<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 28, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________________ TO ____________________
COMMISSION FILE NUMBER 333-00620
COINMACH CORPORATION
- - --------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 53-0188589
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(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
55 LUMBER ROAD, ROSLYN, NY 11576
- - --------------------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (516) 484-2300
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934
DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT
WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO .
---- ----
ON AUGUST 9, 1996, ALL 100 OUTSTANDING SHARES OF THE REGISTRANT'S COMMON STOCK,
PAR VALUE $.01 PER SHARE (THE "COMMON STOCK"), WERE HELD BY COINMACH LAUNDRY
CORPORATION.
<PAGE>
COINMACH CORPORATION
INDEX
PART 1. Financial Information Page No.
--------------------- --------
Item 1. Financial Statements
Condensed Consolidated Balance Sheets (Unaudited)
June 28, 1996 and March 29, 1996 3
Condensed Consolidated Statements of Operations (Unaudited)
Three Months Ended June 28, 1996 and June 30, 1995 4
Condensed Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended June 28, 1996 and June 30, 1995 5
Notes to Condensed Consolidated Financial Statements (Unaudited) 6-8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 9-12
PART II. Other Information 13
-----------------
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders.
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signature Page 14
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Exhibit List
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2
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COINMACH CORPORATION
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PART 1. FINANCIAL INFORMATION
---------------------
ITEM 1. FINANCIAL STATEMENTS
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CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
(dollars in thousands)
June 28, March 29,
1996 1996
------------ -------------
(Unaudited) (Audited)
ASSETS:
Cash and cash equivalents $ 3,201 $ 19,723
Receivables, net 4,648 5,758
Inventories 5,204 4,443
Prepaid expenses 2,971 2,641
Advance rental payments 21,643 20,320
Property and equipment, less accumulated
depreciation of $24,680 and $19,509 92,139 82,699
Contract rights, less accumulated
amortization of $11,124 and $8,925 65,033 59,745
Goodwill, less accumulated amortization
of $2,970 and $ 2,386 43,737 44,071
Other assets, principally debt
issuance costs 10,835 8,767
-------- --------
Total assets $249,411 $248,167
======== ========
LIABILITIES AND
SHAREHOLDER'S DEFICIT:
Accounts payable $ 5,736 $ 5,944
Accrued commissions 8,596 7,380
Accrued interest 3,135 7,745
Other accrued expenses 8,144 7,557
Deferred income taxes 18,474 18,924
11-3/4% Senior Notes 196,655 196,655
12-3/4% Senior Notes 5,000 5,000
Long-term revolving credit facility 5,000 -
Other long-term debt 2,006 1,110
Shareholder's deficit:
Common stock and capital in excess
of par value 18,104 18,104
Notes receivable from management ( 1,692) ( 1,692)
Accumulated deficit (19,747) (18,560)
-------- --------
Total shareholder's deficit ( 3,335) ( 2,148)
--------
Total liabilities and shareholder's deficit $249,411 $248,167
======== ========
The accompanying notes are an integral part of these financial statements.
3
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COINMACH CORPORATION
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
-----------------------------------------------
(UNAUDITED)
-----------
(dollars in thousands)
----------------------
Three Months Ended
--------------------
June 28, June 30,
1996 1995
--------- ---------
GROSS REVENUES $47,940 $46,527
OTHER COSTS AND EXPENSES:
Laundry operating expenses 32,580 32,754
General and administrative expenses 1,016 1,171
Depreciation and amortization 9,810 9,151
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43,406 43,076
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OPERATING INCOME 4,534 3,451
INTEREST EXPENSE 6,121 5,740
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LOSS BEFORE INCOME TAXES (1,587) (2,289)
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(BENEFIT) PROVISION FOR INCOME TAXES:
Currently payable 50 111
Deferred (450) (489)
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(400) (378)
------- -------
NET LOSS $(1,187) $(1,911)
======= =======
The accompanying notes are an integral part of these financial statements.
4
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COINMACH CORPORATION
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
(UNAUDITED)
-----------
(dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended
---------------------
June 28, June 30,
1996 1995
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,187) $(1,911)
Adjustment to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 9,810 9,151
Deferred income taxes (450) (489)
Amortization of debt discount and deferred issue costs 130 363
Increase in other assets (841) (131)
Decrease (increase) in receivables, net 1,109 (890)
(Increase) decrease in inventories and prepayments (1,409) 973
Decrease in accounts payable (134) (515)
(Decrease) increase in accrued interest (4,610) 2,111
Increase (decrease) in accrued expenses 1,494 (291)
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Net cash provided by operating activities 3,912 8,371
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CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (5,942) (5,028)
Advance payment to location owners (2,628) (1,446)
Acquisition of net assets of acquired businesses (16,722) -
-------- -------
Net cash used for investing activities (25,292) (6,474)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Deferred debt issuance costs 79 -
Net borrowings (repayments) of bank and other borrowings 4,887 (538)
Principal payments of capitalized lease obligations (108) -
-------- -------
Net cash provided by (used for ) financing activities 4,858 ( 538)
-------- -------
Net (decrease) increase in cash and cash equivalents (16,522) 1,359
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 19,723 10,773
-------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 3,201 $12,132
======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
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COINMACH CORPORATION
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements include
the accounts of Coinmach Corporation, a Delaware corporation (the "Company"),
and its wholly owned subsidiary, Super Laundry Equipment Corp.
("Super Laundry"). The Company is a wholly-owned subsidiary of Coinmach Laundry
Corporation ("Coinmach Laundry"). Unless otherwise specified herein, references
to the Company hereinafter shall include the Company and Super Laundry.
The Company is a leading supplier of coin-operated laundry equipment services
for multi-family housing units. The Company owns and operates approximately
245,000 coin-operated washers and dryers on routes in over 26,000 multi-family
housing units located in 28 states and the District of Columbia. Such routes
are located throughout the Northeast, Mid-Atlantic, Southeast, South-Central and
Midwest regions of the United States. The Company, through Super Laundry, is a
distributor of laundromat equipment and turnkey laundromat stores.
The accompanying unaudited condensed consolidated financial statements have been
prepared in conformity with generally accepted accounting principles ("GAAP")
for interim financial information and pursuant to the rules and regulations of
the Securities and Exchange Commission. Accordingly, such financial statements
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. GAAP requires
the Company's management make estimates and assumptions that affect the amounts
reported therein. Actual results could vary from such estimates. In addition,
certain reclassifications have been made to prior period financial statements to
conform with the 1996 presentations. The interim results presented herein are
not necessarily indicative of the results to be expected for the entire year.
In the opinion of management, these unaudited condensed consolidated financial
statements contain all adjustments of a normal recurring nature necessary for a
fair presentation of the unaudited condensed consolidated balance sheets of the
Company at June 28, 1996 and of the Company's consolidated statements of
operations and cash flows for the three months ended June 28, 1996 and June 30,
1995.
These unaudited condensed consolidated financial statements should be read in
conjunction with the audited combined and consolidated financial statements
included in the Company's Annual Report on Form 10-K for the six month
transition period ended March 29, 1996.
2. LONG-TERM DEBT
The Company has long-term debt, consisting of approximately $196.7 million of 11
3/4% Senior Notes due 2005 and $5.0 million of 12 3/4% Senior Notes due 2001
(collectively, the "Senior Notes"), and a $35.0 million revolving credit
facility which, among other things, impose restrictions on the Company's ability
to incur debt, make acquisitions and certain restricted payments, create liens,
sell assets or enter into transactions with affiliates. The revolving credit
facility is, in certain circumstances, more restrictive than the Senior Notes.
Also, the Senior Notes and the revolving credit facility presently limit the
Company's ability to pay dividends. The Company has the right under the
Senior Notes to incur up to $10.0 million of purchase money obligations and $5.0
million of other debt. At June 28, 1996, $5.0 million was outstanding under the
revolving credit facility. Concurrent with the Offering (defined below), the
Company repaid all amounts due under the revolving credit facility.
6
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COINMACH CORPORATION
--------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
3. SUBSEQUENT EVENTS
a. Initial Public Offering
On July 23, 1996, Coinmach Laundry completed its initial public offering (the
"Offering") of 4,120,000 shares of its Class A common stock, par value $.01 per
share (the "Common Stock") at an initial public offering price of $14.00 per
share. Coinmach Laundry's registration statement on Form S-1 (No.333-03587) for
4,000,000 shares of Common Stock was filed with the Securities and Exchange
Commission on May 13, 1996 and subsequently declared effective on July 17, 1996.
