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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 17, 1998
REGISTRATION STATEMENT NO. 333-49795
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
POST-EFFECTIVE AMENDMENT NO. 3
ON
FORM S-3*
TO THE
REGISTRATION STATEMENT
ORIGINALLY FILED ON FORM S-1
UNDER
THE SECURITIES ACT OF 1933
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MAC-GRAY CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 04-3361982
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
22 WATER STREET
CAMBRIDGE, MASSACHUSETTS 02141
(617) 492-4040
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)
STEWART GRAY MACDONALD, JR.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
MAC-GRAY CORPORATION
22 WATER STREET
CAMBRIDGE, MASSACHUSETTS 02141
(617) 492-4040
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
----------------
COPIES TO:
STUART M. CABLE, P.C.
GOODWIN, PROCTER & HOAR LLP
EXCHANGE PLACE
BOSTON, MASSACHUSETTS 02109-2881
(617) 570-1000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after this Post-Effective Amendment 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. [X]
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. [_]
This Post-Effective Amendment to the Registration Statement shall become
effective upon order of the Commission pursuant to Section 8(c) of the
Securities Act of 1933, as amended.
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* Filed as a Post-Effective Amendment on Form S-3 to such Form S-1
Registration Statement pursuant to the provisions of Rule 401(e) and the
procedure described therein.
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PROSPECTUS
MAC-GRAY CORPORATION
250,000 SHARES OF COMMON STOCK
This Prospectus relates to the sale of 250,000 shares (the "Shares") of common
stock, par value $.01 per share (the "Mac-Gray Common Stock"), of Mac-Gray
Corporation, a Delaware corporation ("Mac-Gray"), by certain former
shareholders (the "Selling Securityholders") of Copico, Inc., a Massachusetts
corporation ("Copico"). The Selling Securityholders received the Shares in
connection with Mac-Gray's acquisition of Copico, which was consummated on
April 23, 1998 pursuant to the Stock Purchase Agreement, dated as of March 31,
1998 (the "Stock Purchase Agreement") by and among Mac-Gray Services, Inc., a
Delaware corporation and a wholly-owned subsidiary of Mac-Gray ("Mac-Gray
Services"), Copico and the Selling Securityholders, pursuant to which Mac-Gray
Services acquired all of the issued and outstanding capital stock of Copico.
The Selling Securityholders, directly or through agents, dealers or
underwriters designated from time to time, may sell all or a portion of the
Shares offered hereby from time to time on terms to be determined at the time
of sale. To the extent required by law, the specific Shares to be sold, the
names of the Selling Securityholders, the respective purchase prices and public
offering prices, the names of any such agent, dealer or underwriter, and any
applicable commissions or discounts with respect to a particular offer will be
set forth in an accompanying Prospectus Supplement. See "Plan of Distribution."
Each Selling Securityholder reserves the sole right to accept and, together
with such Selling Securityholder's agents, dealers or underwriters from time to
time, to reject, in whole or in part, any proposed purchase of Shares to be
made directly or through agents, dealers or underwriters.
The aggregate proceeds to the Selling Securityholders from the sale of the
Shares offered hereby (the "Offering") will be the purchase price of the Shares
sold less the aggregate agents' commissions and underwriters' discounts, if
any, and other expenses of issuance and distribution not borne by Mac-Gray.
Pursuant to an agreement with the Selling Securityholders, Mac-Gray has agreed
to pay the costs, fees and expenses incurred in connection with the
registration of the Shares; provided, however, that the Selling Securityholders
will be responsible for underwriting commissions or discounts, transfer taxes,
if any, attributable to the sale of the Shares, any fees or expenses of any
counsel, accountants or other persons retained or employed by the Selling
Securityholders and out-of-pocket expenses of the Selling Securityholders and
their agents, including, without limitation, any travel costs. See "The Selling
Securityholders and the Offered Shares--Registration Rights Agreement."
Mac-Gray will not receive any proceeds from the sale of the Shares offered
hereby by the Selling Securityholders.
The Selling Securityholders and any brokers, dealers or agents that participate
with the Selling Securityholders in the distribution of the Shares may be
deemed to be "underwriters" within the meaning of the Securities Act of 1933,
as amended (the "Securities Act"), and any profit on the sale of the Shares by
them and any discounts, concessions or commissions received by such
underwriters, brokers, dealers or agents may be deemed to be underwriting
discounts and commissions under the Securities Act. See "Plan of Distribution."
The Mac-Gray Common Stock is listed on the New York Stock Exchange (the "NYSE")
under the symbol "TUC." On November 13, 1998, the last reported sales price for
the Mac-Gray Common Stock on the NYSE was $11.625 per share.
SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR A DISCUSSION OF CERTAIN INFORMATION
THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE SHARES
OFFERED HEREBY.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS
OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE HEREIN AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED. THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN
WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR
TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY DISTRIBUTION OF THE SHARES OF
MAC-GRAY COMMON STOCK HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE AFFAIRS OF MAC-GRAY SINCE
THE DATE HEREOF.
The date of this Prospectus is November 17, 1998.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
AVAILABLE INFORMATION..................................................... 3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................... 4
FORWARD-LOOKING STATEMENTS................................................ 5
RISK FACTORS.............................................................. 5
Implementation of Acquisition Strategy; Integration of Acquired
Businesses............................................................. 5
Competition............................................................. 6
Dependence Upon Senior Executives....................................... 6
Significant Capital Expenditures; Additional Financings................. 6
Uncertainty of Market Acceptance of New Products and Services........... 7
Dependence Upon Lease Renewals.......................................... 7
Dependence Upon Certain Suppliers....................................... 7
Restrictions Imposed by Our Indebtedness................................ 8
Product Liability; Limited Insurance Coverage........................... 8
Intellectual Property Rights............................................ 8
Voting Control by Principal Stockholders, Directors and Executive
Officers............................................................... 8
Common Stock Contingent Repurchase Obligation........................... 9
Anti-takeover Effect of Our Charter and By-laws and Delaware Law........ 9
Potential Volatility of Stock Price..................................... 10
Absence of Dividends.................................................... 10
Material Benefits to Certain Insiders................................... 10
BUSINESS.................................................................. 11
General................................................................. 11
Recent Developments..................................................... 11
USE OF PROCEEDS........................................................... 11
DESCRIPTION OF CAPITAL STOCK.............................................. 11
Authorized and Outstanding Capital Stock................................ 11
Certain Provisions of Charter and By-laws............................... 12
Statutory Business Combination Provision................................ 14
Transfer Agent and Registrar............................................ 15
THE SELLING SECURITYHOLDERS AND THE OFFERED SHARES........................ 16
Background.............................................................. 16
Registration Rights Agreement........................................... 16
PLAN OF DISTRIBUTION...................................................... 17
LEGAL MATTERS............................................................. 18
EXPERTS................................................................... 18
</TABLE>
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AVAILABLE INFORMATION
Mac-Gray has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the Securities. This
Prospectus, which constitutes part of the Registration Statement, omits certain
of the information contained in the Registration Statement and the exhibits
thereto on file with the Commission pursuant to the Securities Act and the
rules and regulations of the Commission thereunder. The Registration Statement,
including exhibits thereto, 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 the Commission's Regional Offices at 7 World
Trade Center, 13th Floor, New York, New York 10048, and Northwestern Atrium
Center, 500 W. Madison Street, Suite 1400, Chicago, Illinois 60661-2511, and
copies may be obtained at the prescribed rates from the Public Reference
Section of the Commission at its principal office in Washington, D.C. In
addition, Mac-Gray is required to file electronic versions of these documents
with the Commission through the Commission's Electronic Data Gathering,
Analysis and Retrieval (EDGAR) system, and such electronic versions are
available to the public at the Commission's World-Wide Web Site,
http://www.sec.gov. Statements contained in this Prospectus as to the contents
of any contract or other document referred to 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.
