall have furnished to such counsel
such documents as such counsel reasonably requests for the purpose of
enabling it to pass upon such matters.
(g) At the time of execution of this Agreement, the Representatives
shall have received from E&Y, a letter in form and substance satisfactory
to the Representatives, addressed to the Underwriters and dated the date
hereof, (i) confirming that they are independent public accountants within
the meaning of the Act and are in compliance with the applicable
requirements relating to the qualification of accountants under Rule 2-01
of Regulation S-X of the Commission, (ii) stating, as of the date hereof
(or, with
<PAGE>
-28-
respect to matters involving changes or developments since the respective
dates as of which specified financial information is given in the
Prospectus, as of a date not more than five days prior to the date hereof),
the conclusions and findings of E&Y with respect to the financial
information and other matters ordinarily covered by accountants' "comfort
letters" to underwriters in connection with registered public offerings.
(h) With respect to the letter of E&Y referred to in the preceding
paragraph and delivered to the Representatives concurrently with the
execution of this Agreement (the "initial letter"), the Company shall have
--------------
furnished to the Representatives a letter (the "bring-down letter") of such
-----------------
accountants, addressed to the Underwriters and dated the CLOSING DATE, and
each Option Closing Date, as the case may be, (i) confirming that they are
independent public accountants within the meaning of the Act and are in
compliance with the applicable requirements relating to the qualification
of accountants under Rule 2-01 of Regulation S-X of the Commission, (ii)
stating, as of the date of the bring-down letter (or, with respect to
matters involving changes or developments since the respective dates as of
which specified financial information is given in the Prospectus, as of a
date not more than three days prior to the date of the bring-down letter),
the conclusions and findings of such firm with respect to the financial
information and other matters covered by the initial letter and (iii)
confirming in all material respects the conclusions and findings set forth
in the initial letter.
(i) The representations and warranties of the Company and the Selling
Stockholders contained in this Agreement shall be true and correct in all
material respects on and as of the date hereof and on and as of the Closing
Date and each Option Closing Date, as the case may be, as if made on and as
of such date and you shall have received certificates, dated as of the
Closing Date and each Option Closing Date, as the case may be, and signed
by or on behalf of the Selling Stockholders to the effect set forth in this
Section 9(i); the statements of the Company's officers made pursuant to any
certificate delivered in accordance with the provisions hereof shall be
true and correct in all material respects on and as of the date made and
on and as of the Closing Date and each Option Closing Date, as the case may
be; the Company and the Selling Stockholders shall have complied in all
material respects with all agreements and satisfied all conditions on its
part to be performed or
<PAGE>
-29-
satisfied hereunder at or prior to the Closing Date and each Option Closing
Date, as the case may be; and subsequent to the date of the most recent
financial statements in the Prospectus, there shall have been no Material
Adverse Change or any development involving a prospective Material Adverse
Change.
(j) The sale of the Securities by the Company and the Selling
Stockholders hereunder shall not be enjoined (temporarily or permanently)
on the Closing Date or any Option Closing Date, as the case may be.
(k) (i) Neither the Company nor any of its Subsidiaries shall have
sustained since the date of the latest audited financial statements
included in the Prospectus any loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth or contemplated in the Prospectus or
(ii) since such date there shall not have been any change in the capital
stock or long-term debt of the Company or any of its Subsidiaries or any
change, or any development involving a prospective change, in or affecting
the general affairs, management, financial position, stockholders' equity
or results of operations of the Company and its Subsidiaries, otherwise
than as set forth or contemplated in the Prospectus, the effect of which,
in any such case described in clause (i) or (ii), is, in the reasonable
judgment of the Representatives, so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Securities being delivered on the CLOSING DATE and each
Option Closing Date, as the case may be, on the terms and in the manner
contemplated in the Prospectus.
(l) The Company shall have furnished to the Representatives a
certificate, dated the Closing DATE, and each Option Closing Date, as the
case may be, of its Chairman of the Board and Chief Executive Officer and
its Senior Vice President and Chief Financial Officer stating that:
(i) The representations and warranties of the Company in Section
2 that are qualified with reference to a Material Adverse Effect or
materiality are true and correct as of the Closing Date and each
Option Closing Date, as the case may be; and the representations and
warranties of the Company that are not so qualified shall be true and
correct in all material
<PAGE>
-30-
respects, in each case as of the Closing Date and each Option Closing
Date, as the case may be; the Company has complied in all material
respects with all its agreements contained herein; and the conditions
set forth in Sections 9(a) and 9(k) have been fulfilled in all
material respects; and
(ii) They have carefully examined the Registration Statement and
the Prospectus and, in their opinion, (A) as of the Effective Date,
the Registration Statement and Prospectus did not include any untrue
statement of a material fact and did not omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and (B) since the Effective Date no event has
occurred that should have been set forth in a supplement or amendment
to the Registration Statement or the Prospectus.
(m) Each of the Company and each Selling Stockholder shall have
furnished to you "lock-up" letters, in form and substance satisfactory to
you, signed by the Company or such Selling Stockholder, as the case may be,
prohibiting such persons from offering, selling, contracting to sell or
otherwise disposing, directly or indirectly, of any shares of Common Stock
or any interests therein, or any securities convertible into, or
exchangeable for, shares of Common Stock or rights to acquire the same,
during the Lock-up Period, without the prior written consent of the
Representatives.
(n) The Selling Stockholders shall not have failed at or prior to the
Closing Date and each Option Closing Date, as the case may be to have
performed or complied with any of their agreements herein contained and
required to be performed or complied with by them hereunder at or prior to
the Closing Date.
(o) Subsequent to the execution and delivery of this Agreement (i) no
downgrading shall have occurred in the rating accorded the Company's debt
securities by any "nationally recognized statistical rating organization,"
as that term is defined by the Commission for purposes of Rule 436(g)(2) of
the Rules and Regulations, and (ii) no such organization shall have
publicly announced that it has under surveillance or review, with possible
negative implications, its rating of any of the Company's debt or equity
securities.