On July 18, 1996, in connection with the Offering, Coinmach Laundry filed an
additional registration statement on Form S-1 (No. 333-08331) with respect to
the registration of an additional 120,000 shares of Common Stock, which
registration statement was effective upon filing. Proceeds from the Offering
were approximately $53.6 million, after underwriting discounts and commissions.
After giving effect to the redemption of the Preferred Stock (as described
below), net proceeds from the Offering aggregated approximately $34.4 million,
before expenses.
b. Reclassification and Stock Split
In connection with the Offering, Coinmach Laundry approved a reclassification
(the "Reclassification") of all of its capital stock pursuant to which all seven
classes of the issued and outstanding capital stock of Coinmach Laundry prior to
the Offering were converted into a class of preferred stock, a class of voting
common stock and a class of non-voting common stock. As part of the
Reclassification, holders of the Coinmach Laundry's Class A common stock, Class
E common stock and Class F common stock prior to the Offering (collectively, the
"Preference Shares") received shares of Common Stock and shares of Series A
preferred stock, par value $.01 per share ("Preferred Stock") representing an
amount equal to the sum of : (a) preferred dividends on such Preference Shares
in an amount equal to the accrued yield (at a rate of 8% per annum, compounded
quarterly) on the original investment in such Preference Shares through July 23,
1996; and (b) an amount equal to the original investment in such Preference
Shares. Holders of Preference Shares who were members of the Company's
management received an aggregate of approximately 28,300 shares of Common Stock,
and holders of the Preference Shares who were not members of the Company's
management received an aggregate of 1,000 shares of Preferred Stock.
In connection with the Reclassification, Coinmach Laundry also approved an
approximate 23-to-1 stock split (the "Stock Split") payable to shareholders of
record on July 12, 1996.
c. Redemption of Preferred Stock
Immediately following the Offering, approximately $19.2 million from the
proceeds of the Offering was used by Coinmach Laundry to retire all the issued
and outstanding shares of Preferred Stock.
7
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COINMACH CORPORATION
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (continued)
3. SUBSEQUENT EVENTS (continued)
d. Related Party Transactions
Prior to the Offering, Coinmach Laundry issued an additional 79,029 shares of
its Class B common stock to certain members of management, which shares were
purchased through loans made by the Company totaling approximately $56,000. The
difference between the estimated fair market value of such stock (which
management believes to be 85% of the initial offering price in the Offering) and
the amount paid for such stock will be accounted for by the Company as
compensation expense. In addition, approximately $103,000 of receivables
outstanding at June 28, 1996 relating to loans to management in connection with
the purchase of common stock of the Company were forgiven.
In connection with the Offering, Coinmach Laundry also granted options to
purchase up to 735,618 shares of Common Stock at 85% of the Offering price to
management and certain other individuals. With respect to such options granted
to employees of the Company, Coinmach Laundry will record such 15% discount as
compensation expense over an applicable four-year vesting period. These options
will vest 20% on the effective date of the Offering, and 20% on each successive
anniversary date of the Offering thereafter.
e. 1996 Employee Stock Option Plan
In connection with the Offering, Coinmach Laundry adopted the Amended and
Restated 1996 Employee Stock Option Plan (as amended, the "Plan") which provides
for the issuance of options for 1,103,419 shares of Common Stock, representing
approximately 9% of Coinmach Laundry's issued and outstanding Common Stock, at
an exercise price not less than the prevailing market value of a share of Common
Stock on the date of grant. The Plan will be administered by a committee of
the Board of Directors of the Company (the "Compensation Committee"). Subject
to the terms of the Plan, the Compensation Committee will select the
participants and determine the terms and conditions of the options granted
pursuant to the Plan.
4. ACCOUNTING PRONOUNCEMENTS
Effective March 30, 1996, the Company adopted Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of " ("FAS 121"), which requires impairment
losses to be recorded on long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows estimated to be generated
by those assets are less than the assets' carrying amount. FAS 121 also
addresses the accounting for long-lived assets that are expected to be disposed
of. The effect of adoption did not have a material impact on the Company's
results of operations or financial condition for the three months ended June 28,
1996.
In October 1995, the Financial Accounting Standards Board issued Statement
No.123, "Accounting for Stock-Based Compensation" ("FAS 123"). FAS 123
establishes financial accounting and reporting standards for stock-based
employee compensation plans. FAS 123 is effective for transactions entered into
in fiscal years beginning after December 15, 1995. In connection with the
Offering, the Company adopted the Plan. With adoption of the Plan, the Company
will account for stock-based compensation awards under the provisions of
Accounting Principles Board Opinion No. 25, as permitted by FAS 123, but will
provide the necessary disclosure information in the fourth quarter of fiscal
1997.
8
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COINMACH CORPORATION
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- - ------- ----------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
Except for the historical information contained herein, certain matters
discussed in this document are forward-looking statements that involve certain
risks and uncertainties, including the risks and uncertainties discussed below,
as well as the other risks set forth in the Company's Annual Report on Form 10-K
for the six month transition period ended March 29, 1996.
GENERAL
- - -------
The Company is principally engaged in supplying coin-operated laundry equipment
services for multi-family housing units in 28 states and the District of
Columbia located throughout the Northeast, Mid-Atlantic, Southeast, South-
Central and Midwest regions of the United States. The most significant revenue
source is derived from its routes, which are comprised of over 26,000 locations
containing approximately 245,000 coin-operated washing machines and dryers. The
Company provides coin-operated laundry equipment services to locations by
leasing designated laundry rooms in buildings on a long-term basis. The Company
is a wholly owned subsidiary of Coinmach Laundry Corporation ("Coinmach
Laundry").
The Company also owns and operates Super Laundry Equipment Corp. ("Super
Laundry"). Super Laundry's business consists of constructing complete turnkey
laundromat retail stores, retrofitting existing laundromat retail stores,
distributing exclusive and non-exclusive lines of commercial coin and non-coin
machines and parts, and selling service contracts.
RESULTS OF OPERATIONS
- - ---------------------
The following discussion should be read in conjunction with the attached
unaudited condensed consolidated financial statements and notes thereto and with
the Company's audited combined and consolidated financial statements and notes
thereto for the six month transition period ended March 29, 1996, which are
included in the Company's Annual Report on Form 10-K.
Gross revenues of approximately $47.9 million for the quarter ended June 28,
1996 were approximately $1.4 million or 3% higher than gross revenues for the
prior year's corresponding period. The improvement in gross revenues consisted
primarily of increased route revenues of approximately $2.6 million resulting
from the acquisition of a route business in the Midwest region, offset by a
decrease in distribution revenues of approximately $.9 million from Super
Laundry. During the quarter ended June 30,1995, the Company's machine base
declined by approximately 1,500 machines, primarily due to capital constraints,
but increased by approximately 2,000 machines during the quarter ended June
28,1996 (excluding the machines added due to the acquisition in the Midwest).
This favorable trend is primarily the result of a reorganization of the field
management team and additional capital provided by the Company's issuance of its
11 3/4% Senior Notes due 2005 on November 30, 1995 and December 14, 1995.
Laundry operating expenses decreased slightly for the quarter ended June 28,
1996, as compared to the prior year's period. An increase in laundry operating
expenses of approximately $1.7 million related to the acquisition of the Midwest
region route business was offset by (a) a reduction in expenses of approximately
$1.4 million primarily related to the implementation of cost savings programs in
the Company's field operations and the consolidation of certain operating
regions and a decrease in commission expense, and (b) a decrease in the cost of
sales of approximately $.5 million related to Super Laundry's decreased volume.
9
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COINMACH CORPORATION
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- - ------- ----------------------------------------------------------------
RESULTS OF OPERATIONS (continued)
---------------------
RESULTS OF OPERATIONS (continued)
- - ---------------------
As a result of the above, operating income margins improved to approximately 9%
for the quarter ended June 28, 1996, as compared to approximately 7% for the
quarter ended June 30, 1995.
Interest expense increased by approximately $.4 million or approximately 6%.
Approximately $1.1 million of such increase was due primarily to the increased
debt level that resulted from the refinancing of its debt in November 1995.
Offsetting this increase was approximately $.7 million in interest expense due
to the decrease in the effective rate as the result of such refinancing.
