10-Q

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2002

Commission file number:    333-50437

APCOA/STANDARD PARKING, INC.
(Exact Name of Registrant as Specified in Its Charter)

Delaware	16-1171179
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

900 N. Michigan Avenue
Chicago, Illinois 60611-1542
(Address of Principal Executive Offices, Including Zip Code)

(312) 274-2000
(Registrant's Telephone Number, Including Area Code)

        Former name, address and fiscal year, if changed since last report:

        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 ý    o NO

        As of April 30, 2002, there were outstanding 31.3 shares of the issuer's common stock.

APCOA/STANDARD PARKING, INC.
FORM 10-Q INDEX

Part I. Financial Information

Item 1.	Financial Statements (Unaudited):
	Condensed Consolidated Balance Sheets as of March 31, 2002 and December 31, 2001	3
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2002 and March 31, 2001	4
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2002 and March 31, 2001	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	17
Part II. Other Information
Item 1.	Legal Proceedings	18
Item 2.	Changes in Securities and Use of Proceeds	18
Item 4.	Submission of Matters to a Vote of Security Holders	18
Item 5.	Other Information	18
Item 6.	Exhibits and Reports on Form 8-K	19
Signatures		21
Index to Exhibits		22

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

APCOA/STANDARD PARKING, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except for share data)

		March 31, 2002			December 31, 2001
		(Unaudited)			(see Note)
ASSETS
Current assets:
	Cash and cash equivalents	$	7,056		$	7,602
	Notes and accounts receivable, net		43,939			40,276
	Prepaid expenses and supplies		989			1,194
Total current assets			51,984			49,072
Leaseholds and equipment, net			17,694			18,583
Advances and deposits			1,156			1,196
Cost in excess of net assets acquired			115,382			115,332
Intangible and other assets			7,768			8,051
	Total assets	$	193,984		$	192,234
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
	Accounts payable	$	31,957		$	34,620
	Accrued and other current liabilities		23,105			33,054
	Current portion of long-term borrowings		1,469			1,554
	Total current liabilities		56,531			69,228
Long-term borrowings, excluding current portion			155,578			173,703
Other long-term liabilities			13,108			12,658
Senior convertible preferred stock			41,383			—
Redeemable preferred stock			52,589			61,330
Common stock subject to put/call rights; 5.01 shares issued and outstanding			8,743			8,500
Common stockholders' deficit:
	Common stock, par value $1.00 per share; 3,000 shares authorized; 26.3 shares issued and outstanding		1			1
	Additional paid-in capital		15,222			11,422
	Accumulated other comprehensive income		(707	)		(803	)
	Accumulated deficit		(148,464	)		(143,805	)
	Total common stockholders' deficit		(133,948	)		(133,185	)
Total liabilities and stockholders' deficit		$	193,984		$	192,234

See Notes to Condensed Consolidated Financial Statements.

Note: The balance sheet at December 31, 2001 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

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APCOA/STANDARD PARKING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, unaudited)

		Three Months Ended
		March 31, 2002			March 31, 2001
Parking services revenue:
	Lease contracts	$	34,839		$	41,273
	Management contracts		20,377			20,407
			55,216			61,680
Cost of parking services:
	Lease contracts		31,528			37,190
	Management contracts		10,960			10,451
			42,488			47,641
Gross profit			12,728			14,039
General and administrative expenses			7,720			8,531
Other special charges			208			—
Depreciation and amortization			1,409			2,729
Management fee-parent company			750			—
Operating income			2,641			2,779
Interest expense (income):
	Interest expense		3,916			4,662
	Interest income		(45	)		(218	)
			3,871			4,444
Loss before minority interest and income taxes			(1,230	)		(1,665	)
Minority interest			30			49
Income tax expense			115			100
Net loss			(1,375	)		(1,814	)
Preferred stock dividends			3,041			1,524
Increase in value of common stock subject to put/call rights			243			2,404
Net loss attributable to common stockholders		$	(4,659	)	$	(5,742	)

See Notes to Condensed Consolidated Financial Statements.

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APCOA/STANDARD PARKING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)

		Three Months Ended
		March 31, 2002			March 31, 2001
Operating activities:
Net loss		$	(1,375	)	$	(1,814	)
Adjustments to reconcile net loss to net cash provided by operations:
	Depreciation and amortization		1,409			2,729
	Non-cash interest		289			—
	Change in operating assets and liabilities, net of acquisitions		4,164			1,831
	Net cash provided by operating activities		4,487			2,746
Investing activities:
Purchase of leaseholds and equipment			(224	)		(455	)
Net cash used in investing activities			(224	)		(455	)
Financing activities:
Proceeds from long-term borrowings			—			3,800
Payments on long-term borrowings			(3,122	)		(74	)
Payments on joint venture borrowings			(183	)		(209	)
Redemption of preferred stock			(1,600	)		—
Net cash (used in) provided by financing activities			(4,905	)		3,517
Effect of exchange rate on cash and cash equivalents			96			315
(Decrease) increase in cash and cash equivalents			(546	)		6,123
Cash and cash equivalents at beginning of period			7,602			3,539
Cash and cash equivalents at end of period		$	7,056		$	9,662
Supplemental disclosures:
Cash paid during the period for:
	Interest	$	5,812		$	7,404
	Taxes		166			256

See Notes to Condensed Consolidated Financial Statements.

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APCOA/STANDARD PARKING, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2002
(in thousands, unaudited)

1.    Basis of Presentation

        The accompanying unaudited condensed consolidated financial statements of APCOA/Standard Parking, Inc. ("APCOA/Standard" or the "Company") have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States for complete financial statements.

        In the opinion of management, all adjustments (consisting only of adjustments of a normal and recurring nature) considered necessary for a fair presentation of the financial position and results of operations have been included. Operating results for the three-month period ended March 31, 2002 are not necessarily indicative of the results that might be expected for any other interim period or the fiscal year ending December 31, 2002. The financial statements presented in this Report should be read in conjunction with the consolidated financial statements and footnotes thereto included in APCOA/Standard's 2001 Annual Report on Form 10-K filed March 29, 2002.

        Certain reclassifications have been made to the 2001 financial information to conform to the 2002 presentation.

2.    Other Special Charges

        Included in "Other Special Charges" in the accompanying condensed consolidated statements of operations are the following:

	Three Months Ended
	March 31, 2002		March 31, 2001
Cost associated with registration	$	208	$	0

        The costs associated with registration for the period ended March 31, 2002, relate to professional fees incurred to register the 14% senior subordinated second lien notes. There were no special charges for the period ended March 31, 2001.

3.    Exchange Offer

        On January 11, 2002, APCOA/Standard completed an unregistered exchange and recapitalization of a portion of its 9¹/4% Senior Subordinated Notes due 2008. APCOA/Standard received gross cash proceeds of $20.0 million and retired $91.1 million of its outstanding 9¹/4% Senior Subordinated Notes due 2008. In exchange, APCOA/Standard issued $59.3 million of 14% Senior Subordinated Second Lien Notes due 2006 and 3,500 shares of 18% Senior Convertible Redeemable Preferred Stock, with a face value of $35.0 million which is mandatorily redeemable on June 15, 2008. In conjunction with the exchange, the Company repaid $9.5 million of indebtedness under the Senior Credit Facility, paid $2.7 million in accrued interest relating to the $91.1 million of the 9¹/4% Senior Subordinated Notes due 2008 that were tendered, $9.7 million (including $1.3 million capitalized as debt issuance costs related to the amended and restated senior credit facility) in fees and expenses related to the exchange, which included a $3.0 million transaction advisory fee to AP Holdings, Inc. ("AP Holdings"), APCOA/Standard's parent company, and a repurchase of $1.5 million of redeemable preferred stock held by AP Holdings. The fees and expenses of $9.7 million related to the exchange and the amended and restated senior credit facility were provided for in the period ended December 31, 2001.

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        This exchange offer and recapitalization was accounted for as a "modification of terms" type of troubled debt restructuring as prescribed by FASB Statement No. 15, Accounting by Debtors and Creditors for Troubled Debt Restructurings ("FAS 15"). Under FAS 15, an effective reduction in principal or accrued interest does not result in the debtor recording a gain as long as the future contractual payments (principal and interest combined) under the restructured debt are more than the carrying amount of the debt before the restructuring. In those circumstances, the carrying amount of the original debt is not adjusted and the effects of any changes are reflected in future periods as a reduction in interest expense. That is, a constant effective interest rate is applied to the carrying amount of the debt between restructuring and maturity. The effective interest rate is the discount rate that equates the present value of the future cash payments specified by the new terms with the unadjusted carrying amount of the debt.

        In addition, under FAS 15, when a debtor issues a redeemable equity interest in partial satisfaction of debt in conjunction with a modification of terms, the debtor recognizes no gain and the equity is recorded at its estimated fair value. Legal fees and other direct costs incurred by a debtor to effect a troubled debt restructuring are expensed as incurred, except for amounts incurred directly in granting an equity interest, if any.

        The accounting for this exchange under FAS 15 was as follows:

•

No gain was recognized by the Company for the excess of (a) the principal of the unregistered notes exchanged for the registered notes, over (b) the principal of the registered notes.



•

The unrecorded gain, which will remain part of the carrying value of the debt, will be amortized as a reduction to future interest expense using an effective interest rate applied to the combined balance of the unregistered and registered notes.

        Long-term borrowings as of March 31, 2002 includes $16.3 million of carrying value in excess of principal.

4.    Credit Facility

        The Company entered into an amended and restated credit agreement as of January 11, 2002 with the LaSalle Bank National Association ("LaSalle") and Bank One, N.A., ("Bank One") (the lenders under its prior senior credit facility) that restructured its prior $40.0 million senior credit facility into a new senior credit facility. The new facility consists of a $25.0 million revolving credit facility provided by LaSalle, which will expire on March 1, 2004 and a $15.0 million term loan held by Bank One amortizing with $5.0 million due on December 31, 2002 and the remainder due on March 10, 2004. APCOA/Standard utilizes the revolving new facility to provide readily accessible cash for working capital purposes and general corporate purposes and to provide standby letters of credit. The revolving new facility provides for cash borrowings up to the lesser of $25.0 million or 80% of its eligible accounts receivable (as defined therein) and includes a letter of credit facility with a sublimit of $8.0 million (or such greater amount as LaSalle may agree to for letters of credit). The revolving new facility bears interest based, at the Company's option, either on LIBOR plus 3.75% or the Alternate Base Rate (as defined below) plus 1.50%. The Company may elect interest periods of 1, 2, or 3 months for LIBOR-based borrowings. The Alternate Base Rate is the higher of (i) the rate publicly announced from time to time by LaSalle as its "prime rate" and (ii) the overnight federal funds rates plus 0.50%. LIBOR will at all times be determined by taking into account maximum statutory reserves required (if any). The interest rate applicable to the term loan is a fixed rate of 13.0%, of which cash interest at 9.5% will be payable monthly in arrears and 3.5% will accrue without compounding and be payable on March 10, 2004 or earlier maturity, whether pursuant to any permitted prepayment acceleration or otherwise. The new senior credit facility includes covenants that limit the Company's ability to incur additional indebtedness, issue preferred stock or pay dividends and will contain certain other restrictions on its activities. It is secured by substantially all of its existing and future domestic subsidiaries' existing and after-acquired assets (including 100% of the stock of its existing and future domestic subsidiaries and 65% of the stock of its existing and future foreign subsidiaries), by a first priority pledge of all of the common stock of the Company owned by AP Holdings and by all other

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existing and after-acquired property of the parent company. At March 31, 2002, the Company had $3.0 million of letters of credit outstanding under the new facility and borrowings against the new facility aggregated $25.5 million.

5.    Subsidiary Guarantors

        Substantially all of the Company's direct or indirect wholly owned domestic subsidiaries, other than inactive subsidiaries, fully, unconditionally, jointly and severally guarantee the Company's 14% Senior Subordinated Second Lien Notes due December 15, 2006. Financial statements of the guarantor subsidiaries are not separately presented because, in the opinion of management, such financial statements are not material to investors. The non-guarantor subsidiaries include joint ventures, wholly owned subsidiaries of the Company organized under the laws of foreign jurisdictions, inactive subsidiaries, and bankruptcy remote subsidiaries formed in connection with joint ventures, all of which are included in the consolidated financial statements. The following is summarized combined financial information for the Company, the guarantor subsidiaries of the Company and the non-guarantor subsidiaries of the Company:

		APCOA/Standard			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Total
Balance Sheet Data:
March 31, 2002
	Cash and cash equivalents	$	5,122		$	31		$	1,903	$	—		$	7,056
	Notes and accounts receivable		37,046			2,634			4,259		—			43,939
	Current assets		43,012			2,720			6,252		—			51,984
	Leaseholds and equipment, net		9,990			4,860			2,844		—			17,694
	Cost in excess of net assets acquired, net		23,532			88,636			3,214		—			115,382
	Investment in subsidiaries		104,423			—			—		(104,423	)		—
	Total assets		185,577			100,072			12,758		(104,423	)		193,984
	Accounts payable		20,411			8,798			2,748		—			31,957
	Current liabilities		42,843			7,349			6,339		—			56,531
	Long-term borrowings, excluding current portion		153,185			—			2,393		—			155,578
	Senior convertible preferred stock		41,383			—			—		—			41,383
	Redeemable preferred stock		52,589			—			—		—			52,589
	Common stock subject to put/call rights		8,743			—			—		—			8,743
	Total stockholders' equity (deficit)		(122,880	)		90,915			2,440		(104,423	)		(133,948	)
	Total liabilities and stockholders' equity (deficit)		185,577			100,072			12,758		(104,423	)		193,984
December 31, 2001
	Cash and cash equivalents	$	8,522		$	(2,009	)	$	1,089	$	—		$	7,602
	Notes and accounts receivable		30,568			5,767			3,941		—			40,276
	Current assets		40,105			3,822			5,145		—			49,072
	Leaseholds and equipment, net		10,377			5,141			3,065		—			18,583
	Cost in excess of net assets acquired, net		23,492			88,618			3,222		—			115,332
	Investment in subsidiaries		92,335			—			—		(92,335	)		—
	Total assets		170,906			101,771			11,892		(92,335	)		192,234
	Accounts payable		25,238			6,865			2,517		—			34,620
	Current liabilities		55,706			7,769			5,753		—			69,228

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	Long-term borrowings, excluding current portion		171,127			—			2,576			—			173,703
	Redeemable preferred stock		61,330			—			—			—			61,330
	Common stock subject to put/call rights		8,500			—			—			—			8,500
	Total stockholders' equity (deficit)		(136,054	)		93,034			2,170			(92,335	)		(133,185	)
	Total liabilities and stockholders' equity (deficit)		170,906			101,771			11,892			(92,335	)		192,234
Income Statement Data: Three Months Ended March 31, 2002
	Parking Revenue	$	32,102		$	17,630		$	5,484		$	—		$	55,216
	Cost of parking services		24,127			13,758			4,603			—			42,488
	General and administrative expenses		1,084			6,570			67			—			7,720
	Other special charges		208			—			—			—			208
	Depreciation and amortization		741			439			229			—			1,409
	Management fee — parent company		750			—			—			—			750
	Operating income		5,192			(3,137	)		586			—			2,641
	Interest expense, net		3,788			(5	)		88			—			3,871
	Equity in earnings of subsidiaries		(2,865	)		—			—			2,865			—
	Net (loss) income		(1,375	)		(3,131	)		264			2,865			(1,375	)
Three Months Ended March 31, 2001
	Parking Revenue	$	33,610		$	22,393		$	5,677		$	—		$	61,680
	Cost of parking services		24,965			18,147			4,529			—			47,641
	General and administrative expenses		1,244			7,233			74			—			8,531
	Other special charges		—			—			—			—			—
	Depreciation and amortization		1,195			1,247			287			—			2,729
	Operating income		6,226			(4,234	)		787			—			2,779
	Interest expense, net		4,330			(11	)		125			—			4,444
	Equity in earnings of subsidiaries		(3,760	)		—			—			3,760			—
	Net (loss) income		(1,814	)		(4,222	)		462			3,760			(1,814	)
Cash Flow Data: Three Months Ended March 31, 2002
Net cash provided by operating activities		$	1,585		$	2,085		$	817		$	—		$	4,487
Investing activities:
	Purchase of leaseholds and equipment		(175	)		(46	)		(3	)		—			(224	)
Net cash used in investing activities			(175	)		(46	)		(3	)		—			(224	)

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	Financing activities:
		Payments on long-term borrowings		(3,122	)		—			—			—		(3,122	)
		Payments on joint venture borrowings		(183	)		—			—			—		(183	)
		Redemption of redeemable preferred stock		(1,600	)		—			—			—		(1,600	)
Net cash used by financing activities				(4,905	)		—			—			—		(4,905	)
Effect of exchange rate changes				96			—			—			—		96
Three Months Ended March 31, 2001
Net cash provided by (used in) operating activities			$	3,787		$	408		$	(1,449	)	$	—	$	2,746
Investing activities:				—
	Purchase of leaseholds and equipment			(47	)		(408	)		—			—		(455	)
	Net cash used in investing activities			(47	)		(408	)		—			—		(455	)
	Financing activities:
		Proceeds from long-term borrowings		3,800			—			—			—		3,800
		Payments on long-term borrowings		(74	)		—			—			—		(74	)
		Payments on joint venture borrowings		(209	)		—			—			—		(209	)
Net cash provided by financing activities				3,517			—			—			—		3,517
Effect of exchange rate changes				315			—			—			—		315

6.    Subsequent Events

        On April 10, 2002, the Company filed a registration statement on Form S-4 (Registration No. 333-86008) related to the proposed exchange of up to approximately $59.3 million in principal amount of its 14% Senior Subordinated Second Lien Notes due December 15, 2006, which have been registered under the Securities Act, for all of its outstanding unregistered notes.

7.    Recently Issued Accounting Pronouncements

        In June 2001, the Financial Accounting Standards Board issued SFAS No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets.

        On January 1, 2002, the Company adopted SFAS No. 141 and 142. SFAS No. 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001 and also includes guidance on the initial recognition and measurement of goodwill and other intangible assets acquired in a business combination. The initial adoption of SFAS No. 141 did not affect the Company's results of operations or its financial position.

        The adoption of SFAS No. 142 eliminates the amortization of goodwill beginning January 1, 2002, and instead requires that the goodwill be tested for impairment. Transitional impairment tests of goodwill made during the quarter ended March 31, 2002 did not require adjustment to the carrying value of its goodwill. As of March 31, 2002, the Company's definite lived intangible assets of $3,430,

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net of accumulated amortization of $2,813, primarily consisting of non-compete agreements, continue to be amortized over their useful lives.