<PAGE>
-31-
(p) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or the American Stock Exchange or
in the over-the-counter market, or trading in any securities of the Company
on any exchange or in the over-the-counter market, shall have been
suspended or minimum prices shall have been established on any such
exchange or such market by the Commission, by such exchange or by any other
regulatory body or governmental authority having jurisdiction, (ii) a
banking moratorium shall have been declared by Federal or state
authorities, (iii) the United States shall have become engaged in
hostilities, there shall have been an escalation in hostilities involving
the United States or there shall have been a declaration of a national
emergency or war by the United States or (iv) there shall have occurred
such a material adverse change in general economic, political or financial
conditions (or the effect of international conditions on the financial
markets in the United States shall be such) as to make it, in the sole
judgment of Representatives, impracticable or inadvisable to proceed with
the public offering or delivery of the Common Stock being delivered on the
Closing Date and each Option Closing Date, as the case may be, on the terms
and in the manner contemplated in the Prospectus.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
10. Indemnification and Contribution.
--------------------------------
(a) The Company and Golder, Thoma, Cressey, Rauner, Fund IV, L.P.
("GTCR IV") agree jointly and severally to indemnify and hold harmless each
- ---------
Underwriter, each Selling Stockholder (other than GTCR IV) and each person, if
any, who controls any Underwriter or any Selling Stockholder (other than GTCR
IV) within the meaning of Section 15 of the Act or Section 20 of the Exchange
Act, against any losses, claims, damages or liabilities, joint or several, to
which such Underwriter, such Selling Stockholder (other than GTCR IV) or such
controlling person may become subject under the Act, the Exchange Act or
otherwise, insofar as any such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon:
<PAGE>
-32-
(i) any untrue statement or alleged untrue statement of any material fact
contained in (A) the Registration Statement or any amendment thereto or
any Preliminary Prospectus or the Prospectus or any amendments or
supplements thereto or (B) any application or other document, or any
amendment or supplement thereto, executed by the Company or based upon
written information furnished by or on behalf of the Company filed in any
jurisdiction in order to qualify the Securities under the securities or
"Blue Sky" laws thereof or filed with the Commission or any securities
association or securities exchange (each an "Application"); or
-----------
(ii) the omission or alleged omission to state in such Registration
Statement or any amendment thereto, any Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto, or any Application, a
material fact required to be stated therein or necessary to make the
statements therein not misleading,
and will reimburse, as incurred, each Underwriter, each Selling Stockholder
(other than GTCR IV) and each such controlling person for any reasonable legal
or other out-of-pocket expenses reasonably incurred by any such Underwriter,
Selling Stockholder (other than GTCR IV) or any such controlling person in
connection with investigating or defending against or appearing as a third-party
witness in connection with any such loss, claim, damage, liability or action in
respect thereof; provided that the Company will not be liable in any such case
--------
to the extent, but only to the extent, that any such loss, claim, damage, or
liability arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in such Registration Statement or
any amendment thereto, any Preliminary Prospectus or the Prospectus or any
amendments or supplements thereto, or any Application in reliance upon and in
conformity with written information furnished to the Company by the Underwriters
with respect to the Underwriters, or by the Selling Stockholders (other than
GTCR IV) with respect to the Selling Stockholders (other than GTCR IV)
specifically, for use therein; provided, further, that the Company will not be
-------- -------
liable to any Underwriter if such untrue statement or omission or alleged untrue
statement or omission was contained or made in any Preliminary Prospectus and
completely corrected in the Prospectus and any such loss, liability, claim,
damage or expense suffered or incurred by any Underwriter resulted from any
action, claim or suit by any person who purchased Securities that are the
subject thereof from any Underwriter and such Underwriter failed to deliver or
provide a copy of the Prospectus relating to the Securities to such person with
or prior to the confirmation of the sale of such Securities sold to such person
in any case where delivery is required by the Act or the Rules and Regulations,
unless such failure to deliver or provide a copy of the Prospectus relating
<PAGE>
-33-
to the Securities was a result of noncompliance by the Company with Section
6(c)(ii) of this Agreement. This indemnity agreement will be in addition to any
liability that the Company may otherwise have to the indemnified parties. The
Company shall not be liable under this Section 10 for any settlement of any
claim or action effected without its consent, which shall not be unreasonably
withheld.
(b) Each of Stephen R. Kerrigan, Mitchell Blatt and Robert M. Doyle,
officers of the Company (the "Inside Sellers") agree, severally but not jointly,
--------------
to indemnify and hold harmless the Company, its directors and officers who
signed the Registration Statement, each Underwriter and each person, if any, who
controls the Company or any Underwriter within the meaning of Section 15 of the
Act of Section 20 of the Exchange Act against any losses, claims, damages or
liabilities to which the Company, or any such director, officer or underwriter
or controlling person may become subject under the Act, the Exchange Act, or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement or any amendment thereto, any Preliminary Prospectus or the Prospectus
or any amendment or supplement thereto, or any Application or (ii) the omission
or the alleged omission to state therein a material fact required to be stated
in the Registration Statement or any amendment thereto, any Preliminary
Prospectus or the Prospectus or any amendment or supplement thereto, or
necessary to make the statements therein not misleading; and, subject to the
limitation set forth immediately preceding this clause, will reimburse, as
incurred, any legal or other expenses incurred by the Company or any such
director, officer or Underwriter or controlling person in connection with
investigating or defending against or appearing as a third-party witness in
connection with any such loss, claim, damage, liability or action in respect
thereof; provided, that each Inside Seller shall not be liable under this
--------
Section 10 for any amounts in excess of the product of the purchase price per
share set forth in Section 4 hereof and the number of shares being sold by such
Inside Seller hereunder. This indemnity agreement will be in addition to any
liability that the Inside Seller may otherwise have to the indemnified parties.
No Inside Seller shall be liable under this Section 10 for any settlement of any
claim or action effected without its consent, which shall not be unreasonably
withheld.
<PAGE>
-34-
(c) Each Selling Stockholder other than GTCR IV and the Inside Sellers
(the "Other Sellers") severally agrees to indemnify and hold harmless the
-------------
Company, each of its directors and each of its officers who signed the
Registration Statement, each Selling Stockholder and each person, if any, who
controls the Underwriters, the Company or any Selling Stockholder within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act against any
losses, claims, damages or liabilities to which such Underwriter, the Company,
or any such director, officer or Selling Stockholder or controlling person may
become subject under the Act, the Exchange Act, or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement or any amendment thereto,
any Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto, or any Application or (ii) the omission or the alleged omission to
state therein a material fact required to be stated in the Registration
Statement or any amendment thereto, any Preliminary Prospectus or the Prospectus
or any amendment or supplement thereto, or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company or any Underwriter by such Other Sellers specifically
for use therein; and, subject to the limitation set forth immediately preceding
this clause, will reimburse, as incurred, any legal or other expenses incurred
by such Underwriter, the Company or any such director, officer or Selling
Stockholder or controlling person in connection with investigating or defending
against or appearing as a third-party witness in connection with any such loss,
claim, damage, liability or action in respect thereof; provided, that each Other
--------
Seller shall not be liable under this Section 10 for any amounts in excess of
the product of the purchase price per share set forth in Section 4 hereof and
the number of shares being sold by such Other Seller hereunder. This indemnity
agreement will be in addition to any liability that the Underwriters may
otherwise have to the indemnified parties. No Underwriter shall be liable under
this Section 10 for any settlement of any claim or action effected without its
consent, which shall not be unreasonably withheld.