EBITDA (earnings before deductions for interest, income taxes, depreciation and
amortization) was approximately $14.3 million for the quarter ended June 28,
1996, compared to approximately $12.6 million for the corresponding period in
1995, representing an improvement of approximately 14%. EBITDA margins improved
to approximately 30% for the quarter ended June 28, 1996, compared to
approximately 27% for the corresponding period in 1995. EBITDA is used by
management and certain investors as an indicator of a company's historical
ability to service debt. Management believes an increase in EBITDA is an
indication of improved ability to service existing debt, potential future
increases in debt or capital requirements. However, EBITDA is not intended to
represent cash flows for the period, nor has it been presented as an alternative
to either (a) operating income (as determined by GAAP) as an indicator of
operating performance or (b) 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.
The Company's effective income tax rate differs from the amount computed by
applying the U.S. federal statutory rate to loss before income taxes as a result
of state taxes and permanent book/tax differences (largely goodwill
amortization).
10
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COINMACH CORPORATION
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- - ------- ----------------------------------------------------------------
RESULTS OF OPERATIONS (continued)
---------------------
LIQUIDITY AND CAPITAL RESOURCES
- - -------------------------------
The Company continues to have substantial indebtedness and debt service
requirements. At June 28, 1996, the Company had outstanding long-term debt of
approximately $208.7 million and a shareholder's deficit of approximately $3.3
million after restructuring charges and writeoffs.
The Company's level of indebtedness will have several important effects on its
future operations, including the following: (a) 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; (b) financial
covenants contained in certain of the agreements governing the Company's
indebtedness will require the Company to meet certain financial tests and limit
its ability to borrow additional funds or to dispose of assets; (c) the
Company's ability to obtain additional financing in the future for working
capital, capital expenditures, acquisitions, and general corporate purposes may
be impaired; and (d) 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. At June 28, 1996, $5.0 million was outstanding under
its revolving credit facility, which was repaid in July 1996 from a portion of
the net proceeds received from Coinmach Laundry's initial public offering. For
further details, see Note 3 to Unaudited Condensed Consolidated Financial
Statements, "Subsequent Events."
The expenses of the Company include significant amounts of depreciation and
amortization (approximately $9.8 million for the three months ended June 28,
1996) which have the effect of reducing net income but not operating cash flow.
In accordance with generally accepted accounting principles, a significant
amount of the purchase price of businesses acquired by the Company is allocated
to "contract rights", which costs are amortized over periods up to 15 years.
Although such accounting treatment has a favorable effect on cash flow by
reducing taxes, it also reduces net income. The Company expects to continue such
practice with future acquisitions, so as to maximize cash flows through the
recognition of related smaller net income caused by the increased amortization.
Such a practice will be employed until the purchase price has been fully
amortized.
The Company anticipates that it will continue to utilize cash flows from its
operations to finance its capital expenditures and working capital needs,
including interest payments on its outstanding indebtedness. Capital
expenditures for the three months ended June 28, 1996 were approximately $25.3
million. Of such amount, the Company spent approximately $16.7 million on the
acquisition of related businesses, including the acquisition in the Midwest, and
approximately $2.3 million related to the net increase in the machine base. The
balance was used to renew the existing machine base and for general corporate
purposes. The effect of incremental revenues and EBITDA generated from capital
expended on acquisitions and the net increase in the machine base may not be
reflected in the financial results until subsequent reporting periods, depending
on the timing of the capital expended.
11
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COINMACH CORPORATION
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- - ------- ----------------------------------------------------------------
RESULTS OF OPERATIONS (continued)
---------------------
LIQUIDITY AND CAPITAL RESOURCES (continued)
- - -------------------------------
The Company's working capital requirements are, and will 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, the
Company is required to make semi-annual cash interest payments on the 11 3/4%
Senior Notes due 2005 and the 12 3/4% Senior Notes due 2001 (collectively, the
"Senior Notes") and will be required to make monthly interest payments under the
revolving credit facility. Management believes that the Company's future
operating activities will generate sufficient cash flow to repay borrowings
under the Senior Notes and the revolving credit facility or permit refinancing
thereof. An inability of the Company, however, to comply with covenants or
other conditions contained in the indenture governing the Senior Notes or in the
revolving credit facility 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, 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 revolving credit facility or the indenture
governing the Senior Notes.
Coinmach Laundry used approximately $5.0 million of the net proceeds from the
Offering to repay the revolving credit facility. The balance of such net
proceeds are currently invested in short-term, investment grade, interest-
bearing securities, certificates of deposit or direct or guaranteed obligations
of the United States. The Company has not yet determined the specific uses for
the balance of net proceeds of the Offering. 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.
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's 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.
12
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COINMACH CORPORATION
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PART II. OTHER INFORMATION
-----------------
ITEM 1. LEGAL PROCEEDINGS
From time to time, the Company has been, and expects to continue to
be, subject to legal proceedings and claims 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 financial
position and results of operations of the Company.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required to be filed with this report on Form 10-Q are
listed in the accompanying Index to Exhibits filed as part of
this Form 10-Q.
(b) No reports on Form 8-K were filed by the Company during the
three months ended June 28, 1996.
13
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COINMACH CORPORATION
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SIGNATURES
- - ----------
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COINMACH CORPORATION
Date: August 9, 1996 /s/ Robert M. Doyle
----------------------------------
Robert M. Doyle
Senior Vice President and
Chief Financial Officer
(On behalf of registrant and as
Principal Financial Officer)
14
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COINMACH CORPORATION
---------------------
EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
a. Exhibits
EXHIBIT
NUMBER DESCRIPTION
- - ------ -----------
3.1 Restated Certificate of Incorporation of Coinmach Corporation
("Coinmach")
3.2 Bylaws of Coinmach
10.1 Indenture, dated as of November 30, 1995, by and between
Coinmach, as Issuer, and Fleet National Bank of Connecticut
(formerly, Shawmut Bank Connecticut, National Association), as
Trustee (incorporated by reference from exhibit number 4.1 to
Coinmach's Registration Statement on Form S-1, file number 333-
00620)
10.2 First Supplemental Indenture, dated as of December 11, 1995, by
and between Coinmach, as Issuer, and Fleet National Bank of
Connecticut (formerly, Shawmut Bank Connecticut, National
Association), as Trustee (incorporated by reference from exhibit
number 4.2 to Coinmach's Registration Statement on Form S-1, file
number 333-00620)
10.3 First Supplemental Indenture, dated as of November 28, 1995, by
and between Solon Automated Services, Inc. ("Solon") and U.S.
Trust Company of New York, as Trustee (incorporated by reference
from exhibit number 4.3 to Coinmach's Registration Statement on
Form S-1, file number 333-00620)
10.4 Registration Rights Agreement, dated as of November 30, 1995, by
and between Coinmach and Lazard Freres & Co. LLC ("Lazard"), as
Initial Purchaser (incorporated by reference from exhibit number
4.6 to Coinmach's Registration Statement on Form S-1, file number
333-00620)
10.5 Addendum to Registration Rights Agreement, dated December 14,
1995, by and between Coinmach and Lazard, as Initial Purchaser
(incorporated by reference from exhibit number 4.8 to Coinmach's
Registration Statement on Form S-1, file number 333-00620)
10.6 Purchase Agreement, dated as of January 31, 1995, by and among
The Coinmach Corporation ("TCC"), CIC I Acquisition Corp.
("CIC"), the stockholders of CIC and Coinmach Holding Corp.
(incorporated by reference from exhibit number 10.1 to Coinmach's
Registration Statement on Form S-1, file number 333-00620)
10.7 Equity Purchase Agreement, dated as of January 31, 1995, by and
between TCC and Golder, Thoma, Cressey, Rauner Fund IV, L.P.