Mac-Gray 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 concerning
Mac-Gray can be inspected and copied at the locations described above. Copies
of such materials can be obtained via EDGAR or by mail from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, at prescribed rates. In addition, reports, proxy
statements and other information concerning Mac-Gray may be inspected at the
offices of the NYSE, 20 Broad Street, New York, New York 10005, on which shares
of Mac-Gray Common Stock are traded under the symbol "TUC."
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by Mac-Gray with the Commission
pursuant to the Exchange Act are incorporated by reference in this Prospectus:
(i) Annual Report on Form 10-K for the fiscal year ended December 31, 1997,
except for Item 8 Financial Statements and Schedules, which were restated as a
result of the pooling-of-interests with Intirion Corporation which occurred on
March 12, 1998, (ii) Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 1998, (iii) Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1998, (iv) Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 1998, (v) Current Report on Form 8-K filed March 5, 1998,
(vi) Current Report on Form 8-K filed March 17, 1998, (vii) Current Report on
Form 8-K filed March 24, 1998, (viii) Current Report on Form 8-K filed April 3,
1998, (ix) Current Report on Form 8-K filed May 8, 1998, as amended by Form 8-
K/A filed May 11, 1998 and Form 8-K/A filed July 7, 1998, (x) Current Report on
Form 8-K filed June 15, 1998, (xi) Current Report on Form 8-K filed August 28,
1998, (xii) Current Report on Form 8-K filed November 13, 1998, (xiii) Current
Report on Form 8-K filed November 17, 1998 which contains restated financial
statements and (xiv) the description of the Common Stock of Mac-Gray contained
in Mac-Gray's registration statement on Form 8-A dated October 14, 1997.
All documents filed by Mac-Gray 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 of all of the Shares 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. Mac-Gray will provide, without charge, to
each person, including any beneficial owner, to whom a copy of this Prospectus
is delivered, at the request of such person, a copy of any or all of the
documents incorporated herein by reference (other than exhibits thereto, unless
such exhibits are specifically incorporated by reference into such documents).
Requests for such copies should be directed to: Mac-Gray Corporation, 22 Water
Street, Cambridge, Massachusetts, Attention: Chief Financial Officer (Tel. #
(617) 492-4040). In addition, the public may read and copy any materials filed
by the Company with the Commission at the Commission's Public Reference Room at
450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain
information on the operation of the Public Reference Room by calling the
Commission at 1-800-SEC-0330.
Any statement contained herein or in a document incorporated or deemed to be
incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
(or in an applicable Prospectus Supplement) or in any subsequently filed
document that is incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed to
constitute a part of this Prospectus or any Prospectus Supplement, except as so
modified or superseded.
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FORWARD-LOOKING STATEMENTS
Certain statements incorporated by reference or made in this Prospectus under
the captions "Risk Factors" and "Business," and elsewhere in this Prospectus or
in documents incorporated by reference are "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Act of 1934. When we use the words "anticipate," "assume,"
"believe," "estimate," "expect," "intend," and other similar expressions in
this Prospectus, they are generally intended to identify forward-looking
statements. You should not rely on forward-looking statements since they
involve known and unknown risks, uncertainties and other factors which are, in
some cases, beyond our control and which could materially affect our actual
results, performance or achievements. Factors that could cause our actual
results, performance or achievements to differ materially from those expressed
or implied by such forward-looking statements include, but are not limited to,
the factors described under "Risk Factors" in this Prospectus. Prospective
purchasers of the Shares offered hereby should carefully review all of these
factors, which may not be an exhaustive list of such factors.
RISK FACTORS
A purchase of the Shares of Common Stock involves various risks. Prospective
purchasers should consider the following risk factors:
IMPLEMENTATION OF ACQUISITION STRATEGY; INTEGRATION OF ACQUIRED BUSINESSES
Our growth strategy depends, in part, on our ability to acquire and
successfully integrate and operate additional businesses. In order to pursue
this strategy, we continually evaluate potential acquisition candidates that
provide services to the multi-housing market, including laundry route
businesses as well as businesses that could provide ancillary services to our
customer base and target markets. In connection with such evaluations, we may,
from time to time, enter into non-binding letters of intent with, and conduct
due diligence with respect to, potential acquisition candidates. The success of
any completed acquisition will depend in large measure on our ability to
integrate the assets, maintain and improve the results of operations and
increase the revenue of the acquired business. The process of integrating
acquired businesses, and in particular, geographically diverse operations or
operations outside our core business, with our business may involve unforeseen
difficulties and may require a disproportionate amount of our financial and
other resources, including management time. While we generally believe that our
management team and business structure enable us to operate a significantly
larger and more diverse operation, there is no assurance that we will be able
to successfully integrate acquired businesses into our existing operations and
to implement effective cost savings programs.
We have experienced increased competition in our acquisition activities.
Growing competition may increase purchase prices for future acquisitions to
levels that make the acquisitions less attractive or uneconomical. In addition,
future acquisitions accounted for under the purchase method of accounting may
result in the recording of goodwill, the amortization of which may reduce our
net income. If further acquisitions are made, we expect to continue to use cash
and securities, including shares of Mac-Gray Common Stock, as consideration for
such acquisitions. Use of Mac-Gray
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Common Stock as acquisition consideration may result in dilution to our
stockholders. In the event that Mac-Gray Common Stock does not maintain a
sufficient valuation or if potential acquisition candidates are unwilling to
accept shares of Mac-Gray Common Stock as consideration, we will be required to
use more cash resources or other consideration to continue our acquisition
program. In addition, if we are unable to generate sufficient cash for further
acquisitions from existing operations, our acquisition program could be
adversely affected unless we are able to obtain additional capital through
external financings or can borrow sufficient amounts. Any such debt financing
will result in additional leverage and any further equity financing may result
in dilution to our stockholders. There can be no assurance that suitable
additional acquisitions can be identified, financed, consummated on acceptable
terms and integrated into our operations or that future acquisitions will be
financially and operationally successful. Failure to identify, finance and
consummate acquisitions on acceptable terms, or to integrate acquired
operations into our operations could have a material adverse effect on our
business, results of operations, financial condition and prospects.