(d) Each Underwriter severally agrees to indemnify and hold harmless
the Company, each of its directors and each of its officers who signed the
Registration Statement, each Selling Stockholder and each person, if any, who
controls the Company or any Selling Stockholder within the meaning of Section 15
of the
<PAGE>
-35-
Act or Section 20 of the Exchange Act against any losses, claims, damages or
liabilities to which the Company, or any such director, officer or Selling
Stockholder or controlling person may become subject under the Act, the Exchange
Act, or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement or any amendment thereto, any Preliminary Prospectus or
the Prospectus or any amendment or supplement thereto, or any Application or
(ii) the omission or the alleged omission to state therein a material fact
required to be stated in the Registration Statement or any amendment thereto,
any Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto, or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through the Representatives specifically for use therein; and,
subject to the limitation set forth immediately preceding this clause, will
reimburse, as incurred, any legal or other expenses incurred by the Company or
any such director, officer or Selling Stockholder or controlling person in
connection with investigating or defending against or appearing as a third-party
witness in connection with any such loss, claim, damage, liability or action in
respect thereof. This indemnity agreement will be in addition to any liability
that the Underwriters may otherwise have to the indemnified parties. No
Underwriter shall be liable under this Section 10 for any settlement of any
claim or action effected without its consent, which shall not be unreasonably
withheld.
(e) Promptly after receipt by an indemnified party under this Section
10 of notice of the commencement of any action for which such indemnified party
is entitled to indemnification under this Section 10, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 10, notify the indemnifying party of the commencement
thereof, but the omission so to notify the indemnifying party will not relieve
it from any liability that it may have to any indemnified party otherwise than
under this Section 10. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party; provided that if the defendants in any
--------
<PAGE>
-36-
such action include both the indemnified party and the indemnifying party and
the indemnified party shall have been advised by counsel that there may be one
or more legal defenses available to it and/or other indemnified parties that are
different from or additional to those available to the indemnifying party, then
the indemnifying party shall not have the right to direct the defense of such
action on behalf of such indemnified party or parties and such indemnified party
or parties shall have the right to select separate counsel to defend such action
on behalf of such indemnified party or parties. After notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof and approval by such indemnified party of counsel appointed to
defend such action, the indemnifying party will not be liable to such
indemnified party under this Section 10 for any legal or other expenses, other
than reasonable costs of investigation, subsequently incurred by such
indemnified party in connection with the defense thereof, unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the immediately preceding sentence (it being understood, however,
that in connection with such action the indemnifying party shall not be liable
for the expenses of more than one separate counsel (in addition to local
counsel) in any one action or separate but substantially similar actions in the
same jurisdiction arising out of the same general allegations or circumstances,
designated by any Underwriter, in the case of paragraphs (a), (b) and (c) of
this Section 10, or the Company and the Selling Stockholders, in the case of
paragraph (d) of this Section 10, representing the indemnified parties under
such paragraph (a), (b), (c) or (d), as the case may be, who are parties to such
action or actions), (ii) the indemnifying party has authorized the employment of
counsel for the indemnified party at the expense of the indemnifying party or
(iii) the indemnifying party shall have failed to assume the defense or retain
counsel reasonably satisfactory to the indemnified party. After such notice from
the indemnifying party to such indemnified party, the indemnifying party will
not be liable for the costs and expenses of any settlement of such action
effected by such indemnified party without the consent of the indemnifying
party, which consent shall not be unreasonably withheld.
(f) In circumstances in which the indemnity agreement provided for in
the preceding paragraphs of this Section 10 is for any reason unavailable or
insufficient to hold harmless an indemnified party in respect of any losses,
claims, damages or liabilities (or actions in respect thereof), each
indemnifying party, in order to provide for just and equitable contribution,
shall contribute to the amount paid or payable by such indemni-
<PAGE>
-37-
fied party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect (i)
the relative benefits received by the indemnifying party or parties on the one
hand and the indemnified party on the other from the offering of the Securities
or (ii) if the allocation provided by the foregoing clause (i) is not permitted
by applicable law, not only such relative benefits but also the relative fault
of the indemnifying party or parties on the one hand and the indemnified party
on the other in connection with the statements or omissions or alleged
statements or omissions that resulted in such losses, claims, damages or
liabilities (or actions in respect thereof). The relative benefits received by
the Company and the Selling Stockholders on the one hand and the Underwriters on
the other shall be deemed to be in the same proportion as (x) the total proceeds
from the offering (net of underwriter's discounts and commissions but before
deducting expenses) received by the Company and the Selling Stockholders and (y)
the total underwriting discounts and commissions received by the Underwriters,
respectively, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault of the parties shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by an indemnified party or parties on the one
hand, or the indemnifying party or parties on the other, the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission, and any other equitable considerations appropriate
in the circumstances. The Company, the Selling Stockholders and the Underwriters
agree that it would not be equitable if the amount of such contribution were
determined by pro rata or per capita allocation (even if the Company and the
--------
Selling Stockholders on the one hand and the Underwriters on the other hand were
treated as one entity for such purpose) or by any other method of allocation
that does not take into account the equitable considerations referred to in the
first sentence of this paragraph (f). Notwithstanding any other provision of
this paragraph (f), no Underwriter shall be obligated to make contributions
hereunder that in the aggregate exceed the total underwriting discounts and
commissions received by such Underwriter under this Agreement, less the
aggregate amount of any damages that such Underwriter has otherwise paid or been
required to pay by reason of the untrue or alleged untrue statements or the
omissions or alleged omissions to state a material fact, and no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. Notwithstanding any other
<PAGE>
-38-
provision of this paragraph (f), no Selling Stockholder (other than GTCR IV)
shall be liable under this Section 10 for any amounts in excess of the product
of the purchase price per share set forth in Section 4 and the number of shares
being sold by such Selling Stockholder hereunder. For purposes of this paragraph
(f), each person, if any, who controls an Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act shall have the same
rights to contribution as such Underwriter, and each director of the Company,
and each officer of the Company who signed the Registration Statement and each
person, if any, who controls the Company or any Selling Stockholder within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, shall have
the same rights to contribution as the Company or such Selling Stockholder, as
the case may be.