("GTCR Fund IV"), subsequently amended by the Omnibus Agreement
(as hereinafter defined) (incorporated by reference from exhibit
number 10.2 to Coinmach's Registration Statement on Form S-1,
file number 333-00620)
<PAGE>
EXHIBIT
NUMBER DESCRIPTION
- - ------ -----------
10.8 Investor Purchase Agreement, dated as January 31, 1995, by and
between TCC, GTCR Fund IV and President and Fellows of Harvard
College, subsequently amended by the Omnibus Agreement (as
hereinafter defined) (incorporated by reference from exhibit
number 10.3 to Coinmach's Registration Statement on Form S-1,
file number 333-00620)
10.9 Investor Purchase Agreement, dated as January 31, 1995, by and
between TCC, GTCR Fund IV, MCS Capital Management, Inc. and
Stephen R. Kerrigan, subsequently amended by the Omnibus
Agreement (as hereinafter defined) (incorporated by reference
from exhibit number 10.4 to Coinmach's Registration Statement on
Form S-1, file number 333-00620)
10.10 Stock Pledge Agreement, dated as of January 31, 1995, by and
between TCC and MCS Capital, Inc. (incorporated by reference from
exhibit number 10.5 to Coinmach's Registration Statement on Form
S-1, file number 333-00620)
10.11 Stock Pledge Agreement, dated as of January 31, 1995, by and
between TCC and Mitchell Blatt (incorporated by reference from
exhibit number 10.6 to Coinmach's Registration Statement on Form
S-1, file number 333-00620)
10.12 Promissory Note, dated January 31, 1995, of MCS Capital, Inc. in
favor of TCC, subsequently amended by the Omnibus Agreement (as
hereinafter defined) (incorporated by reference from exhibit
number 10.7 to Coinmach's Registration Statement on Form S-1,
file number 333-00620)
10.13 Promissory Note, dated January 31, 1995, of Mitchell Blatt in
favor of TCC, subsequently amended by the Omnibus Agreement (as
hereinafter defined) (incorporated by reference from exhibit
number 10.8 to Coinmach's Registration Statement on Form S-1,
file number 333-00620)
10.14 Management and Consulting Services Agreement, dated as of January
31, 1995, by and between GTCR Fund IV and TCC, subsequently
terminated by the Omnibus Agreement (as hereinafter defined)
(incorporated by reference from exhibit number 10.9 to Coinmach's
Registration Statement on Form S-1, file number 333-00620)
10.15 Senior Management Agreement, dated as of January 31, 1995, by and
between TCC, Stephen R. Kerrigan, MCS Capital, Inc. and GTCR Fund
IV, subsequently amended by the Omnibus Agreement (as hereinafter
defined) (incorporated by reference from exhibit number 10.10 to
Coinmach's Registration Statement on Form S-1, file number 333-
00620)
10.16 Senior Management Agreement, dated as of January 31, 1995, by and
between TCC, Coinmach Industries Co., L.P., Mitchell Blatt and
GTCR Fund IV, subsequently amended by the Omnibus Agreement (as
hereinafter defined) (incorporated by reference from exhibit
number 10.11 to Coinmach's Registration Statement on Form S-1,
file number 333-00620)
10.17 Senior Management Agreement, dated January 31, 1995, by and
between TCC, Coinmach Industries Co., L.P., Robert M. Doyle and
GTCR Fund IV, subsequently amended by the Omnibus Agreement (as
hereinafter defined) (incorporated by reference from exhibit
number 10.12 to Coinmach's Registration Statement on Form S-1,
file number 333-00620)
(ii)
<PAGE>
EXHIBIT
NUMBER DESCRIPTION
- - ------ -----------
10.18 Employment Agreement, dated as of August 4, 1995, by and between
Solon and John E. Denson (incorporated by reference from exhibit
number 10.13 to Coinmach's Registration Statement on Form S-1,
file number 333-00620)
10.19 Employment Agreement, dated as of July 1, 1995, by and between
Solon, Michael E. Stanky and GTCR Fund IV (incorporated by
reference from exhibit number 10.14 to Coinmach's Registration
Statement on Form S-1, file number 333-00620)
10.20 Stock Purchase Agreement, dated as of March 7, 1995, by and among
Ford Coin Laundries, Inc., Kwik Wash Laundries, Inc., Solon and
the Sellers (incorporated by reference from exhibit number 10.15
to Coinmach's Registration Statement on Form S-1, file number
333-00620)
10.21 Supply Agreement, dated July 26, 1995, by and among SAS
Acquisitions Inc. ("SAS"), Solon and Speed Queen Company
(incorporated by reference from exhibit number 10.16 to
Coinmach's Registration Statement on Form S-1, file number 333-
00620)
10.22 Dealer Manager Agreement, dated October 20, 1995, by and among
TCC, Solon, Lazard and Fieldstone Private Capital Group, L.P.
(incorporated by reference from exhibit number 10.17 to
Coinmach's Registration Statement on Form S-1, file number 333-
00620)
10.23 Purchase Agreement, dated November 15, 1995, by and among TCC,
Solon and Lazard (incorporated by reference from exhibit number
10.18 to Coinmach's Registration Statement on Form S-1, file
number 333-00620)
10.24 Addendum to Purchase Agreement, dated December 11, 1995, by and
between Coinmach and Lazard (incorporated by reference from
exhibit number 10.19 to Coinmach's Registration Statement on Form
S-1, file number 333-00620)
10.25 Omnibus Agreement, dated as of November 30, 1995, among SAS,
Solon, TCC and each of the other parties executing a signature
page thereto (the "Omnibus Agreement") (incorporated by reference
from exhibit number 10.20 to Coinmach's Registration Statement on
Form S-1, file number 333-00620)
10.26 Credit Agreement, dated as of November 30, 1995, by and between
Coinmach, as Borrower and Heller Financial, Inc. ("Heller")
(incorporated by reference from exhibit number 10.21 to
Coinmach's Registration Statement on Form S-1, file number 333-
00620)
10.27 First Amendment to Credit Agreement, dated as of December 9,
1995, by and among Coinmach, Heller, SAS, and Super Laundry
Equipment Corp. (incorporated by reference from exhibit number
10.22 to Coinmach's Registration Statement on Form S-1, file
number 333-00620)
10.28 Form of Note, dated November 30, 1995, of Coinmach in favor of
Heller (included as an exhibit to Exhibit 10.26 hereto)
(incorporated by reference from exhibit number 10.23 to
Coinmach's Registration Statement on Form S-1, file number 333-
00620)
10.29 Pledge Agreement, dated as of November 30, 1995, by and between
Coinmach and Heller (incorporated by reference from exhibit
number 10.24 to Coinmach's Registration Statement on Form S-1,
file number 333-00620)
(iii)
<PAGE>
EXHIBIT
NUMBER DESCRIPTION
- - ------ -----------
10.30 Guaranty, dated as of January 31, 1995, by Super Laundry
Management Corp. in favor of Heller (incorporated by reference
from exhibit number 10.25 to Coinmach's Registration Statement on
Form S-1, file number 333-00620)
10.31 Guaranty, dated as of November 30, 1995, by SLEC in favor of
Heller (incorporated by reference from exhibit number 10.26 to
Coinmach's Registration Statement on Form S-1, file number 333-
00620)
10.32 Security Agreement, dated as of November 30, 1995, by and between
Coinmach and Heller (incorporated by reference from exhibit
number 10.27 to Coinmach's Registration Statement on Form S-1,
file number 333-00620)
10.33 Security Agreement, dated as of November 30, 1995, by and between
SLEC and Heller (incorporated by reference from exhibit number
10.28 to Coinmach's Registration Statement on Form S-1, file
number 333-00620)
10.34 Collateral Assignment of Leases of Coinmach to Heller, dated as
of November 30, 1995 (incorporated by reference from exhibit
number 10.29 to Coinmach's Registration Statement on Form S-1,
file number 333-00620)
10.35 Collateral Assignment of Leases of SLEC to Heller, dated as of
November 30, 1995 (incorporated by reference from exhibit number
10.30 to Coinmach's Registration Statement on Form S-1, file
number 333-00620)
27.1 Financial Data Schedule
b. Form 8-K
None
(iv)
<PAGE>
EXHIBIT 3.1
RESTATED
CERTIFICATE OF INCORPORATION
OF
COINMACH CORPORATION
The undersigned, being the duly elected and authorized Vice President
of Coinmach Corporation, a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify as follows:
1. That the Corporation filed its original Certificate of
Incorporation with the Delaware Secretary of State on March 6, 1948 (the
"Certificate").
2. That, the Board of Directors of the Corporation, in accordance
with Sections 141(f) and 245 of the General Corporation Law of Delaware,
duly adopted resolutions authorizing the Corporation to integrate and
restate the Corporation's Certificate in its entirety to read as set forth in
Exhibit A attached hereto and made a part hereof (the "Restated Certificate").
- - ---------
3. That thereafter, pursuant to said resolution, the Restated
Certificate was submitted for approval to the holders of the outstanding shares
of the Corporation entitled to vote thereon, which approval was given by written
consent pursuant to Section 228 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, the undersigned officer of the Corporation, for
the purpose of restating the Certificate of Incorporation of the Corporation
pursuant to the General Corporation Law of the State of Delaware, under
penalties of perjury does hereby declare and certify that this is the act and
deed of the Corporation and the facts stated herein are true, and accordingly
has hereunto signed this Restated Certificate this 30th day of November, 1995.