COMPETITION
The card and coin-operated laundry services industry is highly competitive. In
most of our markets, laundry services may be available through property owners
and managers that operate their own laundry rooms, private, family-owned
businesses or large regional and national laundry services companies. In the
competition to supply services to property owners, local private businesses
tend to have long-standing relationships with customers in their specific
geographic market, and the two larger companies participating in the industry
consolidation, each of which has significantly larger installed machine bases
than we do, tend to have significant operational and managerial resources to
devote to expansion and to capture additional market share. Accordingly, there
can be no assurance that we will be able to compete effectively in any specific
geographic location in the business of supplying laundry equipment services to
property owners and managers or in the acquisition of other businesses.
DEPENDENCE UPON SENIOR EXECUTIVES
We are currently dependent to a significant degree upon the ability and
experience of our senior executives. We have elected not to enter into
employment agreements with any of these executives. Our preference to not
utilize employment agreements for our senior executives may affect our ability
to attract and retain senior executives in the future. The loss of any of our
senior executives could adversely affect our ability to maintain our current
operating performance or to achieve growth through acquisitions.
SIGNIFICANT CAPITAL EXPENDITURES; ADDITIONAL FINANCINGS
The industry in which we operate is capital intensive. Accordingly, we must
continue to make capital expenditures in order to periodically replace our
existing equipment. In addition, our plan to utilize smart-card based
technologies with our equipment will also result in significant capital
expenditures. While we anticipate that our existing capital resources, as well
as cash from operations, will be adequate to finance anticipated capital
expenditures, there can be no assurance that such resources or cash flows will
be sufficient or that the incremental revenue and cost efficiencies associated
with technological enhancements, such as the smart card, will justify the
significant capital expenditures.
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To the extent that our available resources are insufficient to fund capital
requirements, we may need to raise additional funds through public or private
financings that may or may not be on terms favorable to us and, in the case of
equity financings, could result in dilution to our stockholders.
UNCERTAINTY OF MARKET ACCEPTANCE OF NEW PRODUCTS AND SERVICES
We are currently introducing, and intend to introduce in the future, new
products and services utilizing smart card based technologies. While we believe
that cashless transactions will be attractive to our customers and will provide
us with certain benefits, there can be no assurance that there will be
widespread acceptance of these products by property owners, managers, colleges
and universities and residents, or that technical or operational problems will
not arise from their implementation. A lack of market acceptance of these new
products and services could have a material adverse effect on our business,
results of operations, financial condition and prospects.
DEPENDENCE UPON LEASE RENEWALS
Our business is highly dependent upon the renewal of our leases with property
owners, colleges and universities and public housing authorities. We have
traditionally relied upon exclusive, long-term leases with our customers, as
well as frequent customer interaction and an historical emphasis on customer
service, to assure continuity of financial and operating results. There can be
no assurance that we will be able to continue to secure long-term exclusive
leases with our customers or that we will continue to successfully renew
expiring leases. Any failure by us to continue to obtain long-term exclusive
leases with a substantial number of our customers, or to successfully renew our
existing leases as they expire, could have a material adverse effect on our
business, results of operations, financial condition and prospects. In
addition, we have occasionally experienced loss of business when property
owners or management companies choose to vacate properties as a result of
economic downturns that impact occupancy levels. There can be no assurance that
future economic downturns will not result in similar losses of business.
DEPENDENCE UPON CERTAIN SUPPLIERS
We currently purchase more than 90% of the equipment that we utilize in our
laundry route business from Maytag Corporation ("Maytag"). In addition, we
derive a significant amount of our non-laundry route revenue, as well as
certain competitive advantages, from our position as a distributor of Maytag
commercial laundry products. Although the purchase and distribution agreements
between us and Maytag are terminable by either party upon written notice, we
have never had such an agreement terminated by Maytag. We also currently
purchase substantially all of our smart-card based equipment from Schlumberger
Technologies, Inc., a manufacturer of card-based electronic transaction
systems. In addition, we currently procure a substantial amount of the products
used by Intirion Corporation, our wholly-owned subsidiary ("Intirion"), from
certain suppliers, including Sanyo E&E Corporation. A termination of, or
substantial revision of the terms of, the contractual arrangements or business
relationships with the suppliers described above could have a material adverse
effect on our business, results of operations, financial condition and
prospects.
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RESTRICTIONS IMPOSED BY OUR INDEBTEDNESS
In the event we borrow significant amounts under our senior secured revolving
and term loan credit facility with State Street Bank and Trust Company,
CoreStates Bank and BankBoston, N.A. (the "Credit Facility"), such level of
indebtedness could have important consequences to us and our stockholders,
including the following: (i) a substantial portion of our cash flow from
operations would need to be dedicated to the payment of the principal of and
interest on such indebtedness and would not be available for other purposes;
(ii) our ability to obtain financing in the future for working capital needs,
capital expenditures, acquisitions, investments, general corporate purposes or
other purposes could be materially limited or impaired; and (iii) our level of
indebtedness could reduce our flexibility to respond to changing business and
economic conditions. The Credit Facility contains various covenants limiting
the discretion of our management with respect to certain business matters,
including financial and other operating covenants. Failure to comply with any
such covenants, which failure is not waived by the lender, would permit the
lender to accelerate the maturity of the loan, which could have a material
adverse effect on our business, results of operations, financial condition and
prospects.
PRODUCT LIABILITY; LIMITED INSURANCE COVERAGE
Intirion, our wholly-owned subsidiary, markets and distributes MicroFridge(R),
a combination microwave and refrigerator. The sale and distribution of
MicroFridge(R), as well as our other products, entails a certain risk of
product liability claims. Further, the manufacturing of MicroFridge(R),
although it is done by third-party manufacturers under contract with Intirion,
may subject Intirion to further inherent risks of product liability claims.
Potential product liability claims may exceed the amount of our insurance
coverage or may be excluded from coverage under the terms of the policy. There
can be no assurance that our existing insurance can be renewed at a cost and
level of coverage comparable to that presently in effect, if at all. In the
event that Intirion is held liable for a claim against which it is not
indemnified or for damages exceeding the limits of its insurance coverage, such
claim could have a material adverse effect on the our business, results of
operations, financial condition and prospects.
INTELLECTUAL PROPERTY RIGHTS
We rely upon certain trademark, service mark, copyright, patent and trade
secret laws, employee and third-party non-disclosure and non-solicitation
agreements and other methods to protect our proprietary rights. We periodically
make filings with the Patent and Trademark Office to protect certain of our
proprietary rights, although we have traditionally relied upon the protections
afforded by contractual arrangements and through common law assertions of
ownership. There can be no assurance that these contractual arrangements and
legal claims to ownership will adequately protect us and our operations from
adverse claims made by third parties. In addition, any such adverse claims or
litigation, with or without merit, could be costly and could divert
management's attention from the operation of our business.
VOTING CONTROL BY PRINCIPAL STOCKHOLDERS, DIRECTORS AND EXECUTIVE OFFICERS
As of November 13, 1998, the our principal stockholders, directors and
executive officers and their affiliates beneficially owned in the aggregate
approximately 52% of the outstanding shares of Mac-
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Gray Common Stock. This percentage ownership does not include options to
purchase 342,335 shares of Mac-Gray Common Stock (options to acquire 74,067
shares of Mac-Gray Common Stock are currently exercisable) held by certain of
these persons, which, if exercised in whole or in part, will further
concentrate ownership of Mac-Gray Common Stock. As a result, the above-
referenced stockholders, if they act together, possess the voting power
required to elect all of our directors and to approve all other matters
requiring approval by a majority of our stockholders including, in many cases,
significant corporate transactions, such as mergers and sales of all or
substantially all of our assets. Such concentration of ownership, together, in
some cases, with certain provisions of our Amended and Restated Certificate of
Incorporation (the "Mac-Gray Charter") and our By-laws (the "Mac-Gray By-laws")
and certain sections of the Delaware General Corporation Law (the "DGCL"), may
have the effect of delaying or preventing a change in control of Mac-Gray. See
"--Anti-takeover Effect of Our Charter and By-Laws and Delaware Law."
COMMON STOCK CONTINGENT REPURCHASE OBLIGATION
We are obligated to repurchase up to 612,026 shares of Mac-Gray Common Stock
issued in connection with the acquisition of Sun Services of America, Inc., a
Florida corporation ("SSA"), and R. Bodden Coin-Op-Laundry, Inc., a Florida
corporation ("RBCO" and, together with SSA, "Sun Services"), both of which
occurred on April 17, 1997 (the "Sun Services Acquisition"), at a purchase
price of $12.74 per share in the event the holder or holders of such shares
elect to require us to repurchase such shares (the "Put Right"). The Put Right
terminates on October 22, 2000. There can be no assurance that the holder or
holders of such shares will not exercise the Put Right, nor can there be any
assurance that, once exercised, we will be able to obtain financing to satisfy
such Put Right on terms satisfactory to us, if at all. In the event we are
required to repurchase such shares, we may be required to incur additional
indebtedness under our Credit Facility to fund such repurchase. If we were
unable to borrow such funds under our Credit Facility, we would need to pursue
alternative financing sources which, if available, might be at higher interest
rates than presently available under the Credit Facility.
ANTI-TAKEOVER EFFECT OF OUR CHARTER AND BY-LAWS AND DELAWARE LAW
Certain provisions of the our Charter and By-laws, certain sections of the DGCL
and the ability of our Board of Directors (the "Mac-Gray Board") to issue
shares of preferred stock and to establish the voting rights, preferences and
other terms thereof, may be deemed to have an anti-takeover effect and may
discourage takeover attempts not first approved by the Mac-Gray Board,
including takeovers which certain stockholders may deem to be in their best
interests. These provisions and the ability of the Mac-Gray Board to issue
preferred stock without further action by stockholders could delay or frustrate
the removal of incumbent directors or the assumption of control by
stockholders, even if such removal or assumption of control would be beneficial
to stockholders. These provisions also could discourage or make more difficult
a merger, tender offer or proxy contest, even if such events would be
beneficial, in the short term, to the interests of stockholders. Such anti-
takeover provisions include, among other things, a classified Mac-Gray Board
serving staggered three-year terms, the elimination of stockholder voting by
written consent, the absence of cumulative voting for directors, the removal of
directors only for cause, the vesting of exclusive authority in the Mac-Gray
Board to determine the size of the Mac-Gray Board and (subject to certain
limited exceptions) to fill vacancies thereon, the vesting of exclusive
authority in the Mac-Gray Board (except as otherwise required by
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law) to call special meetings of stockholders, and certain advance notice
requirements for stockholder proposals and nominations for election to the Mac-
Gray Board. We are subject to Section 203 of the DGCL ("Section 203") which, in
general, imposes restrictions upon certain acquirors (including their
affiliates and associates) of 15% or more of Mac-Gray Common Stock. See
"Description Capital Stock--Certain Provisions of Charter and By-laws" and "--
Statutory Business Combination Provision."
POTENTIAL VOLATILITY OF STOCK PRICE
The trading price of Mac-Gray Common Stock may be subject to fluctuations in
response to quarter-to-quarter variations in operating results, changes in
earnings estimates by investment analysts or changes in business or regulatory
conditions affecting us, our customers or our competitors. The stock market
historically has experienced volatility which sometimes has been unrelated to
the operating performance of such companies. These market fluctuations may
adversely affect the price of Mac-Gray Common Stock.
ABSENCE OF DIVIDENDS
We intend to retain earnings to finance the growth and development of our
business and do not anticipate paying cash dividends in the foreseeable future.
Declaration of dividends will in the future depend upon, among other things,
our results of operations, financial condition, acquisitions, capital
requirements and general business condition. The Credit Facility also restricts
dividend payments.
MATERIAL BENEFITS TO CERTAIN INSIDERS
As a result of an agreement entered into in connection with the Sun Services
Acquisition, we are obligated to make certain payments to one of our current
directors who owned Sun Services. In addition, we are obligated to make certain
payments to the wife of our co-founder and former Chief Executive Officer for
the remainder of her life.
10
<PAGE>
BUSINESS
GENERAL
Mac-Gray derives its revenue principally through the operation and maintenance
of card and coin-operated laundry rooms in multiple housing facilities, such as
apartment buildings, colleges and universities, condominiums and public housing
complexes. Mac-Gray operates its laundry rooms under long-term leases with
property owners, colleges and universities and governmental agencies. The
leases typically grant Mac-Gray the exclusive right to operate laundry rooms on
the lessor's premises for a fixed term, which is generally seven to ten years,
in exchange for a percentage of the revenue collected. Mac-Gray's laundry route
business consists of more than 155,000 laundry machines, operated in over
25,000 multiple housing laundry rooms located in 27 states.
Mac-Gray also derives revenue as a distributor and servicer of commercial
laundry equipment manufactured by Maytag, and sells laundry equipment
manufactured by American Dryer, The Dexter Company, and Whirlpool Corporation
to provide several alternatives in machine type, cost and capacity.
Additionally, Mac-Gray sells or rents laundry equipment to restaurants, hotels,
health clubs and similar institutional users that operate their own on-premises
laundry facilities.
RECENT DEVELOPMENTS
The Mac-Gray Board has approved a Stock Repurchase Plan under which Mac-Gray is
authorized to acquire up to one million (1,000,000) shares of the Mac-Gray
Common Stock in the open market during the next twelve months. Under the Stock
Repurchase Plan, shares may be repurchased from time to time and in such
amounts as market conditions warrant, subject to regulatory considerations. The
total number of shares subject to repurchase under the Stock Repurchase Plan is
subject to approval by Mac-Gray's senior lenders.
USE OF PROCEEDS
Mac-Gray will not receive any of the proceeds of the sale, if any, of the
Shares offered hereby.
DESCRIPTION OF CAPITAL STOCK
AUTHORIZED AND OUTSTANDING CAPITAL STOCK
The authorized capital stock of Mac-Gray consists of 30,000,000 shares of Mac-
Gray Common Stock and 5,000,000 shares of undesignated preferred stock issuable
in series by the Mac-Gray Board ("Preferred Stock"). As of November 13, 1998,
there were 13,425,758 shares of Mac-Gray Common Stock (including 612,026 shares
of Mac-Gray Common Stock subject to the Put Right) outstanding that were held
of record by 97 stockholders. The following summary description of the capital
stock of Mac-Gray does not purport to be complete and is qualified in its
entirety by reference to the Mac-Gray Charter and the Mac-Gray By-laws. The
Mac-Gray Charter and the Mac-Gray By-laws have been adopted by the stockholders
of Mac-Gray and the Mac-Gray Board.
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<PAGE>
Mac-Gray Common Stock. The holders of Mac-Gray Common Stock are entitled to one
vote per share on all matters to be voted on by stockholders and are entitled
to receive such dividends, if any, as may be declared from time to time by the
Mac-Gray Board from funds legally available therefor. The possible issuance of
Preferred Stock with a preference over Mac-Gray Common Stock as to dividends
could impact the dividend rights of holders of Mac-Gray Common Stock. Holders
of Mac-Gray Common Stock are not entitled to cumulative voting rights.
Therefore, the holders of a majority of the shares voted in the election of
directors can elect all of the directors then standing for election, subject to
the rights of the holders of any then outstanding Preferred Stock, if and when
issued. The holders of Mac-Gray Common Stock have no preemptive or other
subscription rights, and there are no conversion rights or redemption or
sinking fund provisions with respect to the Mac-Gray Common Stock. Upon the
voluntary or involuntary liquidation, dissolution or winding up of Mac-Gray,
the net assets of Mac-Gray shall be distributed pro rata to the holders of the
Mac-Gray Common Stock in accordance with their respective rights and interests,
subject to the rights and interests of the holders of Preferred Stock, if and
when issued. All outstanding shares of Mac-Gray Common Stock are fully paid and
non-assessable.
The Mac-Gray Charter and the Mac-Gray By-laws provide, subject to the rights of
the holders of any Preferred Stock then outstanding, that the number of
directors shall be fixed by the Mac-Gray Board. The directors, other than those
who may be elected by the holders of any Preferred Stock, are divided into
three classes, as nearly equal in number as possible, with each class serving
for a three-year term. Subject to any rights of the holders of Preferred Stock
to elect directors and to remove any director whom the holders of any such
stock had the right to elect, any director of Mac-Gray may be removed from
office only with cause and by the affirmative vote of at least two-thirds of
the total votes which would be eligible to be cast by stockholders in the
election of such director.
Undesignated Preferred Stock. The Mac-Gray Board is authorized, without further
action of the stockholders of Mac-Gray, to issue up to 5,000,000 shares of
Preferred Stock in classes or series and to fix the designations, powers,
preferences and the relative, participating, optional or other special rights
of the shares of each series and any qualifications, limitations and
restrictions thereon as set forth in the Mac-Gray Charter. Any such Preferred
Stock issued by Mac-Gray may rank prior to the Mac-Gray Common Stock as to
dividend rights, liquidation preference or both, may have full or limited
voting rights and may be convertible into shares of Mac-Gray Common Stock.
The purpose of authorizing the Mac-Gray Board to issue Preferred Stock is, in
part, to eliminate delays associated with a stockholder vote on specific
issuances. The issuance of Preferred Stock could have the effect of making it
more difficult for a third party to acquire, or of discouraging a third party
from acquiring or seeking to acquire, a significant portion of the outstanding
Mac-Gray Common Stock.
CERTAIN PROVISIONS OF CHARTER AND BY-LAWS
General. A number of provisions of the Mac-Gray Charter and the Mac-Gray By-
laws concern matters of corporate governance and the rights of stockholders.
Certain of these provisions, as well as the ability of the Mac-Gray Board to
issue shares of Preferred Stock and to set the voting rights, preferences and
other terms thereof, may be deemed to have an anti-takeover effect and may
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<PAGE>
discourage takeover attempts not first approved by the Mac-Gray Board,
including takeovers which certain stockholders may deem to be in their best
interests. To the extent takeover attempts are discouraged, temporary
fluctuations in the market price of Mac-Gray Common Stock, which may result
from actual or rumored takeover attempts, may be inhibited. These provisions,
together with the classified Mac-Gray Board and the ability of the Mac-Gray
Board to issue Preferred Stock without further stockholder action, also could
delay or frustrate the removal of incumbent directors or the assumption of
control by stockholders, even if such removal or assumption would be beneficial
to stockholders of Mac-Gray. These provisions also could discourage or make
more difficult a merger, tender offer or proxy contest, even if a transaction
or contest could be favorable to the interests of stockholders, and could
potentially depress the market price of the Mac-Gray Common Stock. The Mac-Gray
Board believes that these provisions are appropriate to protect the interests
of Mac-Gray and all of its stockholders. The Mac-Gray Board has no present
plans to adopt any other measures or devices which may be deemed to have an
"anti-takeover effect."
Meetings of Stockholders. The Mac-Gray By-laws provide that a special meeting
of stockholders may be called only by the Mac-Gray Board unless otherwise
required by law. The Mac-Gray By-laws provide that only those matters set forth
in the notice of the special meeting may be considered or acted upon at that
special meeting, unless otherwise provided by law. In addition, the Mac-Gray
By-laws set forth certain other requirements, such as advance notice and
informational requirements and time limitations on any director nomination or
any new business which a stockholder wishes to propose for consideration at an
annual meeting of stockholders.
No Stockholder Action by Written Consent. The Mac-Gray Charter provides that,
for so long as Mac-Gray has a class of stock registered pursuant to the
provisions of the Exchange Act, any action required or permitted to be taken by
the stockholders of Mac-Gray at an annual or special meeting of stockholders
must be effected at a duly called meeting and may not be taken or effected by a
written consent of stockholders in lieu thereof.
Indemnification and Limitation of Liability. The Mac-Gray By-laws provide that
directors and officers of Mac-Gray shall be, and in the discretion of the Mac-
Gray Board non-officer employees may be, indemnified by Mac-Gray to the fullest
extent authorized by Delaware law, as it now exists or may in the future be
amended, against all expenses and liabilities reasonably incurred in connection
with service for or on behalf of Mac-Gray, and further permits the advancing of
expenses incurred in defense of claims. The Mac-Gray By-laws also provide that
the right of directors and officers to indemnification shall be a contractual
right and shall not be exclusive of any other right now possessed or hereafter
acquired under any by-law, agreement, vote of stockholders or otherwise. The
Mac-Gray Charter contains a provision permitted by Delaware law that generally
eliminates the personal liability of directors for monetary damages for
breaches of their fiduciary duty, including breaches involving negligence or
gross negligence in business combinations, unless the director has breached his
or her duty of loyalty, failed to act in good faith, engaged in intentional
misconduct or a knowing violation of law, paid a dividend or approved a stock
repurchase in violation of the DGCL or obtained an improper personal benefit.