        Amortization expense for intangible assets during the three months ended March 31, 2002 was $147. Estimated amortization expense for the remainder of 2002 and the five succeeding fiscal years is as follows:

	Estimated Amortization Expense
2002 (remainder)	$	440
2003		587
2004		587
2005		570
2006		516
2007		516

        Actual results of operations for the three months ended March 31, 2002 and the pro forma results of operations for the three months ended March 31, 2001 had we applied the non-amortization provisions of SFAS 142 in the prior period are as follows:

	For the three months ended March 31,
	2002			2001
Net loss	$	(1,375	)	$	(1,814	)
Add: goodwill amortization		—			804
Adjusted net loss	$	(1,375	)	$	(1,010	)

        In August 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, which supersedes both SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of and the accounting and reporting provisions of Accounting Principles Board Opinion No. 30, Reporting the Results of Operations-Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions ("Opinion 30"), for the disposal of a segment of a business (as previously defined in that Opinion). SFAS No. 144 retains the fundamental provisions in SFAS No. 121 for recognizing and measuring impairment losses on long-lived assets held for use and long-lived assets to be disposed of by sale, while also resolving significant implementation issues associated with SFAS No. 121. For example, SFAS No. 144 provides guidance on how a long-lived asset that is used as part of a group should be evaluated for impairment, establishes criteria for when a long-lived asset is held for sale, and prescribes the accounting for a long-lived asset that will be disposed of other than by sale. SFAS No. 144 retains the basic provisions of Opinion 30 on how to present discontinued operations in the income statement but broadens that presentation to include a component of an entity (rather than a segment of a business). Unlike SFAS No. 121, SFAS No. 144 does not provide guidance on impairment of goodwill. Rather, goodwill is evaluated for impairment under SFAS No. 142, Goodwill and Other Intangible Assets. The Company adopted SFAS No. 144 on January 1, 2002, and there was no impact to the results of operations or its financial position upon adoption.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview

        APCOA/Standard Parking, Inc. ("APCOA/Standard" or the "Company") operates in a single reportable segment, operating parking facilities under two types of arrangements: management contracts and leases. Under a management contract, APCOA/Standard typically receives a base monthly fee for managing the property and may also receive a small incentive bonus based on the achievement of facility revenues above a base amount among other factors. In some instances, APCOA/Standard also receives certain fees for ancillary services. Typically, all of the underlying revenues, expenses and capital expenditures under a management contract flow through to the property owner, not to APCOA/Standard. Under lease arrangements, APCOA/Standard generally pays to the property owner either a fixed annual rental, a percentage of gross customer collections or a combination thereof. APCOA/Standard collects all revenues under lease arrangements and is responsible for most operating expenses, but it is typically not responsible for major maintenance or capital expenditures. As of March 31, 2002, APCOA/Standard operated approximately 83% of its 1,973 parking facilities under management contracts and approximately 17% under leases.

        Gross customer collections.    Gross customer collections consist of gross receipts collected at all leased and managed properties, including unconsolidated affiliates.

        Parking services revenue—lease contracts.    Parking services revenues related to lease contracts consist of all revenues received at a leased facility, including development fees, gains on sales of contracts and payments for exercising termination rights.

        Parking services revenue—management contracts.    Management contract revenue consists of management fees, including both fixed and revenue-based fees, and fees for ancillary services such as accounting, equipment leasing, payments received for exercising termination rights, consulting, insurance and other value-added services with respect to managed locations. Management contract revenue excludes gross customer collections at such locations. Management contracts generally provide APCOA/Standard a management fee regardless of the operating performance of the underlying facility.

        Cost of parking services—lease contracts.    The cost of parking services under a lease arrangement consists of contractual rental fees paid to the facility owner and all operating expenses incurred in connection with operating the leased facility. Contractual fees paid to the facility owner are based on either a fixed contractual amount or a percentage of gross revenue, or a combination thereof. Generally under a lease arrangement, APCOA/Standard is not responsible for major capital expenditures or property taxes.

        Cost of parking services—management contracts.    The cost of parking services under a management contract is generally passed through to the facility owner. As a result, therefore these costs are not included in the results of operations of the Company. Several APCOA/Standard contracts, which are referred to as reverse management contracts, however, require APCOA/Standard to pay for certain costs that are offset by larger management fees.

        General and administrative expenses.    General and administrative expenses include primarily salaries, wages, travel and office related expenses for the headquarters and field offices and supervisory employees.

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Summary of Operating Facilities

        The following table reflects the Company's facilities at the end of the periods indicated:

		March 31, 2002	December 31, 2001	March 31, 2000
Managed facilities		1,645	1,617	1,566
Leased facilities		328	329	357
	Total facilities	1,973	1,946	1,923

        The Company's strategy is to add locations in core cities where a concentration of locations improves customer service levels and operating margins. In general, contracts added as set forth in the table above followed this strategy.

Results of Operations

        In analyzing gross margins of APCOA/Standard, it should be noted that the cost of parking services for parking facilities under management contracts, incurred in connection with the provision of management services is generally paid by its clients. Several management contracts, however, which are referred to as reverse management contracts, require the Company to pay for certain costs that are offset by larger management fees. Margins for lease contracts vary significantly not only due to operating performance, but also variability in parking rates in different cities and varying space utilization by parking facility type and location.

        The attacks that occurred on September 11^th had an immediate effect on the Company's business at all of the 74 airports that it operates and, to a lesser extent, at isolated urban facilities near governmental institutions. Although business at airports had been declining before the September 11^th attacks, an immediate significant decrease in airport revenues occurred following those events. Parking revenue at its airports declined 45.3% during the period of September 16 through 30, 2001, compared to the same period of 2000. Revenues at airports have recovered since the attacks to a 16.6% decline for the period December 15-30, 2001, and has improved further to a 11.4% decline for the month of March 2002 as compared to the same period in the prior year. The Company does not know what the lasting effect of the September 11^th attacks will be. However, there remain in place several stringent security measures that prohibit parking within a certain distance of the terminal, which continues to impact utilization of parking spaces. The airport parking transportation market represented approximately 21% of the Company's 2001 annual gross profit.

        The following should be read in conjunction with the condensed consolidated financial statements.

Three Months ended March 31, 2002 Compared to Three Months ended March 31, 2001

        Gross customer collections.    Gross customer collections decreased $38.2 million, or 9.6%, to $357.3 million in the first quarter of 2002, compared to $395.5 in the first quarter of 2001. This decrease is attributable to the economic impact affecting the airport and travel industry, the lingering effects of the attacks of September 11^th, and the downturn in general economic conditions. This decrease was partially offset by the addition of a net total of 50 locations.

        Parking services revenue—lease contracts.    Lease contract revenue decreased $6.5 million, or 15.6%, to $34.8 million in the first quarter of 2002, compared to $41.3 million in the first quarter of 2001. This decrease resulted from the net reduction of 29 leases through contract expirations, conversions to management contracts and the downturn in general economic conditions.

        Parking services revenue—management contracts.    Management contract revenue of $20.4 million in the first quarter of 2002 was equivalent to $20.4 million in the first quarter of 2001. The increase

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resulting from the net addition of 79 management contracts through internal growth and conversions from lease contracts was offset by the negative economic impact on our reverse management contracts.

        Cost of parking services—lease contracts.    Cost of parking services for lease contracts decreased $5.7 million, or 15.2%, to $31.5 million for the first quarter of 2002, compared to $37.2 million in the first quarter of 2001. This decrease resulted from the reduction of 29 leases through terminations and conversions to management contracts. Gross margin for lease contracts declined to 9.5% for the first quarter of 2002 compared to 9.9% for the first quarter of 2001. This decrease resulted from increased rents on lease contract renewals, the lower airport travel volumes and the downturn in general economic conditions.

        Cost of parking services—management contracts.    Cost of parking services for management contracts increased $0.5 million, or 4.9%, to $11.0 million for the first quarter of 2002, compared to $10.5 million in the first quarter of 2001. This increase resulted from the addition of a net total of 79 management contracts through internal growth and conversions from lease contracts. Gross margin for management contracts declined to 46.2% in the first quarter of 2002 compared to 48.8% for the first quarter of 2001. Most management contracts have no cost of parking services related to them, as all costs are reimbursable to the Company. However, several contracts, which are referred to as reverse management contracts, require the Company to pay for certain costs that are offset by larger management fees. The increase in cost of parking for management contracts was related to the addition of several contracts of this type and the negative economic impact affecting airport travel volumes on these types of contracts.

        General and administrative expenses.    General and administrative expenses decreased $0.8 million, or 9.5%, to $7.7 million for the first quarter of 2002, as compared to $8.5 million for the first quarter of 2001. This decrease resulted from cost savings, staff reductions and operating efficiencies.

        Other special charges.    The Company recorded $0.2 million of other special charges in the first quarter of 2002, as compared to no charges in the first quarter of 2001. The 2002 special charges relate to legal costs incurred for the registration of the 14% senior subordinated second lien notes.

        Management fee—parent company.    The Company recorded $0.8 million of management fee to our parent company, AP Holdings, pursuant to the Company's management agreement with AP Holdings and as permitted by the terms and conditions as set forth in the new senior credit agreement.

Liquidity and Capital Resources

        On January 11, 2002, the Company completed a restructuring of its publicly issued debt. The Company exchanged $91.1 million of its outstanding 9¹/4% notes due 2008 for $59.3 million of the Company's newly issued 14% senior subordinated second lien notes due 2006 and shares of the Company's newly issued Series D preferred stock. As part of these transactions, the Company also received $20.0 million in cash. The cash was used to repay borrowings under the Company's old credit facility, repurchase shares of existing redeemable Series C preferred stock owned by our parent company and pay expenses incurred in connection with the restructuring transactions (including approximately $3.0 million to our parent company as a transaction advisory fee).

        The Company entered into an amended and restated credit agreement as of January 11, 2002 with the LaSalle Bank National Association ("LaSalle") and Bank One, N.A., ("Bank One") (the lenders under its prior senior credit facility) that restructured its prior $40.0 million senior credit facility into a new senior credit facility. The new facility consists of a $25.0 million revolving credit facility provided by LaSalle, which will expire on March 1, 2004 and a $15.0 million term loan held by Bank One amortizing with $5.0 million due on December 31, 2002 and the remainder due on March 10, 2004. APCOA/Standard utilizes the revolving new facility to provide readily accessible cash for working capital purposes and general corporate purposes and to provide standby letters of credit. The revolving

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new facility provides for cash borrowings up to the lesser of $25.0 million or 80% of its eligible accounts receivable (as defined therein) and includes a letter of credit facility with a sublimit of $8.0 million (or such greater amount as LaSalle may agree to for letters of credit). The revolving new facility bears interest based, at the Company's option, either on LIBOR plus 3.75% or the Alternate Base Rate (as defined below) plus 1.50%. The Company may elect interest periods of 1, 2, or 3 months for LIBOR-based borrowings. The Alternate Base Rate is the higher of (i) the rate publicly announced from time to time by LaSalle as its "prime rate" and (ii) the overnight federal funds rates plus 0.50%. LIBOR will at all times be determined by taking into account maximum statutory reserves required (if any). The interest rate applicable to the term loan is a fixed rate of 13.0%, of which cash interest at 9.5% will be payable monthly in arrears and 3.5% will accrue without compounding and be payable on March 10, 2004 or earlier maturity, whether pursuant to any permitted prepayment acceleration or otherwise. The new senior credit facility includes covenants that limit the Company's ability to incur additional indebtedness, issue preferred stock or pay dividends and will contain certain other restrictions on its activities. It is secured by substantially all of its existing and future domestic subsidiaries' existing and after-acquired assets (including 100% of the stock of our existing and future domestic subsidiaries and 65% of the stock of its existing and future foreign subsidiaries), by a first priority pledge of all of the common stock of the Company owned by AP Holdings and by all other existing and after-acquired property of the parent company. At March 31, 2002, the Company had $3.0 million of letters of credit outstanding under the new facility and borrowings against the new facility aggregated $25.5 million.

        As a result of day-to-day activity at the parking locations, APCOA/Standard collects significant amounts of cash. Lease contract revenue is generally deposited into local APCOA/Standard bank accounts, with a portion remitted to the clients in the form of rental payments according to the terms of the leases. Under management contracts, some clients require APCOA/Standard to deposit the daily receipts into a local APCOA/Standard bank account, with the cash in excess of the Company's operating expenses and management fees remitted to the client at negotiated intervals. Other clients require the Company to deposit the daily receipts into client accounts and the clients then reimburse the Company for operating expenses and pay the Company's management fee subsequent to month-end. Some clients require a segregated account for the receipts and disbursements of locations.

        Gross daily collections are collected by APCOA/Standard and deposited into banks in one of three methods, which impact the Company's investment in working capital: (i) locations with revenues deposited into APCOA/Standard's bank accounts reduce the Company's investment in working capital, (ii) locations that have segregated accounts generally require no investment in working capital and (iii) accounts where the revenues are deposited into the clients' accounts increase the Company's investment in working capital. The Company's average investment in working capital depends on its contract mix. For example, an increase in contracts that required all cash deposited in the Company's bank accounts reduces its investment in working capital and improves its liquidity. During the period of January 1, 2002 to March 31, 2002, there was no decrease in these types of contracts.

        APCOA/Standard's liquidity also fluctuates on an intra-month and intra-year basis depending on the contract mix and timing of significant cash payments such as the Company's scheduled interest payments. Additionally, the Company's ability to utilize cash deposited into APCOA/Standard local accounts is dependent upon the availability and movement of that cash into the Company's corporate account. For all these reasons, the Company from time to time carries significant cash balances, while at the same time utilizing the senior credit facility.

        The Company is required under certain contracts to provide performance bonds. These bonds are renewed on an annual basis. The market for performance bonds has been severely impacted by the events of September 11^th and general economic conditions. Consequently, the market has contracted, resulting in an industry-wide requirement to provide additional collateral to the surety providers. As of March 31, 2002, the Company provided $3.0 million in letters of credit to collateralize its current

15

performance bond program. The Company expects that it will have to provide additional collateral as the current bonds reach their respective expiration dates. While the Company expects that it will be able to provide sufficient collateral, given the market conditions, there can be no assurance that the Company will be able to do so.

        Based on the Company's current level of operations, the Company believes its cash flow from operations, available cash and available borrowings under its senior credit facility will be adequate to meet its future liquidity needs through the maturity of the senior credit facility.

        The ability of the Company to generate cash from operations is partially dependent upon cash collected and generated from airport parking facilities. As a result of reduced air traffic and the impact of restrictions on the use of parking facilities within 300 feet of airport terminals and also reduced traffic at hotel and retail facilities, the Company may continue to experience a reduction in its revenue and cash flow from these operations.

        Consequently, there can be no assurance that the Company's cash flow from operations, combined with additional borrowings under the senior credit facility and any future credit facility, will be available in an amount sufficient to enable the Company to repay its indebtedness, including the 9¹/4% notes or the 14% notes, or to fund our other liquidity needs or planned capital expenditures. The Company has significant indebtedness. At March 31, 2002, the Company had indebtedness under the 9¹/4% notes, the 14% notes, the senior credit facility, joint venture debentures, capital lease obligations, and other asset financing totaling approximately $140.8 million, including the Company's borrowings against its senior credit facility that aggregated $25.5 million. The Company may need to refinance all or a portion of our indebtedness, including the senior credit facility and possibly including the 14% notes, on or before their respective maturities. There can be no assurance that the Company will be able to refinance any of its indebtedness, including the senior credit facility and the 14% notes, on commercially reasonable terms or at all.

        The Company has lease commitments of $28.0 for fiscal 2002. The leased properties generate sufficient cash flow to meet the base rent payment.

        The Company had cash and cash equivalents of $7.1 million at March 31, 2002, compared to $7.6 million at December 31, 2001.

Three Months ended March 31, 2002 Compared to Three Months ended March 31, 2001

        Net cash provided by operating activities totaled $4.5 million for the first quarter of 2002 compared to net cash provided by operating activities of $2.7 million for the first quarter of 2001. Cash provided during 2002 included a $4.8 million increase in other liabilities and $20.0 million from the exchange (see note 3 of Item 1), which were offset by the payment of $9.0 million in fees and expenses related to the exchange (that had been provided at December 31, 2001), an increase in accounts receivable of $3.7 million, a decrease in accounts payable of $2.8 million and $4.9 million in interest payments on the senior subordinated notes. Net cash provided during 2001 included a $1.5 million reduction in accounts receivable, a $0.5 million reduction in prepaid and other assets, a $3.6 million increase in accounts payable, which was offset by a $3.9 million decrease in other liabilities due primarily to a $6.5 million interest payment on the senior subordinated notes.

        Cash used in investing activities totaled $0.2 million for the first quarter of 2002 compared to $0.5 million for the first quarter of 2001. Cash used in investing for the first quarter of 2002 and the first quarter of 2001 resulted from capital purchases to secure and/or extend leased facilities and investments in management information system enhancements.

        Cash used in financing activities totaled $4.9 million in the first quarter of 2002 compared to cash provided by financing activities of $3.5 million for the first quarter of 2001. The 2002 first quarter activity included $3.1 million in payments on the senior credit facility, $1.6 million in redemption of

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redeemable preferred stock (see note 3 of Item 1), and repayments on joint venture borrowings of $0.2 million. Cash generated from financing activities in the first quarter of 2001 included $3.8 million in borrowings from the senior credit facility, offset by repayments on long-term and joint venture borrowings of $0.3 million.

Special Cautionary Notice Regarding Forward-Looking Statements

        In addition to historical information, this Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in "Management's Discussion and Analysis of Financial Condition and Results of Operations" as well as in this Quarterly Report generally. You should carefully review the risks described in this Quarterly Report as well as the risks described in other documents filed by the Company and from time to time with the Securities and Exchange Commission. In addition, when used in this Quarterly Report, the words "anticipates," "plans," "believes," "estimates," and "expects" and similar expressions are generally intended to identify forward-looking statements. Such statements are subject to a number of risks and uncertainties. Our actual results, performance or achievements could differ materially from the results expressed in, or implied by the Company or these forward-looking statements. The Company undertakes no obligation to revise these forward-looking statements to reflect any future events or circumstances.

Cautionary Statements

        The Company continues to be subject to certain factors that could cause the Company's results to differ materially from expected and historical results (see the "Risk Factors" set forth in the Company's Registration Statement on Form S-4 (No. 333-86008) filed on April 10, 2002 (the "Registration Statement"), and the Company's 2001 Form 10-K filed on March 29, 2002.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rates

        The Company's primary market risk exposure consists of risk related to changes in interest rates. Historically, the Company has not used derivative financial instruments for speculative or trading purposes.

        The Company entered into a $25.0 million revolving variable rate senior credit facility (see note 4 of Item 1). Interest expense on such borrowing is sensitive to changes in the market rate of interest. If the Company were to borrow the entire $25.0 million available under the facility, a 1% increase in the average market rate would result in an increase in the Company's annual interest expense of $0.3 million.

        This amount is determined by considering the impact of the hypothetical interest rates on the Company's borrowing cost, but does not consider the effects of the reduced level of overall economic activity that could exist in such an environment. Due to the uncertainty of the specific changes and their possible effects, the foregoing sensitivity analysis assumes no changes in the Company's financial structure.