11. Survival Clause. The respective representations, warranties,
---------------
agreements, covenants, indemnities and other statements of the Company, the
Company's officers, the Selling Stockholders and the Underwriters set forth in
this Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement shall remain in full force and effect, regardless of (i) any
investigation made by or on behalf of the Company or any of its officers or
directors or any Selling Stockholder, the Underwriters or any controlling person
referred to in Section 10 hereof and (ii) delivery of and payment for the
Securities. The respective agreements, covenants, indemnities and other
statements set forth in Sections 8 and 10 hereof shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement.
12. Termination.
-----------
(a) This Agreement may be terminated in the sole discretion of the
Representatives by notice to the Company and the Selling Stockholders, given
prior to the Closing Date or Option Closing Date, as the case may be, in the
event that the Company or any of the Selling Stockholders shall have failed,
refused or become unable to perform all obligations and satisfy all conditions
on their respective parts to be performed or satisfied hereunder at or prior
thereto or if, at or prior to the Closing Date or Option Closing Date, as the
case may be, any of the events described in Section 9(k), 9(o) or 9(p) shall
have occurred or if the Underwriters shall decline to purchase the Stock for any
reason permitted under this Agreement.
(b) Termination of this Agreement pursuant to this Section 12 shall be
without liability of any party to any other party except as provided in Section
11 hereof.
<PAGE>
-39-
13. Increase in Underwriters' Commitments. If any Underwriter shall
-------------------------------------
default in its obligation to take up and pay for the Securities to be purchased
by it hereunder on the Closing Date or any Option Closing Date and if the amount
of Securities that all Underwriters so defaulting shall have agreed but failed
to take up and pay for does not exceed 10% of the total number of Securities
that the Underwriters are obligated to purchase on the Closing Date or Option
Closing Date, as the case may be, the non-defaulting Underwriters shall take up
and pay for (in addition to the Securities they are obligated to purchase
pursuant to Section 1 hereof) the number of Securities agreed to be purchased by
all such defaulting Underwriters on the Closing Date or Option Closing Date, as
the case may be, as hereinafter provided. Such Securities shall be taken up and
paid for by such non-defaulting Underwriter or Underwriters in such amount or
amounts as you may designate with the consent of each Underwriter so designated
or, in the event no such designation is made, such Securities shall be taken up
and paid for by all non-defaulting Underwriters pro rata in proportion to the
--- ----
aggregate amount of Securities set opposite the names of such non-defaulting
Underwriters in Schedule II.
If a new allocation is made in accordance with the foregoing
provision, you shall have the right to postpone the Closing Date or Option
Closing Date, as the case may be, for a period not exceeding five business days
in order that any necessary changes in the Registration Statement and Prospectus
and other documents may be effected.
The term Underwriter as used in this agreement shall refer to and
include any Underwriter substituted under this Section 13 with like effect as if
such substituted Underwriter had originally been named in Schedule II.
If the amount of Securities that all Underwriters so defaulting shall
have agreed but failed to take up and pay for exceeds 10% of the total number of
Securities that the Underwriters are obligated to purchase on the Closing Date
or Option Closing Date, as the case may be, this Agreement shall terminate
without liability on the part of any non-defaulting Underwriter (provided that
if such default occurs with respect to Additional Securities after the Closing
Date, this Agreement will not terminate as to the Firm Securities).
<PAGE>
-40-
14. Information Supplied by the Underwriters and Selling
----------------------------------------------------
Stockholders.
(a) The statements set forth in the last paragraph on the front cover
page of the Prospectus relating to the Securities and the first, second, fourth,
ninth and last paragraphs under the heading "Underwriting" in the Prospectus
relating to the Securities (to the extent such statements relate to the
Underwriters) constitute the only information furnished by the Underwriters to
the Company and the Selling Stockholders for the purposes of Sections 2(b),
10(a) and 10(d) hereof. Each Underwriter confirms that such statements, to the
extent such statements relate to each such Underwriter, are correct in all
material respects.
(b) The number of shares of Common Stock beneficially owned by the
Other Sellers prior to and after the offering of the Securities and footnotes in
Table 1 under the heading "Principal and Selling Stockholders" in the Prospectus
constitute the only information furnished by the Other Sellers to the Company
and the Underwriters for the purposes of Section 10 (c) hereof. Each Other
Seller confirms that such information, to the extent such statements relate to
each Other Seller, is correct in all material respects.
15. Notices. All communications hereunder shall be in writing and,
-------
if sent to the Underwriters, shall be mailed or delivered or telecopied and
confirmed in writing to the Representatives in care of BT Alex. Brown
Incorporated, One Bankers Trust Plaza, 130 Liberty Street, New York, New York
10006, Attention: Corporate Finance Department, and if sent to any Selling
Stockholder, to such Selling Stockholder in care of the Company and if sent to
the Company, shall be mailed, delivered or telegraphed and confirmed in writing
to Coinmach Laundry Corporation, 55 Lumber Road, Roslyn, New York 11576,
Attention: Chief Financial Officer.
16. Successors. This Agreement shall inure to the benefit of and be
----------
binding upon the Underwriters, the Company and the Selling Stockholders and
their respective successors and legal representatives, and nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person any legal or equitable right, remedy or claim under or in respect of this
Agreement, or any provisions herein contained. This Agreement and all
conditions and provisions hereof are intended to be and are for the sole and
exclusive benefit of such persons and for the benefit of no other person except
that (i) the indemnities of the Company and the Selling Stockholders
<PAGE>
-41-
contained in Section 10 of this Agreement shall also be for the benefit of any
person or persons who control the Underwriters within the meaning of Section 15
of the Act or Section 20 of the Exchange Act and (ii) the indemnities of the
Underwriters contained in Section 10 of this Agreement shall also be for the
benefit of the directors of the Company, the Company's officers who have signed
the Registration Statement, the Selling Stockholders and any person or persons
who control the Company or the Selling Stockholders within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act. No purchaser of
Securities from the Underwriters will be deemed a successor because of such
purchase.
17. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
--------------
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAW.
18. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
<PAGE>
-42-
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between the Company,
the Selling Stockholders and the Underwriters.