This provision does not alter a director's liability under the federal
securities laws. In addition, this provision does not affect the availability
of equitable remedies, such as an injunction or rescission, for breach of
fiduciary duty.
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<PAGE>
Amendment of the Mac-Gray Charter. The Mac-Gray Charter provides that an
amendment thereof must first be approved by a majority of the Mac-Gray Board
and (with certain exceptions) thereafter approved by the holders of a majority
of the outstanding shares entitled to vote on such amendment, and the
affirmative vote of a majority of the outstanding shares of each class entitled
to vote thereon as a class; provided, however, that the affirmative vote of not
less than 80% of the outstanding shares entitled to vote on such amendment, and
the affirmative vote of not less than 80% of the outstanding shares of each
class entitled to vote thereon as a class, is required to amend provisions of
the Mac-Gray Charter relating to the prohibition of stockholder action by
written consent, the establishment, composition and powers of the Mac-Gray
Board, the limitation of director liability and amendments to the Mac-Gray
Charter.
Amendment of the Mac-Gray By-laws. The Mac-Gray Charter provides that the Mac-
Gray By-laws may be amended or repealed by the Mac-Gray Board or by the
stockholders. Such action by the Mac-Gray Board requires the affirmative vote
of a majority of the directors then in office. Such action by the stockholders
requires the affirmative vote of the holders of at least three-fourths of the
total votes present and eligible to be cast by holders of voting stock voting
as a single class with respect to such amendment or repeal at an annual meeting
of stockholders or a special meeting called for such purpose, unless the Mac-
Gray Board recommends that the stockholders approve such amendment or repeal at
such meeting, in which case such amendment or repeal shall only require the
affirmative vote of a majority of the total votes present and eligible to be
cast by holders of voting stock voting as a single class with respect to such
amendment or repeal.
Ability to Adopt Stockholder Rights Plan. The Mac-Gray Board may in the future
resolve to issue shares of Preferred Stock or rights to acquire such shares, to
implement a stockholder rights plan which creates voting or other impediments
or under which shares are distributed to a third-party investor, a group of
investors or stockholders or issued to an employee stock ownership plan to
discourage persons seeking to gain control of Mac-Gray by means of a merger,
tender offer, proxy contest or otherwise, if such change in control is not in
the best interests of Mac-Gray and its stockholders. The Mac-Gray Board has no
present intention of adopting a stockholder rights plan and is not aware of any
attempt to obtain control of Mac-Gray.
STATUTORY BUSINESS COMBINATION PROVISION
Mac-Gray is subject to the provisions of Section 203 of the DGCL. Section 203
provides, with certain exceptions, that a Delaware corporation may not engage
in any of a broad range of business combinations with a person, or an affiliate
or associate of such person, who is an "interested stockholder" for a period of
three years from the date that such person became an interested stockholder
unless: (i) the transaction resulting in a person becoming an interested
stockholder, or the business combination, is approved by the board of directors
of the corporation before the person becomes an interested stockholder; (ii)
the interested stockholder acquired 85% or more of the outstanding voting stock
of the corporation in the same transaction that makes it an interested
stockholder (excluding shares owned by persons who are both officers and
directors of the corporation, and shares held by certain employee stock
ownership plans); or (iii) on or after the date the person becomes an
interested stockholder, the business combination is approved by the
corporation's board of directors and by the holders of at least two-thirds of
the corporation's outstanding voting stock at an annual or special meeting,
excluding shares owned by the interested
14
<PAGE>
stockholder. Under Section 203, an "interested stockholder" is defined (with
certain limited exceptions) as any person that is (x) the owner of 15% or more
of the outstanding voting stock of the corporation or (y) an affiliate or
associate of the corporation and was the owner of 15% or more of the
outstanding voting stock of the corporation at any time within the three-year
period immediately prior to the date on which it is sought to be determined
whether such person is an interested stockholder.
A corporation may, at its option, exclude itself from the coverage of Section
203 by amending its certificate of incorporation or by-laws by action of its
stockholders to exempt itself from coverage; provided, however, that such by-
law or charter amendment shall not become effective until 12 months after the
date the stockholders adopt such exclusion. Neither the Mac-Gray Charter nor
the Mac-Gray By-laws contains any such exclusion.
TRANSFER AGENT AND REGISTRAR
State Street Bank and Trust Company is the transfer agent and registrar for
Mac-Gray Common Stock.
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<PAGE>
THE SELLING SECURITYHOLDERS AND THE OFFERED SHARES
BACKGROUND
The Shares were acquired by the Selling Securityholders pursuant to the Stock
Purchase Agreement on April 23, 1998 upon consummation of the Company's
acquisition of Copico.
REGISTRATION RIGHTS AGREEMENT
In connection with the acquisition of Copico, Mac-Gray and the Selling
Securityholders entered into a registration rights agreement (the "Registration
Rights Agreement"). The material provisions of the Registration Rights
Agreement are set forth below. A copy of the form of the Registration Rights
Agreement which was entered into in connection with the consummation of the
acquisition of Copico has been filed as an exhibit to the Registration
Statement and can be obtained in the manner described under "Available
Information."
Resale Registration. To facilitate the resale by the Selling Securityholders of
the Shares, Mac-Gray has agreed to use commercially reasonable efforts to keep
the Registration Statement continuously effective for a period ending with the
earlier of (a) the sale of all the Shares and (b) April 23, 1999.
Certain Other Provisions. All expenses incident to Mac-Gray's performance of
its registration obligations under the Registration Rights Agreement will be
paid by Mac-Gray. The Selling Securityholders will be responsible for
underwriting commissions or discounts, transfer taxes, if any, attributable to
the sale of the Shares, any fees or expenses of any counsel, accountants or
other persons retained or employed by the Selling Securityholders and out-of-
pocket expenses of the Selling Securityholders and their agents, including,
without limitation, any travel costs.
The Registration Rights Agreement contains customary indemnification provisions
whereby Mac-Gray is obligated to indemnify and hold harmless the Selling
Securityholders and certain related parties, and the Selling Securityholders
are obligated under certain circumstances to indemnify and hold harmless Mac-
Gray and certain related parties, in each case in connection with liabilities
relating to the registration of the Shares.
<TABLE>
<CAPTION>
MAC-GRAY MAC-GRAY MAC-GRAY
COMMON COMMON COMMON
STOCK STOCK STOCK
OWNED REGISTERED OWNED
NAME OF PRIOR TO FOR AFTER
SECURITYHOLDER RESALE RESALE RESALE(1)
-------------- -------- ---------- ---------
<S> <C> <C> <C>
Peter B. Finn................................... 2,500 2,500 --
Edward J. Goulart............................... 67,900 67,900 --
Ronald R. Jalbert............................... 58,200 58,200 --
Robert W. LaRoche............................... 67,900 67,900 --
David Luongo.................................... 2,500 2,500 --
Joseph J. Tischler.............................. 2,500 2,500 --
Massachusetts Capital Resource Company.......... 48,500 48,500 --
</TABLE>
- --------
(1) Assumes that the Selling Securityholders sell all the Shares and do not
acquire additional shares of Mac-Gray Common Stock.
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<PAGE>
PLAN OF DISTRIBUTION
The Selling Securityholders may sell the Shares (i) directly to purchasers as
principals or through one or more underwriters, brokers, dealers or agents from
time to time in one or more transactions (which may involve crosses or block
transactions), (ii) on any exchange or in the over-the-counter market, (iii) in
transactions otherwise than in the over-the-counter market or on an exchange or
(iv) through the writing of options (whether such options are listed on an
options exchange or otherwise) on, or settlement of short sales of, the Shares.
Any such transactions may be effected at market prices prevailing at the time
of sale, at prices related to such prevailing market prices, at varying prices
determined at the time of sale or at negotiated or fixed prices, in each case
as determined by the Selling Securityholders or by agreement between the
Selling Securityholders and underwriters, brokers, dealers, agents or
purchasers. If the Selling Securityholders effect such transactions by selling
the Shares to or through underwriters, brokers, dealers or agents, such
underwriters, brokers, dealers or agents may receive compensation in the form
of discounts, concessions or commissions from the Selling Securityholders or
commissions from purchasers of the Shares for whom they may act as agent (which
discounts, concessions or commissions as to particular underwriters, brokers,
dealers or agents may be in excess of those customary in the types of
transactions involved). The Selling Securityholders and any brokers, dealers or
agents that participate in the distribution of the Shares may be deemed to be
"underwriters" within the meaning of the Securities Act, and any profit on the
sale of the Shares by them and any discounts, concessions or commissions
received by any such underwriters, brokers, dealers or agents may be deemed to
be underwriting discounts and commissions under the Securities Act.
In the event of a "distribution" of the Shares, the Selling Securityholders,
any selling broker-dealer or agent and any "affiliated purchasers" may be
subject to Regulation M under the Exchange Act, which would prohibit, with
certain exceptions, each such person from bidding for, purchasing or attempting
to induce any person to bid for or purchase any security which is the subject
of such distribution until his participation in that distribution is completed.
In addition, Regulation M under the Exchange Act prohibits certain "stabilizing
bids" or "stabilizing purchases" for the purpose of pegging, fixing or
maintaining the price of Mac-Gray Common Stock in connection with any offer of
the Shares by the Selling Securityholders.
To the extent not described herein and as otherwise required by law, the
specific amount of the Shares being offered or sold, the names of the Selling
Securityholders, the respective purchase prices and public offering prices, the
names of any agent, dealer or underwriter, and any applicable commissions or
discounts with respect to a particular offer or sale will be set forth in an
accompanying prospectus supplement or, if appropriate, a post-effective
amendment to the Registration Statement of which this Prospectus is a part.
Mac-Gray will not receive any of the proceeds of the sale of the Shares by any
Selling Securityholder.
Under the securities laws of certain states, the Shares may be sold in such
states only through registered or licensed brokers or dealers. In addition, in
certain states the Shares may not be sold unless the Shares have been
registered or qualified for sale in such state or an exemption from
registration or qualification is available and is complied with.
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<PAGE>
LEGAL MATTERS
The validity of the shares of Mac-Gray Common Stock offered hereby will be
passed upon by Goodwin, Procter & Hoar LLP.
EXPERTS
The consolidated financial statements of Mac-Gray Corporation as of December
31, 1997 and 1996 and for each of the three years ended December 31, 1997, 1996
and 1995 and the combined financial statements of Sun Services of America, Inc.
and R. Bodden Coin-Op-Laundry, Inc. as of and for the year ended December 31,
1996 incorporated in this Prospectus by reference to the Current Report on Form
8-K dated November 17, 1998, have been so incorporated in reliance on the
reports of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting. The financial
statements of Amerivend Corporation as of December 31, 1997 incorporated in
this Prospectus by reference to Mac-Gray's Current Report on Form 8-K/A dated
July 7, 1998, have been so incorporated in reliance on the reports of Morrison,
Brown, Argiz & Company, independent accountants, given on the authority of said
firm as experts in auditing and accounting.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses in connection with the sale
and distribution of the Shares, other than the underwriting discounts and
commissions. All amounts shown are estimates except for the Commission's
registration fee and the NYSE listing fee:
<TABLE>
<CAPTION>
NATURE OF EXPENSE AMOUNT
----------------- ------
<S> <C>
Commission registration fees...................................................... +
NYSE listing fee.................................................................. +
Legal fees and expenses........................................................... +
Accounting fees and expenses...................................................... +
Printing expenses................................................................. +
Miscellaneous..................................................................... +
---
Total........................................................................... +
===
</TABLE>
- --------
+ Previously filed.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
In accordance with Section 145 of the DGCL, Article VII of the Mac-Gray Charter
provides that no director of Mac-Gray shall be personally liable to Mac-Gray or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to Mac-Gray or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) in respect of certain unlawful dividend payments or stock redemptions or
repurchases, or (iv) for any transaction from which the director derived an
improper personal benefit. In addition, the Mac-Gray Charter provides that if
the DGCL is amended to authorize the further elimination or limitation of the
liability of directors, then the liability of a director of Mac-Gray shall be
eliminated or limited to the fullest extent permitted by the DGCL, as so
amended.
Article V of the Mac-Gray By-laws provides for indemnification by Mac-Gray of
its directors and officers and certain non-officer employees under certain
circumstances against expenses (including attorneys fees, judgments, penalties,
fines and amounts paid in settlement) reasonably incurred in connection with
the defense or settlement of any threatened, pending or completed legal
proceeding in which any such person is involved by reason of the fact that such
person is or was an officer or employee of Mac-Gray unless it is determined
that such person did not act in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of Mac-Gray, and, with
respect to criminal actions or proceedings, such person had no reasonable cause
to believe his or her conduct was unlawful.
Mac-Gray has entered into indemnification agreements with each of its directors
reflecting the foregoing provisions of the Mac-Gray By-laws and requiring the
advancement of expenses in proceedings involving directors in most
circumstances and also intends to purchase directors' and officers' insurance
to provide additional protections to the directors and officers of Mac-Gray in
certain circumstances.
II-1
<PAGE>
ITEM 16. EXHIBITS.
Certain exhibits indicated below are incorporated by reference to documents of
Mac-Gray on file with the Commission: (i) each exhibit marked by a cross (+)
was previously filed as an exhibit to Mac-Gray's Registration Statement on Form
S-1 (No. 333-33669) and the number in parentheses following the description of
the exhibit refers to the exhibit number in the Form S-1; (ii) each exhibit
marked by an asterisk (*) was previously filed as an exhibit to Mac-Gray's
Registration Statement, as amended (No. 333-45899); (iii) each exhibit marked
by an (X) was previously filed as an exhibit to Mac-Gray's Registration
Statement on Form S-1, as amended (No. 333-49795); and (iv) each exhibit marked
by a (Z) was previously filed as an exhibit to Mac-Gray's Current Report on
Form 8-K dated April 23, 1998.