Foreign Currency Risk

        The Company's exposure to foreign exchange risk is minimal. All foreign investments are denominated in U.S. dollars, with the exception of Canada. The Company has approximately CAN$2.6 million of cash and no Canadian dollar denominated debt instruments at March 31, 2002. The Company does not hold any hedging instruments related to foreign currency transactions. The Company monitors foreign currency positions and may enter into certain hedging instruments in the future should it determine that exposure to foreign exchange risk has increased.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

        The Company is subject to various claims and legal proceedings which consist principally of lease and contract disputes and includes litigation with The County of Wayne relating to the management of parking facilities at the Detroit Metropolitan Airport. These claims and legal proceedings are considered routine, and incidental to the Company's business, and in the opinion of management, the ultimate liability with respect to these proceedings and claims will not materially affect the financial position, operations, or liquidity of the Company.

Item 2. Changes in Securities and Use of Proceeds

        Pursuant to the APCOA/Standard Parking, Inc. 2001 Stock Option Plan, on January 30, 2002 the Company issued options to purchase 486 shares of its 18% Senior Convertible Redeemable Series D Preferred Stock due 2008 to eight of its directors, officers and consultants at an exercise price of $5,600 per share. No underwriter was engaged in connection with the issuance of these securities. These sales were made in reliance upon the exemption from registration set forth in Section 4(2) of the Securities Act. This exemption was available because the issuance was made to a limited number of sophisticated offerees who had intimate knowledge of the Company and access to information that would be included in a registration statement. The Company received no cash consideration in connection with the issuance of these options.

Item 4. Submission of Matters to a Vote of Security Holders

        An Action by Consent in Writing of the Majority Shareholder was taken on January 10, 2002. The holder of 26.3 shares of the Company's common stock (84.0% of the outstanding common stock) voted to amend the Amended and Restated Certificate of Incorporation to increase the authorized capital stock from 5,000 shares to 22,500 shares, of which 3,000 are common stock (no change) and 19,500 shares are preferred stock (increased from 2,000 shares).

        A Written Action of Shareholders was taken on January 23, 2002. The holder of 26.3 shares of the Company's common stock (84.0% of the outstanding common stock) voted to approve the adoption of the 2001 Stock Option Plan for the benefit of certain key employees, directors, officers and consultants of the Company and its affiliates.

Item 5. Other Information

        On March 11, 2002, APCOA/Standard issued shares of its Series D Redeemable Convertible Preferred Stock (the "Series D Stock") to AP Holdings, the parent of APCOA/Standard, in exchange for shares of APCOA/Standard Series C Preferred Stock on terms which the Company believes are no less favorable than what normally would be obtained through arms length transactions. The Series D Stock was issued without registration in reliance on section 4(2) of the Securities Act of 1933, as amended. The exemption was available on the basis that the issued shares were offered solely to the existing majority APCOA/Standard shareholder and was not, therefore, the subject of a public offering. If, upon the occurrence of an initial public offering, APCOA/Standard does not redeem all of the shares of the Series D Stock, APCOA/Standard or, if APCOA/Standard does not make an election, the holder thereof, may elect to convert all of such holder's shares of the Series D Stock into a number of shares of APCOA/Standard's capital stock offered in such initial public offering equal to, on a per-share basis, the quotient of 118% of the liquidation amount plus an amount equal to 118% of all accrued but unpaid dividends by the price per share of APCOA/Standard's capital stock sold in such initial public offering.

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Item 6. Exhibits and Reports on Form 8-K

(a)

Exhibits

Exhibit Number	Description
3.1	Amended and Restated Certificate of Incorporation of the Company.
3.2	Certificate of Amendment of the Certificate of Incorporation dated January 10, 2002.
3.3	Certificate of Designations, Preferences and Relative, Participating, Optional and other Special Rights of Preferred Stock and Qualifications, Limitations and Restrictions Thereof of Series C Redeemable Preferred Stock of the Company dated March 30, 1998.
3.4	Certificate of Designations, Preferences and Relative, Participating, Optional and other Special Rights of Preferred Stock and Qualifications, Limitations and Restrictions Thereof of 18% Senior Convertible Redeemable Series D Preferred Stock of the Company dated January 10, 2002.
3.5	Amended and Restated By-Laws of the Company (incorporated by reference to Exhibit 3.3 of Amendment No. 2 to the Company's Registration Statement on Form S-4, File No. 333-50437, filed on July 15, 1998).
4.1	Indenture governing the Company's 14% Senior Subordinated Second Lien Notes Due 2006, dated as of January 11, 2002, by and among the Company, the Subsidiary Guarantors and Wilmington Trust Company (incorporated by reference to Exhibit 4.15 of the Company's Annual Report on Form 10-K filed for December 31, 2001).
4.2	Supplemental Indenture governing the Company's 91/4% Senior Subordinated Notes due 2008, dated as of January 11, 2002, by and among the Company, the Subsidiary Guarantors and State Street Bank and Trust Company (incorporated by reference to Exhibit 4.2 of the Company's Registration Statement on Form S-4, File No. 333-86008, filed on April 10, 2002).
4.3	Form of the Company's 14% Senior Subordinated Second Lien Note Due 2006 (incorporated by reference to Exhibit 4.16 of the Company's Annual Report on Form 10-K filed for December 31, 2001).
4.4	Form of the Company's 14% Senior Subordinated Second Lien Note Guarantee Due 2006 (incorporated by reference to Exhibit 4.17 of the Company's Annual Report on Form 10-K filed for December 31, 2001).
10.1	Amended and Restated Senior Credit Agreement dated January 11, 2002 by and among the Company, LaSalle Bank National Association and various Lenders, as defined therein (incorporated by reference to Exhibit 10.37 of the Company's Annual Report on Form 10-K filed for December 31, 2001).
10.2	Technical Correction of the Amended and Restated Senior Credit Agreement dated February 2, 2002, by and among the Company, the Lenders and LaSalle Bank, N.A. as agent for the Lenders (incorporated by reference to Exhibit 10.38 of the Company's Annual Report on Form 10-K filed for December 31, 2001).
10.3	Registration Rights Agreement, dated as of January 11, 2002, by and among the Company, the Subsidiary Guarantors and Credit Suisse First Boston Corporation (incorporated by reference to Exhibit 10.4 of the Company's Registration Statement on Form S-4, File No. 333-86008, filed on April 10, 2002).
10.4	Consulting Engagement Letter between APCOA and AP Holdings dated January 11, 2002 (incorporated by reference to Exhibit 10.35 of the Company's Annual Report on Form 10-K filed for December 31, 2001).
10.5	Intercreditor Agreement dated January 11, 2002 by and among the Company, the Subsidiary Guarantors, Wilmington Trust Company and LaSalle Bank N.A. (incorporated by reference to Exhibit 10.6 of the Company's Registration Statement on Form S-4, File No. 333-86008, filed on April 10, 2002).

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10.6	Assignment of Partnership Interests Security Agreement dated January 11, 2002 by and among the Company, the Subsidiary Guarantors, and Wilmington Trust Company, as trustee and collateral agent (incorporated by reference to Exhibit 10.7 of the Company's Registration Statement on Form S-4, File No. 333-86008, filed on April 10, 2002).
10.7	Limited Liability Company Membership Interests Security Agreement dated January 11, 2002 by and among the Company, the Subsidiary Guarantors, and Wilmington Trust Company, as trustee and collateral agent (incorporated by reference to Exhibit 10.8 of the Company's Registration Statement on Form S-4, File No. 333-86008, filed on April 10, 2002).
10.8	Joint Venture Interest Security Agreement dated January 11, 2002 by and among the Company, the Subsidiary Guarantors, and Wilmington Trust Company, as trustee and collateral agent (incorporated by reference to Exhibit 10.9 of the Company's Registration Statement on Form S-4, File No. 333-86008, filed on April 10, 2002).
10.9	Patent Collateral Assignment and Security Agreement dated January 11, 2002 by and among the Company, the Subsidiary Guarantors, and Wilmington Trust Company, as trustee and collateral agent (incorporated by reference to Exhibit 10.10 of the Company's Registration Statement on Form S-4, File No. 333-86008, filed on April 10, 2002).
10.10	Trademark Collateral Security and Pledge Agreement dated January 11, 2002 by and among the Company, the Subsidiary Guarantors, and Wilmington Trust Company, as trustee and collateral agent (incorporated by reference to Exhibit 10.11 of the Company's Registration Statement on Form S-4, File No. 333-86008, filed on April 10, 2002).
10.11	Memorandum of Grant of Security Interest in Copyrights dated January 11, 2002 by and among the Company, the Subsidiary Guarantors, and Wilmington Trust Company, as trustee and collateral agent (incorporated by reference to Exhibit 10.12 of the Company's Registration Statement on Form S-4, File No. 333-86008, filed on April 10, 2002).
10.12	Securities Pledge Agreement dated January 11, 2002 by and among the Company, the Subsidiary Guarantors, and Wilmington Trust Company, as trustee and collateral agent (incorporated by reference to Exhibit 10.13 of the Company's Registration Statement on Form S-4, File No. 333-86008, filed on April 10, 2002).
10.13	Security Agreement dated January 11, 2002 by and among the Company, the Subsidiary Guarantors, and Wilmington Trust Company, as trustee and collateral agent (incorporated by reference to Exhibit 10.14 of the Company's Registration Statement on Form S-4, File No. 333-86008, filed on April 10, 2002).
10.14	Stock option plan between the Company and eligible executives, employees, directors and/or consultants (incorporated by reference to Exhibit 10.28 of the Company's Annual Report of Form 10-K filed for December 31, 2001).
10.15	Exchange Agreement by and between the Company and AP Holdings dated March 11, 2002 (incorporated by reference to Exhibit 10.29 of the Company's Annual Report of Form 10-K filed for December 31, 2001).
10.16	Third Amendment to the Employment Agreement between the Company and James A. Wilhelm dated January 31, 2002 (incorporated by reference to Exhibit 10.34 of the Company's Annual Report of Form 10-K filed for December 31, 2001).

b)

Reports on Form 8-K

        During the quarter ended March 31, 2002, two reports on Form 8-K were filed on January 9, 2002 and January 15, 2002, both of which reported matters under Item 5, Other Events.

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SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	APCOA/Standard Parking, Inc.
Dated: May 10, 2002	By:	/s/  DANIEL R. MEYER Daniel R. Meyer Senior Vice President, Corporate Controller/ Assistant Treasurer (Principal Accounting Officer and Duly Authorized Officer)

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INDEX TO EXHIBITS

Exhibit Number	Description
3.1	Amended and Restated Certificate of Incorporation of the Company.
3.2	Certificate of Amendment of the Certificate of Incorporation dated January 10, 2002.
3.3	Certificate of Designations, Preferences and Relative, Participating, Optional and other Special Rights of Preferred Stock and Qualifications, Limitations and Restrictions Thereof of Series C Redeemable Preferred Stock of the Company dated March 30, 1998.
3.4	Certificate of Designations, Preferences and Relative, Participating, Optional and other Special Rights of Preferred Stock and Qualifications, Limitations and Restrictions Thereof of 18% Senior Convertible Redeemable Series D Preferred Stock of the Company dated January 10, 2002.
3.5	Amended and Restated By-Laws of the Company (incorporated by reference to Exhibit 3.3 of Amendment No. 2 to the Company's Registration Statement on Form S-4, File No. 333-50437, filed on July 15, 1998).
4.1	Indenture governing the Company's 14% Senior Subordinated Second Lien Notes Due 2006, dated as of January 11, 2002, by and among the Company, the Subsidiary Guarantors and Wilmington Trust Company (incorporated by reference to Exhibit 4.15 of the Company's Annual Report on Form 10-K filed for December 31, 2001).
4.2	Supplemental Indenture governing the Company's 91/4% Senior Subordinated Notes due 2008, dated as of January 11, 2002, by and among the Company, the Subsidiary Guarantors and State Street Bank and Trust Company (incorporated by reference to Exhibit 4.2 of the Company's Registration Statement on Form S-4, File No. 333-86008, filed on April 10, 2002).
4.3	Form of the Company's 14% Senior Subordinated Second Lien Note Due 2006 (incorporated by reference to Exhibit 4.16 of the Company's Annual Report on Form 10-K filed for December 31, 2001).
4.4	Form of the Company's 14% Senior Subordinated Second Lien Note Guarantee Due 2006 (incorporated by reference to Exhibit 4.17 of the Company's Annual Report on Form 10-K filed for December 31, 2001).
10.1	Amended and Restated Senior Credit Agreement dated January 11, 2002 by and among the Company, LaSalle Bank National Association and various Lenders, as defined therein (incorporated by reference to Exhibit 10.37 of the Company's Annual Report on Form 10-K filed for December 31, 2001).
10.2	Technical Correction of the Amended and Restated Senior Credit Agreement dated February 2, 2002, by and among the Company, the Lenders and LaSalle Bank, N.A. as agent for the Lenders (incorporated by reference to Exhibit 10.38 of the Company's Annual Report on Form 10-K filed for December 31, 2001).
10.3	Registration Rights Agreement, dated as of January 11, 2002, by and among the Company, the Subsidiary Guarantors and Credit Suisse First Boston Corporation (incorporated by reference to Exhibit 10.4 of the Company's Registration Statement on Form S-4, File No. 333-86008, filed on April 10, 2002).
10.4	Consulting Engagement Letter between APCOA and AP Holdings dated January 11, 2002 (incorporated by reference to Exhibit 10.35 of the Company's Annual Report on Form 10-K filed for December 31, 2001).

22

10.5	Intercreditor Agreement dated January 11, 2002 by and among the Company, the Subsidiary Guarantors, Wilmington Trust Company and LaSalle Bank N.A. (incorporated by reference to Exhibit 10.6 of the Company's Registration Statement on Form S-4, File No. 333-86008, filed on April 10, 2002).
10.6	Assignment of Partnership Interests Security Agreement dated January 11, 2002 by and among the Company, the Subsidiary Guarantors, and Wilmington Trust Company, as trustee and collateral agent (incorporated by reference to Exhibit 10.7 of the Company's Registration Statement on Form S-4, File No. 333-86008, filed on April 10, 2002).
10.7	Limited Liability Company Membership Interests Security Agreement dated January 11, 2002 by and among the Company, the Subsidiary Guarantors, and Wilmington Trust Company, as trustee and collateral agent (incorporated by reference to Exhibit 10.8 of the Company's Registration Statement on Form S-4, File No. 333-86008, filed on April 10, 2002).
10.8	Joint Venture Interest Security Agreement dated January 11, 2002 by and among the Company, the Subsidiary Guarantors, and Wilmington Trust Company, as trustee and collateral agent (incorporated by reference to Exhibit 10.9 of the Company's Registration Statement on Form S-4, File No. 333-86008, filed on April 10, 2002).
10.9	Patent Collateral Assignment and Security Agreement dated January 11, 2002 by and among the Company, the Subsidiary Guarantors, and Wilmington Trust Company, as trustee and collateral agent (incorporated by reference to Exhibit 10.10 of the Company's Registration Statement on Form S-4, File No. 333-86008, filed on April 10, 2002).
10.10	Trademark Collateral Security and Pledge Agreement dated January 11, 2002 by and among the Company, the Subsidiary Guarantors, and Wilmington Trust Company, as trustee and collateral agent (incorporated by reference to Exhibit 10.11 of the Company's Registration Statement on Form S-4, File No. 333-86008, filed on April 10, 2002).
10.11	Memorandum of Grant of Security Interest in Copyrights dated January 11, 2002 by and among the Company, the Subsidiary Guarantors, and Wilmington Trust Company, as trustee and collateral agent (incorporated by reference to Exhibit 10.12 of the Company's Registration Statement on Form S-4, File No. 333-86008, filed on April 10, 2002).
10.12	Securities Pledge Agreement dated January 11, 2002 by and among the Company, the Subsidiary Guarantors, and Wilmington Trust Company, as trustee and collateral agent (incorporated by reference to Exhibit 10.13 of the Company's Registration Statement on Form S-4, File No. 333-86008, filed on April 10, 2002).
10.13	Security Agreement dated January 11, 2002 by and among the Company, the Subsidiary Guarantors, and Wilmington Trust Company, as trustee and collateral agent (incorporated by reference to Exhibit 10.14 of the Company's Registration Statement on Form S-4, File No. 333-86008, filed on April 10, 2002).
10.14	Stock option plan between the Company and eligible executives, employees, directors and/or consultants (incorporated by reference to Exhibit 10.28 of the Company's Annual Report of Form 10-K filed for December 31, 2001).
10.15	Exchange Agreement by and between the Company and AP Holdings dated March 11, 2002 (incorporated by reference to Exhibit 10.29 of the Company's Annual Report of Form 10-K filed for December 31, 2001).
10.16	Third Amendment to the Employment Agreement between the Company and James A. Wilhelm dated January 31, 2002 (incorporated by reference to Exhibit10.34 of the Company's Annual Report of Form 10-K filed for December 31, 2001).

23

QuickLinks

Part I. Financial Information

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEETS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk

PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K

SIGNATURES
INDEX TO EXHIBITS

EX-3.1

                                                                     EXHIBIT 3.1
                                STATE OF DELAWARE
                        OFFICE OF THE SECRETARY OF STATE

                         -------------------------------


         I, WILLIAM T. QUILLEN, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE RESTATED
CERTIFICATE OF "APCOA, INC.", FILED IN THIS OFFICE ON THE TWENTY FOURTH DAY OF
FEBRUARY, A.D. 1994, AT 2 O' CLOCK P.M.


                       [GREAT SEAL OF THE STATE OF DELAWARE
                              - 1793 - 1847 - 1907]


               [SEAL                             William T. Quillen
         SECRETARY'S OFFICE            --------------------------------------
         1793 DELAWARE 1855]           William T. Quillen, Secretary of State


0923153   8100                          AUTHENTICATION:        7043209

944031036                                             DATE:   03-01-94



                AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

                                       OF

                                   APCOA, INC.

         (Originally incorporated on September 24, 1981, under the name of 120
OAKLAND PLACE, INC.)

         APCOA, Inc., a corporation organized and existing under and by virtue
of the General Corporation Law of the State of Delaware (the "Corporation"),

                  DOES HEREBY CERTIFY:

                  FIRST: That the Board of Directors of the Corporation, has
duly adopted resolutions setting forth a proposed amendment and restatement of
the Certificate of Incorporation of the Corporation and declaring said amendment
and restatement to be advisable. The resolution setting forth the proposed
amendment and restatement is as follows:

                  RESOLVED, that the Corporation's Certificate of Incorporation
be amended in accordance with Section 242 of the General Corporation Law of the
State of Delaware to effect certain changes in said Certificate of
Incorporation, and that the Amended and Restated Certificate of Incorporation
attached hereto be adopted, in accordance with Sections 242 and 245 of the
General Corporation Law of the State of Delaware, as the Amended and Restated
Certificate of Incorporation of the Corporation,

                  SECOND: That in lieu of a meeting and vote of stockholders,
both of the stockholders of the Corporation have given their written consent to
said amendment and restatement and said amendment and restatement was duly
adopted in accordance with the applicable provisions of Sections 242, 245 and
228 of the General Corporation Law of the State of Delaware.

                  THIRD: That the capital of the Corporation shall not be
reduced under or by reason of said amendment and restatement.