COINMACH CORPORATION
/s/ ROBERT M. DOYLE
By: ______________________
Robert M. Doyle
Vice President
<PAGE>
EXHIBIT A
RESTATED
CERTIFICATE OF INCORPORATION
OF
COINMACH CORPORATION
ARTICLE FIRST
-------------
The name of the Corporation is Coinmach Corporation.
ARTICLE SECOND
--------------
The address of the Corporation's registered office in the State of
Delaware is 15 East North Street in the City of Dover, County of Kent 19901.
The name of its registered agent at such address is United Corporate Services,
Inc.
ARTICLE THIRD
-------------
The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
ARTICLE FOURTH
--------------
The total number of shares of stock which the Corporation has
authority to issue is 1,000 shares of Common Stock with a par value of $0.01 per
share.
ARTICLE FIFTH
-------------
The Corporation is to have perpetual existence.
ARTICLE SIXTH
-------------
In furtherance and not in limitation of the powers conferred by
statute, the board of directors of the Corporation is expressly authorized to
make, alter or repeal the by-laws of the Corporation.
ARTICLE SEVENTH
---------------
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws of the Corporation may provide. The books of the
Corporation may be kept outside the State of Delaware at such place or places as
may be designated from time to tome by the board of directors or in the by-laws
of the Corporation. Election of the directors need not be by written ballot
unless the by-laws of the Corporation so provide.
<PAGE>
ARTICLE EIGHTH
--------------
To the fullest extent permitted by the General Corporation Law of the
State of Delaware as the same exists or may hereafter be amended, a director of
this Corporation shall not be liable to the Corporation or its stockholders for
monetary damages for a breach of fiduciary duty as a director. Any repeal or
modification of this ARTICLE EIGHTH shall not adversely affect any right or
--------------
protection of a director of the Corporation existing at the time of such repeal
or modification.
ARTICLE NINTH
-------------
The Corporation expressly elects not to be governed by Section 203 of
the General Corporation Law of the State of Delaware.
ARTICLE TENTH
-------------
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in this certificate of incorporation in the manner now
or hereafter prescribed herein and by the laws of the State of Delaware, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
<PAGE>
EXHIBIT 3.2
BY-LAWS
-------
OF
--
COINMACH CORPORATION
--------------------
A Delaware Corporation
ARTICLE I
---------
OFFICES
-------
Section 1. Registered Office. The registered office of the corporation in
--------- -----------------
the State of Delaware shall be located at 15 East North Street, in the City of
Dover, County of Kent 19901. The name of the corporation's registered agent at
such address shall be United Corporate Services, Inc. The registered office
and/or registered agent of the corporation may be changed from time to time by
action of the board of directors.
Section 2. Other Offices. The corporation may also have offices at such
--------- -------------
other places, both within and without the State of Delaware, as the board of
directors may from time to time determine or the business of the corporation may
require.
ARTICLE II
----------
MEETINGS OF STOCKHOLDERS
------------------------
Section 1. Place and Time of Meetings. An annual meeting of the
--------- --------------------------
stockholders shall be held each year for the purpose of electing directors and
conducting such other proper business as may come before the meeting. The date,
time and place of the annual meeting shall be determined by the president of the
corporation; provided, that if the president does not act, the board of
directors shall determine the date, time and place of such meeting.
Section 2. Special Meetings. Special meetings of stockholders may be
--------- ----------------
called for any purpose and may be held at such time and place, within or without
the State of Delaware, as shall be stated in a notice of meeting or in a duly
executed waiver of notice thereof. Such meetings may be called at any time by
the board of directors, the president or the holders of shares entitled to cast
not less than twenty percent of the votes at the meeting.
Section 3. Place of Meetings. The board of directors may designate any
--------- -----------------
place, either within or without the State of Delaware, as the place of meeting
for any annual meeting or for any special meeting called by the board of
directors. If no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the principal executive office of the
corporation.
<PAGE>
Section 4. Notice. Whenever stockholders are required or permitted to
--------- ------
take action at a meeting, written or printed notice stating the place, date,
time, and, in the case of special meetings, the purpose or purposes, of such
meeting, shall be given to each stockholder entitled to vote at such meeting not
less than ten (10) nor more than sixty (60) days before the date of the meeting.
All such notices shall be delivered, either personally or by mail, by or at the
direction of the board of directors, the president or the secretary, and if
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail, postage prepaid, addressed to the stockholder at his address as the
same appears on the records of the corporation. Attendance of a person at a
meeting shall constitute a waiver of notice of such meeting, except when the
person attends for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened.
Section 5. Stockholders List. The officer having charge of the stock
--------- -----------------
ledger of the corporation shall make, at least ten (10) days before every
meeting of the stockholders, a complete list of the stockholders entitled to
vote at such meeting arranged in alphabetical order, showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten (10) days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
Section 6. Quorum. The holders of a majority of the outstanding shares of
--------- ------
common stock, present in person or represented by proxy, shall constitute a
quorum at all meetings of the stockholders, except as otherwise provided by
statute or by the certificate of incorporation. If a quorum is not present, the
holders of a majority of the shares present in person or represented by proxy at
the meeting, and entitled to vote at the meeting, may adjourn the meeting to
another time and/or place.
Section 7. Adjourned Meetings. When a meeting is adjourned to another
--------- ------------------
time and place, notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty (30) days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
Section 8. Vote Required. When a quorum is present, the affirmative vote
--------- -------------
of the majority of shares present in person or represented by proxy at the
meeting and entitled to vote on the subject matter shall be the act of the
stockholders, unless the question is one upon which by express provisions of an
applicable law or of the certificate of incorporation a different vote is
required, in which case such express provision shall govern and control the
decision of such question.
-2-
<PAGE>
Section 9. Voting Rights. Except as otherwise provided by the General
--------- -------------
Corporation Law of the State of Delaware or by the certificate of incorporation
of the corporation or any amendments thereto and subject to Section 3 of Article
VI hereof, every stockholder shall at every meeting of the stockholders be
entitled to one (1) vote in person or by proxy for each share of common stock
held by such stockholder.
Section 10. Proxies. Each stockholder entitled to vote at a meeting of
---------- -------
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy, but no such proxy shall be voted or acted upon after three (3) years from
its date, unless the proxy provides for a longer period. At each meeting of the
stockholders, and before any voting commences, all proxies filed at or before
the meeting shall be submitted to and examined by the secretary or a person
designated by the secretary, and no shares may be represented or voted under a
proxy that has been found to be invalid or irregular.
Section 11. Action by Written Consent. Unless otherwise provided in the
---------- -------------------------
certificate of incorporation, any action required to be taken at any annual or
special meeting of stockholders of the corporation, or any action which may be
taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent or
consents in writing, setting forth the action so taken and bearing the dates of
signature of the stockholders who signed the consent or consents, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted, and
shall be delivered to the corporation by delivery to its registered office in
the state of Delaware, or the corporation's principal place of business, or an
officer or agent of the corporation having custody of the book or books in which
proceedings of meetings of the stockholders are recorded. Delivery made to the
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested; provided, however, that no consent or consents
--------
delivered by certified or registered mail shall be deemed delivered until such
consent or consents are actually received at the registered office. All
consents properly delivered in accordance with this section shall be deemed to
be recorded when so delivered. No written consent shall be effective to take
the corporate action referred to therein unless, within sixty (60) days of the
earliest dated consent delivered to the corporation as required by this section,
written consents signed by the holders of a sufficient number of shares to take
such corporate action are so recorded. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent shall
be given to those stockholders who have not consented in writing. Any action
taken pursuant to such written consent or consents of the stockholders shall
have the same force and effect as if taken by the stockholders at a meeting
thereof.
-3-
<PAGE>
ARTICLE III
-----------
DIRECTORS
---------
Section 1. General Powers. The business and affairs of the
--------- --------------
corporation shall be managed by or under the direction of the board of
directors.
Section 2. Number, Election and Term of Office. The number of
--------- -----------------------------------
directors which shall constitute the first board shall be five (5). Thereafter,
the number of directors shall be established from time to time by resolution of
the board. The directors shall be elected by a plurality of the votes of the
shares present in person or represented by proxy at the meeting and entitled to
vote in the election of directors. The directors shall be elected in this
manner at the annual meeting of the stockholders, except as provided in Section
4 of this Article III. Each director elected shall hold office until a
successor is duly elected and qualified or until his earlier death, resignation
or removal as hereinafter provided.
Section 3. Removal and Resignation. Any director or the entire board
--------- -----------------------
of directors may be removed at any time by the holders of a majority of the
shareholders then entitled to vote at an election of directors. Any director
may resign at any time upon written notice to the corporation.