Very truly yours,
COINMACH LAUNDRY CORPORATION
By: __________________________
Name:
Title:
SELLING STOCKHOLDERS,
by [ ],
as agent and on behalf of
each Selling Stockholder
By: __________________________
Name:
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
BT ALEX. BROWN INCORPORATED
Lehman Brothers Inc.
Raymond James & Associates, Inc.
Wheat, First Securities, Inc.
Jeffries & Company, Inc.
Acting on behalf of themselves and as
the Representatives of the several
Underwriters named in Schedule II hereto.
By BT ALEX. BROWN INCORPORATED
By
------------------------------
Name:
Title:
<PAGE>
SCHEDULE I
COINMACH LAUNDRY CORPORATION
Selling Stockholders
Number of
Number of Firm Additional
Name/Entity Securities Securities
- ----------- ---------- ----------
<PAGE>
SCHEDULE II
Number of
Shares to
Underwriter Be Purchased
----------- ------------
BT Alex. Brown Incorporated ......................
Lehman Brothers Inc. .............................
Raymond James & Associates, Inc. .................
Wheat, First Securities, Inc. ....................
Jeffries & Company Inc. ..........................
_________
Total 3,750,000
---------
<PAGE>
EXHIBIT 5.1
LETTERHEAD OF ANDERSEN KILL & OLICK
FORM OF OPINION
(212) 278-1258
November __, 1997
Coinmach Laundry Corporation
55 Lumber Road
Roslyn, New York 11576
Ladies and Gentlemen:
We have acted as special counsel to Coinmach Laundry
Corporation, a Delaware corporation ("Coinmach"), in connection with the
--------
preparation of a Registration Statement on Form S-3 (No. 333-37881) which was
filed by Coinmach with the Securities and Exchange Commission on October 14,
1997 (as such Registration Statement may be amended from time to time, the
"Registration Statement"). The Registration Statement relates to the
----------------------
registration by Coinmach under the Securities Act of 1933, as amended, of up to
3,750,000 shares of the Company's common stock, par value $.01 per share (the
"Common Stock"), and the sale of up to an additional 562,500 shares of Common
------------
Stock (the "Over-Allotment Common Stock", and together with the Common Stock,
---------------------------
the "Shares") upon the exercise of an option to purchase such Over-Allotment
Common Stock granted by certain stockholders of the Company to the Underwriters
(as defined).
In rendering the opinions expressed below, we have been furnished
with and, without independent investigation but with your consent, have relied
upon (i) certificates of officers, directors and representatives of Coinmach
with respect to certain factual matters, and (ii) certificates, documents,
instruments and assurances of public officials as we have deemed appropriate or
advisable. We have also examined originals or copies identified to our
satisfaction as being true copies, of the documents listed below, and we have
made no independent investigation of any factual information contained therein
or contained in any documents incorporated by reference or otherwise referred to
therein (collectively, the "Documents"):
A. Registration Statement (together with the form of prospectus forming
a part thereof);
B. Form of Underwriting Agreement (the "Underwriting Agreement") to be
----------------------
entered into among Coinmach, BT Alex. Brown Incorporated, Lehman Brothers, Inc.,
Raymond James & Associates, Inc., Wheat First Butcher Singer and Jefferies &
Company, Inc. (collectively, the "Underwriters");
------------
C. Third Amended and Restated Certificate of Incorporation of Coinmach;
D. Third Amended and Restated Bylaws of Coinmach; and
<PAGE>
Coinmach Laundry Corporation
November __, 1997
Page 2
E. Action by Written Consent in Lieu of Meeting of the Board of
Directors of Coinmach relating to the transactions contemplated by the
Registration Statement.
In addition, for the purposes of the opinions rendered herein, we have
assumed with your permission and without independent verification:
(a) that all signatures of all persons signing all Documents in
connection with which the opinions are rendered are genuine and authorized;
(b) that all Documents submitted to us as true copies, whether certified
or not, conform to authentic original Documents;
(c) that all Documents submitted to us as originals or duplicate
originals are authentic original documents;
(d) the existence, good standing, capacity and, where applicable,
qualification to do business, of all of the parties to the Documents;
(e) the corporate power and authority of each of the parties (other than
Coinmach) to the Documents to enter into and perform their respective
obligations under each of the Documents;
(f) the due authorization, execution and delivery by all of the parties
(other than Coinmach) to each of the Documents;
(g) that each of the Documents constitutes the legal, valid and binding
obligations of all of the parties thereto (other than Coinmach), enforceable
against each of such parties in accordance with their respective terms; and
(h) that the Documents accurately describe and contain the
understandings of the parties, and that there are no oral or written statements
or agreements that modify, amend or vary, or purport to modify, amend or vary,
any of the terms of the Documents.
In rendering the opinions expressed below, we have made no independent
investigation with respect to any matter in connection with which we did not
represent Coinmach. To render these opinions, we have relied upon the actual
knowledge of the attorneys in our firm who have devoted substantial attention to
the transactions contemplated by the Registration Statement, and not to the
knowledge of the firm generally.
Based upon the foregoing, we are of the opinion, subject to the
limitations, qualifications, assumptions and exceptions discussed below, that as
of the date hereof:
(1) Coinmach has been duly organized and is validly existing and in good
standing under the laws of the State of Delaware.
<PAGE>
Coinmach Laundry Corporation
November __, 1997
Page 3
(2) Upon delivery of the Shares in the manner contemplated by the
Underwriting Agreement, such Shares will be validly issued, fully paid and
non-assessable.
Our opinions set forth above are subject to the following additional
qualifications:
(a) Our opinions are limited to the specific issues addressed herein and
are limited in all respects to the laws as they exist on the date hereof and the
facts as stated herein and purport to express what a court would conclude based
on such facts. By rendering our opinions, we do not undertake to advise you of
any changes in such laws or facts which may occur after the date hereof.
(b) We express no opinion as to, or the effect or applicability of, any
laws other than the laws of the State of New York, the Federal laws of the
United States of America and the General Corporation Law of the State of
Delaware. We assume no responsibility with respect to the application to the
subject transactions, or the effect thereon, of the laws of any other
jurisdiction.
We hereby consent to the reference of our name in the Registration
Statement and to the filing of this opinion as Exhibit 5.1 to the Registration
Statement. By giving this consent, we do not admit that we are in the category
of persons whose consent is required under Section 7 of the Securities Act of
1933, as amended, or the rules and regulations of the Securities and Exchange
Commission promulgated thereunder.