                  IN WITNESS WHEREOF, said APCOA, Inc. has caused this
certificate to be signed by its President, and attested by its Assistant
Secretary, this 24th day of February, 1994.


                                             By: /s/ S. Waiver Stuelpe, Jr.
                                                --------------------------------
                                                Name:   B. Waiver Stuelpe, Jr.
                                                Title: President
                                                B. Waiver Stuelpe

ATTEST:



By: /s/ William J. Montie
   --------------------------------------
    Name:  William J. Montie
    Assistant Secretary

                                       2



                AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

                                       OF

                                   APCOA, INC.


                                    ARTICLE I

                  The name of the corporation (which is hereinafter referred to
as the "Corporation") is:

                                   APCOA, Inc.

                                   ARTICLE II

                  The address of the Corporation's registered office in the
state of Delaware is The Corporation Trust Center, 1209 Orange Street in the
City of Wilmington, County of New Castle. The name of the Corporation's
registered agent at such address is The Corporation Trust Company.

                                   ARTICLE III

                  The purpose of the Corporation shall be to engage in any
lawful act or activity for which corporations may be organized and incorporated
under the General Corporation Law of the State of Delaware

                                   ARTICLE IV

                  Section 1. The Corporation shall be authorized to issue 5,000
shares of capital stock, of which 3000 shares



shall be shares of Common Stock, $1.00 par value ("Common Stock"), and 2000
shares shall be shares of Preferred Stock, $.01 par value ("Preferred Stock").

                  Section 2. Shares of Preferred Stock may be issued from time
to time in one or more series. The Board of Directors of the Corporation
(hereinafter referred to as the "Board") is hereby authorized to fix the voting
rights, if any, designations, powers, preferences and the relative,
participation, optional or other rights, if any, and the qualifications,
limitations or restrictions thereof, of any unissued series of Preferred Stock;
and to fix the number of shares constituting such series, and to increase or
decrease the number of shares of any such series (but not below the number of
shares thereof then outstanding).

                  Section 3. Except as otherwise provided by law or by the
resolution or resolutions adopted by the Board designating the rights, powers
and preferences of any series of Preferred Stock, the Common Stock shall have
the exclusive right to vote for the election of directors and for all other
purposes. Each share of Common Stock shall have one vote, and the Common Stock
shall vote together as a single class.

                                    ARTICLE V

                  Unless and except to the extent that the By-Laws of the
Corporation shall so require, the election of directors of the Corporation need
not be by written ballot.

                                       2



                                  ARTICLE VI

                  In furtherance and not in limitation of the powers conforrod
by law, the Board is expressly authorized and empowered to make, alter and
repeal the By-Laws of the Corporation by a majority vote at any regular or
special meeting of the Board or by written consent, subject to the power of the
stockholders of the Corporation to alter or repeal any By Laws made by the
Board.

                                   ARTICLE VII

                  The Corporation reserves the right at any time from time to
time to amend, alter, change or repeal any provision contained in this
Certificate of Incorporation, and any other provisions authorized by the laws of
the State of Delaware at the time in force may be added or inserted, in the
manner now or hereafter prescribed by law; and all rights, preferences and
privileges of whatsoever nature conferred upon stockholders, directors or any
other persons whomsoever by and pursuant to this Certificate of Incorporation in
its present form or as hereafter amended are granted subject to the right
reserved in this Article.

                                       3



                                  ARTICLE VIII

                  Section 1. ELIMINATION OF CERTAIN LIABILITY OF DIRECTORS. A
director of the Corporation shall not be personally liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the General Corporation Law of the State of
Delaware, or (iv) for any transaction from which the director derived an
improper personal benefit.

                  Section 2.   INDEMNIFICATION AND INSURANCE.
                               -----------------------------

                  (a) RIGHT TO INDEMNIFICATION. 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 she, or a person
of whom he or she 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 or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official

                                       4



capacity as a director, officer, employee or agent or in any other capacity
while serving as a director, officer, employee or agent, shall be indemnified
and held harmless by the Corporation to the fullest extent authorized 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
than 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,
judgments, lines, ERISA excise taxes or penalties and amounts paid or to be paid
in settlement) reasonably incurred or suffered by such person in connection
therewith and such Indemnification shall continue as to a person who has ceased
to be a director, officer, employee or agent and shall inure to the benefit of
his or her heirs, executors and administrators; PROVIDED, HOWEVER, that, except
as provided in paragraph (b) hereof, the Corporation shall indemnify any such
person seeking indemnification in connection with a proceeding (or part thereof)
initiated by such person only if such proceeding (or part thereof) was
authorized by the Board. The right to indemnification conferred in this Section
shall be a contract right and shall include the right to be paid by the
Corporation the expenses incurred in defending any such proceeding in advance of
its final disposition; PROVIDED, HOWEVER, that, if the General Corporation Law

                                       5



of the State of Delaware requires, the payment of such expenses incurred by a
director or officer in his or her capacity as a director or officer (and not in
any other capacity in which service was or is rendered by such person while a
director or officer, including, without limitation, service to an employee
benefit plan) in advance of the final disposition of a proceeding, shall be made
only upon delivery to the Corporation of an undertaking, by or on behalf of such
director or officer, to repay all amounts so advanced if it shall ultimately be
determined that such director or officer is not entitled to be indemnified under
this Section or otherwise. The Corporation may, by action of the Board, provide
indemnification to employees and agents of the Corporation with the same scope
and effect as the foregoing indemnification of directors and officers.

                  (b) RIGHT OF CLAIMANT TO BRING SUIT. If a claim under
paragraph (a) of this Section is not paid in full by the Corporation within
thirty days after a written claim has been received by the Corporation, the
claimant may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim and, if successful in whole or in part,
the claimant shall be entitled to be paid also the expense of prosecuting such
claim. 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

                                       6



advance of its final disposition where the required undertaking, if any is
required, 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 proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel, or its 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 or she 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 its 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.

                  (c) NON-EXCLUSIVITY OF RIGHTS. The right to indemnification
and the payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Section shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,

                                       7



provision of the Certificate of Incorporation, By-law, agreement, vote of
stockholders or disinterested directors or otherwise .

                  (d) INSURANCE. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the General Corporation Law of the State of Delaware.

EX-3.2

                                                                     EXHIBIT 3.2

                                                                DELAWARE
                                                            The First State

         I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF DELAWARE,
DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "APCOA/STANDARD PARKING, INC.", FILED IN THIS OFFICE ON THE TENTH
DAY OF JANUARY, A.D. 2002, AT 9 O'CLOCK A.M.

         A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS.






              [SEAL]                           /s/ Harriet Smith Windsor
                                       -----------------------------------------
                                       Harriet Smith Windsor, Secretary of State

         0923153   8100                AUTHENTICATION:1553661
         020019501                           DATE:    01-11-02



                           CERTIFICATE OF AMENDMENT OF
                        THE CERTIFICATE OF INCORPORATION
                          APCOA/STANDARD PARKING, INC.

         I, THE UNDERSIGNED, being an officer of APCOA/Standard Parking, Inc,
(the "Corporation"), do hereby certify, as follows:

                  FIRST: The name of the Corporation is APCOA/Standard Parking,
Inc.

                  SECOND: By unanimous written consent pursuant to Section
141(f) of the DGCL, the Board of Directors of the Corporation on November 20,
2001 duly adopted resolutions in accordance with Section 242 of the DGCL,
setting forth a proposed Amendment to the Certificate of Incorporation of the
Corporation, declaring said amendment to be advisable and authorizing the
solicitation of consent of the proposed amendment from the stockholders. The
resolution setting forth the proposed amendment is as follows:

                  RESOLVED, that the Certificate of Incorporation be amended by
         changing ARTICLE IV, Section 1 of the Certificate of Incorporation so
         that, as amended, said Section shall read in its entirety as follows:

                  "The Corporation shall be authorized to issue 22,500 shares of
                  capital stock, of which 3,000 shares shall be shares of Common
                  Stock, par value $1.00 per share ("Common Stock"), and 19,500
                  shares shall be shares of Preferred Stock, par value $0.01 per
                  share ("Preferred Stock").

                  THIRD: Thereafter, the holder or holders of a majority of the
outstanding voting shares of the Corporation approved the adoption of the
amendment by written consent without a meeting in accordance with Section 228 of
the DGCL.

                  FOURTH: The Amendment to the Certificate of Incorporation was
duly adopted in accordance with the provisions of Section 242 of the DGCL.

                  FIFTH: The capital of said corporation shall not be reduced
under or by reason of said amendment.

         IN WITNESS WHEREOF, I have hereunto set my hand to this Certificate of
Amendment of the Certificate of Incorporation of APCOA/Standard Parking, Inc. on
January 10, 2002.

                                 APCOA/STANDARD PARKING, INC.


                                 By: /s/ James A. Wilhelm
                                    -----------------------------------
                                 Name:   James A. Wilhelm
                                 Title:  President, Chief Executive Officer

EX-3.3

                                                                     EXHIBIT 3.3

                                STATE OF DELAWARE
                        OFFICE OF THE SECRETARY OF STATE

                        -------------------------------


         I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
DESIGNATION OF "APCOA, INC.", FILED IN THIS OFFICE ON THE THIRTIETH DAY OF
MARCH, A.D. 1998, AT 8:45 O'CLOCK A.M.


                       [GREAT SEAL OF THE STATE OF DELAWARE
                              - 1793 - 1847 - 1907]



                       [SEAL                       /s/ Edward J. Freel
                 SECRETARY'S OFFICE         -----------------------------------
                 1793 DELAWARE 1855]        Edward J. Freel, Secretary of State

                                             AUTHENTICATION:         8999694

0923153   8100                                         DATE:

981120484                                                           03-30-98



                    CERTIFICATE OF DESIGNATIONS, PREFERENCES
                    AND RELATIVE, PARTICIPATING, OPTIONAL AND
                        OTHER SPECIAL RIGHTS OF PREFERRED
                      STOCK AND QUALIFICATIONS, LIMITATIONS
                            AND RESTRICTIONS THEREOF

                                       OF

                            SERIES C PREFERRED STOCK

                                       OF

                                    APCOA,INC

                             -----------------------

                         Pursuant to Section 151 of the
                General Corporation Law of the State of Delaware

                             -----------------------

                  APCOA, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware, does hereby certify that,
pursuant to the provisions of Section 151 of the General Corporation Law of the
State of Delaware, the Corporation's Board of Directors has adopted the
following resolution, which resolution remains in full force and effect as of
the date hereof:

                  WHEREAS, the Board of Directors of APCOA, Inc. (the
"CORPORATION") is authorized, within the limitations and restrictions stated in
the Corporation's Amended and Restated Certificate of Incorporation (the
"CERTIFICATE OF Incorporation"), to fix by resolution or resolutions the
designation of each series of Preferred Stock of the Corporation (the "PREFERRED
STOCK") and the powers, preferences and relative participating, optional or
other special rights and qualifications, limitations or restrictions thereof,
including, without limiting the generality of the foregoing, such provisions as
may be desired concerning voting, redemption, dividends, dissolution or the
distribution of assets, conversion or exchange, and such other subjects or
matters as may be fixed by resolution or resolutions of the Board of Directors
under the General Corporation Law of Delaware; and

                  WHEREAS, it is the desire of the Board of Directors of the
Corporation, pursuant to its authority as aforesaid, to designate and fix the
powers, preferences and relative, participating, optional and other special
rights, and the qualifications, limitations and restrictions of a series of
Preferred Stock and the number of shares constituting such series:

                  NOW, THEREFORE, BE IT RESOLVED, that there is hereby
authorized and designated such a series of the Preferred Stock and that the
Board of Directors hereby fixes the



designations, powers, preferences and relative, participating, optional and
other special rights, and the qualifications, limitations and restrictions
thereof as herein set forth:

                  (1) DESIGNATION. The designation of the series of Preferred
Stock authorized by this resolution shall be "Series C Preferred Stock" (the
"SERIES C PREFERRED STOCK"). The number of shares of Series C Preferred Stock
authorized for issuance shall be fifty (50), and each such share shall have a
par value of $0.01.

                  (2) RANK. The Series C Preferred Stock shall, with respect to
dividend rights and rights on liquidation, winding up and dissolution, rank
prior to all classes of the Common Stock, par value $1.00 per share (the "COMMON
STOCK"), of the Corporation, on a parity with any other series of the Preferred
Stock which by its terms ranks on a parity with the Series C Preferred Stock,
and junior with respect to any other securities of the Corporation which by
their respective terms rank senior to the Series C Preferred Stock. (All
securities of the Corporation to which the Series C Preferred Stock ranks prior,
including the Common Stock, are collectively referred to herein as "JUNIOR
SECURITIES", all Preferred Stock of the Corporation with which the Series C
Preferred Stock ranks on a parity are collectively referred to herein as "PARITY
SECURITIES" and all securities of the Corporation to which the Series C
Preferred Stock ranks junior are collectively referred to herein as "SENIOR
SECURITIES".) The Series C Preferred Stock shall be subject to the creation of
Junior Securities, Parity Securities and Senior Securities.

                  (3) DIVIDENDS. (i) The holders of the shares of Series C
Preferred Stock shall be entitled to receive, when, as and if declared by the
Board of Directors, subject to applicable requirements of law respecting the
payment of dividends, cumulative preferred dividends accruing at the annual rate
of 11 1/4% of the then Aggregate Liquidation Preference (as such term is defined
in paragraph (4) hereof), payable on March 15 and September 15 of each year
(each such date being referred to herein as a "DIVIDEND PAYMENT DATE") to the
holders of record of such shares on the immediately preceding March 1 or
September 1, respectively. With respect to any semi-annual dividend not declared
or paid by the Board of Directors in cash, the Aggregate Liquidation Preference
shall be automatically, and without any further act on the part of the
Corporation or the Board of Directors, increased by an amount equal to the
dividend which the holders of shares of Series C Preferred Stock would have
received on such dividend payment date had the full semi-annual dividend been
declared and paid, and such increase shall constitute full payment of such
dividend for all purposes of this Certificate of Designations. Dividends shall
be fully cumulative and shall accrue (whether or not declared), without
interest, from the first day of the semi-annual period in which such dividend
may be payable as herein provided, except that with respect to the first
semi-annual dividend payable after issuance, such dividend shall accrue from the
date of issue of the shares of Series C Preferred Stock in question.

                  (i) All dividends paid with respect to shares of the Series C
Preferred Stock pursuant to paragraph (3)(i) above shall be paid PRO RATA to the
holders entitled thereto. Dividends will be computed on the basis of a 360-day
years comprised of twelve 30-day months.

                  (ii) No full dividends shall be declared by the Board of
Directors or paid or set apart for payment by the Corporation on any Parity
Securities for any period unless full cumula-

                                      -2-



tive dividends have been or contemporaneously are declared and paid or declared
and a sum set apart sufficient for such payment on the Series C Preferred Stock
for all dividend payment periods terminating on or prior to the date of payment
of such full dividends on such Parity Securities. If any dividends are not paid
in full, as aforesaid, upon the shares of the Series C Preferred Stock and any
other Parity Securities, all dividends declared upon shares of the Series C
Preferred Stock and any other Parity Securities shall be declared PRO RATA so
that the amount of dividends declared per share of the Series C Preferred Stock
and such Parity Securities shall in all cases bear to each other the same ratio
that respective dividend rates per share on the Series C Preferred Stock and
such Parity Securities bear to each other. No interest, or sum of money in lieu
of interest, shall be payable in respect of any dividend payment or payments on
the Series C Preferred Stock or any other Parity Securities which may be in
arrears. Any dividend not paid pursuant to paragraph (3)(i) above or this
paragraph (3)(iii) shall be fully cumulative and shall accrue (whether or not
declared), without interest, as set forth in paragraph (3)(i) above, until
declared and paid, which declaration and payment may be for all or part of the
then accrued but unpaid dividends.

                  (iii) (a) Holders of shares of the Series C Preferred Stock
shall be entitled to receive the dividends provided for in paragraph (3)(i)
above in preference to and in priority over any dividends upon any of the Junior
Securities.

                  (b) So long as any shares of the Series C Preferred Stock are
outstanding, the Corporation shall not declare, pay or set apart for payment any
dividend on any of the Junior Securities or make any payment on account of, or
set apart for payment money for a sinking or other similar fund for, the
purchase, redemption or other retirement of, any of the Junior Securities or
Parity Securities or any warrants, rights, calls or options exercisable for or
convertible into any of the Junior Securities or Parity Securities, or make any
distribution in respect thereof, either directly or indirectly, and whether in
cash, obligations or shares of the Corporation or other property (other than
distributions or dividends in Junior Securities to the holders of Junior
Securities), and shall not permit any corporation or other entity directly or
indirectly controlled by the Corporation to purchase or redeem any of the Junior
Securities or Parity Securities or any warrants, rights, calls or options
exercisable for or convertible into any of the Junior Securities or Parity
Securities, UNLESS prior to or concurrently with such declaration, payment,
setting apart for payment, purchase, redemption or distribution, as the case may
be, all accrued and unpaid dividends on shares of the Series C Preferred Stock
not paid on the dates provided for in paragraph (3)(i) above (including accrued
dividends not paid by reason of the terms and conditions of paragraph (3)(i),
paragraph (3)(ii) or paragraph (3)(iii) above) shall have been or be paid.

                  (iv) Subject to the foregoing provisions of this paragraph
(3), the Board of Directors may declare and the Corporation may pay or set apart
for payment dividends and other distributions on any of the Junior Securities or
Parity Securities, and may purchase or otherwise redeem any of the Junior
Securities or Parity Securities or any warrants, rights or options exercisable
for or convertible into any of the Junior Securities or Parity Securities, and
the holders of the shares of the Series C Preferred Stock shall not be entitled
to share therein.

                                      -3-



                  (v) The Corporation may issue fractional shares of Series C
Preferred Stock. The holders of fractional shares shall have all the rights,
privileges and preferences to which they are entitled as owners of the shares of
Series C Preferred Stock represented by such fractional shares, including
without limitation the right to a ratably proportionate amount of all dividends
accruing with respect to outstanding shares of Series C Preferred Stock pursuant
to paragraph (3)(i) above (all such dividends with respect to such outstanding
fractional shares being fully cumulative and accruing (whether or not declared),
without interest, and payable in the same manner and at such times as provided
for in paragraph (3)(i) above with respect to dividends on outstanding shares of
Series C Preferred Stock).