(a) Exhibits. The following is a complete list of exhibits filed or
incorporated by reference as part of this Registration Statement.
2.1 Agreement and Plan of Merger, dated as of December 22, 1997, by and among
Mac-Gray Corporation, MI Acquisition Corp., Intirion Corporation and
Robert P. Bennett. Pursuant to Item 601(b)(2) of Regulation S-K, the
Schedules referred to in the Merger Agreement are omitted. The Registrant
hereby undertakes to furnish supplementally a copy of any omitted Schedule
to the Commission upon request. The Exhibits to the Merger Agreement were
included in Appendix A to the Prospectus/Proxy Statement, which is a part
of the Registrant's previously filed Registration Statement on Form S-4,
as amended (No. 333-45899).*
2.2 Stock Purchase Agreement by and among Mac-Gray Services, Inc., Copico,
Inc. and Certain Stockholders, dated as of March 31, 1998. X
2.3 Stock and Asset Purchase Agreement, dated as of March 4, 1998, by and
among Mac-Gray Services, Inc., Amerivend Corporation, Amerivend Southeast
Corporation and certain stockholders. Z
4.1 Specimen certificate for shares of Common Stock, $.01 par value, of the
Registrant (4.1). +
5.1 Opinion of Goodwin, Procter & Hoar LLP as to the legality of the
securities being offered. X
23.1 Consent of Counsel (included in Exhibit 5.1 hereto). X
23.2 Consent of PricewaterhouseCoopers LLP.
23.3 Consent of Morrison, Brown, Argiz & Company.
24.1 Powers of Attorney. X
(b) Financial Statement Schedules
No Financial Statement Schedules are filed herewith.
ITEM 17. UNDERTAKINGS.
(a) Mac-Gray hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-
effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
II-2
<PAGE>
dollar value of securities offered would not exceed that which was
registered) may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) herein do not
apply if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the undersigned
registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that
are incorporated by reference in the registration statement;
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment 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;
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering.
(b) The registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the registrant's annual
report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report pursuant
to Section 15(d) of the Exchange Act) 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.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
Mac-Gray, Mac-Gray 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 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by Mac-Gray 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, Mac-Gray 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 and will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, MAC-GRAY
CORPORATION 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 POST-
EFFECTIVE AMENDMENT NO. 3 TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF CAMBRIDGE,
THE COMMONWEALTH OF MASSACHUSETTS, ON NOVEMBER 17, 1998.
Mac-Gray Corporation
/s/ Stewart Gray MacDonald, Jr.
By: _________________________________
STEWART GRAY MACDONALD, JR.
CHAIRMAN AND CHIEF EXECUTIVE
OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS POST-EFFECTIVE
NO. 3 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Stewart Gray MacDonald, Jr. Chairman and Chief November 17, 1998
______________________________________ Executive Officer and
STEWART GRAY MACDONALD, JR. Director (Principal
Executive Officer)
* Executive Vice President, November 17, 1998
______________________________________ Mergers and Acquisitions,
PATRICK A. FLANAGAN Secretary and Director
/s/ Neil F. MacLellan, III Executive Vice President November 17, 1998
______________________________________ Chief Financial Officer
NEIL F. MACLELLAN, III and Treasurer (Principal
Financial and Accounting
Officer)
* Director November 17, 1998
______________________________________
JEFFREY C. HUENINK
* Director November 17, 1998
______________________________________
JERRY A. SCHILLER
* Director November 17, 1998
______________________________________
JOHN P. LEYDON
* Director November 17, 1998
______________________________________
EUGENE B. DOGGETT
/s/ Stewart Gray MacDonald, Jr.
*By: _________________________________
STEWART GRAY MACDONALD, JR.
ATTORNEY-IN-FACT
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DOCUMENT DESCRIPTION
------- --------------------
<C> <S>
2.1 Agreement and Plan of Merger, dated as of December 22, 1997, by and
among Mac-Gray Corporation, MI Acquisition Corp., Intirion Corporation
and Robert P. Bennett. Pursuant to Item 601(b)(2) of Regulation S-K,
the Schedules referred to in the Merger Agreement are omitted. The
Registrant hereby undertakes to furnish supplementally a copy of any
omitted Schedule to the Commission upon request. The Exhibits to the
Merger Agreement were included in Appendix A to the Prospectus/Proxy
Statement, which is a part of the Registrant's previously filed
Registration Statement on Form S-4, as amended (No. 333-45899).*
2.2 Stock Purchase Agreement by and among Mac-Gray Services, Inc., Copico,
Inc. and Certain Stockholders, dated as of March 31, 1998.X
2.3 Stock and Asset Purchase Agreement, dated as of March 4, 1998, by and
among Mac-Gray Services, Inc., Amerivend Corporation, Amerivend
Southeast Corporation and certain stockholders.Z
4.1 Specimen certificate for shares of Common Stock, $.01 par value, of
the Registrant (4.1).+
5.1 Opinion of Goodwin, Procter & Hoar LLP as to the legality of the
securities being offered.X
23.1 Consent of Counsel (included in Exhibit 5.1 hereto).X
23.2 Consent of PricewaterhouseCoopers LLP.
23.3 Consent of Morrison, Brown, Argiz & Company.
24.1 Powers of Attorney.X
</TABLE>
- --------
+ Previously filed as an exhibit to Mac-Gray's Registration Statement on Form
S-1 (No. 333-33669) and incorporated by reference herein. The number in
parentheses following the description of the exhibit refers to the exhibit
number in the Form S-1.
* Previously filed as an exhibit to Mac-Gray's Registration Statement, as
amended (No. 333-45899) and incorporated by reference herein.
X Previously filed as an exhibit to Mac-Gray's Registration Statement on Form
S-1, as amended (No. 333-49795).
Z Previously filed as an exhibit to Mac-Gray's Current Report on Form 8-K
dated April 23, 1998.
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 (No. 333-49795) of
Mac-Gray Corporation of our report dated January 30, 1998, except as to the
pooling of interests with Intirion Corporation which is as of March 12, 1998,
relating to the consolidated financial statements of Mac-Gray Corporation and
our report dated May 2, 1997 relating to the combined financial statements of
Sun Services of America, Inc. and R. Bodden Coin-Op-Laundry, Inc., which appear
in Form 8-K of Mac-Gray Corporation dated November 17, 1998. We also consent to
the reference to us under the heading "Experts" in such Prospectus.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
November 17, 1998
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 (File No. 333-
49795), of our report dated February 17, 1998, relating to the financial
statements of Amerivend Corporation as of December 31, 1997. We also consent to
the reference to us under the heading "Experts" in such prospectus.
/s/ Morrison, Brown, Argiz & Company
Miami, Florida
November 16, 1998