This opinion is being rendered only to you for your exclusive benefit
and is intended to be relied upon by you in connection with the transactions
contemplated by the Registration Statement. This opinion may not be used for any
other purpose, or relied on by any other person, firm or entity for any purpose,
without our prior written consent.
Very truly yours,
ANDERSON KILL & OLICK, P.C
By:
-----------------------------
Ronald S. Brody, Esq., a
Member of the Firm
<PAGE>
EXHIBIT 10.4
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
-----------------------------------------
THIS AGREEMENT (the "Agreement") is made as of September 5, 1996,
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between COINMACH CORPORATION, a Delaware corporation (together with its
successors and assigns, the "Company"), and JOHN E. DENSON ("Executive").
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Executive entered into an Employment Agreement, dated as of August 4,
1995, with Solon Automated Services, Inc. The Company and Executive desire to
terminate such Employment Agreement and entered into this Agreement.
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In consideration of the mutual promises and agreements contained in
this Agreement, the receipt and adequacy of which is hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. Employment.
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(a) Term. The Company agrees to employ Executive and Executive
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accepts such employment, for the period from the date hereof until the first
anniversary of the date hereof, unless such employment is otherwise terminated
(i) at the will of Executive, upon no less than 30 days notice to the Company;
or (ii) at the will of the Chief Executive Officer (the "CEO") or in the discre-
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tion of the Company's Board of Directors (the "Board"), upon no less than 30
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days notice to Executive. At the end of such period, this Agreement shall
automatically renew for additional successive one (1) year terms, on
substantially the same terms and conditions as contained herein, unless the
Company provides Executive with written notice of its intent to terminate this
Agreement at the will of the CEO or in the discretion of the Board at least 90
days prior to termination of such one year period. The period from the
commencement of the term of this Agreement to the date of its termination, after
giving effect to any renewal, shall be considered to be the "Employment Period"
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hereunder.
(b) Duties. During the Employment Period, Executive shall serve as a
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Senior Vice President of the Company and shall have the normal duties,
responsibilities and authority assigned to him by the Board or CEO, in their
reasonable discretion, and the Company's by-laws. Executive shall devote his
full time and effort, energies and abilities to the proper and efficient
performance of such duties and responsibilities.
(c) Salary, Bonus and Benefits.
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(i) Salary. During the Employment Period, the Company will pay
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Executive a base salary (the "Annual Base Salary") as the Board may designate
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from time to time, for the period beginning as of the date hereof until December
31, 1996, at the
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rate of $125,000 per annum, and from January 1, 1997, until the termination of
the Employment Period, at the rate of $110,000 per annum, which amount shall be
reviewed each December by the Board in its sole discretion. Executive's Annual
Base Salary for any partial year will be prorated based upon the number of days
elapsed in such year.
(ii) Bonus. The Executive will be entitled to receive annual bonus
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compensation at the end of each calendar year, which bonus compensation shall be
based upon Executive's performance during each such calendar year and shall be
granted by the CEO or Board in their reasonable discretion.
(iii) Benefits. During the Employment Period, Executive will be
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entitled to benefits, including the use of an automobile, in each case
consistent with past practices as well as to such other benefits approved by the
Board and made available to the Company's senior management, in each case, as
such benefits may be adjusted by the Board from time to time in its sole
discretion.
(iv) Expenses. The Company shall reimburse Executive for all
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reasonable expenses actually incurred by Executive, and accounted for and
evidenced in accordance with the standard policies, practices or procedures
regarding expense reimbursement that the Company may establish from time to
time. Executive shall be reimbursed for all reasonable expenses relating to any
relocation of Executive and his family pursuant to the Company's relocation
policy as in effect on the date of such relocation.
(v) Deductions and Withholding. All amounts payable or which become
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payable hereunder shall be subject to any deductions authorized by Executive,
any set-off or reimbursement deemed appropriate by the Company and permitted by
law, and all deductions and withholding authorized by law.
(d) Severance. If this Agreement is terminated by the Company, for
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any reason other than for Cause, Executive shall be entitled to receive
severance pay in an amount equal to the greater of $110,000 or his Annual Base
Salary then in effect, in either case payable in equal bi-weekly installments
over one year. If Executive is terminated for Cause, Executive shall not be
entitled to any severance pay under this Agreement. Each such severance payment
payable hereunder shall commence upon the execution by the Company and Executive
of a mutual release of the parties' respective rights, duties, privileges and
obligations hereunder other than those rights, duties, privileges and obliga-
tions which are contemplated to continue beyond the Employment Period, which
release the parties hereby agree to use their reasonable good faith efforts to
secure.
(e) Effect of Termination on Bonuses and Benefits. All of Executive's
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rights to fringe benefits and bonuses hereunder (if any) which accrue after the
termination of the Employment
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Period shall, except as otherwise provided by law, cease upon such termination
and except with respect to any bonus or other compensation earned but unpaid at
the time of termination; provided, however, that Executive shall continue to be
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entitled to medical benefits consistent with those provided to Executive prior
to termination during the period that severance payments are being made to
Executive pursuant to Section 1(d) herein. The Company may offset the amounts
of any outstanding loans, advances or other disbursements made to or on behalf
of the Executive by the Company against any amounts the Company owes Executive
hereunder for severance pay, benefits, bonuses or other items.
2. Confidential Information. Executive acknowledges that the
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information, observations and data obtained by him during the course of his
performance under this Agreement concerning the business and affairs of the
Company, its Subsidiaries and its Affiliates will be the property of such
entities. Therefore, Executive agrees that he will not disclose to any
unauthorized person or use for the account of any person other than the Company,
its Subsidiaries and Affiliates any such information, observations or data
including, without limitation, any business secrets or methods, policies,
manuals or instructions, reports, location lists, landlord lists, lists of names
of customers or suppliers, personnel information, pricing information or any
other confidential or proprietary information of the Company, its Subsidiaries
and its Affiliates (whether or not patented, copyrighted or otherwise protected
under applicable law) (collectively, "Confidential Information") without the
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Board's or CEO's prior written consent, unless and to the extent that the
aforementioned matters become generally known to and available for use by the
public other than as a result of Executive's acts or omissions to act and except
as required by law or legal process. Executive agrees to deliver to the
Company, at the termination of the Employment Period, or at any other time the
Company may request, all Confidential Information, memoranda, notes, plans,
records, reports and other documents (and copies thereof) relating to the
business of the Company, its Subsidiaries and Affiliates, and all location
lists, landlord lists, acquisition prospects, lists and contact information
which he may then possess or have under his control.
3. Noncompetition and Nonsolicitation
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(a) Noncompetition. Executive acknowledges that in the course of his
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employment with the Company he will become familiar with the Company's and its
Subsidiaries' and Affiliates' (collectively, the "Coinmach Group") trade
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secrets and with other confidential information concerning the Coinmach Group,
and that his services will be of special, unique and extraordinary value to the
Coinmach Group. Therefore, Executive agrees that, during the Employment Period
and for one year thereafter (the "Noncompete Period"), he shall not directly or
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indirectly own, manage, control, participate in, consult with, assist, render
services for, or in any manner engage in any business competing with, or
otherwise substantially similar to, the businesses of the Coinmach Group as
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such businesses exist, or are in process on the date of the termination of
Executive's employment, (i) within the geographical area included in the 50-mile
radius around each location of a customer of the Coinmach Group or any similar
business which, to the knowledge of Executive, a member of the Coinmach Group is
actively considering acquiring at the time of Executive's termination or has
actively considered acquiring in the last twelve months or (ii) within any State
in the United States or any Province in Canada in which Executive has spent a
significant amount of time on behalf of the Coinmach Group at any time during
the twelve-month period prior to the date of Executive's termination. The
restrictions of this Section 3(a) shall not apply to Executive's ownership
interests in not more than three laundromats at any one time.
(b) Nonsolicitation. During the Noncompete Period, Executive shall
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not directly or indirectly through another entity (i) induce or attempt to
induce any employee of the Coinmach Group to leave the employ of the Coinmach
Group, or in any way interfere with the relationship between the Coinmach Group
and any employee thereof, (ii) offer employment to or hire any person who was an
employee of the Coinmach Group at any time during the one-year period prior to
the termination of the Employment Period, or (iii) induce or attempt to induce
any customer, supplier, licensee or other business relation of the Coinmach
Group to cease doing business with the Coinmach Group, or in any way interfere
with the relationship between any such customer, supplier, licensee or business
relation and the Coinmach Group.
(c) Enforcement. If, at the time of enforcement of Sections 2 or 3 of
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this Agreement, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum duration, scope and geographical area reasonable under such
circumstances shall be substituted for the stated period, scope and area and
that the court shall be allowed to reduce the restrictions contained herein to
cover the maximum duration, scope and area permitted by law.
(d) Submission to Jurisdiction. Each of the parties (i) submits to
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the jurisdiction of any state or federal court sitting in New York, New York in
any action or proceeding arising out of or relating to this Agreement, (ii)
agrees that all claims in respect of such action or proceeding may be heard or
determined in any such court, and (iii) agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court.
Each of the parties waives any defense of inconvenient forum to the maintenance
of any action or proceeding so brought and waives any bond, surety or other
security that might be required of any other party with respect thereto. Each
party agrees that a final judgment in any action or proceeding so brought shall
be conclusive and may be enforced by suit on the judgment or in any other manner
provided by law.
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4. Definitions.
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"Affiliate" of any particular person or entity means any other person
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or entity controlling, controlled by or under common control with such
particular person or entity.
"Cause" means (i) a material breach of any agreement with the Company,
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its subsidiaries, affiliates or corporate parent or its stockholders by
Executive (after notice and reasonable opportunity to cure), (ii) a breach of
Executive's duty of loyalty to the Company or any of its subsidiaries,
affiliates or corporate parent or any act of dishonesty, gross negligence,
willful misconduct or fraud with respect to the Company or any of its
subsidiaries, affiliates or corporate parent or any of their respective stock
holders, customers or suppliers, (iii) the commission by Executive of a felony,
a crime involving moral turpitude or other act or omission tending to cause harm
to the standing and reputation of, or otherwise bring public disgrace or
disrepute to, the Company or any of its subsidiaries, affiliates or corporate
parent, (iv) Executive's continued failure or refusal to perform any material
duty to the Company or any of its subsidiaries, affiliates or corporate parent
which is normally attached to his position (after notice and reasonable
opportunity to cure), or (v) Executive's gross negligence or willful misconduct
in performing those duties which are normally attached to his position (after
notice and reasonable opportunity to cure). For purposes of this Agreement,
"Executive's duty of loyalty to the Company or any of its subsidiaries,
affiliates or corporate parent" shall include Executive's fiduciary obligation
to place the interests of the Company and its subsidiaries, affiliates or
corporate parent ahead of his personal interests and thereby not knowingly
profit personally at the expense of the Company or any of its subsidiaries,
affiliates or corporate parent, and shall also include specifically the affirma-
tive obligation to disclose promptly to the Board any known conflicts of
interest Executive may have with respect to the Company and its subsidiaries,
affiliates or corporate parent, and the negative obligations not to usurp
corporate opportunities of the Company or any of its subsidiaries, affiliates or
corporate parent, not to engage in any "conflict-of-interest" transactions with
the Company or its subsidiaries, affiliates or corporate parent (without the
approval of the Board), and not to compete directly with the Company or its
subsidiaries, affiliates or corporate parent (without the approval of the
Board).
"Subsidiary" means, with respect to any person, any corporation,
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partnership, association or other business entity of which (i) if a corporation,
a majority of the total voting power of shares of stock entitled (without regard
to the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by that person or one or more of the other Subsidiaries of that
person or a combination thereof, or (ii) if a partnership, association or other
business entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or
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controlled, directly or indirectly, by any person or one or more Subsidiaries of
that person or a combination thereof. For purposes hereof, a person or persons
shall be deemed to have a majority ownership interest in a partnership,
association or other business entity if such person or persons shall be
allocated a majority of partnership, association or other business entity gains
or losses or shall be or control the managing director or general partner of
such partnership, association or other business entity.
5. Notices. Any notice provided for in this Agreement must be in
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writing and must be either personally delivered, mailed by first class mail
(postage prepaid and return receipt requested) or sent by reputable overnight
courier service (charges prepaid) to each person at the address set forth below:
If to the Company:
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Coinmach Corporation
55 Lumber Road
Roslyn, New York 11576
Attention: Chief Executive Officer
With a copy (which will constitute notice to
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the Company) to:
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Anderson Kill & Olick, P.C.
1251 Avenue of the Americas
New York, New York 10020
Attention: Ronald S. Brody, Esq.
If to Executive:
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John E. Denson
c/o Coinmach Corporation
55 Lumber Road
Roslyn, New York 11576
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S. mail.
6. General Provisions.
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(a) Severability. Whenever possible, each provision of this Agreement
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will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such
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invalid, illegal or unenforceable provision had never been contained herein.