                  (4) LIQUIDATION PREFERENCE. (i) In the event of any voluntary
or involuntary liquidation, dissolution or winding up of the affairs of the
Corporation, the holders of shares of Series C Preferred Stock then outstanding
shall be entitled to be paid out of the assets of the Corporation available for
distribution to its stockholders an amount in cash equal to $1,000,000 for each
share outstanding (the "INITIAL AGGREGATE LIQUIDATION PREFERENCE") plus the
aggregate amount of any increases to such Initial Aggregate Liquidation
Preference made in accordance with paragraph (3) hereof (the aggregate amount of
such Initial Aggregate Liquidation Preference and any such increases being
referred to herein as the "AGGREGATE LIQUIDATION PREFERENCE"), plus an amount in
cash equal to all dividends accrued but unpaid (or as to the which the Aggregate
Liquidation Preference was not increased in lieu of the payment of a cash
dividend) thereon to the date fixed for liquidation, dissolution or winding up,
before any payment shall be made or any assets distributed to the holders of any
of the Junior Securities. Except as provided in the preceding sentence, holders
of Series C Preferred Stock shall not be entitled to any distribution in the
event of liquidation, dissolution or winding up of the affairs of the
Corporation. If the assets of the Corporation are not sufficient to pay in full
the liquidation payments payable to the holders of outstanding shares of the
Series C Preferred Stock and any Parity Securities, then the holders of all such
shares shall share ratably in such distribution of assets in accordance with the
amount which would be payable on such distribution if the amounts to which the
holders of outstanding shares of Series C Preferred Stock and the holders of
outstanding shares of such Parity Securities are entitled were paid in full.

                  (ii) For the purposes of this paragraph (4), neither the
voluntary sale, conveyance, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all the property or
assets of the Corporation, nor the consolidation or merger of the Corporation
with one or more other corporations, shall be deemed to be a liquidation,
dissolution or winding up, voluntary or involuntary.

                  (iii) The liquidation payment with respect to each outstanding
fractional share of Series C Preferred Stock shall be equal to a ratably
proportionate amount of the liquidation payment with respect to each outstanding
share of Series C Preferred Stock.

                  (5) REDEMPTION. (i) The Corporation shall redeem shares of
Series C Preferred Stock at any time at which AP Holdings, Inc. ("HOLDINGS"),
redeems or is required to repurchase, pursuant to the terms of the Indenture,
dated as of March 30, 1998, by and between Holdings and State Street Bank and
Trust Company (the "INDENTURE"), any of its 11 1/4 % Senior

                                      -4-



Discount Notes Due 2008 or any other notes issued by Holdings pursuant to the
Indenture (collectively, the "NOTES").

                  (ii) The number of shares of Series C Preferred Stock which
shall be redeemed at any time pursuant to paragraph (5)(i) above shall be such
number of shares as have an aggregate Aggregate Liquidation Preference most
nearly equal to (but not less than) the Accreted Value (as defined in the
Indenture) of the Notes to be redeemed or repurchased at such time.

                  (iii) The redemption price per share of Series C Preferred
Stock which shall be redeemed at any time pursuant to paragraph (5)(i) above
shall be the Aggregate Liquidation Preference at such price.

                  (iv) Shares of Series C Preferred Stock which have been issued
and reacquired in any manner, including shares purchased or redeemed, shall
(upon compliance with any applicable provisions of the laws of the State of
Delaware) have the status of authorized and unissued shares of the class of
Preferred Stock undesignated as to series and may be redesignated and reissued
as part of any series of the Preferred Stock, PROVIDED, HOWEVER, that no such
issued and reacquired shares of Series C Preferred Stock shall be reissued or
sold as Series C Preferred Stock.

                  (6) PROCEDURE FOR REDEMPTION. (i) In the event that fewer than
all the outstanding shares of Series C Preferred Stock are to be redeemed, the
shares to be redeemed or exchanged shall be selected by (a) first selecting for
redemption in full, or on a by lot basis to the extent possible, fractional
shares and then allocating the remaining number of shares to be redeemed, if
any, among the outstanding shares and selecting for redemption or exchange such
shares on either a PRO RATA or a by lot basis, as selected by the Corporation or
(b) selecting for redemption all shares to be redeemed on either a PRO RATA or
on a by lot basis, as selected by the Corporation. The Corporation may redeem
shares in accordance with clause (a) or (b) hereof at its sole discretion.

                  (ii) In the event the Corporation shall redeem shares of
Series C Preferred Stock, notice of such redemption or exchange shall be given
by first class mail, postage prepaid, mailed not less than 10 days nor more than
60 days prior to the redemption or exchange date, to each holder of record of
the shares to be redeemed at such holder's address as the same appears on the
stock register of the Corporation, PROVIDED, HOWEVER, that no failure to give
such notice nor any defect therein shall affect the validity of the proceeding
for the redemption or exchange of any shares of Series C Preferred Stock to be
redeemed except as to the holder to whom the Corporation has failed to mail said
notice or except as to the holder whose notice was defective. Such notice shall
state: (a) the redemption date; (b) the number of shares of Series C Preferred
Stock to be redeemed and, if less than all the shares held by such holder are to
be redeemed from such holder, the number of shares to be redeemed from such
holder; (c) the redemption price; (d) the place or places where certificates for
such shares are to be surrendered for payment of the redemption price; and (e)
that dividends on the shares to be redeemed will cease to accrue on such
redemption date.

                  (iii) Notice having been mailed as aforesaid, from and after
the redemption date (unless default shall be made by the Corporation in
providing money for the payment of the re-

                                      -5-



demption price of the shares called for redemption) dividends on the shares of
Series C Preferred Stock so called for redemption shall cease to accrue, and
said shares shall no longer be deemed to be outstanding and shall have the
status of authorized but unissued shares of Preferred Stock, unclassified as to
series, and shall not be reissued as shares of Series C Preferred Stock, and all
rights of the holders thereof as stockholders of the Corporation (except the
right to receive from the Corporation the redemption price and any accrued and
unpaid dividends) shall cease. Upon surrender in accordance with said notice of
the certificates for any shares so redeemed (properly endorsed or assigned for
transfer, if the Board of Directors of the Corporation shall so require and the
notice shall so state), such shares shall be redeemed by the Corporation at the
redemption price aforesaid. In case fewer than all the shares represented by any
such certificate are redeemed, a new certificate shall be issued representing
the unredeemed shares without cost to the holder thereof.

                  (7) VOTING RIGHTS. (i) The holders of record of shares of
Series C Preferred Stock shall not be entitled to any voting rights except as
hereinafter provided in this paragraph (7) or as otherwise provided by law or
the Certificate of Incorporation.

                  (ii) (a) So long as any shares of Preferred Stock of any
series shall be outstanding, the Corporation shall not, without the affirmative
vote or written consent of the holders of at least a majority of the aggregate
number of shares of Preferred Stock of all series at the time outstanding,
considered as a class without regard to series, alter or change the
designations, or the powers, preferences or rights, or the qualifications,
limitations or restrictions of the Preferred Stock adversely, PROVIDED, HOWEVER,
that, notwithstanding the foregoing, no alteration or change shall be made in
the par value of the Series C Preferred Stock or in the designations or the
powers, preferences or rights, or the qualifications, limitations or
restrictions of the Series C Preferred Stock so as to affect adversely the
holders of the Series C Preferred Stock, without the affirmative vote or written
consent of the holders of at a majority of the Series C Preferred Stock then
outstanding, voting separately as a class.

                  (b) Notwithstanding the proviso to the preceding paragraph
(ii)(a), no such class vote or written consent of holders of Series C Preferred
Stock shall be required in connection with any authorization, issuance, increase
in the authorized number of shares or designation of the rights and preferences
of any capital stock (whether common, preferred or of other type) so long as
such issuance, increase, action, or fixing, does not change the designations,
powers, preferences or rights, or the qualifications, limitations or
restrictions of the Series C Preferred Stock so as to affect adversely the
holders of the Series C Preferred Stock.

                                      -6-



                  IN WITNESS WHEREOF, APCOA, INC. has caused this Certificate of
Designations to be duly signed by the undersigned this 30th day of March, 1998.

                           APCOA, INC.


                                By: /s/ Michael J. Celebrezze
                                   ---------------------------------------------
                                   Name:   Michael J. Celebrezze
                                   Title:  Senior Vice President, Chief
                                   Financial Officer, Treasurer

EX-3.4

      CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING,
            OPTIONAL AND OTHER SPECIAL RIGHTS OF PREFERRED STOCK AND
              QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS THEREOF

                                       OF

           18% SENIOR CONVERTIBLE REDEEMABLE SERIES D PREFERRED STOCK

                                       OF

                          APCOA/STANDARD PARKING, INC.

                             ----------------------

                         Pursuant to Section 151 of the
                General Corporation Law of the State of Delaware
                             ----------------------

               APCOA/Standard Parking, Inc. (the "COMPANY"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware (the "DGCL"), does hereby certify that, pursuant to the provisions of
Section 151 of the DGCL, the Company's Board of Directors has adopted the
following resolution, which resolution remains in full force and effect as of
the date hereof:

               WHEREAS, the Board of Directors of the Company (the "BOARD") is
authorized, within the limitations and restrictions stated in the Company's
Amended and Restated Certificate of Incorporation (the "CERTIFICATE OF
INCORPORATION"), to fix by resolution or resolutions the designation of each
series of Preferred Stock of the Company (the "PREFERRED STOCK") and the powers,
preferences and relative, participating, optional or other special rights and
qualifications, limitations or restrictions thereof, including, without limiting
the generality of the foregoing, such provisions as may be desired concerning
voting, redemption, dividends, dissolution or the distribution of assets,
conversion or exchange, and such other subjects or matters as may be fixed by
resolution or resolutions of the Board under the DGCL; and

               WHEREAS, it is the desire of the Board, pursuant to its authority
as aforesaid, to designate and fix the powers, preferences and relative,
participating, optional and other special rights, and the qualifications,
limitations and restrictions of a series of the Preferred Stock and the number
of shares constituting such series.

               NOW, THEREFORE, BE IT RESOLVED, that there is hereby authorized
and designated such a series of the Preferred Stock and that the Board hereby
fixes the designations, powers, preferences and relative, participating,
optional and other special rights, and the qualifications, limitations and
restrictions thereof as herein set forth:

        1.     DESIGNATION. The designation of the series of the Preferred Stock
authorized by this resolution shall be "18% Senior Convertible Redeemable Series
D Preferred Stock" (the "SERIES D STOCK"). The number of shares of Series D
Stock authorized for issuance shall be 17,500, and each such share shall have a
par value of $0.01.



        2.     RANK. The Series D Stock shall, with respect to dividend rights
and rights on liquidation, rank (a) junior to, or on a parity with, as the case
may be, any other series of the Preferred Stock established by the Board, the
terms of which shall specifically provide that such series shall rank senior to,
or on parity with, as the case may be, the Series D Stock with respect to
dividend rights and rights on liquidation, (b) senior to the existing Series C
Preferred Stock of the Company (the "SERIES C STOCK"), and (c) senior to any
other equity securities of the Company, including all classes of Company Common
Stock. (All of such equity securities of the Company to which the Series D Stock
ranks prior, including the Series C Stock and all classes of Company Common
Stock, are at times collectively referred to herein as the "JUNIOR SECURITIES").

        3.     DIVIDENDS. (a) The holders of record of shares of Series D Stock
on the record date specified by the Board at the time such dividend is declared
shall be entitled to receive, when, as and if declared by the Board, to the
extent permitted under the DGCL, preferred dividends cumulative quarterly and
payable on the first day of March, June, September and December (each such day
being a "DIVIDEND PAYMENT DATE"); PROVIDED, that such record date shall not be
more than sixty (60) days nor less than ten (10) days prior to the respective
Dividend Payment Date; PROVIDED, FURTHER, that such dividends may, at the option
of the Board, accrue and accumulate. Each of such dividends shall be fully
cumulative and shall accrue (whether or not declared, whether or not the Company
has earnings or profits, and whether or not there are funds legally available
for the payment of such dividends), without interest, from the first day of each
of March, June, September and December, except that with respect to the first
dividend, such dividend shall accrue from the date of the issuance of the Series
D Stock. The per annum dividend rate on outstanding shares shall be 18% per
share, of which 3% may, at the option of the Board, be paid in cash and the
remaining 15% shall accrue and accumulate until paid; PROVIDED, that the Company
may not pay any portion of such dividend in cash until on or after December 15,
2002. The Company shall take all actions required or permitted under the DGCL to
permit the payment of dividends on the Series D Stock, including, without
limitation, through the revaluation of its assets in accordance with the DGCL,
to make or keep funds legally available for the payment of dividends.

               (b)    (i) All dividends paid with respect to shares of Series D
Stock pursuant to paragraph (3)(a) shall be paid PRO RATA to the holders
entitled thereto. Dividends will be computed on the basis of a 360-day year
comprised of twelve 30-day months.

               (c)    Each fractional share of Series D Stock outstanding shall
be entitled to a ratably proportionate amount of all dividends accruing with
respect to each outstanding share of Series D Stock pursuant to Paragraph (3)(a)
hereof, and all such dividends with respect to such outstanding fractional
shares shall be fully cumulative and shall accrue (whether or not declared)
without interest, and shall be payable in the same manner and at such times as
provided for in Paragraph (3)(a) hereof with respect to dividends on each
outstanding share of Series D Stock.

               (d)    Notwithstanding anything contained herein to the contrary,
no cash dividends on shares of Series D Stock shall be declared by the Board or
paid or set apart for payment by the Company at such time as the terms and
provisions of any agreement of the Company, including any agreement relating to
its indebtedness, specifically prohibits such declaration, payment or setting
apart for payment; PROVIDED, that nothing herein contained shall

                                       -2-


in any way or under any circumstance be construed or deemed to require the Board
to declare, or the Company to pay or set apart for payment, any dividends on
shares of Series D Stock at any time, whether or not permitted by any of such
agreements.

               (e)    If at any time the Company shall have failed to pay all
dividends that have accrued on any outstanding shares of any other series of the
Preferred Stock having cumulative dividend rights ranking prior to or on parity
with the shares of Series D Stock at the times such dividends are payable, no
cash dividend shall be declared by the Board or paid or set apart for payment by
the Company on shares of Series D Stock unless prior to or concurrently with
such declaration, payment or setting apart for payment, all accrued and unpaid
dividends on all outstanding shares of such other series of the Preferred Stock
shall have been or be declared, paid or set apart for payment, without interest;
PROVIDED, that in the event such failure to pay accrued dividends is only with
respect to the outstanding shares of Series D Stock and any outstanding shares
of any other series of the Preferred Stock having cumulative dividend rights on
parity with the shares of Series D Stock, subject to Paragraph 3(d) above, cash
dividends may be declared, paid or set apart for payment, without interest, PRO
RATA on shares of Series D Stock and shares of such other series of the
Preferred Stock so that the amount of any cash dividends declared, paid or set
apart for payment on shares of Series D Stock and shares of such other series of
the Preferred Stock shall in all cases bear to each other the same ratio that,
at the time of such declaration, payment or setting apart for payment, all
accrued but unpaid cash dividends on shares of Series D Stock and shares of such
other series of the Preferred Stock bear to each other. Any dividend not paid
pursuant to Paragraph (3)(a) hereof or this Paragraph (3)(e) shall be fully
cumulative and shall accrue (whether or not declared), without interest, as set
forth in Paragraph (3)(a) hereof.

               (f)    Holders of shares of Series D Stock shall be entitled to
receive the dividends provided for in Paragraph (3)(a) hereof in preference to
and in priority over any dividends upon any of the Junior Securities.

               (g)    So long as any shares of Series D Stock are outstanding,
the Company shall not declare, pay or set apart for payment any dividend on any
of the Junior Securities or any warrants, rights, calls or options exercisable
for any of the Junior Securities, or make any distribution in respect thereof,
either directly or indirectly, and whether in cash, obligations or shares of the
Company or other property (other than pursuant to the conversion rights set
forth herein and other than distributions or dividends in stock to the holders
of such stock), and shall not permit any corporation or other entity directly or
indirectly controlled by the Company to purchase or redeem any of the Junior
Securities or any warrants, rights, calls or options exercisable for any of the
Junior Securities, UNLESS prior to or concurrently with such declaration,
payment, setting apart for payment, purchase or distribution, as the case may
be, all accrued and unpaid cash dividends on shares of Series D Stock not paid
on the dates provided for in Paragraph (3)(a) hereof (including if not paid
pursuant to the terms and conditions of paragraph (3)(a) or Paragraph (3)(e)
hereof) shall have been or be paid; PROVIDED, that the Company may declare
dividends on the Series C Stock and pay such dividends in cash so long as at the
time of each such declaration, all dividends on the Series D Stock shall have
been timely and properly declared; PROVIDED, FURTHER, that nothing herein
contained shall limit or restrict the Company or any corporation or other entity
directly or indirectly controlled by the Company from purchasing, redeeming or
otherwise retiring any securities of the Company, including any Junior
Securities

                                       -3-


and any warrants, rights, calls or options exercisable for any of the Junior
Securities, (I) issued to any individual who was or is an employee or officer of
the Company or any of its subsidiaries, or (II) that are subject to any
stockholders agreement, any agreement providing for put/call rights or any
similar agreement to which the Company or any of its subsidiaries is a party,
which agreement provides for such purchase, redemption or retirement.

               (h)    Subject to the foregoing provisions of this Paragraph 3,
the Board may declare, and the Company may pay or set apart for payment,
dividends and other distributions on any of the Junior Securities, and pay,
purchase or otherwise redeem any of the Junior Securities or any warrants,
rights or options exercisable for any of the Junior Securities, and the holders
of the shares of Series D Stock shall not be entitled to share therein.

        4.     LIQUIDATION PREFERENCE. (a) In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Company, the holders of shares of Series D Stock then outstanding shall be
entitled to be paid out of the assets of the Company available for distribution
to its stockholders an amount in cash equal to ten thousand dollars ($10,000)
for each share outstanding (the "LIQUIDATION AMOUNT") plus an amount in cash
equal to all accrued but unpaid dividends thereon to the date fixed for
liquidation, before any payment shall be made or any assets distributed to the
holders of any of the Junior Securities; PROVIDED, that the holders of
outstanding shares of Series D Stock shall not be entitled to receive such
liquidation payment until the liquidation payments on all outstanding shares of
any other series of the Preferred Stock having liquidation rights ranking prior
to the shares of Series D Stock shall have been paid in full. If the assets of
the Company are not sufficient to pay in full the liquidation payments payable
to the holders of outstanding shares of Series D Stock and any outstanding
shares of any other series of the Preferred Stock having liquidation rights on
parity with the shares of Series D Stock, then the holders of all such shares
shall share ratably in such distribution of assets in accordance with the amount
which would be payable on such distribution if the amounts to which the holders
of outstanding shares of Series D Stock and the holders of outstanding shares of
such other series of the Preferred Stock are entitled were paid in full. The
consolidation or merger of the Company with another entity shall not be deemed a
voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the Company and shall not give rise to any rights provided for in this
Paragraph 4.

               (b)    The liquidation payment with respect to each fractional
share of Series D Stock outstanding or accrued but unpaid shall be equal to a
ratably proportionate amount of the liquidation payment with respect to each
outstanding share of Series D Stock.

        5.     REDEMPTION. (a) OPTIONAL.

                      (I)    Shares of Series D Stock may be redeemed, in whole
        or from time to time in part, at the election of the Company (the
        "OPTIONAL REDEMPTION"), at a redemption price per share in cash (the
        "REDEMPTION PRICE") equal to 118% of (x) the then-effective Liquidation
        Amount applicable to such share (treating the applicable date of
        redemption as the date of liquidation, dissolution or winding-up for
        such purpose) and (y) all accrued but unpaid dividends thereon.