Section 4. Vacancies. Vacancies and newly created directorships
--------- ---------
resulting from any increase in the authorized number of directors shall be
filled by a majority of the shareholders. Each director so chosen shall hold
office until a successor is duly elected and qualified or until his or her
earlier death, resignation or removal as herein provided.
Section 5. Annual Meetings. The annual meeting of each newly elected
--------- ---------------
board of directors shall be held without other notice than this by-law
immediately after, and at the same place as, the annual meeting of stockholders.
Section 6. Other Meetings and Notice. Regular meetings, other than
--------- -------------------------
the annual meeting, of the board of directors may be held without notice at such
time and at such place as shall from time to time be determined by resolution of
the board. Special meetings of the board of directors may be called by or at
the request of the chairman and chief executive officer or any director on at
least twenty-four (24) hours notice to each director, either personally, by
telephone, by mail, or by telegraph.
Section 7. Quorum, Required Vote and Adjournment. A majority of the
--------- -------------------------------------
total number of directors shall constitute a quorum for the transaction of
business. The vote of a majority of directors present at a meeting at which a
quorum is present shall be the act of the board of directors. If a quorum shall
not be present at any meeting of the board of directors, the directors present
thereat may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
-4-
<PAGE>
Section 8. Committees. The board of directors may, by resolution
--------- ----------
passed by a majority of the whole board, designate one (1) or more committees,
each committee to consist of one (1) or more of the directors of the
corporation, which to the extent provided in such resolution or these by-laws
shall have and may exercise the powers of the board of directors in the
management and affairs of the corporation except as otherwise limited by law.
The board of directors may designate one (1) or more directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee. Such committee or committees shall have such name
or names as may be determined from time to time by resolution adopted by the
board of directors. Each committee shall keep regular minutes of its meetings
and report the same to the board of directors when required.
Section 9. Committee Rules. Each committee of the board of directors
--------- ---------------
may fix its own rules of procedure and shall hold its meetings as provided by
such rules, except as may otherwise be provided by a resolution of the board of
directors designating such committee. Unless otherwise provided in such a
resolution, the presence of at least a majority of the members of the committee
shall be necessary to constitute a quorum. In the event that a member and that
member's alternate, if alternates are designated by the board of directors as
provided in Section 8 of this Article III, of such committee is or are absent or
disqualified, the member or members thereof present at any meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the board of directors to act
at the meeting in place of any such absent or disqualified member.
Section 10. Communications Equipment. Members of the board of
---------- ------------------------
directors or any committee thereof may participate in and act at any meeting of
such board or committee through the use of a conference telephone or other
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in the meeting pursuant to this
section shall constitute presence in person at the meeting.
Section 11. Waiver of Notice and Presumption of Assent. Any member of
---------- ------------------------------------------
the board of directors or any committee thereof who is present at a meeting
shall be conclusively presumed to have waived notice of such meeting except when
such member attends for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened. Such member shall be conclusively presumed to have assented
to any action taken unless his dissent shall be entered in the minutes of the
meeting or unless his written dissent to such action shall be filed with the
person acting as the secretary of the meeting before the adjournment thereof or
shall be forwarded by registered mail to the secretary of the corporation
immediately after the adjournment of the meeting. Such right to dissent shall
not apply to any member who voted in favor of such action.
Section 12. Action by Written Consent. Unless otherwise restricted
---------- -------------------------
by the certificate of incorporation, any action required or permitted to be
taken at any meeting of the board of directors, or of any committee thereof, may
be taken without a meeting if all members of the board or committee, as the case
may be, consent thereto in writing.
-5-
<PAGE>
ARTICLE IV
----------
OFFICERS
--------
Section 1. Number. The officers of the corporation shall be elected
--------- ------
by the board of directors and shall consist of a chairman and chief executive
officer, a chief operating officer, a president, one (1) or more vice-
presidents, a secretary, a treasurer, and such other officers and assistant
officers as may be deemed necessary or desirable by the board of directors. Any
number of offices may be held by the same person. In its discretion, the board
of directors may choose not to fill any office for any period as it may deem
advisable, except that the offices of president and secretary shall be filled as
expeditiously as possible.
Section 2. Election and Term of Office. The officers of the
--------- ---------------------------
corporation shall be elected annually by the board of directors at its first
meeting held after each annual meeting of stockholders or as soon thereafter as
conveniently may be. Vacancies may be filled or new offices created and filled
at any meeting of the board of directors. Each officer shall hold office until
a successor is duly elected and qualified or until his earlier death,
resignation or removal as hereinafter provided.
Section 3. Removal. Any officer or agent elected by the board of
--------- -------
directors may be removed by the board of directors whenever in its judgment the
best interests of the corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed.
Section 4. Vacancies. Any vacancy occurring in any office because of
--------- ---------
death, resignation, removal, disqualification or otherwise, may be filled by the
board of directors for the unexpired portion of the term by the board of
directors then in office.
Section 5. Compensation. Compensation of all officers shall be fixed
--------- ------------
by the board of directors, and no officer shall be prevented from receiving such
compensation by virtue of his also being a director of the corporation.
Section 6. Chairman and Chief Executive Officer. The chairman and
--------- ------------------------------------
chief executive officer shall preside at all meetings of the stockholders and
board of directors at which he is present; subject to the powers of the board of
directors, the chairman and chief executive officer shall be in general and
active charge of the entire business and affairs of the corporation, and shall
be its chief policy making officer. Whenever the president is unable to serve,
by reason of sickness, absence or otherwise, the chairman and chief executive
officer shall perform all the duties and responsibilities and exercise all the
powers of the president.
Section 7. Chief Operating Officer. The chief operating officer of
--------- -----------------------
the corporation, subject to the powers of the board of directors, shall have
general and active management of the business of the corporation; and shall see
that all orders and resolutions of the board of directors are carried into
effect. The chief operating officer shall have such other powers and perform
-6-
<PAGE>
such other duties as may be prescribed by the chairman of the board, the chief
executive officer or the board of directors or as may be provided in these by-
laws.
Section 8. The President. The president shall be the chief operating
--------- -------------
officer of the corporation subject to the powers of the board of directors, and
shall see that all orders and resolutions of the board of directors are carried
into effect. The president shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation. Whenever the
chairman and chief executive officer is unable to serve, by reason of sickness,
absence or otherwise, the president shall have the powers and perform the duties
of the chairman and chief executive officer.
Section 9. Vice-Presidents. The vice-president, or if there shall be
--------- ---------------
more than one (1), the vice-presidents in the order determined by the board of
directors or by the president, shall, in the absence or disability of the
president, act with all of the powers and be subject to all the restrictions of
the president. The vice-presidents shall also perform such other duties and
have such other powers as the board of Directors, the president or these by-laws
may, from time to time, prescribe.
Section 10. The Secretary and Assistant Secretaries. The secretary
---------- ---------------------------------------
shall attend all meetings of the board of directors, all meetings of the
committees thereof and all meetings of the stockholders and record all the
proceedings of the meetings in a book or books to be kept for that purpose.
Under the president's supervision, the secretary shall give, or cause to be
given, all notices required to be given by these by-laws or by law; shall have
such powers and perform such duties as the board of directors, the president or
these by-laws may, from time to time, prescribe; and may have custody of the
corporate seal of the corporation. The secretary, or an assistant secretary,
shall have authority to affix the corporate seal to any instrument requiring it
and when so affixed, it may be attested by his signature or by the signature of
such assistant secretary. The board of directors may give general authority to
any other officer to affix the seal of the corporation and to attest the
affixing by his signature. The assistant secretary, or if there be more than
one, the assistant secretaries in the order determined by the board of
directors, shall, in the absence or disability of the secretary, perform the
duties and exercise the powers of the secretary and shall perform such other
duties and have such other powers as the board of directors, the president, or
secretary may, from time to time, prescribe.
Section 11. The Treasurer and Assistant Treasurer. The treasurer
---------- -------------------------------------
shall have the custody of the corporate funds and securities; shall keep full
and accurate accounts of receipts and disbursements in books belonging to the
corporation; shall deposit all monies and other valuable effects in the name and
to the credit of the corporation as may be ordered by the board of directors;
shall cause the funds of the corporation to be disbursed when such disbursements
have been duly authorized, taking proper vouchers for such disbursements; and
shall render to the president and the board of directors, at its regular meeting
or when the board of directors so requires, an account of the corporation; shall
have such powers and perform such duties as the board of directors, the
president or these by-laws may, from time to time, prescribe. If required
-7-
<PAGE>
by the board of directors, the treasurer shall give the corporation a bond
(which shall be rendered every six (6) years) in such sums and with such surety
or sureties as shall be satisfactory to the board of directors for the faithful
performance of the duties of the office of treasurer and for the restoration to
the corporation, in case of death, resignation, retirement, or removal from
office, of all books, papers, vouchers, money, and other property of whatever
kind in the possession or under the control of the treasurer belonging to the
corporation. The assistant treasurer, or if there shall be more than one (1),
the assistant treasurers, in the order determined by the board of directors,
shall in the absence or disability of the treasurer, perform the duties and
exercise the powers of the treasurer. The assistant treasurers shall perform
such other duties and have such other powers as the board of directors, the
president or treasurer may, from time to time, prescribe.
Section 12. Other Officers, Assistant Officers and Agents. Officers,
---------- ---------------------------------------------
assistant officers and agents, if any, other than those whose duties are
provided for in these by-laws, shall have such authority and perform such duties
as may from time to time be prescribed by resolution of the board of directors.
Section 13. Absence or Disability of Officers. In the case of the
---------- ---------------------------------
absence or disability of any officer of the corporation and of any person hereby
authorized to act in such officer's place during such officer's absence or
disability, the board of directors may by resolution delegate the powers and
duties of such officer to any other officer or to any director, or to any other
person whom it may select.
ARTICLE V
---------
INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS
-------------------------------------------------
Section 1. Nature of Indemnity. Each person who was or is made a
--------- -------------------
party or is threatened to be made a party to or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he, or a person of whom
he is the legal representative, is or was a director or officer, of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee, fiduciary, or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, shall be indemnified and
held harmless by the corporation to the fullest extent which it is empowered to
do so unless prohibited from doing so by the General Corporation Law of the
State of Delaware, as the same 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) against all expense,
liability and loss (including attorneys' fees actually and reasonably incurred
by such person in connection with such proceeding) and such indemnification
shall inure to the benefit of his heirs, executors and administrators; provided,
however, that, except as provided in Section 2 hereof, the corporation 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 corporation. The right to
-8-
<PAGE>
indemnification conferred in this Article V shall be a contract right and,
subject to Sections 2 and 5 hereof, shall include the right to be paid by the
corporation the expenses incurred in defending any such proceeding in advance of
its final disposition. The corporation may, by action of its board of
directors, provide indemnification to employees and agents of the corporation
with the same scope and effect as the foregoing indemnification of directors and
officers.
Section 2. Procedure for Indemnification of Directors and Officers.
--------- ---------------------------------------------- --------
Any indemnification of a director or officer of the corporation under Section I
of this Article V or advance of expenses under Section 5 of this Article V shall
be made promptly, and in any event within thirty (30) days, upon the written
request of the director or officer. If a determination by the corporation that
the director or officer is entitled to indemnification pursuant to this Article
V is required, and the corporation fails to respond within sixty (60) days to a
written request for indemnity, the corporation shall be deemed to have approved
the request. If the corporation denies a written request for indemnification or
advancing of expenses, in whole or in part, or if payment in full pursuant to
such request is not made within thirty (30) days, the right to indemnification
or advances as granted by this Article V shall be enforceable by the director or
officer in any court of competent jurisdiction. Such person's costs and
expenses incurred in connection with successfully establishing his right to
indemnification, in whole or in part, in any such action shall also be
indemnified by the corporation. 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 corporation) that the claimant has not met the
standards of conduct which make it permissible under the General Corporation Law
of the State of Delaware for the corporation to indemnify the claimant for the
amount claimed, but the burden of such defense shall be on the corporation.
Neither the failure of the corporation (including its board of directors,
independent legal counsel, or stockholders) to have made a determination prior
to the commencement of such action that indemnification of the claimant is
proper in the circumstances because he has met the applicable standard of
conduct set forth in the General Corporation Law of the State of Delaware, nor
an actual determination by the corporation (including its board of directors,
independent legal counsel, or stockholders) that the claimant has not met such
applicable standard of conduct, shall be a defense to the action or create a
presumption that the claimant has not met the applicable standard of conduct.
Section 3. Article Not Exclusive. The rights to indemnification and
--------- ---------------------
the payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Article V shall not be 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 4. Insurance. The corporation may purchase and maintain
--------- ---------
insurance on its own behalf and on behalf of any person who is or was a
director, officer, employee, fiduciary, or agent of the corporation 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 any liability asserted against him and incurred by him in any
such capacity, whether or
-9-
<PAGE>
not the corporation would have the power to indemnify such person against such
liability under this Article V.
Section 5. Expenses. Expenses incurred by any person described in
--------- --------
Section I of this Article V in defending a proceeding shall be paid by the
corporation in advance of such proceeding's final disposition unless otherwise
determined by the board of directors 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 is not entitled to be indemnified by
the corporation. Such expenses incurred by other employees and agents may be so
paid upon such terms and conditions, if any, as the board of directors deems
appropriate.
Section 6. Employees and Agents. Persons who are not covered by the
--------- --------------------
foregoing provisions of this Article V and who are or were employees or agents
of the corporation, or who are or were serving at the request of the corporation
as employees or agents of another corporation, partnership, joint venture, trust
or other enterprise, may be indemnified to the extent authorized at any time or
from time to time by the board of directors.
Section 7. Contract Rights. The provisions of this Article V shall be
--------- ---------------
deemed to be a contract right between the corporation and each director or
officer who serves in any such capacity at any time while this Article V and the
relevant provisions of the General Corporation Law of the State of Delaware or
other applicable law are in effect, and any repeal or modification of this
Article V or any such law shall not affect any rights or obligations then
existing with respect to any state of facts or proceeding then existing.
Section 8. Merger or Consolidation. For purposes of this Article V,
--------- -----------------------
references to "the corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify, its
directors, officers, and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under this Article V
with respect to the resulting or surviving corporation as he would have with
respect to such constituent corporation if its separate existence had continued.
ARTICLE VI
----------
CERTIFICATES OF STOCK
---------------------
Section 1. Form. Every holder of stock in the corporation shall be
--------- ----
entitled to have a certificate, signed by the chairman and chief executive
officer and the secretary or an assistant secretary of the corporation in the
name of the corporation, certifying the number of shares owned by such holder in
the corporation. If such a certificate is countersigned (1) by a transfer agent
or an assistant transfer agent other than the corporation or its employee or (2)
by a
-10-
<PAGE>
registrar, other than the corporation or its employee, the signature of any such
president, vice-president, secretary, or assistant secretary may be facsimiles.
In case any officer or officers who have signed, or whose facsimile signature or
signatures have been used on, any such certificate or certificates shall cease
to be such officer or officers of the corporation whether because of death,
resignation or otherwise before such certificate or certificates have been
delivered by the corporation, such certificate or certificates may nevertheless
be issued and delivered as though the person or persons who signed such
certificate or certificates or whose facsimile signature or signatures have been
used thereon had not ceased to be such officer or officers of the corporation.
All certificates for shares shall be consecutively numbered or otherwise
identified. The name of the person to whom the shares represented thereby are
issued, with the number of shares and date of issue, shall be entered on the
books of the corporation. Shares of stock of the corporation shall only be
transferred on the books of the corporation by the holder of record thereof or
by such holder's attorney duly authorized in writing, upon surrender to the
corporation of the certificate or certificates for such shares endorsed by the
appropriate person or persons, with such evidence of the authenticity of such
endorsement, transfer, authorization, and other matters as the corporation may
reasonably require, and accompanied by all necessary stock transfer stamps. In
that event, it shall be the duty of the corporation to issue a new certificate
to the person entitled thereto, cancel the old certificate or certificates, and
record the transaction on its books. The board of directors may appoint a bank
or trust company organized under the laws of the United States or any state
thereof to act as its transfer agent or registrar, or both in connection with
the transfer of any class or series of securities of the corporation.
Section 2. Lost Certificates. The board of directors may direct a new
--------- -----------------
certificate or certificates to be issued in place of any certificate or
certificates previously issued by the corporation alleged to have been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen, or destroyed. When
authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen, or destroyed certificate or
certificates, or his legal representative, to give the corporation a bond
sufficient to indemnify the corporation against any claim that may be made
against the corporation on account of the loss, theft or destruction of any such
certificate or the issuance of such new certificate.
Section 3. Fixing a Record Date for Stockholder Meetings. In order
--------- ---------------------------------------------
that the corporation may determine the stockholders entitled to notice of or to
vote at any meeting of stockholders or any adjournment thereof, the board of
directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the board of
directors, and which record date shall not be more than sixty (60) nor less than
ten (10) days before the date of such meeting. If no record date is fixed by the
board of directors, the record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be the close of business
on the next day preceding the day on which notice is given, or if notice is
waived, at the close of business on the day next preceding the day on which the
meeting is held. A determination of stockholders of record entitled to notice
of or to vote at a
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<PAGE>
meeting of stockholders shall apply to any adjournment of the meeting; provided,
--------
however, that the board of directors may fix a new record date for the adjourned
meeting.
Section 4. Fixing a Record Date for Action by Written Consent. In
--------- --------------------------------------------------
order that the corporation may determine the stockholders entitled to consent to
corporate action in writing without a meeting, the board of directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the board of directors, and
which date shall not be more than ten (10) days after the date upon which the
resolution fixing the record date is adopted by the board of directors. If no
record date has been fixed by the board of directors, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the board of directors is required by
statute, shall be the first date on which a signed written consent setting forth
the action taken or proposed to be taken is delivered to the corporation by
delivery to its registered office in the State of Delaware, its principal place
of business, or an officer or agent of the corporation having custody of the
book in which proceedings of meetings of stockholders are recorded. Delivery
made to the corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. If no record date has been fixed by
the board of directors and prior action by the board of directors is required by
statute, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting shall be at the close of business
on the day on which the board of directors adopts the resolution taking such
prior action.
Section 5. Fixing a Record Date for Other Purposes. In order that
--------- ---------------------------------------
the corporation may determine the stockholders entitled to receive payment of
any dividend or other distribution or allotment or any rights or the
stockholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purposes of any other lawful action,
the board of directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted,
and which record date shall be not more than sixty (60) days prior to such
action. If no record date is fixed, the record date for determining
stockholders for any such purpose shall be at the close of business on the day
on which the board of directors adopts the resolution relating thereto.
Section 6. Registered Stockholders. Prior to the surrender to the
--------- -----------------------
corporation of the certificate or certificates for a share or shares of stock
with a request to record the transfer of such share or shares, the corporation
may treat the registered owner as the person entitled to receive dividends, to
vote, to receive notifications, and otherwise to exercise all the rights and
powers of an owner. The corporation shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof.
Section 7. Subscriptions for Stock. Unless otherwise provided for in
--------- -----------------------
the subscription agreement, subscriptions for shares shall be paid in full at
such time, or in such installments and at such times, as shall be determined by
the board of directors. Any call made by the board of directors for payment on
subscriptions shall be uniform as to all shares of the same class or as to all
shares of the same series. In case of default in the payment of any installment
or call
-12-
<PAGE>
when such payment is due, the corporation may proceed to collect the amount due
in the same manner as any debt due the corporation.
ARTICLE VII
-----------
GENERAL PROVISIONS
------------------
Section 1. Dividends. Dividends upon the capital stock of the
--------- ---------
corporation, subject to the provisions of the certificate of incorporation, if
any, may be declared by the board of directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock of the corporation, subject to the provisions of the
certificate of incorporation. Before payment of any dividend, there may be set
aside out of any funds of the corporation available for dividends such sum or
sums as the directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the corporation, or
any other purpose and the directors may modify or abolish any such reserve in
the manner in which it was created.
Section 2. Checks, Drafts or Orders. All checks, drafts, or other
--------- ------------------------
orders for the payment of money by or to the corporation and all notes and other
evidences of indebtedness issued in the name of the corporation shall be signed
by such officer or officers, agent or agents of the corporation, and in such
manner, as shall be determined by resolution of the board of directors or a duly
authorized committee thereof.
Section 3. Contracts. The board of directors may authorize any
--------- ---------
officer or officers, or any agent or agents, of the corporation to enter into
any contract or to execute and deliver any instrument in the name of and on
behalf of the corporation, and such authority may be general or confined to
specific instances.
Section 4. Loans. The corporation may lend money to, or guarantee any
--------- -----
obligation of, or otherwise assist any officer or other employee of the
corporation or of its subsidiary, including any officer or employee who is a
director of the corporation or its subsidiary, whenever, in the judgment of the
directors, such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. The loan, guaranty or other assistance may be with or
without interest, and may be unsecured, or secured in such manner as the board
of directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing in this section contained shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
Section 5. Fiscal Year. The fiscal year of the corporation shall be
--------- -----------
the year ending March 31.
Section 6. Corporate Seal. The board of directors may provide a
--------- --------------
corporate seal which shall be in the form of a circle and shall have inscribed
thereon the name of the corporation and
-13-
<PAGE>
the words "Corporate Seal, Delaware". The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or otherwise.
Section 7. Voting Securities Owned By Corporation. Voting securities
--------- --------------------------------------
in any other corporation or partnership held by the corporation (including,
without limitation, partnership interests) shall be voted by the president,
unless the board of directors specifically confers authority to vote with
respect thereto, which authority may be general or confined to specific
instances, upon some other person or officer. Any person authorized to vote
securities shall have the power to appoint proxies, with general power of
substitution.
Section 8. Inspection of Books and Records. Any stockholder of
--------- -------------------------------
record, in person or by attorney or other agent, shall, upon written demand
under oath stating the purpose thereof, have the right during the usual hours
for business to inspect for any proper purpose the corporation's stock ledger
and a list of its stockholders and to make copies or extracts therefrom. A
proper purpose shall mean any purpose reasonably related to such person's
interest as a stockholder. In every instance where an attorney or other agent
shall be the person who seeks the right to inspection, the demand under oath
shall be accompanied by a power of attorney or such other writing which
authorizes the attorney or other agent to so act on behalf of the stockholder.
The demand under oath shall be directed to the corporation at its registered
office in the State of Delaware or at its principal place of business.
Section 9. Section Headings. Section headings in these by-laws are
--------- ----------------
for convenience of reference only and shall not be given any substantive effect
in limiting or otherwise construing any provision herein.
Section 10. Inconsistent Provisions. In the event that any provision
---------- -----------------------
of these by-laws is or becomes inconsistent with any provision of the
certificate of incorporation, the General Corporation Law of the State of
Delaware or any other applicable law, such provision of these by-laws shall not
be given any effect to the extent of such inconsistency but shall otherwise be
given full force and effect.
ARTICLE VIII
------------
AMENDMENTS
----------
These by-laws may be amended, altered, or repealed and new by-laws
adopted at any meeting of the board of directors by a majority vote. The fact
that the power to adopt, amend, alter, or repeal the by-laws has been conferred
upon the board of directors shall not divest the stockholders of the same
powers.
-14-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-28-1997
<PERIOD-START> MAR-30-1996
<PERIOD-END> JUN-28-1996
<CASH> 3,201
<SECURITIES> 0
<RECEIVABLES> 4,648
<ALLOWANCES> 0
<INVENTORY> 5,204
<CURRENT-ASSETS> 0
<PP&E> 116,819
<DEPRECIATION> 24,680
<TOTAL-ASSETS> 249,411<F1>
<CURRENT-LIABILITIES> 0
<BONDS> 201,655
0
0
<COMMON> 18,104
<OTHER-SE> (21,439)
<TOTAL-LIABILITY-AND-EQUITY> 249,411
<SALES> 0<F2>
<TOTAL-REVENUES> 47,940
<CGS> 0
<TOTAL-COSTS> 32,580<F3>
<OTHER-EXPENSES> 10,826
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,121
<INCOME-PRETAX> (1,587)
<INCOME-TAX> (400)<F4>
<INCOME-CONTINUING> (1,187)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,187)<F5>
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Includes Advance Rental Payments of $21,643, Contract Rights of $65,033, and
Goodwill of $43,737, each net of accumulated amortization, for the 3 months
ended June 28, 1996.
<F2>Total Revenues include Sales of laundromats and equipment of $4,558, for the
3 months ended June 28, 1996.
<F3>Total Costs include Cost of Goods Sold of $3,375, for the 3 months ended
June 28, 1996.
<F4>The provision (benefit) for income taxes consists of $50 currently payable
and ($450) deferred, for the 3 months ended June 28, 1996.
<F5>In addition, EBITDA (earnings before deductions for interest, income taxes,
depreciation and amortization) of $14,344, was generated for the reported
period. EBITDA is used by management and certain investors as an indicator
of a company's historical ability to service debt.
</FN>
</TABLE>