(b) Complete Agreement. This Agreement, those documents expressly
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referred to herein and other documents of even date herewith (i) embody the
complete agreement and understanding among the parties, (ii) supersede and
preempt any prior summaries of terms and conditions, understandings, agreements
or representations by or among the parties, written or oral, which may have
related to the subject matter hereof in any way, and (iii) terminate and cancel
any employment, severance, stock option, bonus or other employee benefit, loan,
tax or other indemnity agreement (except for that certain Agreement of
Resignation and Release of Trustee, dated October 1, 1994) among Executive and
his Affiliates, on one hand, and the Company and its Affiliates, on the other
hand.
(c) Counterparts. This Agreement may be executed in separate
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counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
(d) Successors and Assigns. Except as otherwise provided herein, this
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Agreement shall bind Executive and the Company and their respective successors
and permitted assigns and inure to the benefit of and be enforceable by
Executive and the Company and their respective successors and permitted assigns.
This Agreement will not be assignable by Executive, but will be freely
assignable by the Company and will inure to the benefit of its successors and
assigns.
(e) CHOICE OF LAW. THE CORPORATE LAW OF THE STATE OF DELAWARE WILL
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GOVERN ALL QUESTIONS CONCERNING THE RELATIVE RIGHTS OF THE COMPANY AND ITS
STOCKHOLDERS. ALL OTHER QUESTIONS CONCERN ING THE CONSTRUCTION, VALIDITY AND
INTERPRETATION OF THIS AGREEMENT AND THE EXHIBITS HERETO WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER
OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE
APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.
(f) Remedies. Each of the parties to this Agreement will be entitled
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to enforce its rights under this Agreement, specifically, to recover damages and
costs (including attorney's fees) caused by any breach of any provision of this
Agreement and to exercise all other rights existing in its favor. The parties
hereto agree and acknowledge that money damages may not be an adequate remedy
for any breach of the provisions of this Agreement, and, except as otherwise
provided in Section 3(d), that any party may in its sole discretion apply to any
court of law or equity of competent jurisdiction (without posting any bond or
deposit) for specific performance and/or other injunctive relief in order to
enforce or prevent any violations of the provisions of this Agreement.
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(g) Amendment and Waiver. Except as otherwise expressly provided
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herein, the provisions of this Agreement may be amended or modified only by
written agreement of the Company and Executive. No other course of dealing
between the parties or third-party beneficiaries hereof or any delay in
exercising any rights hereunder shall operate as a waiver of any rights of any
such holders.
(h) Survival of Representations and Warranties. All representations
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and warranties contained herein or made in writing by any party in connection
herewith shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, regardless of any
investigation made by Executive or on his behalf or by the Company or on its
behalf.
(i) Business Days. If any time period for giving notice or taking
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action hereunder expires on a day which is a Saturday, Sunday or holiday in the
State of New York, the time period shall be automatically extended to the
business day immediately following such Saturday, Sunday or holiday.
(j) Descriptive Headings; Interpretation. The descriptive headings
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of this Agreement are inserted for convenience only and do not constitute a
Section of this Agreement. The use of the word "including" in this Agreement
shall be by way of example rather than by limitation.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
COINMACH CORPORATION
/s/ ROBERT M. DOYLE
By: __________________________
Name: Robert M. Doyle
Title: Senior Vice President
EXECUTIVE
/s/ JOHN E. DENSON
____________________________
John E. Denson
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EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
Amendment No. 2 to the Registration Statement (Form S-3 No. 333-37881) and
related Prospectus of Coinmach Laundry Corporation for the registration of
3,750,000 shares of its common stock and to the incorporation by reference
therein of our report dated May 13, 1997 (except for Note 7b., as to which the
date is June 2, 1997), with respect to the consolidated financial statements
of Coinmach Laundry Corporation included in its Amendment No. 2 on Form 10-K/A
to its Annual Report on Form 10-K for the year ended March 28, 1997, filed
with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Melville, New York
November 25, 1997
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
Amendment No. 2 to the Registration Statement (Form S-3 No. 333-37881) and
related Prospectus of Coinmach Laundry Corporation for the registration of
3,750,000 shares of its common stock and to the incorporation by reference
therein of our report dated March 3, 1997, with respect to the combined
financial statements of Kwik Wash Laundries, Inc. and KWL, Inc., included in
the Company's Amendment No. 3 on Form 8-K/A to its Current Report on Form 8-K
dated January 8, 1997, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Dallas, Texas
November 25, 1997
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
Amendment No. 2 to the Registration Statement (Form S-3 No. 333-37881) and
related Prospectus of Coinmach Laundry Corporation for the registration of
3,750,000 shares of its common stock and to the incorporation by reference
therein of our report dated March 20, 1996, with respect to the combined and
consolidated financial statements of Coinmach Corporation and Subsidiaries
(formerly Solon Automated Services, Inc., which was combined with The Coinmach
Corporation and Subsidiaries, a company under common control, beginning April
5, 1995) included in Amendment No. 2 on Form 10-K/A to its Annual Report on
Form 10-K for Coinmach Laundry Corporation for the year ended March 28, 1997,
filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Philadelphia, Pennsylvania
November 25, 1997
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EXHIBIT 23.4
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our report dated December 19, 1994 and to all references to our
firm included in or made a part of this Amendment No. 2 to Form S-3
Registration Statement (File No. 333-37881).
Arthur Andersen LLP
Philadelphia, PA
November 25, 1997
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EXHIBIT 23.5
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Coinmach Laundry Corporation:
We consent to the use of our reports dated April 28, 1995, with respect to
the consolidated statements of operations, stockholders' deficiency and cash
flows of CIC I Acquisition Corp. and subsidiaries for the year ended December
31, 1994 and to the consolidated statements of operations and accumulated
deficit and cash flows of CIC I Acquisition Corp. and subsidiaries for the
month ended January 31, 1995, which reports are incorporated herein by
reference. We also consent to the use of our report dated July 7, 1995, with
respect to the consolidated statements of operations and accumulated deficit
and cash flows of The Coinmach Corporation and subsidiaries for the two months
ended March 31, 1995, which report is incorporated herein by reference. Such
reports appear in Amendment No. 1 to Form 10-K/A of Coinmach Laundry
Corporation for the fiscal year ended March 28, 1997. In addition, we consent
to the reference to our firm under the heading "Experts" in the prospectus.
KPMG Peat Marwick LLP
New York, New York
November 25, 1997