                                       -4-


                      (II)   Shares of Series D Stock may be redeemed, in whole
        or from time to time in part, at a price per share equal to the
        then-effective Redemption Price at the election of the holder thereof or
        the Company, upon the occurrence of a Change of Control (as defined
        below) (a "CHANGE OF CONTROL REDEMPTION"), in which case the Redemption
        Price shall be paid in cash; PROVIDED, that if, upon the occurrence of a
        Change of Control Redemption, (x) the Company does not have sufficient
        funds available to pay the Redemption Price in cash, and (y) the parties
        to the Credit Agreement have not foreclosed or exercised their right to
        vote the shares of capital stock that have been pledged to such parties
        as collateral under the Credit Agreement, then holders of a majority of
        the shares of Series D Stock shall have the right to appoint a number of
        directors to the Board equal to the then-current number of directors
        plus one, and the Board shall take all action necessary, including
        amending the by-laws of the Company, to ensure that such appointments
        are valid and effective; PROVIDED, FURTHER, that the Company shall not
        be required to make a Change of Control Redemption if such a redemption
        would be prohibited by the terms of the 9-1/4% Notes, the New Notes or
        the Credit Agreement. If the Redemption Price payable in respect of a
        Change of Control Redemption shall not be paid in cash, the Board shall
        promptly declare a special dividend, payable in shares of Series D
        Stock, in an amount equal to the excess of the then-effective Redemption
        Price over the Liquidation Amount.

                      (III)  Upon the occurrence of an IPO (an "IPO
        REDEMPTION"), each share of Series D Stock may, at the election of the
        Company, be redeemed for an amount in cash equal to the then-effective
        Redemption Price.

               (b)    MANDATORY. On June 15, 2008 (the "MANDATORY REDEMPTION
DATE"), the Company shall redeem (subject to the legal availability of funds
therefor) all outstanding shares of Series D Stock at the then-effective
Redemption Price, payable in cash.

               (c)    ALLOCATION. If the Company elects to make an Optional
Redemption, a Change of Control Redemption or an IPO Redemption, the Company may
redeem all or any number of the shares of Series D Stock then outstanding. If
the Company shall elect to redeem less than all of the shares of Series D Stock
then outstanding, the Company shall determine the number of shares of Series D
Stock to be redeemed and shall redeem from each holder a number of shares of
Series D Stock equal to the product of (i) the number of shares of Series D
Stock held by such holder multiplied by (ii) a fraction, the numerator of which
shall be the number of shares of Series D Stock included in such redemption by
the Company and the denominator of which shall be the total number of shares of
Series D Stock then outstanding.

                                       -5-


        6.     CONVERSION. If, upon the occurrence of an IPO, the Company does
not redeem shares of Series D Stock pursuant to Paragraph 5(a)(III), at the
election of the Company or, if the Company does not make such an election, at
the election of the holder thereof, all of such holder's shares of Series D
Stock shall be converted into a number of shares of Company Common Stock equal
to the quotient of the then-effective Redemption Price divided by the price per
share at which shares of Company Common Stock are sold in such IPO (a
"CONVERSION").

        7.     PROCEDURE FOR REDEMPTION AND CONVERSION.

               (a)    REDEMPTION.

                      (I)    In the event the Company shall redeem shares of
        Series D Stock, notice of such redemption shall be given by first class
        mail, postage prepaid, mailed not less than 30 days nor more than 60
        days prior to the redemption date, to each holder of record of the
        shares to be redeemed, at such holder's address as the same appears on
        the stock register of the Company. Each such notice shall state: (v) the
        redemption date; (w) the number of shares of Series D Stock to be
        redeemed and, if less than all the shares held by such holder are to be
        redeemed, the number of shares to be redeemed from such holder; (x) the
        Redemption Price; (y) the place or places where certificates for such
        shares are to be surrendered for payment of the Redemption Price; and
        (z) that dividends on the shares to be redeemed will cease to accrue on
        such redemption date.

                      (II)   Notice having been mailed as aforesaid, from and
        after the redemption date (unless default shall be made by the Company
        in providing money for the payment of the redemption price of the shares
        called for redemption) dividends on the shares of Series D Stock so
        called for redemption shall cease to accrue, and said shares shall no
        longer be deemed to be outstanding, and all rights of the holders
        thereof as stockholders of the Company (except the right to receive from
        the Company the Redemption Price) shall cease. Upon surrender in
        accordance with said notice of the certificates for any shares so
        redeemed (properly endorsed or assigned for transfer, if the Board shall
        so require and the notice shall so state), such shares shall be redeemed
        by the Company at the redemption price aforesaid. In case fewer than all
        the shares represented by any such certificate are redeemed, a new
        certificate shall be issued representing the unredeemed shares without
        cost to the holder thereof.

               (b)    CONVERSION.

                      (I)    In the event the Company or the holder thereof
        shall elect to convert shares of Series D Stock in connection with an
        IPO, notice of such Conversion shall be given by the party making such
        election by first class mail, postage prepaid, mailed not less than 30
        days nor more than 60 days prior to the Conversion date, to (i) each
        holder of record of the shares to be converted, at such holder's address
        as the same appears on the stock register of the Company, if the Company
        shall be the party electing to convert shares, or (ii) to the Company,
        if a holder shall be the party electing to convert shares. Each such
        notice shall state: (v) the Conversion date; (w) the number of shares of
        Series D Stock to be converted; (x) the Redemption Price; (y) the place
        or places where certificates for such shares are to be surrendered for
        Conversion of such shares;

                                       -6-


        and (z) that dividends on the shares to be converted will cease to
        accrue on such Conversion date.

                      (II)   Notice having been mailed as aforesaid, from and
        after the Conversion date dividends on the shares of Series D Stock so
        called for conversion shall cease to accrue, and said shares shall no
        longer be deemed to be outstanding, and all rights of the holders
        thereof as holders of Series D Stock the Company (except the right to
        receive from the Company the number of shares of Company Common Stock
        applicable to such Conversion) shall cease. Upon surrender in accordance
        with said notice of the certificates for any shares so converted
        (properly endorsed or assigned for transfer, if the Board shall so
        require and the notice shall so state), a new certificate for the shares
        of Company Common Stock into which such shares of Series D Stock are
        converted shall be issued.

        8.     VOTING RIGHTS.

               (a)    The holders of record of Series D Stock shall not be
entitled to any voting rights except as hereinafter provided in this
Paragraph 8.

               (b)    So long as any shares of Series D Stock are outstanding,
the Company will not, without the affirmative vote or consent at an annual or
special meeting of its stockholders of at least a majority of the outstanding
shares of Series D Stock (excluding treasury shares and shares held by
Subsidiaries of the Company) voting as a separate class, create any class or
series of shares ranking senior to the Series D Stock either as to dividends or
upon liquidation, or amend, alter or repeal (whether by merger, consolidation or
otherwise) the Certificate of Incorporation to affect adversely the voting
powers (except as such powers may be limited by the voting rights given to
additional shares of any class), rights or preferences of the Series D Stock.

               (c)    At any annual or special meeting of the stockholders of
the Company at which a matter is submitted to the holders of Series D Stock,
each holder shall be entitled to one vote per share of Series D Stock.

        9.     CERTAIN ADDITIONAL PROVISIONS. The Company shall comply with each
of the covenants set forth below. If at any time the Company breaches any of
such covenants (an "EVENT OF DEFAULT"), holders of a majority of the shares of
Series D Stock shall have the right to appoint one (1) director to the Board and
the Board shall take all action necessary, including amending the by-laws of the
Company, to ensure that such appointment is valid and effective.

               (a)    LIMITATION ON ISSUANCES OF CAPITAL STOCK OF WHOLLY OWNED
RESTRICTED SUBSIDIARIES. The Company (i) shall not, and shall not permit any
Wholly Owned Restricted Subsidiary of the Company to, transfer, convey, sell,
lease or otherwise dispose of any Capital Stock of any Wholly Owned Subsidiary
of the Company to any Person (other than the Company or a Wholly Owned
Restricted Subsidiary of the Company), unless (A) such transfer, conveyance,
sale, lease or other disposition is of all the Capital Stock of such Wholly
Owned Restricted Subsidiary, and (B) the cash Net Proceeds from such transfer,
conveyance, sale, lease or other disposition are applied in accordance with
Paragraph 9(g) of this Certificate of Designation, and (ii) will not permit any
Wholly Owned Restricted Subsidiary of the Company to issue any of its

                                       -7-


Equity Interests (other than, if necessary, shares of its Capital Stock
constituting directors' qualifying shares) to any Person other than to the
Company or a Wholly Owned Restricted Subsidiary of the Company.

               (b)    BUSINESS ACTIVITIES. The Company shall not, and shall not
permit any Restricted Subsidiary to, engage in any business other than Permitted
Businesses, except to such extent as would not be material to the Company and
its Restricted Subsidiaries taken as a whole.

               (c)    RESTRICTED PAYMENTS.

                      (i)    From and after the date of the first issuance of
Series D Stock the Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly:

                      (A)    declare or pay any dividend or make any other
        payment or distribution on account of the Company's or any of its
        Restricted Subsidiaries' Equity Interests (including, without
        limitation, any payment in connection with any merger or consolidation
        involving the Company) or to the direct or indirect holders of the
        Company's or any of its Restricted Subsidiaries' Equity Interests in
        their capacity as such (other than dividends or distributions payable in
        Equity Interests (other than Disqualified Stock) of the Company);

                      (B)    purchase, redeem or otherwise acquire or retire for
        value (including without limitation, in connection with any merger or
        consolidation involving the Company) any Equity Interests of the Company
        or any direct or indirect parent of the Company;

                      (C)    make any payment on or with respect to, or
        purchase, redeem, defease or otherwise acquire or retire for value any
        Indebtedness that is PARI PASSU with or subordinated to the 9-1/4% Notes
        (other than the 9-1/4% Notes), except a payment of interest or principal
        at Stated Maturity; or

                      (D)    make any Restricted Investment (all such payments
        and other actions set forth in these clauses (A) through (D) above being
        collectively referred to as "RESTRICTED PAYMENTS"),

unless, at the time of and after giving effect to such Restricted Payment:

                      (A)    no Event of Default would occur as a consequence
        thereof;

                      (B)    the Company would, at the time of such Restricted
        Payment and after giving pro forma effect thereto as if such Restricted
        Payment had been made at the beginning of the applicable four-quarter
        period, have been permitted to incur at least $1.00 of additional
        Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth
        in Paragraph 9(e) hereof; and

                      (C)    such Restricted Payment, together with the
        aggregate amount of all other Restricted Payments made by the Company
        and its Subsidiaries after the date of the

                                       -8-


        first issuance of Series D Stock (excluding Restricted Payments
        permitted by clauses (B) and (C) of paragraph (ii) below), is less than
        the sum of:

                             (1)  50% of the Consolidated Net Income of the
               Company for the period (taken as one accounting period) from the
               beginning of the first fiscal quarter commencing after the date
               of the first issuance of Series D Stock to the end of the
               Company's most recently ended fiscal quarter for which internal
               financial statements are available at the time of such Restricted
               Payment (or, if such Consolidated Net Income for such period is a
               deficit, less 100% of such deficit), plus

                             (2)  100% of the aggregate net cash proceeds
               received by the Company from the issue or sale since the date of
               the first issuance of Series D Stock of Equity Interests of the
               Company (other than Disqualified Stock) or of Disqualified Stock
               or debt securities of the Company that have been converted into
               such Equity Interests (other than Equity Interests (or
               Disqualified Stock or convertible debt securities) sold to a
               Subsidiary of the Company and other than Disqualified Stock or
               convertible debt securities that have been converted into
               Disqualified Stock), plus

                             (3)  to the extent that any Restricted Investment
               that was made after the date of the first issuance of Series D
               Stock is sold for cash or otherwise liquidated or repaid for
               cash, the lesser of (x) the cash return of capital with respect
               to such Restricted Investment (less the cost of disposition, if
               any) and (y) the initial amount of such Restricted Investment,
               plus

                             (4)  if any Unrestricted Subsidiary (x) is
               redesignated as a Restricted Subsidiary, the fair market value of
               such redesignated Subsidiary (as determined in good faith by the
               Board) as of the date of its redesignation or (y) pays any cash
               dividends or cash distributions to the Company or any of its
               Restricted Subsidiaries, 50% of any such cash dividends or cash
               distributions made after the date of the first issuance of Series
               D Stock.

               (ii)   The foregoing provisions will not prohibit:

                      (A)    the payment of any dividend within 60 days after
               the date of declaration thereof, if at said date of declaration
               such payment would have complied with the provisions of this
               Certificate of Designation;

                      (B)    the redemption, repurchase, retirement, defeasance
               or other acquisition of any PARI PASSU or subordinated
               Indebtedness or Equity Interests of the Company in exchange for,
               or out of the net cash proceeds of the substantially concurrent
               sale or issuance (other than to a Restricted Subsidiary of the
               Company) of, other Equity Interests of the Company (other than
               any Disqualified Stock);

                      (C)    the defeasance, redemption, repurchase or other
               acquisition of PARI PASSU or subordinated Indebtedness with the
               net cash proceeds from an incurrence of Permitted Refinancing
               Indebtedness;

                                       -9-


                      (D)    the payment of any dividend by a Restricted
               Subsidiary of the Company to the holders of its Equity Interests
               on a PRO RATA basis;

                      (E)    Investments in any Person (other than the Company
               or a Wholly Owned Restricted Subsidiary) engaged in a Permitted
               Business in an amount taken together with all other Investments
               made pursuant to this clause (E) that are at that time
               outstanding not to exceed $5.0 million;

                      (F)    other Investments in Unrestricted Subsidiaries
               having an aggregate fair market value, taken together with all
               other Investments made pursuant to this clause (F) that are at
               that time outstanding, not to exceed $2.0 million;

                      (G)    the repurchase, redemption or other acquisition or
               retirement for value of any Equity Interests of Holdings or the
               Company held by any member of Holdings' or the Company's (or any
               of their Restricted Subsidiaries') management pursuant to any
               management equity subscription agreement or stock option
               agreement or in connection with the termination of employment of
               any employees or management of Holdings or the Company or their
               Subsidiaries; PROVIDED, that the aggregate price paid for all
               such repurchased, redeemed, acquired or retired Equity Interests
               shall not exceed $2.0 million in the aggregate plus the aggregate
               cash proceeds received by Holdings or the Company after the date
               of the first issuance of Series D Stock from any reissuance of
               Equity Interests by Holdings or the Company to members of
               management of Holdings or the Company and their Restricted
               Subsidiaries; and

                      (I)    other Restricted Payments in an aggregate amount
               not to exceed $10.0 million.

               The Board may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause an Event of Default;
PROVIDED, that in no event shall the business currently operated by any
Subsidiary Guarantor be transferred to or held by an Unrestricted Subsidiary.
For purposes of making such determination, all outstanding Investments by the
Company and its Restricted Subsidiaries (except to the extent repaid in cash) in
the Subsidiary so designated will be deemed to be Restricted Payments at the
time of such designation and will reduce the amount available for Restricted
Payments under clause (i) of this Paragraph 9(c). All such outstanding
Investments will be deemed to constitute Investments in an amount equal to the
fair market value of such Investments at the time of such designation (as
determined in good faith by the Board). Such designation will only be permitted
if such Restricted Payment would be permitted at such time and if such
Restricted Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary.

               The amount of all Restricted Payments (other than cash) shall be
the fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any non-cash Restricted Payment shall be determined in good
faith by the Board, such determination to be based upon an opinion or

                                      -10-


appraisal issued by an accounting, appraisal or investment banking firm of
national standing if such fair market value exceeds $10.0 million.

               (d)    DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING
RESTRICTED SUBSIDIARIES.

                      (i)    The Company  shall not, and shall not permit any of
its Restricted Subsidiaries to, directly or indirectly, create or otherwise
cause or suffer to exist or become effective any encumbrance or restriction on
the ability of any Restricted Subsidiary to:

                             (A)  (1) pay dividends or make any other
               distributions to the Company or any of its Restricted
               Subsidiaries (x) on its Capital Stock or (y) with respect to any
               other interest or participation in, or measured by, its profits,
               or (2) pay any indebtedness owed to the Company or any of its
               Restricted Subsidiaries;

                             (B)  make loans or advances to the Company or any
               of its Restricted Subsidiaries; or

                             (C)  transfer any of its properties or assets to
               the Company or any of its Restricted Subsidiaries.

                      (ii)   The encumbrances and restrictions in Paragraph
9(d)(i) will not apply to encumbrances or restrictions existing under or by
reason of:

                      (A)    Existing Indebtedness as in effect on the date of
               the first issuance of Series D Stock;

                      (B)    the Credit Agreement as in effect as of the date of
               the first issuance of Series D Stock, and any amendments,
               modifications, restatements, renewals, increases, supplements,
               refundings, replacements or refinancings thereof; PROVIDED, that
               such amendments, modifications, restatements, renewals,
               increases, supplements, refundings, replacement or refinancings
               are no more restrictive in the aggregate (as determined by the
               Credit Agent in good faith) with respect to such dividend and
               other payment restrictions than those contained in the Credit
               Agreement as in effect on the date of the first issuance of
               Series D Stock;

                      (C)    the Indenture, the 9-1/4% Notes, the New Indenture
               or the New Notes;

                      (D)    any applicable law, rule, regulation or order;

                      (E)    any instrument governing Indebtedness or Capital
               Stock of a Person acquired by the Company or any of its
               Restricted Subsidiaries as in effect at the time of such
               acquisition (except to the extent such Indebtedness was incurred
               in connection with or in contemplation of such acquisition),
               which encumbrance or restriction is not applicable to any Person,
               or the properties or assets of any Person, other than the Person,
               or the property or assets of the Person,

                                      -11-


               so acquired; PROVIDED, that in the case of Indebtedness, such
               Indebtedness was permitted by the terms of this Certificate of
               Designation to be incurred;

                      (F)    by reason of customary non-assignment provisions in
               leases entered into in the ordinary course of business and
               consistent with past practices;

                      (G)    purchase money obligations for property acquired in
               the ordinary course of business that impose restrictions of the
               nature described in clause (C) of Paragraph 9(d)(i) above on the
               property so acquired;

                      (H)    Permitted Refinancing Indebtedness; PROVIDED, that
               the material restrictions contained in the agreements governing
               such Permitted Refinancing Indebtedness are no more restrictive
               than those contained in the agreements governing the Indebtedness
               being refinanced;

                      (I)    contracts for the sale of assets, including without
               limitation customary restrictions with respect to a Subsidiary
               pursuant to an agreement that has been entered into for the sale
               or disposition of all or substantially all of the Capital Stock
               or assets of such Subsidiary; and

                      (J)    restrictions on cash or other deposits or net worth
               imposed by customers under contracts entered into in the ordinary
               course of business.

               (e)    INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED
STOCK.

                      (i)    The Company shall not, and shall not permit any of
        its Subsidiaries to, directly or indirectly, create, incur, issue,
        assume, guarantee or otherwise become directly or indirectly liable,
        contingently or otherwise, with respect to (collectively, "INCUR") any
        Indebtedness (including Acquired Debt), and the Company will not issue
        any Disqualified Stock and will not permit any of its Subsidiaries to
        issue any shares of preferred stock; PROVIDED, that the Company may
        incur Indebtedness (including Acquired Debt) or issue shares of
        Disqualified Stock, if the Fixed Charge Coverage Ratio for the Company's
        most recently ended four full fiscal quarters for which internal
        financial statements are available immediately preceding the date on
        which such additional Indebtedness is incurred or such Disqualified
        Stock is issued would have been at least 2.0 to 1, determined on a pro
        forma basis (including a pro forma application of the net proceeds
        therefrom), as if the additional Indebtedness had been incurred, or the
        Disqualified Stock had been issued, as the case may be, at the beginning
        of such four-quarter period.

                      (ii)   The provisions of Paragraph 9(e)(i) will not apply
        the incurrence of any of the following items of Indebtedness
        (collectively, "PERMITTED DEBT"):

                      (A)    the incurrence by the Company of additional
               Indebtedness and letters of credit pursuant to the Credit
               Agreement in an aggregate principal amount at any one time
               outstanding under this clause (A) (with letters of credit being
               deemed to have a principal amount equal to the maximum potential
               liability of the Company and its Subsidiaries thereunder) not to
               exceed $40.0 million less

                                      -12-


               the aggregate amount of all Net Proceeds of Asset Sales applied
               to permanently repay Indebtedness under the Credit Agreement
               pursuant to the covenant described in Paragraph 9(g);

                      (B)    the incurrence by the Company and its Restricted
               Subsidiaries of the Existing Indebtedness;

                      (C)    the incurrence by the Company and the Subsidiary
               Guarantors of Indebtedness represented by the 9-1/4% Notes, the
               New Notes, the Note Guarantees and the New Note Guarantees,
               respectively;

                      (D)    the incurrence by the Company or any of its
               Restricted Subsidiaries of Indebtedness represented by Capital
               Lease Obligations, mortgage financings or purchase money
               obligations, in each case incurred for the purpose of financing
               all or any part of the purchase price or cost of construction or
               improvement of property, plant or equipment used in the business
               of the Company or such Restricted Subsidiary (whether through the
               direct purchase of assets or the Capital Stock of any Person
               owning such assets), in an aggregate principal amount not to
               exceed $7.5 million;

                      (E)    the incurrence by the Company or any of its
               Restricted Subsidiaries of Indebtedness in connection with the
               acquisition of assets or a new Restricted Subsidiary; PROVIDED,
               that such Indebtedness was incurred by the prior owner of such
               assets or such Restricted Subsidiary prior to such acquisition by
               the Company or one of its Subsidiaries and was not incurred in
               connection with, or in contemplation of, such acquisition by the
               Company or one of its Subsidiaries; PROVIDED, FURTHER, that the
               principal amount (or accreted value, as applicable) of such
               Indebtedness, together with any other outstanding Indebtedness
               incurred pursuant to this clause (E), does not exceed $5.0
               million;

                      (F)    the incurrence by the Company or any of its
               Restricted Subsidiaries of Permitted Refinancing Indebtedness in
               exchange for, or the net proceeds of which are used to refund,
               refinance or replace Indebtedness that was permitted to be
               incurred under Paragraph 9(e)(i) or clause (A), (B), (C), (D),
               (E) or (O) of this Paragraph 9(e)(ii);

                      (G)    the incurrence by the Company or any of its
               Restricted Subsidiaries of intercompany Indebtedness between or
               among the Company and any of its Wholly Owned Restricted
               Subsidiaries; PROVIDED, that:

                             (x)  if the Company is the obligor on such
                      Indebtedness and the payee is not a Subsidiary Guarantor,
                      such Indebtedness is expressly subordinated to the prior
                      payment in full in cash of all Obligations with respect to
                      the 9-1/4% Notes; and

                             (y) (I) any subsequent issuance or transfer of
                      Equity Interests that results in any such Indebtedness
                      being held by a Person other than the Company or a Wholly
                      Owned Restricted Subsidiary, and (II) any sale or

                                      -13-


                      other transfer of any such Indebtedness to a Person that
                      is not either the Company or a Wholly Owned Restricted
                      Subsidiary shall be deemed, in each case, to constitute an
                      incurrence of such Indebtedness by the Company or such
                      Restricted Subsidiary, as the case may be;

                      (H)    the incurrence by the Company or any of its
               Restricted Subsidiaries of Hedging Obligations that are incurred
               for the purpose of fixing or hedging currency risk or interest
               rate risk with respect to any floating rate Indebtedness that is
               permitted by the terms of this Certificate of Designation to be
               outstanding;

                      (I)    the guarantee by the Company or any of its
               Restricted Subsidiaries of Indebtedness of the Company or a
               Restricted Subsidiary of the Company that was permitted to be
               incurred by another provision of this covenant;

                      (J)    the incurrence by the Company's Unrestricted
               Subsidiaries of Non-Recourse Debt; PROVIDED, that if any such
               Indebtedness ceases to be Non-Recourse Debt of an Unrestricted
               Subsidiary, such event shall be deemed to constitute an
               incurrence of Indebtedness by a Restricted Subsidiary of the
               Company that was not permitted by this clause (J);

                      (K)    Indebtedness incurred by the Company or any of its
               Restricted Subsidiaries constituting reimbursement obligations
               with respect to letters of credit issued in the ordinary course
               of business, including without limitation to letters of credit in
               respect to workers' compensation claims or self-insurance, surety
               bonds or other Indebtedness with respect to reimbursement type
               obligations regarding workers' compensation claims; PROVIDED,
               that upon the drawing of such letters of credit or the incurrence
               of such Indebtedness, such obligations are reimbursed within 30
               days following such drawing or incurrence;

                      (L)    Indebtedness arising from agreements of the Company
               or a Restricted Subsidiary providing for indemnification,
               adjustment of purchase price or similar obligations, in each
               case, incurred or assumed in connection with the disposition of
               any business, asset or Subsidiary, other than guarantees of
               Indebtedness incurred by any Person acquiring all or any portion
               of such business, assets or Subsidiary for the purpose of
               financing such acquisition; PROVIDED, that the maximum aggregate
               liability of all such Indebtedness shall at no time exceed 50% of
               the gross proceeds actually received by the Company;

                      (M)    obligations in respect of performance and surety
               bonds and completion guarantees provided by the Company or any
               Restricted Subsidiary in the ordinary course of business;

                      (N)    guarantees  incurred in the  ordinary  course of
               business in an aggregate principal amount not to exceed $5.0
               million; and

                      (O)    the issuance by the Company or any of its
               Restricted Subsidiaries of Disqualified Stock and/or the
               incurrence by the Company or any of its

                                      -14-


               Restricted Subsidiaries of additional Indebtedness, including
               Attributable Debt incurred after the date of the first issuance
               of Series D Stock, in an aggregate principal amount (or accreted
               value, as applicable) at any time outstanding, including all
               Permitted Refinancing Indebtedness incurred to refund, refinance
               or replace any other Disqualified Stock or Indebtedness incurred
               pursuant to this clause (O), not to exceed $25.0 million (which
               amount may but need not be incurred, in whole or in part, in
               clause (A) above).

               For purposes of determining compliance with this Paragraph 9(e),
in the event that an item of Indebtedness meets the criteria of more than one of
the categories of Permitted Debt described in clauses (A) through (O) above or
is entitled to be incurred pursuant to Paragraph 9(e)(i), the Company shall, in
its sole discretion, classify such item of Indebtedness in any manner that
complies with this Paragraph 9(e) and such item of Indebtedness will be treated
as having been incurred pursuant to only one of such clauses or pursuant to
Paragraph 9(e)(i). The incurrence of Indebtedness pursuant to Paragraph 9(e)(i)
described above shall not be classified as any of the items in clauses (A)
through (O) above. Accrual of interest and the accretion of accreted value shall
not be deemed to be an incurrence of Indebtedness for purposes of this covenant.

               (f)    TRANSACTIONS WITH AFFILIATES.

                      (i)    The  Company  shall not,  and shall not  permit any
of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer
or otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate (each of the foregoing, an "AFFILIATE TRANSACTION"),
unless such Affiliate Transaction is on terms that are no less favorable to the
Company or the relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person.

                      (ii)   The following items will not be deemed to be
Affiliate Transactions and, therefore, will not be subject to the provisions of
Paragraph 9(f)(i):

                             (A)  any employment agreement entered into by the
               Company or any of its Restricted Subsidiaries in the ordinary
               course of business and consistent with the past practice of the
               Company or such Restricted Subsidiary;

                             (B)  transactions between or among the Company
               and/or its Restricted Subsidiaries;

                             (C)  Permitted  Investments  and  Restricted
               Payments that are permitted by Paragraph 9(c) hereof;

                             (D)  customary loans, advances, fees and
               compensation paid to, and indemnity provided on behalf of,
               officers, directors, employees or consultants of the Company or
               any of its Restricted Subsidiaries;

                             (E)  annual management fees paid to Holdings,
               Steamboat and their affiliates and successor entities not to
               exceed $5.0 million in any one year;

                                      -15-


                             (F)  transactions pursuant to any contract or
               agreement in effect on the date of the first issuance of Series D
               Stock, as the same may be amended, modified or replaced from time
               to time so long as any such amendment, modification or
               replacement is no less favorable to the Company and its
               Restricted Subsidiaries than the contract or agreement as in
               effect on the date of the first issuance of Series D Stock or is
               approved by a majority of the disinterested directors of
               Holdings;

                             (G)  transactions between the Company or its
               Restricted Subsidiaries on the one hand, and Holdings, Steamboat
               and their affiliates and successor entities on the other hand,
               involving the procuring or provision of financial or advisory
               services by Holdings, Steamboat and their affiliates and
               successor entities; PROVIDED, that fees and expenses payable to
               Holdings, Steamboat and their affiliates and successor entities
               do not exceed the usual and customary fees and expenses or
               similar services; and

                             (H)  the insurance arrangements between Holdings
               and its Subsidiaries and an Affiliate of Holberg, Holdings or
               Steamboat that are not less favorable to the Company or any of
               its Subsidiaries than those that are in effect on the date of the
               first issuance of Series D Stock; PROVIDED, that such
               arrangements are conducted in the ordinary course of business
               consistent with past practices.

               (g)    ASSET SALES. The Company shall not, and shall not permit
any of its Restricted Subsidiaries to, consummate an Asset Sale unless:

                      (i)    the Company (or the Restricted Subsidiary, as the
        case may be) receives consideration at the time of such Asset Sale at
        least equal to the fair market value of the assets or Equity Interests
        issued or sold or otherwise disposed of; and

                      (ii)   at least 80% of the consideration therefor received
        by the Company on such Restricted Subsidiary is in the form of cash;
        PROVIDED, that the amount of:

                      (A)    any liabilities (as shown on the Company's or such
               Restricted Subsidiary's most recent balance sheet) of the Company
               or any Restricted Subsidiary (other than contingent liabilities
               and liabilities that are by their terms subordinated to the
               9-1/4% Notes or any guarantee thereof) that are assumed by the
               transferee of any such assets pursuant to a customary novation
               agreement that releases the Company or such Restricted Subsidiary
               from further liability; and

                      (B)    any securities, notes or other obligations received
               by the Company or any such Restricted Subsidiary from such
               transferee that are converted by the Company or such Restricted
               Subsidiary into cash within 180 days (to the extent of the cash
               received), shall be deemed to be cash for purposes of this
               provision.

        Within 360 days after the receipt of any Net Proceeds from an Asset
Sale, the Company may apply such Net Proceeds, at its option:

                                      -16-


               (x)    to repay permanently Senior Debt, (and to correspondingly
        reduce commitments with respect thereto in the case of revolving
        borrowings), or

               (y)    to the acquisition of a controlling interest in another
        business, the making of a capital expenditure or the acquisition of
        other long-term assets and parking facility agreements, in each case, in
        a Permitted Business.

        Pending the final application of any such Net Proceeds, the Company may
temporarily reduce the revolving Indebtedness under the Credit Agreement or
otherwise invest such Net Proceeds in any manner that is not prohibited by the
terms of the Indenture.

               10.    DEFINITIONS.  For  purposes  of this  Certificate  of
Designation, the following terms shall have the respective meaning set forth
below:

               "9-1/4% NOTES" shall mean the 9-1/4% Senior Subordinated Notes
due 2008 of the Company, as amended.

               "ACQUIRED DEBT" shall mean, with respect to any specified Person
(i) Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into, or becoming a
Subsidiary of, such specified Person; and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.

               "AFFILIATE" of any specified Person shall mean any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control," (including, with correlative meanings, the terms, "controlling,"
"controlled by" and "under common control with") as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or otherwise;
PROVIDED, that beneficial ownership of 10% or more of the voting securities of a
Person shall be deemed to be control.

               "AGENT" shall mean any registrar, paying agent or co-registrar.

               "ASSET SALE" shall mean:

        (i)    the sale, lease, conveyance or other disposition of any assets or
               rights (including, without limitation, by way of a sale and
               leaseback) other than sales of inventory in the ordinary course
               of business consistent with past practices; and

        (ii)   the issuance or sale of Equity Interests by any of the Company's
               Restricted Subsidiaries.

               Notwithstanding the preceding, none of the following items will
be deemed to be an Asset Sale:

                                      -17-


        (i)    any single transaction or series of related transactions that
               involves assets having a fair market value, or for net proceeds,
               of less than $3.0 million;

        (ii)   a transfer of assets between or among the Company and its Wholly
               Owned Restricted Subsidiaries;

        (iii)  an issuance of Equity Interests by a Restricted Subsidiary to the
               Company, Holdings or to another Wholly Owned Subsidiary; and

        (iv)   a Restricted Payment or Permitted Investment that is permitted by
               Paragraph 9(c) hereof.

               "ATTRIBUTABLE DEBT" in respect of a sale and leaseback
transaction shall mean, at the time of determination, the present value
(discounted at the rate of interest implicit in such transaction, determined in
accordance with GAAP) of the obligation of the lessee for net rental payments
during the remaining term of the lease included in such sale and leaseback
transaction (including any period for which such lease has been extended or may,
at the option of the lessor, be extended).

               "BANKRUPTCY LAW" means Title 11, U.S. Code or any similar federal
or state law for the relief of debtors.

               "BOARD OF DIRECTORS" shall mean (i) with respect to a
corporation, the board of directors of the corporation; (ii) with respect to a
partnership, the Board of Directors of the general partner of the partnership;
and (iii) with respect to any other Person, the board or committee of such
Person serving a similar function.

               "CAPITAL LEASE OBLIGATION" shall mean, at the time any
determination thereof is to be made, the amount of the liability in respect of a
capital lease that would at such time be required to be capitalized on a balance
sheet in accordance with GAAP.

               "CAPITAL STOCK" shall mean (i) in the case of a corporation,
corporate stock; (ii) in the case of an association or business entity, any and
all shares, interests, participations, rights or other equivalents (however
designated) of corporate stock; (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited); and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.

               "CASH EQUIVALENTS" shall mean

               (i)    United States dollars;

               (ii)   securities issued or directly and fully guaranteed or
                      insured by the United States government or any agency or
                      instrumentality thereof having maturities of not more than
                      six months from the date of acquisition;

               (iii)  certificates of deposit and eurodollar time deposits with
                      maturities of six months or less from the date of
                      acquisition, bankers' acceptances with

                                      -18-


                      maturities not exceeding six months and overnight bank
                      deposits, in each case, with any lender party to the
                      Credit Agreement or with any domestic commercial bank
                      having capital and surplus in excess of $500.0 million and
                      a Thomson Bank Watch Rating of "B" or better;

               (iv)   repurchase obligations with a term of not more than seven
                      days for underlying securities of the types described in
                      clauses (ii) and (iii) above entered into with any
                      financial institution meeting the qualifications specified
                      in clause (iii) above; and

               (v)    commercial paper having the highest rating obtainable from
                      Moody's Investors Service, Inc. or Standard & Poor's
                      Corporation and, in each case, maturing within six months
                      after the date of acquisition.

               "CHANGE OF CONTROL" shall mean the occurrence of any of the
following: (i) the sale, lease, transfer, conveyance or other disposition (other
than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of Holdings and its
Subsidiaries or of the Company and its Subsidiaries, in each case, taken as a
whole to any "person" (as such term is used in Section 13(d)(3) of the Exchange
Act) other than the Principals or their Related Parties and Permitted Holders,
(ii) the adoption of a plan relating to the liquidation or dissolution of
Holdings or the Company, (iii) the consummation of any transaction (including,
without limitation, any merger or consolidation) the result of which is that any
"person" (as defined above), other than the Principals and their Related Parties
and Permitted Holders, becomes the "beneficial owner" (as such term is defined
in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that a person shall
be deemed to have "beneficial ownership" of all securities that such person has
the right to acquire, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition), directly or
indirectly, of more than 50% of the Voting Stock of Holdings or the Company
(measured by voting power rather than number of shares), (iv) the first day on
which a majority of the members of the Board are not Continuing Directors or (v)
Holdings or the Company consolidates with, or merges with or into, any Person or
sells, assigns, conveys, transfers, leases or otherwise disposes of all or
substantially all of its assets to any Person, or any Person consolidates with,
or merges with or into, Holdings or the Company, in any such event pursuant to a
transaction in which any of the outstanding Voting Stock of Holdings or the
Company is converted into or exchanged for cash, securities or other property,
other than any such transaction where the Voting Stock of Holdings or the
Company outstanding immediately prior to such transaction is converted into or
exchanged for Voting Stock (other than Disqualified Stock) of the surviving or
transferee Person constituting a majority of the outstanding shares of such
Voting Stock of such surviving or transferee Person (immediately after giving
effect to such issuance).

               "COMPANY COMMON STOCK" shall mean the shares of common stock, par
value $0.01, of the Company.

               "CONSOLIDATED NET INCOME" shall mean, with respect to any
specified Person for any period, the aggregate of the Net Income of such Person
and its Restricted Subsidiaries for such period, on a consolidated basis,
determined in accordance with GAAP; PROVIDED, that:

                                      -19-


        (i)    the Net Income (but not loss) of any Person that is not a
               Restricted Subsidiary or that is accounted for by the equity
               method of accounting will be included only to the extent of the
               amount of dividends or distributions paid in cash to the
               specified Person or a Wholly Owned Restricted Subsidiary of the
               Person;

        (ii)   the Net Income of any Restricted Subsidiary will be excluded to
               the extent that the declaration or payment of dividends or
               similar distributions by that Restricted Subsidiary of that Net
               Income is not at the date of determination permitted without any
               prior governmental approval (that has not been obtained) or,
               directly or indirectly, by operation of the terms of its charter
               or any agreement, instrument, judgment, decree, order, statute,
               rule or governmental regulation applicable to that Subsidiary or
               its stockholders;

        (iii)  the Net Income of any Person acquired in a pooling of interests
               transaction for any period prior to the date of such acquisition
               will be excluded;

        (iv)   the cumulative effect of a change in accounting principles will
               be excluded; and

        (v)    the Net Income of any Unrestricted Subsidiary will be excluded,
               whether or not distributed to the Company or one of its
               Restricted Subsidiaries for purposes of Paragraph 9(e) of this
               Certificate of Designation.

               "CONTINUING DIRECTORS" shall mean, as of any date of
determination, any member of the board of directors of such Person who (a) was a
member of such board of directors on the date of the first issuance of Series D
Stock or (b) was nominated for election or elected to such board of directors
with the approval of a majority of the Continuing Directors who were members of
such board at the time of such nomination or election.

               "CREDIT AGENT" shall mean LaSalle Bank National Association, in
its capacity as Agent for the lenders party to the Credit Agreement or any
successor thereto or any person otherwise appointed.

               "CREDIT AGREEMENT" shall mean that certain Credit Agreement,
dated as of January 11, 2002, by and among the Company and LaSalle Bank National
Association as Agent, LaSalle Bank National Association and Bank One, N.A.,
together with all related agreements, instruments and documents executed or
delivered pursuant thereto at any time, in each case as such agreements,
instruments and documents may be amended, restated, modified or supplemented and
in effect from time to time, including any agreements, instruments or documents
extending the maturity of, refinancing, replacing or otherwise restructuring all
or any portion of the indebtedness and other obligations under such credit
agreement or any successor or replacement agreement, whether by the same or any
other agent, lender or group of lenders.

               "CREDIT FACILITIES" shall mean, one or more debt facilities
(including, without limitation, the Credit Agreement) or commercial paper
facilities, in each case with banks or other institutional lenders providing for
revolving credit loans, term loans, receivables financing (including through the
sale of receivables to such lenders or to special purpose entities formed to
borrow from such lenders against such receivables) or letters of credit, in each
case, as amended,

                                      -20-


restated, modified, renewed, refunded, replaced or refinanced in whole or in
part from time to time.

               "CUSTODIAN" shall mean any receiver, trustee, assignee,
liquidator or similar official under any Bankruptcy Law.

               "DISQUALIFIED STOCK" shall mean any Capital Stock that, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
redeemable at the option of the holder of the Capital Stock, in whole or in
part, on or prior to the date that is 91 days after the date on which the 9-1/4%
Notes mature. Notwithstanding the preceding sentence, any Capital Stock that
would constitute Disqualified Stock solely because the holders of the Capital
Stock have the right to require the Company to repurchase such Capital Stock
upon the occurrence of a change of control or an asset sale shall not constitute
Disqualified Stock if the terms of such Capital Stock provide that the Company
may not repurchase or redeem any such Capital Stock pursuant to such provisions
unless such repurchase or redemption complies with Paragraph 9(c) hereof.

               "EQUITY INTERESTS" shall mean Capital Stock and all warrants,
options or other rights to acquire Capital Stock (but excluding any debt
security that is convertible into, or exchangeable for, Capital Stock).

               "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, together with the rules and regulations promulgated thereunder.

               "EXISTING INDEBTEDNESS" shall mean Indebtedness of the Company
and its Subsidiaries (other than Indebtedness under the Credit Agreement) in
existence on the date of the first issuance of Series D Stock, until such
amounts are repaid.

               "GAAP" shall mean generally accepted accounting principles in the
United States of America set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as have been
approved by a significant segment of the accounting profession, which are in
effect on the date of the first issuance of Series D Stock.

               "GUARANTEE" shall mean a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.

               "GUARANTOR" shall mean each of (i) the guarantors listed on the
signature pages to the Indenture; and (ii) any other Subsidiary that executes a
Note Guarantee in accordance with the provisions of the Indenture, and their
respective successors and assigns

               "HEDGING OBLIGATIONS" shall mean, with respect to any specified
Person, the obligations of such Person under (i) interest rate swap agreements,
interest rate cap agreements

                                      -21-


and interest rate collar agreements; and (ii) other agreements or arrangements
designed to protect such Person against fluctuations in interest rates or
currency rates.

               "HOLBERG" shall mean Holberg Industries, Inc., a Delaware
corporation.

               "HOLDINGS" shall mean AP Holdings, Inc., a Delaware corporation
and the parent (but not 100% owner) of the Company.

               "INDEBTEDNESS" shall mean, with respect to any specified Person,
any indebtedness of such Person, whether or not contingent, (i) in respect of
borrowed money; (ii) evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements in respect
thereof); (iii) in respect of banker's acceptances; (iv) representing Capital
Lease Obligations; (v) representing the balance deferred and unpaid of the
purchase price of any property, except any such balance that constitutes an
accrued expense or trade payable; or (vi) representing any Hedging Obligations,
if and to the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance sheet
of the specified Person prepared in accordance with GAAP as well as all
indebtedness of others secured by a Lien on any asset of such Person (whether or
not such indebtedness is assumed by the specified Person) and, to the extent not
otherwise included, the Guarantee by such Person of any indebtedness of any
other Person.

               The amount of any Indebtedness outstanding as of any date shall
be (i) the accreted value thereof, in the case of any Indebtedness that does not
require current payments of interest; and (ii) the principal amount thereof,
together with any interest thereon that is more than 30 days past due, in the
case of any other Indebtedness.

               Notwithstanding anything to the contrary, any put right, right of
redemption or right of repurchase will, in any such case, for the purposes of
this definition, not be treated as Indebtedness, no matter what the accounting
treatment of said transaction may be. In addition, notwithstanding anything to
the contrary, the carrying value (as determined in accordance with FASB 15) of
any Indebtedness that has been redeemed shall not be deemed Indebtedness for
purposes of this definition.

               "INDENTURE" shall mean the Indenture, dated as of March 30, 1998,
among the Company, the Subsidiary Guarantors and State Street Bank and Trust
Company, as trustee thereunder, relating to the 9-1/4% Notes, as the same may be
from time to time amended, supplemented and/or restated.

               "INVESTMENT" shall mean, with respect to any Person, all direct
or indirect investments by such Person in other Persons (including Affiliates)
in the forms of loans (including Guarantees or other obligations), advances or
capital contributions (excluding commission, travel and similar advances to
officers and employees made in the ordinary course of business), purchases or
other acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If the Company
or any Restricted Subsidiary of the Company sells or otherwise disposes of any
Equity Interests of any direct or indirect Restricted Subsidiary of the Company
such that, after giving effect to any such sale or

                                      -22-


disposition, such Person is no longer a Restricted Subsidiary of the Company,
the Company will be deemed to have made an Investment on the date of any such
sale or disposition equal to the fair market value of the Equity Interests of
such Restricted Subsidiary not sold or disposed of in an amount determined as
provided in the second paragraph of Section 9(c)(ii). The acquisition by the
Company or any Subsidiary of the Company of a Person that holds an Investment in
a third Person will be deemed to be an Investment by the Company or such
Subsidiary in such third Person in an amount equal to the fair market value of
the Investment held by the acquired Person in such third Person in an amount
determined as provided in the second paragraph of Section 9(c)(ii).

               "IPO" shall mean an initial public offering of shares of Company
Common Stock registered under the Securities Act, whether for the sale of shares
of Company Common Stock by the Company or by stockholders of the Company.

               "LIEN" shall mean, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law, including any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to sell or give a
security interest in and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction.

               "NET INCOME" shall mean, with respect to any Person, the net
income (loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however: (i) any
gain (but not loss), together with any related provision for taxes on such gain
(but not loss), realized in connection with (A) any Asset Sale, including,
without limitation, dispositions pursuant to sale and leaseback transactions; or
(B) the disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries; and (ii) any extraordinary or nonrecurring gain
(but not loss), together with any related provision for taxes on such
extraordinary or nonrecurring gain (but not loss).

               "NET PROCEEDS" shall mean the aggregate cash proceeds received by
the Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale, including, without limitation,
legal, accounting and investment banking fees, and sales commissions, and any
relocation expenses incurred as a result of the Asset Sale, taxes paid or
payable as a result of the Asset Sale, in each case, after taking into account
any available tax credits or deductions and any tax sharing arrangements, and
any reserve for adjustment in respect of the sale price of such asset or assets
established in accordance with GAAP.

               "NEW INDENTURE" shall mean the Indenture dated January 11, 2002
among the Company, the Subsidiary Guarantors and Wilmington Trust Company, as
trustee thereunder, relating to the New Notes, as the same may be from time to
time amended, supplemented and/or restated.

                                      -23-


               "NEW NOTE GUARANTEE" shall mean the Guarantee by each guarantor
of the Company's payment obligations under the New Indenture and on the New
Notes, executed pursuant to the provisions of the New Indenture.

               "NEW NOTES" shall mean the 14% Senior Subordinated Second Lien
Notes due 2006 of the Company, as the same may be amended, restated, modified or
supplemented from time to time.

               "NON-RECOURSE DEBT" shall mean Indebtedness (i) as to which
neither the Company nor any of its Restricted Subsidiaries (A) provides credit
support of any kind (including any undertaking, agreement or instrument that
would constitute Indebtedness), (B) is directly or indirectly liable (as a
guarantor or otherwise), or (C) constitutes the lender; (ii) no default with
respect to which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness (other than
the New Notes) of the Company or any of its Restricted Subsidiaries to declare a
default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity; and (iii) as to which the
lenders have been notified in writing that they will not have any recourse to
the stock or assets of the Company or any of its Restricted Subsidiaries.

               "NOTE GUARANTEE" shall mean the Guarantee by each Guarantor of
the Company's payment obligations under the Indenture and on the 9-1/4% Notes,
executed pursuant to the provisions of the Indenture.

               "OBLIGATIONS" shall mean any principal, interest, penalties,
fees, indemnifications, reimbursements, damages and other liabilities payable
under the documentation governing any Indebtedness, and in all cases whether now
outstanding or hereafter created, assumed or incurred and including, without
limitation, interest accruing subsequent to the filing of a petition in
bankruptcy at the rate provided in the relevant document, whether or not an
allowed claim, and any obligation to redeem or defease any of the foregoing.

               "OFFICER" shall mean, with respect to any Person, the Chairman of
the Board, the Chief Executive Officer, the President, the Chief Operating
Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer,
the Controller, the Secretary or any Vice-President of such Person.

               "PERMITTED BUSINESSES" shall mean any of the businesses and any
other businesses related to the businesses engaged in by the Company and its
respective Restricted Subsidiaries on the date of the first issuance of Series D
Stock.

               "PERMITTED HOLDER" shall mean the holders of the Series D Stock.

               "PERMITTED INVESTMENT" shall mean:

        (i)    any Investment in the Company or in a Wholly Owned Restricted
               Subsidiary of the Company that is engaged in a Permitted
               Business;

        (ii)   any Investment in Cash Equivalents;

                                      -24-


        (iii)  any Investment by the Company or any Restricted Subsidiary of the
               Company in a Person, if as a result of such Investment:

               (A)    such Person becomes a Wholly Owned Restricted Subsidiary
                      of the Company that is engaged in a Permitted Business; or

               (B)    such Person is merged, consolidated or amalgamated with or
                      into, or transfers or conveys substantially all of its
                      assets to, or is liquidated into, the Company or a Wholly
                      Owned Restricted Subsidiary of the Company that is engaged
                      in a Permitted Business;

        (iv)   any Investment made as a result of the receipt of non-cash
               consideration from an Asset Sale that was made pursuant to and in
               compliance with Section 3.9 of the Indenture;

        (v)    any acquisition of assets solely in exchange for the issuance of
               Equity Interests (other than Disqualified Stock) of the Company;

        (vi)   loans and advances made after the date of the first issuance of
               Series D Stock to Steamboat or any successor thereto not to
               exceed $10.0 million at any time outstanding;

        (vii)  make and permit to remain outstanding travel and other like
               advances in the ordinary course of business consistent with past
               practices to officers, employees and consultants of the Company
               or a Subsidiary of the Company;

        (viii) other Investments in any Person having an aggregate fair market
               value (measured on the date each such Investment was made and
               without giving effect to subsequent changes in value), when taken
               together with all other Investments made pursuant to this clause
               (viii) that are at the time not to exceed $10.0 million; and

        (ix)   loans and advances made after the date of the first issuance of
               Series D Stock to Holdings, not to exceed $9.0 million at any
               time outstanding.

               "PERMITTED REFINANCING INDEBTEDNESS" shall mean any Indebtedness
of the Company or any of its Restricted Subsidiaries issued in exchange for, or
the net proceeds of which are used to extend, refinance, renew, replace, defease
or refund other Indebtedness of the Company or any of its Restricted
Subsidiaries; PROVIDED, that:

        (i)    the principal amount (or accreted value, if applicable) of such
               Permitted Refinancing Indebtedness does not exceed the principal
               amount (or accreted value, if applicable) of the Indebtedness
               extended, refinanced, renewed, replaced, defeased or refunded
               (plus all accrued interest on the Indebtedness and the amount of
               all reasonable expenses incurred in connection therewith);

        (ii)   such Permitted Refinancing Indebtedness has a final maturity date
               later than the final maturity date of, and has a Weighted Average
               Life to Maturity equal to or

                                      -25-


               greater than the Weighted Average Life to Maturity of, the
               Indebtedness being extended, refinanced, renewed, replaced,
               defeased or refunded;

        (iii)  if the Indebtedness being extended, refinanced, renewed,
               replaced, defeased or refunded is subordinated in right of
               payment to the 9-1/4% Notes, such Permitted Refinancing
               Indebtedness has a final maturity date later than the final
               maturity date of, and is subordinated in right of payment to, the
               9-1/4% Notes on terms at least as favorable to the Permitted
               Holders as those contained in the documentation governing the
               Indebtedness being extended, refinanced, renewed, replaced,
               defeased or refunded; and

        (iv)   such Indebtedness is incurred either by the Company or by the
               Restricted Subsidiary who is the obligor on the Indebtedness
               being extended, refinanced, renewed, replaced, defeased or
               refunded.

               "PERSON" shall mean any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization, limited liability company or government or other agency.

               "PRINCIPALS" shall mean Steamboat, John V. Holten or, in the case
of the Company, Holdings.

               "RELATED PARTY" with respect to any Principal shall mean (i) any
controlling stockholder or partner, 80% (or more) owned Subsidiary, or spouse or
immediate family member (in the case of an individual) of such Principal, or
(ii) any trust, corporation, partnership, limited liability company or other
entity, the beneficiaries, stockholders, partners, members, owners or Persons
beneficially holding an 80% or more controlling interest of which consist of
such Principal and/or such other Persons referred to in the immediately
preceding clause (i).

               "RESTRICTED INVESTMENT" shall mean an Investment other than a
Permitted Investment.

               "RESTRICTED SUBSIDIARY" shall mean any Subsidiary that is not an
Unrestricted Subsidiary.

               "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, together with the rules and regulations promulgated thereunder.

               "SENIOR DEBT" shall mean:

        (i)    all Indebtedness outstanding under the Credit Agreement,
               including any Guarantees thereof and all Hedging Obligations with
               respect thereto;

        (ii)   any other Indebtedness permitted to be incurred by the Company or
               its Restricted Subsidiaries under the terms of this Certificate
               of Designation, unless the instrument under which such
               Indebtedness is incurred expressly provides that it is on a
               parity with or subordinated in right of payment to the 9-1/4%
               Notes; and

                                      -26-


        (iii)  all Obligations with respect to the foregoing.

        Notwithstanding anything to the contrary in the foregoing, Senior Debt
will not include:

        (i)    any liability for federal, state, local or other taxes owed or
               owing by the Company;

        (ii)   any Indebtedness of the Company to any of its Subsidiaries or
               other Affiliates;

        (iii)  any trade payables; or

        (iv)   any Indebtedness that is incurred in violation of the Indenture.

               "SIGNIFICANT SUBSIDIARY" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date of the first issuance of Series D Stock.

               "STATED MATURITY" shall mean, with respect to any installment of
interest or principal on any series of Indebtedness, the date on which such
payment of interest or principal was scheduled to be paid in the original
documentation governing such Indebtedness, and shall not include any contingent
obligations to repay, redeem or repurchase any such interest or principal prior
to the date originally scheduled for the payment thereof.

               "STEAMBOAT" shall mean Steamboat Holdings, Inc., a Delaware
corporation and the parent of Holdings.

               "SUBSIDIARY" shall mean with respect to any specified Person:

                      (i)    any  corporation,  association or other business
entity of which more than 50% of the total voting power of shares of Capital
Stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees of the corporation, association
or other business entity is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person (or a combination thereof); and

                      (ii)   any  partnership  (a) the sole  general  partner or
the managing general partner of which is such Person or a Subsidiary of such
Person or (b) the only general partners of which are that Person or one or more
Subsidiaries of that Person (or any combination thereof).

               "UNRESTRICTED SUBSIDIARY" shall mean any Subsidiary that is
designated by the Board as an Unrestricted Subsidiary pursuant to a resolution
of the Board; but only to the extent that such Subsidiary:

        (i)    has no Indebtedness other than Non-Recourse Debt;

        (ii)   is not party to any agreement, contract, arrangement or
               understanding with the Company or any Restricted Subsidiary of
               the Company unless the terms of any

                                      -27-


               such agreement, contract, arrangement or understanding are no
               less favorable to the Company or such Restricted Subsidiary than
               those that might be obtained at the time from Persons who are not
               Affiliates of the Company;

        (iii)  is a Person with respect to which neither the Company nor any of
               its Restricted Subsidiaries has any direct or indirect obligation
               (i) to subscribe for additional Equity Interests or (ii) to
               maintain or preserve such Person's financial condition or to
               cause such Person to achieve any specified levels of operating
               results; and

        (iv)   has not guaranteed or otherwise directly or indirectly provided
               credit support for any Indebtedness of the Company or any of its
               Restricted Subsidiaries.

               "VOTING STOCK" of any Person as of any date shall mean the
Capital Stock of such Person that is at the time entitled to vote in the
election of the Board of Directors of such Person.

               "WEIGHTED AVERAGE LIFE TO MATURITY" shall mean, when applied to
any Indebtedness at any date, the number of years obtained by dividing:

               (i)    the sum of the products obtained by multiplying (a) the
               amount of each then remaining installment, sinking fund, serial
               maturity or other required payments of principal, including
               payment at final maturity, in respect of the Indebtedness, by (b)
               the number of years (calculated to the nearest one-twelfth) that
               will elapse between such date and the making of such payment; by

               (ii)   the then outstanding principal amount of such
               Indebtedness.

               "WHOLLY OWNED SUBSIDIARY" of any Person shall mean a Subsidiary
of such Person all of the outstanding Capital Stock or other ownership interests
of which (other than directors' qualifying shares) shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person or by
such Person and one or more Wholly Owned Subsidiaries of such Person.

                                  *     *     *

                                      -28-


        IN WITNESS WHEREOF, the Company has caused this Certificate of
Designation to be duly executed by the undersigned this    day of January, 2002.

                                        By:
                                           -------------------------------------
                                        Name:
                                        Title: