-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N0HtMU3O+/IllJ3APiVMg6cXg8ZZOHAJXmKyv0scuYjZ2/lQNMGIs1MqTkF/Eiv/ N66O1XzYp8/YEZNk4sF2vg== 0000950123-98-005792.txt : 19980610 0000950123-98-005792.hdr.sgml : 19980610 ACCESSION NUMBER: 0000950123-98-005792 CONFORMED SUBMISSION TYPE: S-4/A PUBLIC DOCUMENT COUNT: 19 FILED AS OF DATE: 19980609 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: APCOA INC CENTRAL INDEX KEY: 0001059262 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-AUTO RENTAL & LEASING (NO DRIVERS) [7510] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-50437 FILM NUMBER: 98644996 BUSINESS ADDRESS: STREET 1: 800 SUPERIOR AVE CITY: CLEVELAND STATE: OH ZIP: 44114-2601 BUSINESS PHONE: 2185220700 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TOWER PARKING INC CENTRAL INDEX KEY: 0001059985 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 310878291 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-50437-01 FILM NUMBER: 98644997 BUSINESS ADDRESS: STREET 1: 800 SUPERIOR AVE CITY: CLEVELAND STATE: OH ZIP: 44114-2601 BUSINESS PHONE: 2165220700 MAIL ADDRESS: STREET 1: 800 SUPERIOR AVE CITY: CLEVELAND STATE: OH ZIP: 44114-2601 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GRAELIC INC CENTRAL INDEX KEY: 0001059986 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 341327948 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-50437-02 FILM NUMBER: 98644998 BUSINESS ADDRESS: STREET 1: 800 SUPERIOR AVE CITY: CLEVELAND STATE: OH ZIP: 44114-2601 BUSINESS PHONE: 2165220700 MAIL ADDRESS: STREET 1: 800 SUPERIOR AVE CITY: CLEVELAND STATE: OH ZIP: 44114-2601 FILER: COMPANY DATA: COMPANY CONFORMED NAME: APCOA CAPITAL CORP CENTRAL INDEX KEY: 0001059987 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 061334158 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-50437-03 FILM NUMBER: 98644999 BUSINESS ADDRESS: STREET 1: 800 SUPERIOR AVE CITY: CLEVELAND STATE: OH ZIP: 44114-2601 BUSINESS PHONE: 2165220700 MAIL ADDRESS: STREET 1: 800 SUPERIOR AVE CITY: CLEVELAND STATE: OH ZIP: 44114-2601 FILER: COMPANY DATA: COMPANY CONFORMED NAME: A-1 AUTO PARK INC CENTRAL INDEX KEY: 0001059988 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 581336837 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-50437-04 FILM NUMBER: 98645000 BUSINESS ADDRESS: STREET 1: 800 SUPERIOR AVE CITY: CLEVELAND STATE: OH ZIP: 44114-2601 BUSINESS PHONE: 2165220700 MAIL ADDRESS: STREET 1: 800 SUPERIOR AVE CITY: CLEVELAND STATE: OH ZIP: 44114-2601 FILER: COMPANY DATA: COMPANY CONFORMED NAME: METROPOLITAN PARKING SYSTEM INC CENTRAL INDEX KEY: 0001059989 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 042607263 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-50437-05 FILM NUMBER: 98645001 BUSINESS ADDRESS: STREET 1: 800 SUPERIOR AVE CITY: CLEVELAND STATE: OH ZIP: 44114-2601 BUSINESS PHONE: 2165220700 MAIL ADDRESS: STREET 1: 800 SUPERIOR AVE CITY: CLEVELAND STATE: OH ZIP: 44114-2601 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EVENTS PARKING CO INC CENTRAL INDEX KEY: 0001059991 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 043223993 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-50437-06 FILM NUMBER: 98645002 BUSINESS ADDRESS: STREET 1: 800 SUPERIOR AVE CITY: CLEVELAND STATE: OH ZIP: 44114-2601 BUSINESS PHONE: 2165220700 MAIL ADDRESS: STREET 1: 800 SUPERIOR AVE CITY: CLEVELAND STATE: OH ZIP: 44114-2601 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STANDARD PARKING CORP CENTRAL INDEX KEY: 0001059993 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 362932936 STATE OF INCORPORATION: IL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-50437-08 FILM NUMBER: 98645003 BUSINESS ADDRESS: STREET 1: 200 EAST RANDOLPH DR STREET 2: STE 4800 CITY: CHICAGO STATE: IL ZIP: 60601 BUSINESS PHONE: 3126964000 MAIL ADDRESS: STREET 1: 200 EAST RANDOLPH DR STREET 2: STE 4800 CITY: CHICAGO STATE: IL ZIP: 60601 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STANDARD PARKING CORP IL CENTRAL INDEX KEY: 0001059996 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 363880811 STATE OF INCORPORATION: IL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-50437-10 FILM NUMBER: 98645004 BUSINESS ADDRESS: STREET 1: 200 EAST RANDOLPH DR STREET 2: STE 4800 CITY: CHICAGO STATE: IL ZIP: 60601 BUSINESS PHONE: 3126964000 MAIL ADDRESS: STREET 1: 200 EAST RANDOLPH DR STREET 2: STE 4800 CITY: CHICAGO STATE: IL ZIP: 60601 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STANDARD AUTO PARK INC CENTRAL INDEX KEY: 0001059997 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 362439841 STATE OF INCORPORATION: IL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-50437-11 FILM NUMBER: 98645005 BUSINESS ADDRESS: STREET 1: 200 EAST RANDOLPH DR STREET 2: STE 4800 CITY: CHICAGO STATE: IL ZIP: 60601 BUSINESS PHONE: 3126964000 MAIL ADDRESS: STREET 1: 200 EAST RANDOLPH DR STREET 2: STE 4800 CITY: CHICAGO STATE: IL ZIP: 60601 FILER: COMPANY DATA: COMPANY CONFORMED NAME: S&S PARKING INC CENTRAL INDEX KEY: 0001063498 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 953400682 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-50437-16 FILM NUMBER: 98645006 BUSINESS ADDRESS: STREET 1: 800 SUPERIOR AVE CITY: CLEVELAND STATE: OH ZIP: 44114-2601 BUSINESS PHONE: 2165220700 MAIL ADDRESS: STREET 1: 800 SUPERIOR AVE CITY: CLEVELAND STATE: OH ZIP: 44114-2601 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SENTRY PARKING CORP CENTRAL INDEX KEY: 0001063499 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 962950648 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-50437-18 FILM NUMBER: 98645007 BUSINESS ADDRESS: STREET 1: 800 SUPERIOR AVE CITY: CLEVELAND STATE: OH ZIP: 44114-2601 BUSINESS PHONE: 2165220700 MAIL ADDRESS: STREET 1: 800 SUPERIOR AVE CITY: CLEVELAND STATE: OH ZIP: 44114-2601 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTURY PARKING INC CENTRAL INDEX KEY: 0001063500 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4/A SEC ACT: SEC FILE NUMBER: 333-50437-17 FILM NUMBER: 98645008 BUSINESS ADDRESS: STREET 1: 800 SUPERIOR AVE CITY: CLEVELAND STATE: OH ZIP: 44114-2601 BUSINESS PHONE: 2165220700 MAIL ADDRESS: STREET 1: 800 SUPERIOR AVE CITY: CLEVELAND STATE: OH ZIP: 44114-2601 S-4/A 1 APCOA/STANDARD PARKING, INC. ET AL: AMENDMENT #1 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 9, 1998. REGISTRATION NO. 333-50437 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ AMENDMENT NO. 1 TO FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ APCOA, INC.* (TO BE RENAMED APCOA/STANDARD PARKING, INC.) (EXACT NAME OF REGISTRANT SPECIFIED IN ITS CHARTER) DELAWARE 7521 16-1171179 (STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
800 SUPERIOR AVENUE CLEVELAND, OHIO 44114-2601 (216) 522-0700 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF THE COMPANY'S PRINCIPAL EXECUTIVE OFFICES) ------------------------ Copies of all communications to: ROBERT N. SACKS, ESQ. ADAM O. EMMERICH, ESQ. EXECUTIVE VICE PRESIDENT WACHTELL, LIPTON, ROSEN & KATZ AND GENERAL COUNSEL 51 WEST 52ND STREET 800 SUPERIOR AVENUE NEW YORK, NEW YORK 10019 CLEVELAND, OHIO 44114-2601 (212) 403-1000 (216) 522-0700 (NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: Upon consummation of the Exchange Offer referred to herein. ------------------------ If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. [ ] If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] ------------------------ THE REGISTRANTS HEREBY AMEND THE REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. ================================================================================ 2 *TABLE OF ADDITIONAL REGISTRANTS
STATE OR OTHER JURISDICTION OF PRIMARY STANDARD I.R.S. EMPLOYER INCORPORATION OR INDUSTRY IDENTIFICATION NAME, ADDRESS AND TELEPHONE NUMBER ORGANIZATION CLASSIFICATION NUMBER NUMBER ---------------------------------- ---------------- --------------------- ---------------- Tower Parking, Inc.(1).......................... Ohio 7521 31-0878291 Graelic, Inc.(1)................................ Ohio 7521 34-1327948 APCOA Capital Corporation(1).................... Delaware 7521 06-1334158 A-1 Auto Park, Inc.(1).......................... Georgia 7521 58-1336837 Metropolitan Parking System, Inc.(1)............ Massachusetts 7521 04-2607263 Events Parking Company, Inc.(1)................. Massachusetts 7521 04-3223993 Standard Parking Corporation(2)................. Illinois 7521 36-2932936 Standard Parking Corporation IL(2).............. Illinois 7521 36-3880811 Standard Auto Park, Inc.(2)..................... Illinois 7521 36-2439841 S&S Parking, Inc.(1)............................ California 7521 95-3400582 Century Parking, Inc.(2)........................ California 7521 95-2548427 Sentry Parking Corporation(2)................... California 7521 95-2950548
- --------------- (1) The address and telephone number of these additional registrants is the same as that of APCOA, Inc. (2) The address of these additional registrants is 200 East Randolph Drive, Suite 4800, Chicago, Illinois 60601. Their telephone number is (312) 696-4000. EXPLANATORY NOTE This Amendment No. 1 to the Registration Statement reflects, among other things, (i) the change of the Company's name to APCOA/Standard Parking, Inc. and (ii) the mergers of certain of the Company's wholly owned subsidiaries as follows: Standard Parking, L.P., a Delaware limited partnership, Standard Parking Corporation MW, an Illinois corporation, Standard/Wabash Parking Corporation, an Illinois corporation, Standard Parking of Canada, L.P., an Illinois limited partnership, Standard Parking I, L.L.C., a Delaware limited liability company, and Standard Parking II, L.L.C., a Delaware limited liability company will each merge with and into Standard Parking Corporation, an Illinois corporation and a wholly owned subsidiary of the Company. Following the merger, the separate corporate or other existence of each such subsidiary will cease and as such these entities will no longer be additional registrants or guarantors of any obligations of the Company. The Company expects to complete such transactions prior to the effectiveness of the Registration Statement. 3 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION, DATED JUNE 9, 1998 [STANDARD PARKING LOGO] [APCOA LOGO] OFFER TO EXCHANGE ALL OUTSTANDING 9 1/4% SENIOR SUBORDINATED NOTES DUE 2008 ($140,000,000 PRINCIPAL AMOUNT OUTSTANDING) FOR 9 1/4% NEW SENIOR SUBORDINATED NOTES DUE 2008 ($140,000,000 PRINCIPAL AMOUNT) OF APCOA/STANDARD PARKING, INC. (FORMERLY KNOWN AS APCOA, INC.) THE EXCHANGE OFFER WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON , 1998, UNLESS EXTENDED APCOA/Standard Parking, Inc., a Delaware corporation (the "Company") formerly known as APCOA, Inc., hereby offers (the "Exchange Offer"), upon the terms and subject to the conditions set forth in this Prospectus and the accompanying Letter of Transmittal (the "Letter of Transmittal"), to exchange up to an aggregate principal amount of $140,000,000 of its 9 1/4% New Senior Subordinated Notes due 2008 (the "New Notes") for an equal principal amount of its outstanding 9 1/4% Senior Subordinated Notes due 2008 (the "Notes"), in integral multiples of $1,000. The New Notes will be fully and unconditionally guaranteed on an unsecured basis (the "New Note Guarantees") by, and will be joint and several obligations of, the following wholly owned subsidiaries of the Company: Tower Parking, Inc., an Ohio corporation, Graelic, Inc., an Ohio corporation, APCOA Capital Corporation, a Delaware corporation, A-1 Auto Park Inc., a Georgia corporation, Metropolitan Parking System, Inc., a Massachusetts corporation, Events Parking Company, Inc., a Massachusetts corporation, Standard Parking Corporation, an Illinois corporation, Standard Parking Corporation IL, an Illinois corporation, Standard Auto Park, Inc., an Illinois corporation, S&S Parking, Inc., a California corporation, Century Parking, Inc., a California corporation, and Sentry Parking Corporation, a California corporation (the "Subsidiary Guarantors"). The New Notes will be general unsecured obligations of the Company and are substantially identical (including principal amount, interest rate, maturity and redemption rights) to the Notes for which they may be exchanged pursuant to this offer, except that (i) the offering and sale of the New Notes will have been registered under the Securities Act of 1933, as amended (the "Securities Act"), and (ii) holders of New Notes will not be entitled to certain rights of holders under a Registration Rights Agreement of the Company and the Subsidiary Guarantors dated as of March 30, 1998 (the "Registration Rights Agreement"). The Notes have been, and the New Notes will be, issued under an Indenture dated as of March 30, 1998, as amended as of June , 1998 (the "Indenture"), among the Company, the Subsidiary Guarantors and State Street Bank & Trust Company, as trustee (the "Trustee"). See "Description of New Notes." There will be no proceeds to the Company from this offering; however, pursuant to the Registration Rights Agreement, the Company will bear certain offering expenses. ------------------------ SEE "RISK FACTORS," COMMENCING ON PAGE 17, FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY HOLDERS WHO TENDER NOTES IN THE EXCHANGE OFFER OR IN CONNECTION WITH AN INVESTMENT IN THE NEW NOTES. ------------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE DATE OF THIS PROSPECTUS IS , 1998. (cover page continued) 4 The Company will accept for exchange any and all validly tendered Notes on or prior to 12:00 midnight New York City time, on , 1998; unless the Exchange Offer is extended (the "Expiration Date"). Tenders of Notes may be withdrawn at any time prior to 12:00 midnight, New York City time, on the Expiration Date; otherwise such tenders are irrevocable. State Street Bank & Trust Company will act as Exchange Agent with respect to the Notes (in such capacity, the "Exchange Agent") in connection with the Exchange Offer. The Exchange Offer is not conditioned upon any minimum principal amount of Notes being tendered for exchange, but is otherwise subject to certain customary conditions. The Notes were sold by the Company on March 25, 1998 in transactions not registered under the Securities Act in reliance upon the exemption provided in Section 4(2) of the Securities Act. A portion of the Notes were subsequently resold to qualified institutional buyers in reliance upon Rule 144A under the Securities Act, to a limited number of institutional accredited investors in a manner exempt from registration under the Securities Act and to persons outside the United States in reliance on Regulation S under the Securities Act. Accordingly, the Notes may not be reoffered, resold or otherwise transferred in the United States unless registered under the Securities Act or unless an applicable exemption from the registration requirements of the Securities Act is available. The New Notes are being offered hereunder in order to satisfy certain obligations of the Company under the Registration Rights Agreement. See "The Exchange Offer." The New Notes will bear interest from March 25, 1998, the date of issuance of the Notes that are tendered in exchange for the New Notes (or the most recent Interest Payment Date (as defined herein) to which interest on such Notes has been paid), at a rate equal to 9 1/4% per annum. Interest on the New Notes will be payable semiannually on March 15 and September 15 of each year, commencing September 15, 1998. The New Notes are redeemable at the option of the Company, in whole or in part, at any time on or after March 15, 2003, at the redemption prices set forth herein, plus accrued and unpaid interest and liquidated damages, if any, thereon to the date of redemption. See "Description of New Notes -- Optional Redemption," and "Prospectus Summary -- Summary of Terms of New Notes." At any time prior to March 15, 2001, the Company may redeem up to 35% of the initially outstanding aggregate principal amount of New Notes at a redemption price equal to 109.25% of the principal amount thereof, plus accrued and unpaid interest, and Liquidated Damages, if any, thereon to the date of redemption, with the net cash proceeds, of a Public Equity Offering; provided that, in each case, at least 65% of the initially outstanding aggregate principal amount of New Notes remains outstanding immediately after any such redemption. Upon the occurrence of a Change of Control (as defined in the Indenture), each Holder (as defined herein) of New Notes may require the Company to repurchase all or a portion of such Holder's New Notes at 101% of the aggregate principal amount of the New Notes, together with accrued and unpaid interest, and Liquidated Damages, if any, to the date of repurchase. There can be no assurance that sufficient funds will be available at the time of any Change of Control to make any required repurchase of the New Notes tendered. See "Risk Factors -- Payment Upon a Change of Control" and "Description of New Notes -- Repurchase at the Option of Holders." The New Notes will be general unsecured obligations of the Company, will rank subordinate in right of payment to all Senior Debt of the Company and senior or pari passu in right of payment to all existing and future subordinated indebtedness of the Company. The New Note Guarantees will be general unsecured obligations of the Subsidiary Guarantors, will rank subordinate in right of payment to all Senior Debt of the Subsidiary Guarantors and senior or pari passu in right of payment to all existing and future subordinated indebtedness of the Subsidiary Guarantors. The New Notes and the New Note Guarantees will be effectively Subordinated to all indebtedness, including trade payables, of the Company's subsidiaries that are not Subsidiary Guarantors. As of March 31, 1998, on a pro forma basis, after giving effect to the Combination and the related financings and other transactions described herein, there would have been $0.5 million of Senior Debt outstanding. Upon the closing of the Offering (the "Closing"), the Company entered into a $40.0 million revolving credit facility pursuant to which $4.9 million in letters of credit were issued as of the Closing. See "Capitalization" and "Risk Factors -- Subordination." Based on an interpretation by the staff of the SEC (as defined herein) set forth in no-action letters issued to third parties, the Company believes that New Notes issued pursuant to the Exchange Offer in exchange for Notes may be offered for resale, resold and otherwise transferred by any holder thereof (other than (i) a broker-dealer that acquired Notes directly from the Company or (ii) any such holder which is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such New Notes are acquired in the ordinary course of such holder's business and that such holder does not intend to participate in the distribution of such New Notes. 2 5 Notwithstanding the foregoing, each broker-dealer that receives New Notes for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with the initial resale of such New Notes. The Letter of Transmittal delivered with this Prospectus states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of New Notes received in exchange for Notes where such Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. The Company has agreed that for a period of 120 days after the consummation of the Exchange Offer, it will make this Prospectus available to any broker-dealer for use in connection with any such resale. Notwithstanding the foregoing, broker-dealers that acquired Notes directly from the Company may not resell New Notes received in exchange for such Notes without complying with the registration and prospectus delivery requirements of the Securities Act. Any Holder who tenders in the Exchange Offer with the intention to participate, or for purpose of participating, in a distribution of the New Notes cannot rely on the position of the staff of the SEC enunciated in Exxon Capital Holdings Corporation (available April 13, 1989), or Morgan Stanley & Co., Inc. (available June 5, 1991) or similar no-action letters and, in the absence of an exemption therefrom, must comply with the registration and prospectus delivery requirements of the Securities Act in connection with the resale of the New Notes. Failure to comply with such requirements in such instance may result in such Holder incurring liability under the Securities Act for which the Holder is not indemnified by the Company. The Company does not intend to list the New Notes on any securities exchange, or to seek admission thereof to trading in the National Association of Securities Dealers Automated Quotation System. Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") and First Chicago Capital Markets, Inc. ("First Chicago" and, together with DLJ, the "Initial Purchasers") have advised the Company that they intend to make a market in the New Notes; however, they are not obligated to do so and any market-making may be discontinued at any time. As a result, the Company cannot determine whether an active public market will develop for the New Notes. ANY NOTES NOT TENDERED AND ACCEPTED IN THE EXCHANGE OFFER WILL REMAIN OUTSTANDING. TO THE EXTENT ANY NOTES ARE TENDERED AND ACCEPTED IN THE EXCHANGE OFFER, A HOLDER'S ABILITY TO SELL UNTENDERED NOTES COULD BE ADVERSELY AFFECTED. FOLLOWING CONSUMMATION OF THE EXCHANGE OFFER, THE HOLDERS OF NOTES WILL CONTINUE TO BE SUBJECT TO THE EXISTING RESTRICTIONS UPON TRANSFER THEREOF AND THE COMPANY WILL HAVE FULFILLED ONE OF ITS OBLIGATIONS UNDER THE REGISTRATION RIGHTS AGREEMENT. HOLDERS OF NOTES WHO DO NOT TENDER THEIR NOTES GENERALLY WILL NOT HAVE ANY FURTHER REGISTRATION RIGHTS UNDER THE REGISTRATION RIGHTS AGREEMENT OR OTHERWISE. SEE "THE EXCHANGE OFFER -- CONSEQUENCES OF FAILURE TO EXCHANGE." The New Notes issued pursuant to this Exchange Offer generally will be issued in the form of Global New Notes (as defined herein), which will be deposited with, or on behalf of, The Depository Trust Company (the "Depositary" or "DTC") and registered in its name or in the name of Cede & Co., its nominee. Beneficial interests in the Global New Notes representing the New Notes will be shown on, and transfers thereof will be effected through, records maintained by the Depositary and its participants. Notwithstanding the foregoing, Notes held in certificated form will be exchanged solely for New Notes in certificated form. After the initial issuance of the Global New Notes, New Notes in certificated form will be issued in exchange for the Global New Notes only on the terms set forth in the Indenture. See "Description of New Notes -- Book-Entry, Delivery and Form." ------------------------ NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE NEW NOTES OFFERED HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY OF THE NEW NOTES TO ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION TO SUCH PERSON. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF. UNTIL , 1998 (90 DAYS AFTER COMMENCEMENT OF THIS OFFERING), ALL DEALERS EFFECTING TRANSACTIONS IN THE NEW NOTES, WHETHER OR NOT PARTICIPATING IN THE EXCHANGE OFFER, MAY BE REQUIRED TO DELIVER A PROSPECTUS. 3 6 AVAILABLE INFORMATION The Company has filed with the Securities and Exchange Commission (the "SEC" or the "Commission") a Registration Statement on Form S-4 under the Securities Act for the registration of the New Notes offered hereby (the "Registration Statement"). This Prospectus, which constitutes a part of the Registration Statement, does not contain all of the information set forth in the Registration Statement, certain items of which are contained in exhibits and schedules to the Registration Statement as permitted by the rules and regulations of the SEC. For further information with respect to the Company or the New Notes offered hereby, reference is made to the Registration Statement, including the exhibits and financial statement schedules thereto, which may be inspected without charge at the public reference facility maintained by the SEC at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and copies of which may be obtained from the SEC at prescribed rates. Statements made in this Prospectus concerning the contents of any document referred to herein are not necessarily complete. With respect to each such document filed with the SEC as an exhibit to the Registration Statement, reference is made to the exhibit for a more complete description of the matter involved, and each such statement shall be deemed qualified in its entirety by such reference. Such documents and other information filed by the Company can be inspected and copied at the public reference facilities of the SEC at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, at the web site maintained by the SEC (http://www.sec.gov) and at the regional offices of the SEC located at 7 World Trade Center, 13th Floor, New York, New York 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such materials may be obtained from the Public Reference Section of the SEC, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at its public reference facilities in New York, New York and Chicago, Illinois at prescribed rates. The Company and the Subsidiary Guarantors are not currently subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). As a result of the offering of the New Notes, each of the Company and the Subsidiary Guarantors will become subject to the informational requirements of the Exchange Act. The Company will fulfill its obligations with respect to such requirements by filing periodic reports with the Commission on its own behalf or, in the case of the Subsidiary Guarantors, by including information regarding the Subsidiary Guarantors in the Company's periodic reports. In addition, the Company will send to each holder of New Notes copies of annual reports and quarterly reports containing the information required to be filed under the Exchange Act. So long as the Company is subject to the periodic reporting requirements of the Exchange Act, it is required to furnish the information required to be filed with the SEC to the Trustees and the holders of the Notes and the New Notes. The Company has agreed that, even if it is not required under the Exchange Act to furnish such information to the SEC, it will nonetheless continue to furnish information that would be required to be furnished by the Company by Section 13 of the Exchange Act to the Trustees and the holders of the Notes or New Notes as if it were subject to such periodic reporting requirements. In addition, the Company and the Subsidiary Guarantors have agreed that, for so long as any of the Notes remain outstanding, they will make available to any prospective purchaser of the Notes or Holder of the Notes in connection with any sale thereof, the information required by Rule 144A(d)(4) under the Securities Act. THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON REQUEST FROM APCOA/STANDARD PARKING, INC., 800 SUPERIOR AVENUE, CLEVELAND, OHIO 44114-2601, (216) 522-0700; ATTENTION: ROBERT N. SACKS. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY , 1998. 4 7 PROSPECTUS SUMMARY The following summary is qualified in its entirety by reference to and should be read in conjunction with the more detailed information and financial statements, including the notes thereto, appearing elsewhere in this Prospectus. Unless otherwise indicated, all references in this Prospectus to the Company's business and all pro forma data give effect to the Transactions described below. An index of certain defined terms used herein can be found on page 106. Unless the context indicates or otherwise requires, (i) references in this Prospectus to "APCOA" are to APCOA/Standard Parking, Inc., and its subsidiaries; (ii) references in this Prospectus to "Standard" are to the combined operations of the group of affiliated entities controlled by the Standard Owners as defined in "The Transactions -- The Combination"; and (iii) references in this Prospectus to the "Company" are to APCOA and Standard, on a combined basis after giving effect to the Combination. THE COMPANY The Company is a leading national provider of parking facility management services. The Company provides on-site management services at multi-level and surface parking facilities in the two major markets of the parking industry: urban parking and airport parking. Following consummation of the Combination, the Company manages approximately 1,100 parking facilities, containing approximately 580,000 parking spaces in over 45 cities across the United States and Canada. The Company's pro forma gross customer collections, pro forma parking services revenue, pro forma EBITDA and pro forma net loss for the year ended December 31, 1997 were $948.6 million, $186.1 million, $19.9 million and $2.8 million, respectively. The Company believes that its superior management services coupled with its focus on increasing market share in select core cities leads to higher profitability per parking facility than its competitors. The Company believes that it enhances its leading position by providing: (i) Ambiance in Parking(R), an approach to parking that includes a number of premium, on-site, value-added services and amenities; (ii) state-of-the-art information technology, including Client View(C), a proprietary client reporting system which allows the Company to provide clients with real-time access to site-level financial and operating information; and (iii) award-winning training programs for on-site employees that promote customer service and client retention. In addition, the Company believes that it distinguishes itself from its competitors because of its ability to leverage its long-standing experience in securing contracts, particularly with regard to the airport parking market. The Company's diversified client base includes some of the nation's largest owners and developers of major office building complexes, shopping centers, sports complexes, hotels and hospitals. In addition, the Company manages parking operations at many of the major airports in North America. In the urban parking market, the Company's clients include CB Commercial Real Estate Group, Equity Office Properties, the Taubman Company, Harvard Medical School, Northwestern University, Children's Memorial Medical Center in Chicago and Cedars Sinai Medical Center in Los Angeles. Parking facilities managed by the Company include the CNN Center in Atlanta, the Kennedy Center for the Performing Arts in Washington, D.C. and the Gateway Sports Complex in Cleveland. In the airport parking market, the Company's clients include Chicago O'Hare International and Chicago Midway, Cleveland-Hopkins International, Minneapolis-St. Paul International and Detroit Metropolitan airports. The Company operates its clients' parking properties through two types of arrangements: management contracts and leases. The Company does not own any parking facilities and, as a result, the Company assumes fewer of the risks of real estate ownership. Under a management contract, the Company typically receives a base monthly fee for managing the property, and may also receive an incentive fee based on the achievement of facility revenues above a base amount. In some instances, the Company also receives certain fees for ancillary services. Typically, all of the underlying revenues and expenses under a management contract flow through to the property owner, not to the Company. Under lease arrangements, the Company generally pays either a fixed annual rental, a percentage of gross customer collections, or a combination thereof to the property owner. The Company 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, 1998, the Company operated approximately 73% of its approximately 1,100 parking facilities under 5 8 management contracts and approximately 27% under leases. Renewal rates for the Company's management contracts and leases were approximately 96% for each of the last three years. RECENT DEVELOPMENTS THE COMBINATION Pursuant to the terms of the Combination Agreement, on March 30, 1998, APCOA acquired all of the outstanding capital stock, partnership and other equity interests of Standard for consideration consisting of $65 million in cash, 16% of the common stock of the Company and the assumption of certain liabilities, subject to certain adjustments. See "The Transactions -- The Combination." THE FINANCING In connection with, and concurrently with the consummation of, the Combination, on March 30, 1998, (a) the Company consummated the Offering and entered into the New Credit Facility and (b) AP Holdings, Inc. ("AP Holdings"), a Delaware corporation and the parent of the Company, contributed $40.7 million of cash to the Company (the "Preferred Stock Contribution") in exchange for $40.7 million initial liquidation preference of new preferred stock of the Company. The Preferred Stock Contribution was financed through AP Holdings' sale of $40.7 million in gross proceeds of its debt securities, the fees and expenses of which were borne by the Company. The net proceeds from the Offering, together with the Preferred Stock Contribution, were used by the Company: (i) to fund the cash portion of the consideration payable in connection with the Combination; (ii) to repay certain indebtedness; (iii) for general corporate purposes, including working capital needs and future acquisitions; (iv) to redeem preferred stock held by Holberg; and (v) to pay fees and expenses in connection with the Transactions. See "Use of Proceeds" and "The Transactions -- The Financing." OTHER ACQUISITIONS On May 1, 1998, the Company acquired the remaining 76% interest in Executive Parking Industries LLC, a Delaware limited liability company ("EPI") through the acquisition of all of the outstanding capital stock of S&S Parking, Inc., a California corporation ("S&S Parking"), the sole asset of which was such 76% interest in EPI, for $7.0 million in cash. In addition, on June 1, 1998, the Company acquired all of the outstanding capital stock of Century Parking, Inc., a California corporation ("Century Parking"), and Sentry Parking Corporation, a California corporation ("Sentry Parking"), for consideration consisting of $5.2 million in cash at closing and $1.0 million payable on the third anniversary of the closing date. See "Management's Discussion and Analysis of Financial Condition and Results of Operations of APCOA -- Summary of Operating Facilities." 6 9 THE INDUSTRY The International Parking Institute, a trade organization of parking professionals, estimates that there are 35,000 parking facilities in the United States generating over $26.0 billion in gross customer collections. The parking industry is highly fragmented, with over 1,700 commercial parking operators in the United States, as estimated by the Parking Market Research Company, an independent research company. Industry participants, the vast majority of which are privately-held companies, consist of relatively few nationwide companies and a large number of small regional or local operators, including a substantial number of companies providing parking as an ancillary service in connection with property management or ownership. Clients of parking facility managers include the owners of office buildings, major airports, shopping centers, sports complexes, hotels and hospitals, which provide parking to customers. The parking industry is comprised of two major markets: urban parking and airport parking. The urban parking market consists of many sub-markets with differing clients including commercial, office, residential, event, entertainment, retail, shopping centers, hospitals and hotels. In contrast, the airport parking market consists of a relatively small number of clients with large revenue-generating parking operations and similar needs that are unique to airport parking facilities. THE COMBINATION AND EXPECTED BENEFITS Pursuant to the terms of the Combination Agreement, APCOA has combined its operations with the operations of Standard (the "Combination"). After consummation of the Combination, the Company is one of the largest parking facility managers in the United States, operating approximately 1,100 parking locations, providing first-class, customer-oriented parking services, and using proprietary, award-winning management information systems and technology to improve services and reduce costs. Through the Combination, the Company believes that it will be able to achieve approximately $6.3 million of annualized cost savings within 12 to 18 months following the Combination as a result of the elimination of certain duplicative costs and achievement of operating efficiencies. Specific anticipated benefits include: - Reduced Personnel Expenses. Subsequent to the Combination, the Company intends to consolidate headquarters in Chicago and eliminate redundant corporate functions. In addition, the Company expects to reduce the number of field managers and administrative staff with overlapping functions in certain core cities. The Company also expects to realize additional net savings from the restructuring of certain executive compensation packages. - Operational Improvements and Elimination of Redundant Services Provided by Third Parties. The Company plans to rely on APCOA's state-of-the-art proprietary management information and reporting systems to perform many services which Standard previously outsourced to third parties, such as payroll and accounts receivable processing. The Company also expects to realize purchasing economies and eliminate redundant services from consolidating certain third-party service providers. In addition, since January 1, 1997, the Company completed six small acquisitions (the "Other Acquisitions" as defined below under "Management's Discussion and Analysis of Financial Condition and Results of Operations of APCOA"). The Company expects to realize $1.9 million of cost savings related to the Other Acquisitions. Of the aggregate potential $8.2 million in annualized cost savings discussed above, approximately $4.9 million are reflected in the Pro Forma Condensed Consolidated Financial Statements included elsewhere herein. Actual cost savings achieved by the Company may vary considerably from the estimates discussed above. See "Summary Unaudited Pro Forma Consolidated Financial Data" and "Risk Factors--Ability to Integrate Acquisitions." BUSINESS STRATEGY & COMPETITIVE ADVANTAGES The Company believes its innovative parking facility amenities, services and management, coupled with its state-of-the-art information technology and reporting systems, position the Company to enhance its 7 10 standing as a leading provider of parking services. Specific elements of the Company's business strategy and competitive advantages include: - Focus on Core Cities. Part of the Company's business strategy is to focus on increasing system-wide profitability by maximizing operating leverage. As part of this strategy, the Company operates in certain core cities and realizes certain economies of scale, including the ability to spread administrative overhead costs across a large number of parking facilities in a single market. As a result, the Company has been able to significantly increase profitability per contract. For example, in 1997, management estimates that the Company's average profit per contract in cities in which it operated more than 35 parking locations was nearly double the Company's profit per contract in cities in which it operated fewer than 35 locations. - Strong Operating Performance and Stable Cash Flow. From 1993 to 1997, the Company's EBITDA increased from $7.2 million to $15.0 million, representing a compounded annual growth rate ("CAGR") of 20.0%. The Company's cash flow from operating activities increased from $3.2 million to $6.0 million from 1993 to 1997. Over the same period, the Company's capital expenditures averaged less than $3.0 million per year. In addition, the Company reduced exposure to increasing cost of parking services by (i) increasing the proportion of its management contracts, which generally pass cost of parking services onto the Company's clients, and (ii) maintaining low minimum rental commitments under its non-cancelable leases. The Company's average management and lease contract renewal rate over the last three years was approximately 96%. As a result of the Company's operating performance, as well as the low capital expenditure requirements and low risk portfolio of management contracts and leases, the Company has been able to generate consistent cash flow. After giving pro forma effect to the Transactions and the Other Acquisitions, the Company's earnings would have been inadequate to cover fixed charges by $2.4 million for the year ended December 31, 1997. - Strategic Growth Through Acquisitions. The parking industry is highly fragmented, with over 1,700 industry participants. In addition to pursuing individual contracts, the Company is seeking to capitalize on this industry fragmentation by pursuing a focused acquisition strategy which includes: (i) acquiring parking management companies within core cities and target cities where the Company believes it can attain a significant market share, and (ii) acquiring larger, regional parking management companies. As a part of this strategy, APCOA and Standard, combined, have successfully acquired and integrated 6 companies with 138 new facilities and 252 net individual contracts over the past five years. - Leading Client Base. The Company's diversified, long-standing customer base comprises many of the premier national property management and ownership organizations in the United States and Canada. The Company is a market leader in airport parking, operating approximately 100 parking facilities at airports in the United States and Canada. Management believes that the Company's focus on select core cities enables the Company to maintain broader and stronger relationships with the local client base and improves its client retention rates and its ability to compete for new contracts. - Value-Added Services and Award-Winning Information Systems. The Company believes that it can continue to increase profitability and attract new clients by providing: (i) Ambiance in Parking(R); (ii) state-of-the-art information technology, including Client View(C); and (iii) award-winning training programs for on-site employees. Management believes that these capabilities facilitate development opportunities that typically lead to long-term lease and management contracts on new facilities. Also, the Company has developed state-of-the-art information technology systems which connect local offices across the country to its corporate office. These systems, which received the 1994 Esprit Award sponsored by Booz-Allen & Hamilton and CIO magazine, enable a centralized staff to eliminate inefficient duplication of administrative and accounting functions at the field level and also help provide key operational information to clients. Management believes that these systems will enable the Company to add many new clients and contracts without incurring additional administrative staff and expense. - Experienced Management Team. Myron C. Warshauer, the Company's Chief Executive Officer and the third generation of his family to direct Standard, has over 35 years of industry experience. 8 11 G. Walter Stuelpe, Jr., the Company's President, has been with APCOA for over 25 years, serving as Chief Executive Officer since 1986. Other members of the Company's executive team are the most experienced, talented executives from both companies. Overall, the members of the Company's executive team have an average of over 15 years of industry experience. THE TRANSACTIONS In connection with the Combination, the Company: (i) consummated the Offering; (ii) entered into the New Credit Facility; and (iii) received the Preferred Stock Contribution. The Combination, the issuance of the Notes, the New Credit Facility, the Preferred Stock Contribution, the application of proceeds therefrom and the payment of related fees and expenses are collectively referred to herein as the "Transactions." ------------------------ The Company's principal executive offices are presently located at 800 Superior Avenue, Cleveland, Ohio 44114-2601, and its telephone number is (216) 522-0700. The Company expects to move its principal executive offices to Chicago, Illinois, at a location to be determined. 9 12 THE OFFERING The Notes.................. The Notes were sold by the Company on March 25, 1998 and were subsequently resold to qualified institutional buyers pursuant to Rule 144A under the Securities Act, to institutional investors that are accredited investors in a manner exempt from registration under the Securities Act and to persons in transactions outside the United States in reliance on Regulation S under the Securities Act (the "Offering"). Registration Rights Agreement................. In connection with the Offering, the Company entered into the Registration Rights Agreement, which grants Holders of the Notes certain exchange and registration rights, which generally terminate upon the consummation of the Exchange Offer. THE EXCHANGE OFFER Securities Offered......... $140.0 million in aggregate principal amount of the Company's 9 1/4% New Senior Subordinated Notes due 2008. The Exchange Offer......... $1,000 principal amount of New Notes in exchange for each $1,000 principal amount of the Notes. As of the date hereof, $140.0 million aggregate principal amount of Notes are outstanding. The Company will issue the New Notes to Holders on or promptly after the Expiration Date. Expiration Date............ 12:00 midnight, New York City time on , 1998, unless the Exchange Offer is extended, in which case the term "Expiration Date" means the latest date and time to which the Exchange Offer is extended. Interest on the New Notes and the Notes............. The New Notes will bear interest from March 25, 1998, the date of issuance of the Notes that are tendered in exchange for the New Notes (or the most recent Interest Payment Date (as defined below in the Summary of Terms of New Notes) to which interest on such Notes has been paid). Accordingly, Holders of Notes that are accepted for exchange will not receive interest on the Notes that is accrued but unpaid at the time of tender, but such interest will be payable on the first Interest Payment Date after the Expiration Date. Conditions to the Exchange Offer.................... The Exchange Offer is subject to certain customary conditions, which may be waived by the Company. See "The Exchange Offer -- Conditions." Procedures for Tendering Notes.................... Each Holder of Notes wishing to accept the Exchange Offer must complete, sign and date the relevant accompanying Letter of Transmittal, or a facsimile thereof, in accordance with the instructions contained herein and therein, and mail or otherwise deliver such Letter of Transmittal, or such facsimile, together with the Notes and any other required documentation to the relevant Exchange Agent at the address set forth in the Letter of Transmittal. The Letter of Transmittal should be used to tender Notes. By executing the Letter of Transmittal, each Holder will represent to the Company that, among other things, the Holder or the person receiving such New Notes, whether or not such person is the Holder, is acquiring the New Notes in the ordinary course of business 10 13 and that neither the Holder nor any such other person has any arrangement or understanding with any person to participate in the distribution of such New Notes. In lieu of physical delivery of the certificates representing Notes, tendering Holders may transfer Notes pursuant to the procedure for book-entry transfer as set forth under "The Exchange Offer -- Procedures for Tendering." Special Procedures for Beneficial Owners......... Any beneficial owner whose Notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact such registered Holder promptly and instruct such registered Holder to tender on such beneficial owner's behalf. If such beneficial owner wishes to tender on such beneficial owner's own behalf, such beneficial owner must, prior to completing and executing the Letter of Transmittal and delivering its Notes, either make appropriate arrangements to register ownership of the Notes in such beneficial owner's name or obtain a properly completed bond power from the registered Holder. The transfer of registered ownership may take considerable time. Guaranteed Delivery Procedures............... Holders of Notes who wish to tender their Notes and whose Notes are not immediately available or who cannot deliver their Notes, the Letter of Transmittal or any other documents required by the Letter of Transmittal to the Exchange Agent (or comply with the procedures for book-entry transfer) prior to the Expiration Date must tender their Notes according to the guaranteed delivery procedures set forth in "The Exchange Offer -- Guaranteed Delivery Procedures." Withdrawal Rights.......... Tenders may be withdrawn at any time prior to 12:00 midnight, New York City time, on the Expiration Date pursuant to the procedures described under "The Exchange Offer -- Terms of the Exchange Offer." Acceptance of Notes and Delivery of New Notes.... The Company will accept for exchange any and all Notes that are properly tendered in the Exchange Offer prior to 12:00 midnight, New York City time, on the Expiration Date. The New Notes issued pursuant to the Exchange Offer will be delivered promptly following the Expiration Date. See "The Exchange Offer -- Terms of the Exchange Offer." Federal Income Tax Consequences............. The issuance of the New Notes to Holders of the Notes pursuant to the terms set forth in this Prospectus will not constitute an exchange for federal income tax purposes. Consequently, no gain or loss would be recognized by Holders of the Notes upon receipt of the New Notes. See "Certain Federal Income Tax Consequences of the Exchange Offer." Use of Proceeds............ There will be no proceeds to the Company from the exchange of Notes pursuant to the Exchange Offer. Effect on Holders of Notes..................... As a result of the making of this Exchange Offer, the Company will have fulfilled certain of its obligations under the Registration Rights Agreement, and Holders of Notes who do not tender their Notes will generally not have any further registration rights under the Registration Rights Agreement or otherwise. Such Holders will continue to hold the un- 11 14 tendered notes and will be entitled to all the rights and subject to all the limitations applicable thereto under the Indentures, except to the extent such rights or limitations, by their terms, terminate or cease to have further effectiveness as a result of the Exchange Offer. All untendered Notes will continue to be subject to certain restrictions on transfer. Accordingly, if any Notes are tendered and accepted in the Exchange Offer, the trading market for the untendered Notes could be adversely affected. Exchange Agent............. State Street Bank and Trust Company is serving as exchange agent in connection with the Exchange Offer. See "The Exchange Offer -- Exchange Agent." SUMMARY OF TERMS OF NEW NOTES The form and terms of the New Notes are the same as the form and terms of the Notes (which they will replace) except that (i) the New Notes have been registered under the Securities Act and, therefore, will not bear legends restricting the transfer thereof and (ii) the Holders of the New Notes generally will not be entitled to further registration rights under the Registration Rights Agreement, which rights generally will be satisfied when the Exchange Offer is consummated. The New Notes will evidence the same debt as the Notes and will be entitled to the benefits of the Indenture. See "Description of New Notes." Securities Offered......... $140.0 million in aggregate principal amount of 9 1/4% New Senior Subordinated Notes due 2008. Maturity Date.............. March 15, 2008. Interest Rate.............. The New Notes will bear interest at the rate of 9 1/4% per annum, payable semi-annually in cash on March 15 and September 15 of each year, commencing September 15, 1998. Optional Redemption........ The New Notes will be redeemable at the option of the Company, in whole or in part, at any time on or after March 15, 2003 in cash at the redemption prices set forth herein, plus accrued and unpaid interest and Liquidated Damages (as defined), if any, thereon to the date of redemption. In addition, at any time prior to March 15, 2001, the Company may redeem up to 35% of the initially outstanding aggregate principal amount of New Notes at a redemption price equal to 109.25% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the redemption date, with the net cash proceeds of a Public Equity Offering (as defined); provided that, in each case, at least 65% of the initially outstanding aggregate principal amount of Notes remains outstanding immediately after the occurrence of any such redemption. See "Description of Notes--Optional Redemption." Change of Control.......... Upon the occurrence of a Change of Control (as defined), each holder of New Notes will have the right to require the Company to repurchase all or any part of such holder's New Notes at an offer price in cash equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the date of repurchase. See "Description of Notes--Repurchase at the Option of Holders--Change of Control." There can be no assurance that, in the event of a Change of Control, the Company would have sufficient funds to purchase all New Notes tendered. See "Risk Factors--Payment Upon a Change of Control." 12 15 Note Guarantees............ The New Notes will be fully and unconditionally guaranteed on a joint and several basis by each of the following 12 wholly owned subsidiaries of the Company: Tower Parking, Inc., Graelic, Inc., APCOA Capital Corporation, A-1 Auto Park, Inc., Metropolitan Parking System, Inc., Events Parking Company, Inc., Standard Parking Corporation, Standard Parking Corporation IL, Standard Auto Park, Inc., S&S Parking, Inc., Century Parking, Inc. and Sentry Parking Corporation (the "Subsidiary Guarantors"). Effective as of July 1, 1998, the Company completed a reorganization of certain of its wholly owned subsidiaries pursuant to which certain of such subsidiaries were merged with and into another such subsidiary. As a result, such subsidiaries are no longer guarantors of any obligations of the Company. See "Description of New Notes -- General." The Company has 32 additional subsidiaries which will not be guarantors of the New Notes (the "Non-Guarantor Subsidiaries"). The aggregate pro forma total assets, net income (loss) and total stockholders' equity of the Non-Guarantor Subsidiaries for the year ended December 31, 1997 were $13.3 million, ($0.2) million and $0.4 million, respectively, and for the three months ended March 31, 1998 were $14.1 million, $0.2 million and $1.0 million, respectively. Condensed consolidating financial information for the Company, the Subsidiary Guarantors and the Non- Guarantor Subsidiaries is set forth in Note M to the Consolidated Financial Statements of APCOA, Inc. presented herein. Ranking.................... The New Notes will be general unsecured obligations of the Company, will rank subordinate in right of payment to all Senior Debt of the Company and senior or pari passu in right of payment to all existing and future subordinated indebtedness of the Company. The New Note Guarantees will be general unsecured obligations of the Subsidiary Guarantors, will rank subordinate in right of payment to all Senior Debt of the Subsidiary Guarantors and senior or pari passu in right of payment to all existing and future subordinated indebtedness of the Subsidiary Guarantors. The New Notes and the New Note Guarantees will be effectively subordinated to all indebtedness, including trade payables, of the Company's subsidiaries that are not Subsidiary Guarantors. As of March 31, 1998, on a pro forma basis, after giving effect to the Combination and the related financings and other transactions described herein, there would have been $0.5 million of Senior Debt outstanding. Upon the closing of the Offering, the Company entered into a $40.0 million revolving credit facility pursuant to which $4.9 million in letters of credit were issued as of the closing of the Offering. See "Risk Factors--Subordination." Certain Covenants.......... The Indenture contains certain covenants that limit, among other things, the ability of the Company and its Restricted Subsidiaries to: (i) pay dividends, redeem capital stock or make certain other restricted payments or investments; (ii) incur additional indebtedness or issue preferred equity interests; (iii) merge, consolidate or sell all or substantially all of its assets; (iv) create liens on assets; and (v) enter into certain transactions with affiliates or related persons. See "Description of New Notes--Certain Covenants." 13 16 Form and Denomination...... The certificates representing the New Notes will be issued in fully registered form, deposited with a custodian for and registered in the name of a nominee of the Depositary in the form of a Global New Note certificate. Beneficial interests in the certificates representing the Global New Note will be shown on, and transfers thereof will be effected through, records maintained by the Depositary and its Participants. See "Book Entry, Delivery and Form." Exchange Offer; Registration Rights........ If any Holder of an aggregate of at least $2.0 million in principal amount of Notes notifies the Company within 20 business days of the consummation of the Exchange Offer that (A) such Holder is prohibited by law or SEC policy from participating in the Exchange Offer, or (B) such Holder may not resell the New Notes acquired by it in the Exchange Offer to the public without delivering a prospectus and the Prospectus contained in the Registration Statement is not appropriate or available for such resales by such Holder, or (C) such Holder is a broker-dealer and holds Notes acquired directly from the Company or one of its respective affiliates, then the Company and the Subsidiary Guarantors will be required to provide a shelf registration statement (the "Shelf Registration Statement") to cover resales of the Notes by the Holders thereof. Notwithstanding the foregoing, at any time after consummation of the Exchange Offer, the Company may allow the Shelf Registration Statement to cease to be effective and usable if (i) the Board of Directors of the Company determines in good faith that it is in the best interests of the Company not to disclose the existence of or facts surrounding any proposed or pending material corporate transaction involving the Company, and the Company notifies the Holders within a certain period of time after the Board of Directors makes such determination, or (ii) the prospectus contained in the Shelf Registration Statement contains an untrue statement of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Company will pay certain liquidated damages to Holders of Notes and Holders of New Notes if the Company is not in compliance with its obligations under the Registration Rights Agreement. See "Exchange Offer; Registration Rights." FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PARTICIPANTS IN THE EXCHANGE OFFER OR IN CONNECTION WITH AN INVESTMENT IN THE NEW NOTES, SEE "RISK FACTORS." 14 17 SUMMARY HISTORICAL AND UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA (DOLLARS IN THOUSANDS) The following table sets forth summary historical financial data of APCOA at and for the year ended December 31, 1997 and at and for the three months ended March 31, 1998 and summary unaudited pro forma consolidated income statement data of the Company for the year ended December 31, 1997 and the three months ended March 31, 1998. The historical financial data at and for the year ended December 31, 1997, have been derived from the audited financial statements of APCOA, and the historical financial data at and for the three months ended March 31, 1998, have been derived from the unaudited financial statements of APCOA. The pro forma consolidated balance sheet data at March 31, 1998 give effect to the acquisition of EPI as if it had occurred on March 31, 1998. The pro forma consolidated income statement data and other data for the year ended December 31, 1997 and the three months ended March 31, 1998 give effect to the Transactions and the Other Acquisitions as if they had occurred at the beginning of the period presented. The following information should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations of APCOA," "Management's Discussion and Analysis of Financial Condition and Results of Operations of Standard," the audited financial statements of APCOA, the unaudited financial statements of APCOA, the unaudited pro forma financial statements of the Company, the historical financial statements of Standard and the related notes thereto included elsewhere herein.
YEAR ENDED THREE MONTHS ENDED DECEMBER 31, 1997 MARCH 31, 1998 ---------------------- ---------------------- HISTORICAL PRO FORMA HISTORICAL PRO FORMA ---------- --------- ---------- --------- INCOME STATEMENT DATA: Parking services revenue........................ $115,676 $186,078 $ 28,804 $ 44,769 Cost of parking services........................ 92,818 146,165 23,576 35,571 General and administrative expenses............. 13,528 20,045 3,460 5,131 Restructuring charge............................ -- -- 14,500 14,500 Depreciation and amortization................... 3,767 7,496 1,055 1,860 -------- -------- -------- -------- Operating income (loss)......................... 5,563 12,372 (13,787) (12,293) Interest expense, net........................... 3,243 14,735 888 3,668 Minority interest............................... 321 321 143 143 Income tax expense.............................. 140 140 30 30 -------- -------- -------- -------- Income (loss) before extraordinary item......... $ 1,859 $ (2,824) $(14,848) $(16,134) ======== ======== ======== ========
HISTORICAL PRO FORMA ------------------------------- AT AT DECEMBER 31, AT MARCH 31, MARCH 31, 1997 1998 1998 --------------- ------------ --------- BALANCE SHEET DATA: Cash and cash equivalents........................... $ 3,322 $ 60,480 $ 54,078 Working capital (deficiency)........................ (17,059) 27,691 20,332 Total assets........................................ 59,095 213,510 215,136 Total debt.......................................... 38,283 150,123 150,221 Redeemable preferred stock.......................... 8,728 40,683 40,683 Common stock subject to put/call rights(1).......... -- 4,589 4,589 Stockholders' equity (deficit)...................... (22,259) (45,706) (45,706)
15 18
YEAR ENDED THREE MONTHS ENDED DECEMBER 31, 1997 MARCH 31, 1998 ---------------------- ---------------------- HISTORICAL PRO FORMA HISTORICAL PRO FORMA ---------- --------- ---------- --------- OTHER DATA: Gross customer collections...................... $476,183 $948,612 $128,591 $250,256 EBITDA(2)....................................... 9,330 19,868 1,768 4,067 Capital expenditures............................ 2,357 2,849 1,600 1,600 Net cash provided by (used in): Operating activities......................... 931 N/A (5,017) N/A Investing activities......................... (3,592) N/A (72,869) N/A Financing activities......................... 3,451 N/A 135,044 N/A Ratio of earnings to fixed charges(3)........ 1.5x N/A N/A N/A
- ------------------------------ (1) In accordance with the Stockholders Agreement (as defined below under "Certain Relationships and Related Party Transactions -- Stockholders Agreement"), the Company will be obligated under certain circumstances to repurchase shares of common stock issued in connection with the Combination. The Company will not be obligated to repurchase such common stock prior to the third anniversary of the consummation of the Combination. (2) EBITDA represents operating income plus depreciation and amortization and restructuring charge.
YEAR ENDED THREE MONTHS ENDED DECEMBER 31, 1997 MARCH 31, 1998 ---------------------- ---------------------- HISTORICAL PRO FORMA HISTORICAL PRO FORMA ---------- --------- ---------- --------- EBITDA is computed as follows: Operating income (loss).................................. $ 5,563 $ 12,372 $(13,787) $(12,293) Depreciation and amortization............................ 3,767 7,496 1,055 1,860 Restructuring charge..................................... -- -- 14,500 14,500 -------- -------- -------- -------- EBITDA................................................... $ 9,330 $ 19,868 $ 1,768 $ 4,067 ======== ======== ======== ========
EBITDA is presented because management believes it is a widely accepted financial indicator used by certain investors and analysts to analyze and compare companies on the basis of operating performance. EBITDA, as prepared by the Company, however, may not necessarily be comparable to similarly titled measures prepared by other companies within the industry. The Company understands that EBITDA is not intended to represent (a) cash flow for the period, (b) a source of liquidity or (c) funds to be used for discretionary purposes, nor has it been presented as an alternative to operating income as an indicator of operating performance and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with generally accepted accounting principles. (3) For purposes of computing this ratio, earnings consist of income before income taxes and minority interest plus fixed charges. Fixed charges consist of interest expense, amortization of deferred financing costs and one-third of the rent expense from operating leases, which management believes is a reasonable approximation of the interest factor of the rent. For the year ended December 31, 1997, on a pro forma basis, earnings were inadequate to cover fixed charges by $2.4 million. For the three months ended March 31, 1998, on a historical and pro forma basis, earnings were inadequate to cover fixed charges by $14.7 million and $16.0 million, respectively. 16 19 RISK FACTORS Holders of Notes and prospective purchasers of New Notes should consider carefully the factors set forth below, as well as the other information set forth elsewhere in this Prospectus, before tendering Notes in the Exchange Offer or making an investment in the New Notes. This Prospectus includes forward-looking statements, including statements concerning the Company's business strategy, operations, cost savings initiatives, economic performance, financial condition and liquidity and capital resources. Such statements are subject to various risks and uncertainties. The Company's actual results may differ materially from the results discussed in such forward-looking statements because of a number of factors, including those identified in this "Risk Factors" section and elsewhere in this Prospectus. See "Prospectus Summary," "Management's Discussion and Analysis of Financial Condition and Results of Operations of APCOA," "Management's Discussion and Analysis of Financial Condition and Results of Operations of Standard" and "Business." The forward-looking statements are made as of the date of this Prospectus, and the Company assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements. SUBSTANTIAL LEVERAGE AND DEBT SERVICE REQUIREMENTS The Company is and will continue to be highly leveraged as a result of substantial indebtedness it has incurred in connection with the Transactions. After giving pro forma effect to the acquisition of EPI, the Company would have had total indebtedness of $150.2 million and a stockholders' deficit of $45.7 million as of March 31, 1998, and earnings would have been inadequate to cover fixed charges by $2.4 million for the year ended December 31, 1997 and $16.0 million for the three months ended March 31, 1998. The pro forma ratio of total indebtedness to total capitalization would have been 1.0x as of March 31, 1998. The Company may incur additional indebtedness in the future, subject to limitations imposed by the Indenture and the New Credit Facility. See "Capitalization," "Unaudited Pro Forma Combined Financial Statements," "The Transactions--The Combination" and "Description of Indebtedness." The Company's ability to make scheduled payments of principal of, or to pay interest on, or to refinance its indebtedness (including the New Notes) depends on its future performance, which, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors beyond its control. Based upon the current level of operations and anticipated growth, management of the Company believes that, together with available borrowings under the New Credit Facility, its cash flow and available cash will be adequate to meet the Company's anticipated future requirements for working capital, capital expenditures, scheduled payments of principal of and interest on its indebtedness, and interest on the New Notes. However, all or a portion of the principal payments at maturity on the New Notes may require refinancing. There can be no assurance that the Company's business will generate sufficient cash flow from operations or that future borrowings will be available in an amount sufficient to enable the Company to service its indebtedness, including the New Notes, or to make necessary capital expenditures, or that any refinancing would be available on commercially reasonable terms or at all. See "Management's Discussion and Analysis of Financial Condition and Results of Operations of APCOA--Liquidity and Capital Resources." The degree to which the Company is now leveraged and will continue to be leveraged following the Offering could have important consequences to holders of the New Notes, including, but not limited to, the following: (i) approximately $13.0 million of the Company's annual cash flow from operations will be required to service interest on the New Notes and will not be available for other purposes; (ii) the Company's ability to obtain additional financing in the future could be limited and (iii) the Indenture and the New Credit Facility contain financial and restrictive covenants that limit the ability of the Company to, among other things, borrow additional funds, dispose of assets or pay cash dividends. Failure by the Company to comply with such covenants could result in an event of default, which, if not cured or waived, could have a material adverse effect on the Company. 17 20 SUBORDINATION The New Notes will be subordinated in right of payment to all Senior Debt, including the principal of or premium, if any, and interest on and all other amounts due on or payable in connection with Senior Debt. At March 31, 1998, on a pro forma basis after giving effect to the Transactions, the Company would have had $0.5 million of Senior Debt outstanding. However, the Company entered into a $40.0 million revolving credit facility pursuant to which $4.9 million in letters of credit were issued at Closing. The New Notes will rank subordinate in right of payment to borrowings under the revolving credit facility. By reason of such subordination, in the event of the insolvency, liquidation, reorganization, dissolution or other winding-up of the Company or upon a default in payment with respect to, or the acceleration of, any Senior Debt, the holders of such Senior Debt must be paid in full before the holders of the New Notes may be paid. If the Company incurs any additional pari passu debt, the holders of such debt would be entitled to share ratably with the holders of the New Notes in any proceeds distributed in connection with any insolvency, liquidation, reorganization, dissolution or other winding-up of the Company. This may have the effect of reducing the amount of proceeds paid to holders of the New Notes. In addition, no payments may be made with respect to the principal of, premium and Liquidated Damages, if any, or interest on the New Notes if a payment default exists with respect to Senior Debt and, under certain circumstances, no payments may be made with respect to the principal of, premium and Liquidated Damages, if any, or interest on the New Notes for a period of up to 179 days if a non-payment default exists with respect to Senior Debt. In addition, the Indenture and the New Credit Facility permit the Company and its subsidiaries to incur additional debt, including Senior Debt, if certain conditions are met. See "Description of Notes--Subordination." All extensions of credit under the New Credit Facility to the Company will be secured, subject to certain exceptions, by all existing and after-acquired personal property of the Company and its subsidiaries, including all outstanding capital stock of the Company's subsidiaries, and any intercompany debt obligations, and all existing and after-acquired real property fee and leasehold interests and management contracts, subject to prohibitions in certain of such arrangements relating to collateral assignments. In the event of a default on secured indebtedness (whether as a result of the failure to comply with a payment or other covenant, a cross-default, or otherwise), the lenders under the New Credit Facility (the "Lenders") will have a prior secured claim on such assets. If such Lenders should attempt to foreclose on their collateral, the Company's financial condition and the value of the New Notes could be materially adversely affected. See "Description of Indebtedness." The Company has subsidiaries that are not guaranteeing the New Notes. Accordingly, the New Notes will be effectively subordinated to all existing and future liabilities, including trade payables, of such non-guaranteeing subsidiaries. DEPENDENCE ON MANAGEMENT CONTRACTS AND LEASES The principal sources of the Company's revenues are management contracts and leases covering parking facilities. For the years ended December 31, 1996 and December 31, 1997, gross profits from management contracts accounted for 43.8% and 42.5%, respectively, of the Company's total gross profits, and for the years ended December 31, 1996 and December 31, 1997, gross profits from leased facilities accounted for 56.2% and 57.5%, respectively, of the Company's total gross profits. Under a management contract, the Company typically receives a base monthly fee for managing the property, and may also receive an incentive fee based on the achievement of facility revenues above a base amount. In some instances, the Company also receives certain fees for ancillary services. Typically, all of the underlying revenues and expenses under a management contract flow through to the property owner, not to the Company. Leases generally are for three to ten year terms. Certain of Standard's management contracts and leases contain provisions allowing the property owner to terminate such management contract or lease in the event of a transaction such as the Combination. There can be no assurance that property owners will not terminate such management contracts or leases upon consummation of the Combination, nor that any such terminations would not have a material adverse effect on the Company and its business, operations or financial condition. There also can be no assurance that the Company will be able to maintain or renew its management contracts and leases on favorable terms. In addition, because certain management contracts and leases are with state, local and quasi-governmental entities, changes to certain governmental entities' approaches to contracting regarding parking facilities could 18 21 affect such contracts. The loss, or renewal on less favorable terms, of a substantial number of management contracts or leases could have a material adverse effect on the Company. In addition, a material reduction in the profit margins associated with ancillary services provided by the Company under its management contracts and leases, including increases in costs or claims associated with, or reductions in the number of clients purchasing, insurance provided by the Company, could have a material adverse effect on the Company. See "Management's Discussion and Analysis of Financial Condition and Results of Operations of APCOA," "Management's Discussion and Analysis of Financial Condition and Results of Operations of Standard" and "Business--Insurance." DEPENDENCE ON PROPERTY PERFORMANCE The Company's leases generally require the Company to make a fixed monthly lease payment regardless of the parking fees collected. Some management contracts provide for payment to the Company based on a percentage of revenues generated by the parking facility. Accordingly, the Company's revenues and net income are dependent on the performance of the parking facilities it leases and manages. Such performance depends, in part, on the ability to negotiate favorable contract terms, the ability to control operating expenses, financial conditions prevailing generally and in areas where parking facilities are located, the nature and extent of competitive parking facilities in the area, weather conditions at certain properties (particularly with respect to airports), government-mandated security measures at airport parking facilities and the real estate market generally. See "Management's Discussion and Analysis of Financial Condition and Results of Operations of APCOA" and "Management's Discussion and Analysis of Financial Condition and Results of Operations of Standard." EXPANSION OF BUSINESS; ABILITY TO INTEGRATE ACQUISITIONS The Company will have to integrate Standard's and APCOA's businesses, as well as the Other Acquisitions. While this process has already begun and the Company believes that such integration provides significant opportunities to reduce costs, there can be no assurance that the Company will be able to meet performance expectations or successfully integrate these businesses on a timely basis without disruption in the quality and reliability of service to its customers or clients or diversion of management resources. In addition, while each of APCOA and Standard has made acquisitions successfully before, the Combination is substantially larger than any of such prior acquisitions. Further, the Company intends to expand its business by adding leases and management contracts and by acquiring additional parking management companies. The Company's growth will be directly affected by results of operations of added parking facilities, which will depend, in turn, upon the Company's ability to obtain suitable financing, contract terms, government licenses and approvals, and the competitive environment for acquisitions. In that regard, the nature of licenses and approvals, and the timing and likelihood of obtaining them, vary widely from state to state and from country to country. Some of the acquired operations may be located in geographic markets in which the Company has little or no presence. Successful integration and management of additional facilities will depend on a number of factors, many of which are beyond the Company's control. There can be no assurance that suitable acquisition candidates will be identified, that such acquisitions can be consummated, or that the acquired operations can be integrated successfully. See "Management's Discussion and Analysis of Financial Condition and Results of Operations of APCOA--Liquidity and Capital Resources," "Management's Discussion and Analysis of Financial Condition and Results of Operations of Standard--Liquidity and Capital Resources," "Business--Business Strategy and Competitive Advantages" and "--Regulation." ENVIRONMENTAL AND OTHER REGULATIONS Under various federal, state, and local environmental laws, ordinances, and regulations, a current or previous owner or operator of real property may be liable for the costs of removal or remediation of hazardous or toxic substances on, under, or in such property. Such laws typically impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. In connection with the operation of parking facilities, the Company may be potentially liable for such costs. Although the Company is currently not aware of any material environmental claims pending or threatened against it or any of its operated parking facilities, no assurances can be given that a material environmental claim will not be asserted against the Company or against the parking facilities it operates. The 19 22 cost of defending against claims of liability, or of remediating a contaminated property, could have a material adverse effect on the results of operations or financial condition of the Company. Various other governmental regulations affect the Company's operation of parking facilities, both directly and indirectly, including air quality laws, licensing laws and the Americans with Disabilities Act of 1990 (the "ADA"). Under the ADA, all public accommodations, including parking facilities, are required to meet certain federal requirements related to access and use by disabled persons. Although management believes that the parking facilities it operates are in substantial compliance with these requirements, a determination that the Company or the facility owner is not in compliance with the ADA could result in the imposition of fines or damage awards against the Company. See "Business--Regulation." COMPETITION The parking industry is highly competitive with limited barriers to entry. The Company's competitors range from small single-lot operators to large regional and national multi-facility operators, and include municipal and other governmental entities. Some of the Company's present and potential competitors have or may obtain greater financial and marketing resources than those of the Company. Furthermore, the Company competes for qualified management personnel with other parking facility operators, with property management companies, and with property owners. The Company competes for acquisitions with other parking facility operators. There can be no assurance that the Company will not encounter increased competition for acquisitions in the future and that such competition will not have an adverse effect on the Company's ability to complete acquisitions or on prices paid for acquisitions. See "Business--Competition." DEPENDENCE ON KEY PERSONNEL The Company's success is, and will continue to be, substantially dependent upon the continued services of the Company's management team. The loss of the services of one or more members of senior management could have a material adverse effect on the Company's financial condition and results of operations. Although the Company has entered into employment agreements with, and historically has been successful in retaining the services of, its senior management, there can be no assurance that the Company will be able to retain such personnel in the future. In addition, the Company's continued growth depends on the ability to attract and retain skilled operating managers and employees and the ability of its key personnel to manage the Company's growth and consolidate and integrate its operations. See "Management." CONTROL BY PRINCIPAL STOCKHOLDER Following the consummation of the Transactions, Holberg Industries, Inc. ("Holberg") owns 82.5% of the issued and outstanding Common Stock of AP Holdings, which, in turn, owns 84.0% of the issued and outstanding common stock of the Company. See "Security Ownership of Certain Beneficial Holders and Management." Holberg has sufficient rights and/or voting power to elect the majority of the Board of Directors of the Company, and thereby exercise control over the business, policies and affairs of the Company, and, in general, determine the outcome of any corporate transaction or other matters submitted to stockholders for approval, such as any amendment to the certificate of incorporation of the Company (the "Certificate of Incorporation"), the authorization of additional shares of capital stock, and any merger, consolidation or sale of all or substantially all of the assets of the Company, all of which could adversely affect the Company and holders of the New Notes. See "Security Ownership of Certain Beneficial Holders and Management." PAYMENT UPON A CHANGE OF CONTROL Upon the occurrence of a Change of Control, each holder of New Notes may require the Company to repurchase all or a portion of such holder's Notes at 101% of the principal amount of the New Notes, together with accrued and unpaid interest, if any, and Liquidated Damages, if any, to the date of repurchase. The Indenture requires that prior to such a repurchase, the Company must either repay all outstanding 20 23 indebtedness under the New Credit Facility or obtain any required consent to such repurchase. If a Change of Control were to occur, the Company may not have the financial resources to repay all of its obligations under the New Credit Facility, the New Notes and the other indebtedness that would become payable upon such event. See "Description of New Notes--Repurchase at the Option of Holders--Change of Control." FRAUDULENT CONVEYANCE RISKS Management of the Company believes that the indebtedness represented by the New Notes is being, and by the Notes for which New Notes are exchanged was, incurred for proper purposes and in good faith, and that, based on present forecasts, asset valuations and other financial information, after the consummation of the Exchange Offer, and the Transactions, the Company will be, and was, solvent, will, and did, have sufficient capital for carrying on its business and will be, and was, able to pay its debts as they mature. See "--Substantial Leverage and Debt Service Requirements." Notwithstanding management's belief, however, if a court of competent jurisdiction in a suit by an unpaid creditor or a representative of creditors (such as a trustee in bankruptcy or a debtor-in-possession) were to find that, at the time of the incurrence of such indebtedness (either under the New Notes or the Notes for which New Notes are exchanged), the Company was insolvent, was rendered insolvent by reason of such incurrence, was engaged in a business or transaction for which its remaining assets constituted unreasonably small capital, intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they matured, or intended to hinder, delay or defraud its creditors, and that the indebtedness was incurred for less than reasonably equivalent value, then such court could, among other things, (i) void all or a portion of the Company's obligations to the holders of the New Notes, the effect of which would be that the holders of the New Notes may not be repaid in full and/or (ii) subordinate the Company's obligations to the holders of the New Notes to other existing and future indebtedness of the Company to a greater extent than would otherwise be the case, the effect of which would be to entitle such other creditors to be paid in full before any payment could be made on the New Notes. The Company's obligations under the New Notes will be, and by the Notes for which New Notes are exchanged has been, fully and unconditionally guaranteed, jointly and severally, on a senior subordinated basis, by each of the Subsidiary Guarantors. Management of the Company believes that indebtedness represented by the New Note Guarantees is being, and the Subsidiary Guarantors' obligations under the Notes was, incurred by the Subsidiary Guarantors for proper purposes and in good faith, and that, based on present forecasts, asset valuations and other financial information, after consummation of the Exchange Offer, and the Transactions, each of the Subsidiary Guarantors will be, and was, solvent, will, and did, have sufficient capital for carrying on its business, and will be, and was, able to pay its debts as they mature. See "--Substantial Leverage and Debt Service Requirements." Notwithstanding management's belief, however, if a court of competent jurisdiction in a suit by an unpaid creditor or a representative of creditors (such as a trustee in bankruptcy or a debtor-in-possession) were to find that, at the time of the incurrence of such indebtedness(either under the New Notes or the Notes for which New Notes are exchanged), the Subsidiary Guarantors were insolvent, were rendered insolvent by reason of such incurrence, were engaged in a business or transaction for which their remaining assets constituted unreasonably small capital, intended to incur, or believed that they would incur, debts beyond their ability to pay such debts as they matured, or intended to hinder, delay or defraud their creditors, and that the indebtedness was incurred for less than reasonably equivalent value, then such court could, among other things, (i) void all or a portion of such Subsidiary Guarantors' obligations to the holders of the New Notes, the effect of which would be that the holders of the New Notes may not be repaid in full or at all and/or (ii) subordinate such Subsidiary Guarantors' obligations to the holders of the New Notes to other existing and future indebtedness of such Subsidiary Guarantors, the effect of which would be to entitle such other creditors to be paid in full before any payment could be made on the New Notes. Among other things, a legal challenge to a New Note Guarantee on fraudulent conveyance grounds may focus on the benefits, if any, realized by the Subsidiary Guarantors as a result of the issuance by the Company of the New Notes. 21 24 ABSENCE OF PUBLIC MARKET FOR THE NEW NOTES; RESTRICTIONS ON TRANSFERS The Notes are currently owned by a relatively small number of beneficial owners. The Notes have not been registered under the Exchange Act and will be subject to restrictions on transferability to the extent that they are not exchanged for the New Notes. The New Notes will constitute a new issue of securities with no established trading market. Although the New Notes will generally be permitted to be resold or otherwise transferred by Holders who are not affiliates of the Company without compliance with the registration requirements under the Securities Act, the Company does not intend to list the New Notes on any securities exchange or to seek admission thereof to trading in the National Association of Securities Dealers Automated Quotation System. Although DLJ and First Chicago have advised the Company that they currently intend to make a market in the New Notes, they are not obligated to do so and may discontinue such market making at any time without notice. If a trading market does not develop or is not maintained, holders of the New Notes may experience difficulty in reselling the New Notes or may be unable to sell them at all. If a market for the New Notes develops, any such market may be discontinued at any time. In addition, such market making activity will be subject to the limits imposed by the Exchange Act. See "Description of New Notes -- Registration Rights; Liquidated Damages." Accordingly, there can be no assurance as to the development or liquidity of any market for the New Notes. COMPLIANCE WITH EXCHANGE OFFER PROCEDURES; RESTRICTIONS ON RESALES Issuance of the New Notes in exchange for Notes pursuant to the Exchange Offer will be made only after a timely receipt by the Exchange Agent of such Notes, a properly completed and duly executed Letter of Transmittal and all other required documents. Therefore, Holders of the Notes desiring to tender such Notes in exchange for New Notes should allow sufficient time to ensure timely delivery. The Company is under no duty to give notification of defects or irregularities with respect to the tenders of Notes for exchange. Notes that are not tendered or are tendered but not accepted will, following the consummation of the Exchange Offer, continue to be subject to the existing restrictions upon transfer thereof and, upon consummation of the Exchange Offer, the registration rights under the Registration Rights Agreement generally will terminate. In addition, any Holder of Notes who tenders in the Exchange Offer for the purpose of participating in a distribution of the New Notes may be deemed to have received restricted securities and, if so, will be required to comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale. Each broker-dealer that receives New Notes for its own account in exchange for Notes, where such Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities must acknowledge that it will deliver a prospectus in connection with the initial resale of such New Notes. To the extent that Notes are tendered and accepted in the Exchange Offer, the trading market for untendered and tendered but unaccepted Notes could be adversely affected. See "The Exchange Offer." FORWARD-LOOKING STATEMENTS This Prospectus includes forward-looking statements, including statements concerning the Company's business strategy, operations, cost savings initiatives, economic performance, financial condition and liquidity and capital resources. Such statements are subject to various risks and uncertainties. The Company's actual results may differ materially from the results discussed in such forward-looking statements because of a number of factors, including those identified in the sections of this Prospectus captioned "Prospectus Summary," "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations of APCOA," "Management's Discussion and Analysis of Financial Condition and Results of Operations of Standard" and "Business." Forward-looking statements are made as of the date of this Prospectus, and the Company assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements. 22 25 THE EXCHANGE OFFER The following discussion sets forth or summarizes what the Company believes are the material terms of the Exchange Offer, including those set forth in the Letter of Transmittal distributed with this Prospectus. This summary is qualified in its entirety by reference to the full text of the documents underlying the Exchange Offer, copies of which are filed as exhibits to the Registration Statement of which this Prospectus is a part, and are incorporated by reference herein. PURPOSE AND EFFECT OF THE EXCHANGE OFFER The Notes were sold by the Company on March 25, 1998, and were subsequently resold to qualified institutional buyers pursuant to Rule 144A under the Securities Act, to institutional investors that are accredited investors in a manner exempt from registration under the Securities Act and to certain persons in transactions outside the United States in reliance on Regulation S under the Securities Act. In connection with the Offering, the Company entered into the Registration Rights Agreement, which requires, among other things, that promptly following the completion of the Offering, the Company and the Subsidiary Guarantors (i) file with the SEC a registration statement under the Securities Act with respect to an issue of new Notes of the Company identical in all material respects to the Notes, (ii) use their best efforts to cause such registration statement to become effective under the Securities Act and (iii) upon the effectiveness of that registration statement, offer to the Holders of the Notes the opportunity to exchange their Notes for a like principal amount of New Notes, which would be issued without a restrictive legend and may be reoffered and resold by the holder without restrictions or limitations under the Securities Act (other than any such holder that is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act). A copy of the Registration Rights Agreement has been filed as an exhibit to the Registration Statement of which this Prospectus is a part. The term "Holder" with respect to the Exchange Offer means any person in whose name the Notes are registered on the books of the Company or any other person who has obtained a properly completed bond power from the registered holder. Because the Exchange Offer is for any and all Notes, the number of Notes tendered and exchanged in the Exchange Offer will reduce the principal amount of Notes outstanding. Following the consummation of the Exchange Offer, Holders of the Notes who did not tender their Notes generally will not have any further registration rights under the Registration Rights Agreement, and such Notes will continue to be subject to certain restrictions on transfer. Accordingly, the liquidity of the market for such Notes could be adversely affected. The Notes are currently eligible for sale pursuant to Rule 144A through the Private Offerings, Resales and Trading through Automated Linkages ("PORTAL") System of the National Association of Securities Dealers, Inc. Because the Company anticipates that most holders of Notes will elect to exchange such Notes for New Notes due to the absence of restrictions on the resale of New Notes under the Securities Act, the Company anticipates that the liquidity of the market for any Notes remaining after the consummation of the Exchange Offer may be substantially limited. TERMS OF THE EXCHANGE OFFER Upon the terms and subject to the conditions set forth in this Prospectus and in the Letter of Transmittal, the Company will accept any and all Notes validly tendered and not withdrawn prior to 12:00 midnight, New York City time, on the Expiration Date. The Company will issue $1,000 principal amount of New Notes in exchange for each $1,000 principal amount of outstanding Notes accepted in the Exchange Offer. Holders may tender some or all of their Notes pursuant to the Exchange Offer. However, Notes may be tendered only in integral multiples of $1,000. The form and terms of the New Notes are the same as the form and terms of the Notes except that (i) the New Notes have been registered under the Securities Act and hence will not bear legends restricting the transfer thereof and (ii) the holders of the New Notes generally will not be entitled to certain rights under the Registration Rights Agreement, which rights generally will terminate upon consummation of the Exchange Offer. The New Notes will evidence the same debt as the Notes and will be entitled to the benefits of the Indentures. 23 26 Holders of Notes do not have any appraisal or dissenters' rights under the General Corporation Law of Delaware or the Indenture in connection with the Exchange Offer. The Company intends to conduct the Exchange Offer in accordance with the applicable requirements of the Exchange Act and the rules and regulations of the SEC thereunder, including Rule 14e-1 thereunder. The Company shall be deemed to have accepted validly tendered Notes when, as and if the Company has given oral or written notice thereof to the Exchange Agents. The Exchange Agent will act as agent for the tendering Holders for the purpose of receiving the New Notes from the Company. If any tendered Notes are not accepted for exchange because of an invalid tender, the occurrence of certain other events set forth herein or otherwise, the certificates for any such unaccepted Notes will be returned, without expense, to the tendering Holder thereof as promptly as practicable after the Expiration Date. Holders who tender Notes in the Exchange Offer will not be required to pay brokerage commissions or fees or, subject to the instructions in the Letter of Transmittal, transfer taxes with respect to the exchange of Notes pursuant to the Exchange Offer. The Company will pay all charges and expenses, other than transfer taxes in certain circumstances, in connection with the Exchange Offer. See "-- Fees and Expenses." EXPIRATION DATE; EXTENSIONS; AMENDMENTS The term "Expiration Date" shall mean 12:00 midnight, New York City time, on , 1998, unless the Company, in its sole discretion, extends the Exchange Offer, in which case the term "Expiration Date" shall mean the latest date and time to which the Exchange Offer is extended. To extend the Exchange Offer, the Company will notify the Exchange Agent of any extension by oral or written notice, followed by a public announcement thereof no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date. The Company reserves the right, in its reasonable judgment, (i) to delay accepting any Notes, to extend the Exchange Offer or to terminate the Exchange Offer if any of the conditions set forth below under "-- Conditions" shall not have been satisfied, by giving oral or written notice of such delay, extension or termination to the Exchange Agent or (ii) to amend the terms of the Exchange Offer in any manner. Any such delay in acceptance, extension, termination or amendment will be followed as promptly as practicable by a public announcement thereof. If the Exchange Offer is amended in a manner determined by the Company to constitute a material change, the Company will promptly disclose such amendment by means of a prospectus supplement that will be distributed to the registered Holders, and, depending upon the significance of the amendment and the manner of disclosure to the registered Holders, the Company will extend the Exchange Offer for five to ten business days if the Exchange Offer would otherwise expire during such five to ten business-day period. If the Company does not consummate the Exchange Offer, or, in lieu thereof, the Company does not file and cause to become effective a resale shelf registration for the New Notes within the time periods set forth herein, liquidated damages will accrue and be payable on the New Notes either temporarily or permanently. See "Description of New Notes -- Registration Rights; Liquidated Damages." INTEREST ON NEW NOTES The New Notes will bear interest from March 25, 1998, the date of issuance of the Notes that are tendered in exchange for the New Notes (or the most recent Interest Payment Date to which interest on such Notes has been paid). Accordingly, Holders of Notes that are accepted for exchange will not receive interest that is accrued but unpaid on the Notes at the time of tender, but such interest will be payable on the first Interest Payment Date after the Expiration Date. Interest on the New Notes will be payable semiannually on each March 15 and September 15, commencing on September 15, 1998. 24 27 PROCEDURES FOR TENDERING Only a Holder of Notes may tender such Notes in the Exchange Offer. To tender in the Exchange Offer, a Holder must complete, sign and date the relevant Letter of Transmittal, or a facsimile thereof, have the signatures thereon guaranteed if required by the Letter of Transmittal and mail or otherwise deliver such Letter of Transmittal or such facsimile, together with the Notes and any other required documents, to the Exchange Agent so as to be received by the Exchange Agent at the address set forth below prior to 12:00 midnight, New York City time, on the Expiration Date. The Letter of Transmittal must be used to tender Notes. Delivery of the Notes may be made by book-entry transfer in accordance with the procedures described below. Confirmation of such book-entry transfer must be received by the Exchange Agent prior to the Expiration Date. By executing the Letter of Transmittal, each Holder will make to the Company the representation set forth below in the second paragraph under the heading "-- Resale of New Notes." The tender by a Holder and the acceptance thereof by the Company will constitute an agreement between such Holder and the Company in accordance with the terms and subject to the conditions set forth herein and in the Letter of Transmittal. THE METHOD OF DELIVERY OF NOTES AND THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS. Any beneficial owner whose Notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact the registered Holder promptly and instruct such registered Holder to tender on such beneficial owner's behalf. Signatures on the Letter of Transmittal or a notice of withdrawal, as the case may be, must be guaranteed by an Eligible Institution (as defined below) unless the Notes tendered pursuant thereto are tendered (i) by a registered Holder who has not completed the box entitled "Special Registration Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or (ii) for the account of an Eligible Institution. In the event that signatures on a Letter of Transmittal or a notice of withdrawal, as the case may be, are required to be guaranteed, such guarantee must be by a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States or an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under the Exchange Act (an "Eligible Institution"). If the Letter of Transmittal is signed by a person other than the registered Holder of any Notes listed therein, such Notes must be endorsed or accompanied by a properly completed bond power, signed by such registered Holder as such registered Holder's name appears on such Notes with the signature thereon guaranteed by an Eligible Institution. If the Letter of Transmittal or any Notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and unless waived by the Company, evidence satisfactory to the Company of their authority to so act must be submitted with the Letter of Transmittal. The Company understands that each Exchange Agent will make a request promptly after the date of this Prospectus to establish accounts with respect to the Notes at the Depositary for the purpose of facilitating the Exchange Offer, and subject to the establishment thereof, any financial institution that is a participant in the Depositary's system may make book-entry delivery of the Notes by causing the Depositary to transfer such 25 28 Notes into the Exchange Agent's account with respect to the Notes in accordance with the Depositary's procedures for such transfer. Although delivery of the Notes may be effected through book-entry transfer into the Exchange Agent's account at the Depositary, an appropriate Letter of Transmittal properly completed and duly executed with any required signature guarantee and all other required documents must in each case be transmitted to and received or confirmed by the Exchange Agent at its address set forth below on or prior to the Expiration Date, or, if the guaranteed delivery procedures described below are complied with, within the time period provided under such procedures. Delivery of documents to the Depositary does not constitute delivery to the Exchange Agent. All questions as to the validity, form, eligibility (including time of receipt), acceptance of tendered Notes and withdrawal of tendered Notes will be determined by the Company in its sole discretion, which determination will be final and binding. The Company reserves the absolute right to reject any and all Notes not properly tendered or any Notes the Company's acceptance of which would, in the opinion of counsel for the Company, be unlawful. The Company also reserves the right to waive any defects, irregularities or conditions of tender as to particular Notes. The Company's interpretation of the terms and conditions of the Exchange Offer (including the instructions in the Letter of Transmittal) will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Notes must be cured within such time as the Company shall determine. Although the Company intends to notify Holders of defects or irregularities with respect to tenders of Notes, none of the Company, the Exchange Agent or any other person shall incur any liability for failure to give such notification. Tenders of Notes will not be deemed to have been made until such defects or irregularities have been cured or waived. Any Notes received by the Exchange Agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned by the Exchange Agent to the tendering Holders, unless otherwise provided in the Letter of Transmittal, as soon as practicable following the Expiration Date. GUARANTEED DELIVERY PROCEDURES Holders who wish to tender their Notes and (i) whose New Notes are not immediately available, (ii) who cannot deliver their Notes, the Letter of Transmittal or any other required documents to the relevant Exchange Agent or (iii) who cannot complete the procedures for book-entry transfer, prior to the Expiration Date, may effect a tender if: (a) the tender is made through an Eligible Institution; (b) prior to the Expiration Date, the relevant Exchange Agent receives from such Eligible Institution a properly completed and duly executed Notice of Guaranteed Delivery (by facsimile transmission, mail or hand delivery) setting forth the name and address of the Holder, the certificate number(s) of such Notes and the principal amount of Notes tendered, stating that the tender is being made thereby and guaranteeing that, within three New York Stock Exchange trading days after the Expiration Date, the Letter of Transmittal (or facsimile thereof), together with the certificates(s) representing the Notes (or a confirmation of book-entry transfer of such Notes into the Exchange Agent's account at the Depositary) and any other documents required by the Letter of Transmittal, will be deposited by the Eligible Institution with the Exchange Agent; and (c) such properly completed and executed Letter of Transmittal (or facsimile thereof), as well as the certificate(s) representing all tendered Notes in proper form for transfer (or a confirmation of book-entry transfer of such Notes into the Exchange Agent's account at the Depositary) and all other documents required by the Letter of Transmittal, are received by the Exchange Agent within three New York Stock Exchange trading days after the Expiration Date. Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be sent to Holders who wish to tender their Notes according to the guaranteed delivery procedures set forth above. 26 29 WITHDRAWALS OF TENDERS Except as otherwise provided herein, tenders of Notes may be withdrawn at any time prior to 12:00 midnight New York City time, on the Expiration Date. To withdraw a tender of Notes in the Exchange Offer, a written or facsimile transmission notice of withdrawal must be received by the Exchange Agent at its address set forth herein prior to 12:00 midnight New York City time, on the Expiration Date. Any such notice of withdrawal must (i) specify the name of the person having deposited the Notes to be withdrawn (the "Depositor"), (ii) identify the Notes to be withdrawn (including the certificate number(s) and principal amount of such Notes, or, in the case of Notes transferred by book-entry transfer, the name and number of the account at the Depositary to be credited), (iii) be signed by the Holder in the same manner as the original signature on the Letter of Transmittal by which such Notes were tendered (including any required signature guarantees) or be accompanied by documents of transfer sufficient to have the Trustee with respect to the Notes register the transfer of such Notes into the name of the person withdrawing the tender, and (iv) specify the name in which any such Notes are to be registered, if different from that of the Depositor. All questions as to the validity, form and eligibility (including time or receipt) of such notices will be determined by the Company, whose determination shall be final and binding on all parties. Any Notes so withdrawn will be deemed not to have been validly tendered for purposes of the Exchange Offer and no New Notes will be issued with respect thereto unless the Notes so withdrawn are validly retendered. Any Notes which have been tendered but which are not accepted for exchange will be returned to the Holder thereof without cost to such Holder as soon as practicable after withdrawal, rejection of tender or termination of the Exchange Offer. Properly withdrawn Notes may be retendered by following one of the procedures described above under "-- Procedures for Tendering" at any time prior to the Expiration Date. CONDITIONS Notwithstanding any other term of the Exchange Offer, the Company shall not be required to accept for exchange, or to exchange New Notes for, any Notes, and may terminate or amend the Exchange Offer as provided herein before the acceptance of such Notes, if any law, statute, rule, regulation or interpretation by the staff of the SEC is proposed, adopted or enacted, which, in the reasonable judgment of the Company, might materially impair the ability of the Company to proceed with the Exchange Offer or materially impair the contemplated benefits of the Exchange Offer to the Company. If the Company determines in its reasonable judgment that any of the conditions are not satisfied, the Company may (i) refuse to accept any Notes and return all tendered Notes to the tendering Holders, (ii) extend the Exchange Offer and retain all Notes tendered prior to the expiration of the Exchange Offer, subject, however, to the rights of Holders to withdraw such Notes (see "Withdrawals of Tenders") or (iii) waive such unsatisfied conditions with respect to the Exchange Offer and accept all properly tendered Notes which have not been withdrawn. If such waiver constitutes a material change to the Exchange Offer, the Company will promptly disclose such waiver by means of a prospectus supplement that will be distributed to the registered Holders, and, depending upon the significance of the waiver and the manner of disclosure to the registered Holders, the Company will extend the Exchange Offer for a period of five to ten business days if the Exchange Offer would otherwise expire during such five to ten business-day period. EXCHANGE AGENT State Street Bank & Trust Company will act as Exchange Agent for the Exchange Offer with respect to the Notes (the "Exchange Agent"). 27 30 Questions and requests for assistance, requests for additional copies of this Prospectus or of the Letter of Transmittal for the Notes and requests for copies of Notice of Guaranteed Delivery should be directed to the Exchange Agent, addressed as follows: By Mail By Facsimile Transmission: By Hand or Overnight Courier: (registered or certified mail (617) 664-5395 recommended): State Street Bank and State Street Bank and Confirm by Telephone Trust Company Trust Company or for Information Call: Corporate Trust Department Corporate Trust Department (617) 664-5587 4th floor P.O. Box 778 Attn: Kellie Mullen Two International Place Boston, MA 02102-0078 Boston, MA 02110
FEES AND EXPENSES The expenses of soliciting tenders will be borne by the Company. The principal solicitation is being made by mail; however, additional solicitation may be made by telegraph, telephone, facsimile or in person by officers and regular employees of the Company and its affiliates. The Company has not retained any dealer-manager in connection with the Exchange Offer and will not make any payments to brokers or other persons soliciting acceptances of the Exchange Offer. The Company, however, will pay the Exchange Agent reasonable and customary fees for their services and will reimburse them for their reasonable out-of-pocket expenses in connection therewith and pay other registration expenses, including fees and expenses of the Trustees, filing fees, blue sky fees and printing and distribution expenses. The Company will pay all transfer taxes, if any, applicable to the exchange of the Notes pursuant to the Exchange Offer. If, however, certificates representing the New Notes or the Notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be issued in the name of, any person other than the registered Holder of the Notes tendered, or if tendered Notes are registered in the name of any person other than the person signing the Letter of Transmittal, or if a transfer tax is imposed for any reason other than the exchange of the Notes pursuant to the Exchange Offer, then the amount of any such transfer taxes (whether imposed on the registered Holder or any other person) will be payable by the tendering Holder. ACCOUNTING TREATMENT The New Notes will be recorded at the same carrying value as the Notes, which is the aggregate principal amount in the case of the Notes, as reflected in the Company's accounting records on the date of exchange. Accordingly, no gain or loss for accounting purposes will be recognized in connection with the Exchange Offer. The expenses of the Exchange Offer will be amortized over the term of the New Notes. RESALE OF NEW NOTES Based on an interpretation by the staff of the SEC set forth in no-action letters issued to third parties, the Company believes that New Notes issued pursuant to the Exchange Offer in exchange for Notes may be offered for resale, resold and otherwise transferred by any Holder of such New Notes (other than (i) a broker-dealer that acquired Notes directly from the Company or (ii) any such Holder which is an "affiliate" of the Company within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such New Notes are acquired in the ordinary course of such Holder's business and such Holder does not intend to participate, and has no arrangement or understanding with any person to participate, in the distribution of such New Notes. Any Holder who tenders in the Exchange Offer with the intention to participate, or for the purpose of participating, in a distribution of the New Notes may not rely on the position of the staff of the SEC enunciated in Exxon Capital Holdings Corporation (available April 13, 1989) and Morgan Stanley & Co., Incorporated (available June 5, 1991), or similar no-action letters, but rather must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. In addition, any such 28 31 resale transaction should be covered by an effective registration statement containing the selling security holder's information required by Item 507 or 508 of Regulation S-K of the Securities Act, as applicable. Notwithstanding the foregoing, each broker-dealer that receives New Notes for its own account in exchange for Notes, where such Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, may be a statutory underwriter and must acknowledge that it will deliver a prospectus in connection with any resale of such New Notes. Notwithstanding the foregoing, broker-dealers that acquired Notes directly from the Company may not resell New Notes received in exchange for such Notes without complying with the registration and prospectus delivery requirements of the Securities Act. By tendering in the Exchange Offer, each Holder will represent to the Company that, among other things, (i) the New Notes acquired pursuant to the Exchange Offer are being obtained in the ordinary course of business of the person receiving such New Notes, whether or not such person is a Holder, (ii) neither the Holder nor any such other person has an arrangement or understanding with any person to participate in the distribution of such New Notes and (iii) the Holder and such other person acknowledge that if they participate in the Exchange Offer for the purpose of distributing the New Notes (a) they must, in the absence of an exemption therefrom, comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale of the New Notes and cannot rely on the no-action letters referenced above and (b) failure to comply with such requirements in such instance could result in such Holder incurring liability under the Securities Act for which such Holder is not indemnified by the Company. Further, by tendering in the Exchange Offer, each Holder that may be deemed an "affiliate" (as defined under Rule 405 of the Securities Act) of the Company will represent to the Company that such Holder understands and acknowledges that the New Notes may not be offered for resale, resold or otherwise transferred by that Holder without registration under the Securities Act or an exemption therefrom. As set forth above, (i) broker-dealers that acquired Notes directly from the Company or (ii) affiliates of the Company are not entitled to rely on the foregoing interpretations of the staff of the SEC with respect to resales of the New Notes without compliance with the registration and prospectus delivery requirements of the Securities Act. CONSEQUENCES OF FAILURE TO EXCHANGE As a result of the making of this Exchange Offer, the Company will have fulfilled one of its obligations under the Registration Rights Agreement, and Holders of Notes who do not tender their Notes generally will not have any further registration rights under the Registration Rights Agreement or otherwise. Accordingly, any Holder of Notes that does not exchange that Holder's Notes for New Notes will continue to hold the untendered Notes and will be entitled to all the rights and limitations applicable thereto under the Indentures, except to the extent that such rights or limitations, by their terms, terminate or cease to have further effectiveness as a result of the Exchange Offer. The Notes that are not exchanged for New Notes pursuant to the Exchange Offer will remain restricted securities. Accordingly, such Notes may be resold only (i) to the Company (upon redemption thereof or otherwise), (ii) pursuant to an effective registration statement under the Securities Act, (iii) so long as the Notes are eligible for resale pursuant to Rule 144A, to a qualified institutional buyer within the meaning of Rule 144A under the Securities Act in a transaction meeting the requirements of Rule 144A, (iv) outside the United States to a foreign person pursuant to the exemption from the registration requirements of the Securities Act provided by Regulation S thereunder, (v) pursuant to an exemption from registration under the Securities Act provided by Rule 144 thereunder (if available), or (vi) to an institutional accredited investor in a transaction exempt from the registration requirements of the Securities Act, in each case in accordance with any applicable securities laws of any state of the United States. See "Risk Factors--Absence of Public Market for the New Notes; Restrictions on Transfer." 29 32 OTHER Participation in the Exchange Offer is voluntary and holders should carefully consider whether to accept. Holders of the Notes are urged to consult their financial and tax advisors in making their own decision on what action to take. The Company may in the future seek to acquire untendered Notes in open market or privately negotiated transactions, through subsequent exchange offers or otherwise. The Company has no present plans to acquire any Notes that are not tendered in the Exchange Offer or to file a registration statement to permit resales of any untendered Notes. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OFFER The following discussion is based upon current provisions of the Internal Revenue Code of 1986, as amended, applicable Treasury regulations, judicial authority and administrative rulings and practice. There can be no assurance that the Internal Revenue Service (the "IRS") will not take a contrary view, and no ruling from the IRS has been or will be sought. Legislative, judicial or administrative changes or interpretations may be forthcoming that could alter or modify the statements and conditions set forth herein. Any such changes or interpretations may or may not be retroactive and could affect the tax consequences to Holders. Certain Holders of the Notes (including insurance companies, tax-exempt organizations, financial institutions, broker-dealers, foreign corporations and persons who are not citizens or residents of the United States) may be subject to special rules not discussed below. Each Holder of a Note should consult his, her or its own tax advisor as to the particular tax consequences of exchanging such Holder's Notes for New Notes, including the applicability and effect of any state, local or foreign tax laws. The issuance of the New Notes to Holders of the Notes pursuant to the terms set forth in this Prospectus will not constitute an exchange for federal income tax purposes. Consequently, no gain or loss would be recognized by Holders of the Notes upon receipt of the New Notes, and ownership of the New Notes will be considered a continuation of ownership of the Notes. For purposes of determining gain or loss upon the subsequent sale or exchange of the New Notes, a Holder's basis in the New Notes should be the same as such Holder's basis in the Notes exchanged therefor. A Holder's holding period for the New Notes should include the Holder's holding period for the Notes exchanged therefor. The issue price and other tax characteristics of the New Notes should be identical to the issue price and other tax characteristics of the Notes exchanged therefor. See also "Description of Certain Federal Income Tax Consequences." 30 33 THE TRANSACTIONS In connection with, and concurrently with the consummation of, the Combination, on March 30, 1998, the Company: (i) consummated the Offering, (ii) received the Preferred Stock Contribution, and (iii) entered into the New Credit Facility. The Offering, the Preferred Stock Contribution and the New Credit Facility, collectively, will be referred to herein as the "Financing." The Combination and the Financing will collectively be referred to as the "Transactions." See "Description of Indebtedness." THE COMBINATION Pursuant to the Combination Agreement, dated as of January 15, 1998 (the "Combination Agreement"), by and among Myron C. Warshauer, Stanley Warshauer, Steven A. Warshauer, Dosher Partners, L.P., a Delaware limited partnership, SP Parking Associates, an Illinois general partnership, and SP Associates, an Illinois general partnership (collectively, "Standard Owners") and APCOA, APCOA has, subject to the terms and conditions contained in the Combination Agreement, on March 30, 1998, acquired all of the outstanding capital stock, partnership and other equity interests of Standard Parking Corporation, an Illinois corporation; Standard Auto Park, Inc., an Illinois corporation; Standard Parking Corporation MW, an Illinois corporation; Standard Parking, L.P., a Delaware limited partnership; Standard Parking Corporation IL, an Illinois corporation; and Standard/Wabash Parking Corporation, an Illinois corporation (all such entities, collectively, "Standard") for consideration consisting of $65.0 million in cash, 5.0095230 shares or 16%, of the common stock of the Company ("Company Common Stock") outstanding as of January 15, 1998, valued at $4.6 million, and the assumption of certain liabilities. In addition, on March 30, 1998, APCOA paid to the Standard Owners $2.8 million, generally representing Standard's earnings through the date of the Combination and Standard's cash on hand at such time. See "Management's Discussion and Analysis of Financial Condition and Results of Operations of APCOA--Pro Forma Liquidity and Capital Resources." Pursuant to the Combination Agreement, the Company executed certain agreements including (a) a stockholders agreement among the stockholders of the Company, (b) an escrow agreement among the Company and the Standard Owners, (c) an employment agreement between the Company and Myron C. Warshauer, and (d) a consulting agreement between the Company and Sidney Warshauer. The Combination Agreement contains customary representations and warranties by the parties which generally survive for a period of two years after the consummation of the Combination. The Standard Owners and APCOA have agreed to indemnify each other for any loss resulting from such party's breach of a representation, warranty or covenant made by such party; provided, however, that such indemnity is limited, in the aggregate, to a basket of $2.0 million and is limited to a cap of $10.0 million, except for an indemnity by the Standard Owners related to taxes which shall not be subject to such limitations. THE FINANCING In addition to the Offering, the Financing consisted of the following: The Preferred Stock Contribution. In connection with the Combination, AP Holdings, Inc. ("AP Holdings"), a Delaware corporation and the parent of the Company, contributed $40.7 million of cash to the Company (the "Preferred Stock Contribution") in exchange for $40.7 million initial liquidation preference of new preferred stock of the Company. The Preferred Stock Contribution was financed through AP Holdings' sale of $40.7 million in gross proceeds of its debt securities, the fees and expenses of which were borne by the Company. The New Credit Facility. Upon the closing of the Offering, the Company entered into a $40.0 million secured revolving credit facility (the "New Credit Facility") with The First National Bank of Chicago (the "Agent"). Borrowings under the New Credit Facility bear interest at variable rates based, at the Company's option, either on LIBOR, the federal funds rate, or the Agent's base rate. See "Description of Indebtedness--New Credit Facility." 31 34 USE OF PROCEEDS (DOLLARS IN MILLIONS) The net proceeds from the Offering (after deducting discounts and commissions and estimated expenses), together with the Preferred Stock Contribution, were used by the Company: (i) to fund the cash portion of the consideration payable in connection with the Combination; (ii) to repay certain indebtedness; (iii) for general corporate purposes, including working capital needs and future acquisitions; (iv) to redeem preferred stock held by Holberg; and (v) to pay fees and expenses in connection with the Transactions. The existing indebtedness repaid in connection with the Offering included approximately $40.7 million of borrowings under APCOA's then-existing credit facility and approximately $0.35 million of borrowings under Standard's then-existing credit facility. See "Certain Relationships and Related Party Transactions." The following table sets forth the approximate sources and uses of funds in connection with the Transactions: SOURCES OF FUNDS: 9 1/4% Senior Subordinated Notes due 2008................. $140.0 Preferred Stock Contribution.............................. 40.7 ------ Total sources of funds................................. $180.7 ====== USES OF FUNDS: Cash consideration to the Standard Owners................. $ 65.0 Refinance APCOA debt...................................... 40.7 Refinance Standard debt................................... 0.3 General corporate purposes................................ 45.6 Consideration to EPI owners............................... 7.0 Redeem preferred stock.................................... 8.0 Fees and expenses......................................... 14.1 ------ Total uses of funds.................................... $180.7 ======
32 35 CAPITALIZATION (DOLLARS IN THOUSANDS) The following table sets forth the actual cash and cash equivalents and capitalization of the Company as of March 31, 1998, which reflects the Transactions, and on a pro forma basis, adjusted to reflect the acquisition of EPI. This table should be read in conjunction with the historical financial statements of APCOA and the related notes thereto, the historical financial statements of Standard and the related notes thereto and the unaudited pro forma financial statements of the Company and the related notes thereto, each included elsewhere herein. See "The Transactions."
AS OF MARCH 31, 1998 --------------------- ACTUAL PRO FORMA -------- --------- Cash and cash equivalents................................... $ 60,480 $ 54,078 ======== ======== Long-term debt (including current portion): New Credit Facility(1).................................... $ 497 $ 497 9 1/4% Senior Subordinated Notes due 2008................. 140,000 140,000 Other debt................................................ 9,626 9,724 -------- -------- Total long-term debt................................... 150,123 150,221 Redeemable preferred stock.................................. 40,683 40,683 Common stock subject to put/call rights(2).................. 4,589 4,589 Stockholders' equity (deficit): Common stock and additional paid-in capital............... 11,423 11,423 Retained earnings (deficit)............................... (57,129) (57,129) -------- -------- Total stockholders' equity (deficit)................... (45,706) (45,706) -------- -------- Total capitalization.............................. $149,689 $149,787 ======== ========
- ------------------------------ (1) $40.0 million is available under the New Credit Facility for working capital and general corporate purposes, including the issuance of letters of credit, $4.9 million of which were issued at Closing, which occurred on March 30, 1998, subject to the achievement of certain financial ratios and compliance with certain conditions. See "Description of Indebtedness--New Credit Facility." (2) In accordance with the Stockholders Agreement (as defined below under "Certain Relationships and Related Party Transactions--Stockholders Agreement"), the Company will be obligated under certain circumstances to repurchase shares of common stock issued in connection with the Combination. The amount reflected herein has been calculated based on the formula in the Stockholders Agreement. The Company will not be obligated to repurchase such common stock prior to the third anniversary of the consummation of the Combination. 33 36 SELECTED HISTORICAL FINANCIAL DATA OF APCOA (DOLLARS IN THOUSANDS) The following table presents selected historical consolidated financial data of APCOA at and for the fiscal years 1993, 1994, 1995, 1996 and 1997 which have been derived from the audited financial statements of APCOA, audited by Ernst & Young LLP, and at and for the three months ended March 31, 1997 and 1998, which have been derived from the unaudited financial statements of APCOA. The selected financial data set forth below should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations of APCOA" and the historical consolidated financial statements of APCOA and the notes thereto included elsewhere herein. In the opinion of management, the interim financial statements at and for the three months ended March 31, 1997 and 1998 reflect all adjustments (consisting only of normal recurring adjustments) necessary to fairly present the information presented for such periods. The results of operations for the three months ended March 31, 1998 are not necessarily indicative of the results of operations to be expected for the full year.
THREE MONTHS YEAR ENDED DECEMBER 31, ENDED MARCH 31, ---------------------------------------------------- ------------------- 1993 1994 1995 1996 1997 1997 1998 INCOME STATEMENT DATA: Parking services revenue.............. $150,280 $148,398 $141,540 $135,752 $115,676 $ 27,019 $ 28,804 Cost of parking services............. 132,598 129,175 120,215 113,501 92,818 22,547 23,576 General and administrative expenses............. 10,712 10,879 12,121 13,017 13,528 2,940 3,460 Restructuring charge.... -- -- -- -- -- -- 14,500 Depreciation and amortization......... 8,486 8,749 8,772 4,888 3,767 1,110 1,055 -------- -------- -------- -------- -------- -------- -------- Operating income (loss)............... (1,516) (405) 432 4,346 5,563 422 (13,787) Interest expense, net... 2,021 2,350 2,705 2,877 3,243 767 888 Other expense........... 500 125 -- -- -- -- -- Minority interest....... 496 850 604 424 321 38 143 Income tax expense...... 126 169 240 106 140 60 30 Extraordinary loss...... -- -- -- -- -- -- 2,816 -------- -------- -------- -------- -------- -------- -------- Net income (loss)....... $ (4,659) $ (3,899) $ (3,117) $ 939 $ 1,859 $ (443) $(17,664) ======== ======== ======== ======== ======== ======== ======== OTHER DATA: Gross customer collections.......... $352,466 $389,556 $408,952 $430,696 $476,183 $108,474 $128,591 Capital expenditures.... 1,577 2,002 2,782 2,552 2,357 257 1,600 Net cash provided by (used in): Operating activities......... 3,062 3,403 4,340 2,042 931 (4,216) (5,017) Investing activities......... (3,013) (4,647) (4,917) (3,349) (3,592) (658) (72,869) Financing activities......... (98) 1,068 1,107 1,288 3,451 6,304 135,044 Ratio of earnings to fixed charges(1)..... N/A N/A N/A 1.3x 1.5x N/A N/A Number of managed locations............ 173 197 227 207 318 217 813 Number of leased locations............ 232 223 260 243 252 240 303 Number of total locations............ 405 420 487 450 570 457 1,116 Number of parking spaces............... 268,000 235,000 226,000 225,000 273,000 243,000 595,000
34 37
THREE MONTHS YEAR ENDED DECEMBER 31, ENDED MARCH 31, ---------------------------------------------------- ------------------- 1993 1994 1995 1996 1997 1997 1998 BALANCE SHEET DATA (AT END OF PERIOD): Cash and cash equivalents.......... $ 2,197 $ 2,021 $ 2,551 $ 2,532 $ 3,322 $ 3,962 $ 60,480 Working capital (deficiency)......... (24,065) (20,795) (20,990) (19,455) (17,059) (13,626) 27,691 Total assets............ 52,788 51,544 51,605 52,823 59,095 56,101 213,510 Total debt.............. 24,829 27,700 30,461 32,795 38,283 39,099 150,123 Redeemable preferred stock................ 6,000 6,330 7,045 7,841 8,728 7,842 40,683 Common stock subject to put/call rights...... -- -- -- -- -- -- 4,589 Stockholders' equity (deficit)............ (14,137) (19,542) (23,374) (23,231) (22,259) (23,490) (45,706)
(1) For purposes of computing this ratio, earnings consist of income before income taxes, minority interest and extraordinary item plus fixed charges. Fixed charges consist of interest expense, amortization of deferred financing costs and one-third of the rent expense from operating leases, which management believes is a reasonable approximation of the interest factor of the rent. For the years ended December 31, 1993, 1994 and 1995, and the three months ended March 31, 1997 and 1998, earnings were inadequate to cover fixed charges by $4,037, $2,880, $2,273, $345 and $14,675, respectively. 35 38 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF APCOA The following discussion of APCOA's results of operations should be read in conjunction with the consolidated financial statements of APCOA and the notes thereto included elsewhere herein. OVERVIEW APCOA operates facilities under two types of arrangements: management contracts and leases. APCOA does not own any parking facilities and, as a result, APCOA assumes few of the risks of real estate ownership. Under a management contract, APCOA typically receives a base monthly fee for managing the property, and may also receive an incentive fee based on the achievement of facility revenues above a base amount. In some instances, APCOA 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. Under lease arrangements, APCOA generally pays to the property owner either a fixed annual rental, a percentage of gross customer collections or a combination thereof. APCOA 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, 1998, the Company (giving effect to the Combination and the Other Acquisitions) operated approximately 73% of its approximately 1,100 parking facilities under management contracts and approximately 27% 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--leases. Lease parking services revenues consist of all revenues received at a leased facility. Parking services revenue--management contracts. Management contract revenues consist of management fees, including both fixed and revenue-based, and fees for ancillary services such as accounting, equipment leasing, consulting, and other value-added services with respect to managed locations, but exclude gross customer collections at such locations. Management contracts generally provide APCOA a management fee regardless of the operating performance of the underlying facility. Cost of parking services--leases. Cost of parking services under lease arrangements consist of (i) contractual rental fees paid to the facility owner and (ii) 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 is not responsible for major capital expenditures or property taxes. Cost of parking services--management contracts. Cost of parking services under management contracts are generally passed through to the facility owner. Most management contracts have no cost of parking services related to them as all costs are reimbursable to APCOA by the client. Several APCOA contracts, however, require APCOA to pay for certain costs which are offset by larger management fees. These contracts tend to be large airport properties with high cost structures. General and administrative expenses. General and administrative expenses include primarily salaries, wages, travel and office related expenses for the headquarters and field employees. SUMMARY OF OPERATING FACILITIES Pursuant to the terms of the Combination Agreement, APCOA paid to the Standard Owners $65.0 million in cash and 16.0% of the Company Common Stock outstanding as of January 15, 1998. In addition to the Combination, the Company completed six acquisitions since January 1, 1997, as follows: (i) Colonial Richmond (March 1, 1997); (ii) Metropolitan Parking (June 1, 1997); (iii) the remaining 50% interest in APCOA Parking Management & Development, Ltd. (November 1, 1997); (iv) Dixie Parking (January 22, 1998); (v) S&S Parking (the remaining 76% interest in EPI) (May 1, 1998); and (vi) Century Parking and 36 39 Sentry Parking (June 1, 1998) (the "Other Acquisitions"). The Other Acquisitions, excluding Century Parking and Sentry Parking, contributed 233 additional parking locations as of March 31, 1998. The following table reflects the Company's facilities at the end of the periods indicated taking into consideration the Combination and the Other Acquisitions, on a pro forma basis:
THREE MONTHS FISCAL YEAR ENDED MARCH 31, --------------------- ---------------- 1995 1996 1997 1997 1998 Managed facilities: APCOA..................................... 227 207 263 217 262 Standard.................................. 233 295 344 303 364 Other Acquisitions........................ N/A N/A 187 31 187 --- --- ----- --- ----- Combined............................... 460 502 794 551 813 Leased facilities: APCOA..................................... 260 243 227 240 224 Standard.................................. 32 32 35 30 33 Other Acquisitions........................ N/A N/A 46 22 46 --- --- ----- --- ----- Combined............................... 292 275 308 292 303 --- --- ----- --- ----- Total facilities............................ 752 777 1,102 843 1,116 === === ===== === ===== Contract retention rate..................... 96% 96% 96% N/A N/A
RESULTS OF OPERATIONS APCOA has made a strategic decision to pursue management contracts primarily because its target client base generally prefers such arrangements and, therefore, management believes that there are greater growth opportunities in this area. In analyzing gross margins of APCOA, it should be noted that the cost of parking services in connection with the provision of management services is generally paid by the clients. Margins for lease arrangements are significantly impacted by variables other than operating performance, such as the ability to charge higher parking rates in different cities and widely varying space utilization by parking facility type. The following table sets forth, for the periods indicated, APCOA's results of operations expressed in thousands of dollars:
THREE MONTHS FISCAL YEAR ENDED MARCH 31, -------------------------------- -------------------- 1995 1996 1997 1997 1998 Gross customer collections............... $408,952 $430,696 $476,183 $108,474 $128,591 ======== ======== ======== ======== ======== Parking services revenue: Lease contracts........... $128,745 $120,286 $ 99,594 $ 23,371 $ 24,663 Management contracts...... 12,795 15,466 16,082 3,648 4,141 -------- -------- -------- -------- -------- 141,540 135,752 115,676 27,019 28,804 Cost of parking services: Lease contracts........... 113,337 104,718 83,327 20,158 21,315 Management contracts...... 6,878 8,783 9,491 2,389 2,261 -------- -------- -------- -------- -------- 120,215 113,501 92,818 22,547 23,576
37 40
THREE MONTHS FISCAL YEAR ENDED MARCH 31, -------------------------------- -------------------- 1995 1996 1997 1997 1998 General and administrative expenses.................. $ 12,121 $ 13,017 $ 13,528 $ 2,940 $ 3,460 Restructuring charge........ -- -- -- -- 14,500 Depreciation and amortization.............. 8,772 4,888 3,767 1,110 1,055 -------- -------- -------- -------- -------- Operating income (loss)..... 432 4,346 5,563 422 (13,787) Interest expense, net....... 2,705 2,877 3,243 767 888 Minority interest........... 604 424 321 38 143 Income tax expense.......... 240 106 140 60 30 Extraordinary loss.......... -- -- -- -- 2,816 -------- -------- -------- -------- -------- Net income (loss)........... $ (3,117) $ 939 $ 1,859 $ (443) $(17,664) ======== ======== ======== ======== ========
FIRST QUARTER 1998 COMPARED TO FIRST QUARTER 1997 Gross customer collections. Gross customer collections increased $20.1 million, or 18.5%, to $128.6 million in the first quarter of 1998 compared to $108.5 in the first quarter of 1997. This increase is attributable to the net addition of 14 management contracts plus the acquisition of 55 managed locations and 25 leased locations during the period. Parking services revenue -- leases. Lease revenue increased $1.3 million, or 5.5%, to $24.7 million during the first quarter of 1998 as compared to $23.4 million in the first quarter of 1997. This increase was driven by core business growth of $2.2 million and revenue from acquisitions of $0.4 million, offset somewhat by the impact of the loss of a large airport lease in January 1997 that had revenue of $1.3 million in the first quarter of 1997. Parking services revenue -- management contracts. Management contract revenue increased $0.5 million, or 13.5%, to $4.1 million in the first quarter of 1998 as compared to $3.6 million in the first quarter of 1997. This increase resulted from improvement in management fees at existing locations of $0.3 million, and the impact of management contracts added through acquisitions of $0.2 million. Cost of parking services -- leases. Cost of parking for leases increased $1.1 million, or 5.7%, to $21.3 million in the first quarter of 1998 from $20.2 million in the first quarter of 1997. This increase resulted from increases in costs at existing locations of $2.3 million and costs associated with acquired leases of $0.3 million offset by expenses at an airport that was lost in 1997 of $1.4 million. Gross margin for leases remained relatively flat for the first quarter of 1998 at 13.6% of lease revenue compared to 13.7% for the first quarter of 1997. Cost of parking services -- management contracts. Cost of parking for management contracts decreased by $0.1 million, or 5.4%, to $2.3 million in the first quarter of 1998 from $2.4 million in the first quarter of 1997. This improvement resulted from $0.2 million of cost reductions at existing accounts offset by $0.1 million of additional costs for acquired management contracts. Gross margin for management contracts improved to 45.4% in the first quarter of 1998 compared to 34.5% for the first quarter of 1997. This improvement resulted from the relative mix of locations that were added compared to those already in the contract portfolio. Management contracts added to the contract portfolio relating to new locations do not carry any cost of parking services because all of such costs are paid by the client while some of the older management contracts in the contract portfolio do carry costs of parking services. The addition of management contracts relating to new locations dilutes the impact of the costs borne by the Company in respect of older management contracts and thereby improves gross margin as a percent of management contract revenue. General and administrative expenses. General and administrative costs increased $0.6 million, or 17.7%, to $3.5 million for the first quarter of 1998 as compared to $2.9 million for the first quarter of 1997. This increase resulted primarily from inflation and increases in field administrative costs associated with the acquisitions made in 1997. 38 41 Restructuring charge. APCOA recorded a $14.5 million restructuring charge in the first quarter of 1998 which was based upon a thorough analysis of the costs associated with implementing the planned consolidation of the Company's headquarters in Chicago and the costs related to APCOA staff reductions. The charge included $5.8 million of severance costs, $5.0 million of relocation costs, the write-off of $2.4 million of assets that will no longer be used in the business, and $1.3 million in other restructuring costs. Other income and expenses. Net interest expense for the first quarter of 1998 increased $0.1 million to $0.9 million from $0.8 million in the first quarter of 1997. During the first quarter of 1998, the Company recorded an extraordinary loss of $2.8 million which was comprised of $2.1 million from a prepayment penalty for early extinguishment of debt and $0.7 million from a write-off of the unamortized balance of deferred financing costs associated with the extinguished debt. Minority interest expense for the first quarter of 1998 totaled $0.1 million. FISCAL 1997 COMPARED TO FISCAL 1996 Gross customer collections. Gross customer collections increased $45.5 million, or 10.6%, to $476.2 million in fiscal 1997 from $430.7 million in fiscal 1996. This increase resulted primarily from the net addition of 120 leased and managed locations, as well as a combination of rate increases and higher utilization of parking spaces at existing facilities. Parking services revenue--leases. Lease revenue decreased $20.7 million, or 17.2%, to $99.6 million in fiscal 1997 from $120.3 million in fiscal 1996. This decrease resulted from the loss of an airport lease ($31.7 million) partially offset by improvements at other lease facilities ($6.9 million) and new leases acquired in connection with the Other Acquisitions ($4.1 million). Parking services revenue--management contracts. Management contract revenue increased $0.6 million, or 4.0%, to $16.1 million in fiscal 1997 from $15.5 million in fiscal 1996. This increase resulted primarily from increased revenues at existing facilities ($0.4 million) and new contracts acquired in connection with the Other Acquisitions ($1.1 million), offset by APCOA's Los Angeles facilities that were contributed to EPI ($0.9 million). Cost of parking services--leases. Cost of parking for leases decreased $21.4 million, or 20.4%, to $83.3 million in fiscal 1997 from $104.7 million in fiscal 1996. The reduction in cost of parking services leases was due to the loss of a large airport lease ($31.2 million) partially offset by increases in costs at existing lease locations ($6.6 million) and new leases acquired in connection with the Other Acquisitions ($3.8 million). Gross margin for leases improved to 16.3% of lease revenue in 1997 from 12.9% in 1996. This improvement in gross margin resulted from the termination of a large airport lease with a low gross margin. Cost of parking services--management contracts. Cost of parking for management contracts increased $0.7 million, or 8.1%, to $9.5 million in fiscal 1997 from $8.8 million in fiscal 1996. Most management contracts have no cost of parking services related to them as all costs are reimbursable to APCOA. However, several contracts (primarily large airport properties), require APCOA to pay for certain costs which are offset by larger management fees. The increase in cost of parking for management contracts was related to growth at two airport facilities ($0.8 million), costs related to new management contracts and the acquisition of Metropolitan in June 1997 ($0.4 million), offset by APCOA's Los Angeles facilities that were contributed to EPI ($0.5 million). Gross margin for management contracts declined to 41.0% of management contract revenue in 1997 from 43.2% in 1996. This decline resulted from the addition of a location in 1997 that had a small loss in its initial contract year. General and administrative expenses. General and administrative expenses increased $0.5 million, or 3.9%, to $13.5 million in fiscal 1997 from $13.0 million in fiscal 1996. This increase was primarily a result of inflation. Depreciation and amortization expense. Depreciation and amortization expense decreased $1.1 million, or 22.9%, to $3.8 million in fiscal 1997 from $4.9 million in fiscal 1996. This decrease resulted primarily from 39 42 the declining balance of the leasehold contracts which were amortized over seven years. The leasehold contracts were recorded in 1989 at their fair value in connection with the acquisition of APCOA by Holberg. Other income and expenses. Net interest expense for 1997 increased $0.3 million, or 12.7%, to $3.2 million from $2.9 million in 1996. The increase was due to an increased level of indebtedness resulting from the incurrence of debt to fund working capital needs and acquisitions that occurred in 1997. Minority interest expense for 1997 declined by $0.1 million to $0.3 million compared to $0.4 million in 1996. Income taxes were $0.1 million in both 1997 and 1996. FISCAL 1996 COMPARED TO FISCAL 1995 Gross customer collections. Gross customer collections increased $21.7 million, or 5.3%, to $430.7 million in fiscal 1996 from $409.0 million in fiscal 1995. This increase resulted primarily from a combination of rate increases and higher utilization of parking spaces at existing facilities. Parking services revenue--leases. Lease revenue decreased $8.4 million, or 6.6%, to $120.3 million in fiscal 1996 from $128.7 million in fiscal 1995. This decrease resulted from a strategic shift from leases to management contracts, particularly the conversion of one large airport lease ($10.7 million). This decrease was partially offset by growth in existing revenues at other locations ($2.3 million). Parking services revenue--management contracts. Management contract revenue increased $2.7 million, or 20.9%, to $15.5 million in fiscal 1996 from $12.8 million in fiscal 1995. This increase resulted from the conversion of one large lease to a management contract ($0.2 million), significant growth at two large airports ($1.4 million) and the increased revenues at existing facilities primarily as a result of rate increases ($1.1 million). Cost of parking services--leases. Cost of parking for leases decreased $8.6 million, or 7.6%, to $104.7 million in fiscal 1996 from $113.3 million in fiscal 1995. The reduction in cost of parking services for leases is primarily related to the conversion of one airport lease to a management contract ($10.4 million). Gross margin for leases improved to 12.9% of lease revenue in 1996 from 12.0% in 1995 due to an improvement in the average profit per contract and growth in the number of urban contracts which generally earn a higher margin than airport leases. Cost of parking services--management contracts. Cost of parking for management contracts increased $1.9 million, or 27.7%, to $8.8 million in fiscal 1996 from $6.9 million in fiscal 1995. The increase in cost of parking services for management contracts reflects the significant growth at two airport facilities ($0.9 million), and additional costs at other management accounts ($1.0 million). Gross margin for management contracts declined to 43.2% of management contract revenue in 1996 from 46.2% in 1995. This change resulted from the addition of an airport shuttle contract under which APCOA is obligated to pay payroll expenses out of its management fee, thereby reducing the gross margin of the contract. General and administrative expenses. General and administrative expenses increased $0.9 million, or 7.4%, to $13.0 million in fiscal 1996 from $12.1 million in fiscal 1995. This increase was primarily a result of additions to the airport administrative staff designed to stimulate growth in that segment. Depreciation and amortization. Depreciation and amortization expenses decreased $3.9 million, or 44.3%, to $4.9 million in fiscal 1996 from $8.8 million in fiscal 1995. This decrease resulted primarily from the declining balance of the leasehold contracts which were amortized over seven years. The leasehold contracts were recorded in 1989 at their fair value in connection with the acquisition of APCOA by Holberg. Other income and expenses. Net interest expense for 1996 increased $0.2 million, or 6.4%, to $2.9 million from $2.7 million in 1995. The increase resulted from minor fluctuations in interest rates during the period. Minority interest expense for 1996 decreased $0.2 million to $0.4 million from $0.6 million in 1995. Income taxes declined to $0.1 million in 1996 from $0.2 million in 1995. 40 43 HISTORICAL LIQUIDITY AND CAPITAL RESOURCES As a result of day-to-day activity at the parking locations, APCOA collects significant amounts of cash. Under lease contracts, this revenue is deposited into APCOA's bank account, 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 to deposit the daily receipts into an APCOA bank account while others require the deposit into a client account. The locations with revenues deposited into the APCOA banks result in the Company operating with a negative working capital. This negative working capital arises from the liability that is created for the amount of revenue that will be remitted to the clients in the form of rents or net profit distributions subsequent to month end, after the books are closed and reconciled. Since the Company operates with a revolving working capital facility, all funds held for future remittance to the clients are used to reduce the line until the payments are made to the clients. The Company had $27.7 million of working capital at March 31, 1998 as compared to $13.6 million of negative working capital at March 31, 1997. This significant increase resulted primarily from an increase in the cash balance to $60.5 million at March 31, 1998, from $4.0 million at March 31, 1997, resulting from the retention of excess cash from a cash contribution from the parent of the Company and the proceeds of the debt offering consummated by the Company in March 1998, partially offset by an increase in accrued liabilities as a result of the restructuring charge of $14.5 million recorded in March 1998 and other purchase accounting reserves that were recorded in March 1998. The majority of the balance in these accruals will be disbursed during the remainder of 1998. Net cash used in operating activities totaled $5.0 million for the first quarter of 1998 compared to $4.2 million for the first quarter of 1997. This increase in cash used resulted from a $2.1 million prepayment penalty for early extinguishment of debt offset by improved operating profit. Cash used in investing activities totaled $72.9 million in the first quarter of 1998 compared to $0.7 million in the same period in 1997. The change was a result of the acquisition of Standard and Dixie Parking by APCOA in the first quarter of 1998. In addition, APCOA expended $1.6 million in capital purchases in the first quarter of 1998 compared to $0.3 million in the first quarter of 1997. This increase related to the acquisition of a leasehold in March 1998. Cash from financing activities totaled $135.0 million in the first quarter of 1998 compared to $6.3 million for the same quarter in 1997. The financing activities in the first quarter of 1998 included $148.9 million of proceeds from the issuance of debt, $40.7 million of proceeds from the issuance of preferred stock, $40.7 million in debt repayments and $8.0 million for the redemption of preferred stock. These transactions were completed in conjunction with the combination with Standard. Cash from financing activities for the first quarter of 1997 included primarily an increase in the working capital revolver due to seasonal working capital swings. APCOA had $17.1 million of negative working capital at December 31, 1997 as compared to $19.5 million at December 31, 1996. The reduction in negative working capital in fiscal 1997 resulted primarily from an increase in cash and accounts receivable attributable to the addition of management contracts during the year. This is partially offset by the increase in current portion of long-term debt which totaled $4.1 million at December 31, 1997 and $0.7 million at December 31, 1996. Net cash provided by operating activities totaled $0.9 million for fiscal 1997 and $2.0 million for fiscal 1996. The reduction of $1.1 million resulted from working capital uses primarily related to adding new management contracts and reductions in accrued rent and insurance reserves. The new management contracts were concentrated in the type that require the Company to deposit the receipts into the client's account. The reductions in accrued rent were primarily a result of a location that was lost in a competitive bid. Insurance reserves declined due to a concerted effort to close out old claims. Cash used in investing activities totaled $3.6 million in 1997 and $3.3 million in 1996. The primary use is for capital expenditures which are used to extend lease contracts, obtain new contracts and for management information system equipment and upgrades. The Company has historically expended about $2.0 million annually on capital expenditures at parking properties. These expenditures are generally used to acquire 41 44 parking equipment, booths, or install paving or fencing. The average expenditure is $50,000 to $60,000 per project. In addition, the Company spends approximately $250,000 to $500,000 per year on management information system upgrades. Cash from financing activities totaled $3.5 million in 1997 up from $1.3 million in 1996. The primary reason for the increase was the acquisition of three small parking companies in 1997 that were funded partially with promissory notes issued by APCOA to the sellers in these transactions. APCOA had $19.5 million of negative working capital at December 31, 1996 as compared to $21.0 million at December 31, 1995. The change resulted from a small decline in accounts payable and accrued insurance. Net cash provided by operating activities totaled $2.0 million for 1996 compared to $4.3 million for 1995. This reduction resulted primarily from changes in working capital including a decrease in accounts payable of $2.9 million. Cash used in investing activities totaled $3.3 million in 1996 compared to $4.9 million in 1995. The reduction in spending resulted from lower capital expenditures during 1996. Cash provided by financing activities totaled $1.3 million in 1996 compared to $1.1 million in 1995. During 1996, APCOA refinanced its revolver with a new bank. PRO FORMA LIQUIDITY AND CAPITAL RESOURCES In connection with the Offering, the Company has $54.1 million of additional cash on its balance sheet as of March 31, 1998. The Company anticipates using this cash to finance working capital needs, as well as for future acquisitions. The Company has lease commitments of $51.4 million for fiscal 1998. The leased properties generate sufficient cash flow to meet the base rent payments. In addition, following the Combination, APCOA paid to the Standard Owners $2.8 million, generally representing Standard's earnings through the date of the Combination and Standard's cash on hand at such time. See "The Transactions--The Combination." The pro forma results of operations for the first quarter of 1998, assuming the Transactions had occurred as of January 1, 1998, include $37.9 million in lease parking services revenues, $6.9 million in management contract revenues, $33.0 million in cost of parking services under lease arrangements, $2.6 million in cost of parking services under management contracts and $5.1 million in general and administrative expenses. In addition, the pro forma statement of operations for the first quarter of 1998 reflects a $14.5 million restructuring charge, depreciation and amortization of $1.9 million and $3.7 million of interest expense. Pro forma results of operations for 1997, assuming the Transactions had occurred as of January 1, 1997, include $159.8 million in lease parking services revenues, $26.3 million in management contract revenues, $136.7 million in cost of parking services under lease arrangements, $9.5 million in cost of parking services under management contracts and $20.0 million in general and administrative expenses. In addition, the pro forma statement of operations for 1997 reflects $7.5 million of depreciation and amortization and $15.0 million of interest expense. The Company entered into the New Credit Facility for $40.0 million of secured revolving credit. Borrowings under the New Credit Facility will bear interest at variable rates based, at the Company's option, either on LIBOR, overnight federal funds rate, or the bank's base rate. The New Credit Facility contains certain covenants with which the Company must comply, including restrictions on debt limits relative to EBITDA, capital expenditures, and other customary requirements. The Company's primary capital requirements are for working capital, capital expenditures and debt service. In addition, the Company will be relocating its headquarters offices to Michigan Avenue in Chicago, Illinois in the fall of 1998. It is expected that the costs to improve the space for the new office will approximate $3.5 million which will be capitalized as expended. The Company believes that cash flow from operating activities, cash and cash equivalents and borrowings under the New Credit Facility will be adequate to meet 42 45 the Company's short-term and long-term liquidity requirements prior to the maturity of its long-term indebtedness, although no assurance can be provided in this regard. If the Company identifies investment opportunities requiring cash in excess of the Company's cash flows and the net proceeds from the Offering, the Company may borrow under the New Credit Facility, or may seek additional sources of capital including the sale or issuance of Company Common Stock. The Company has in the past and expects in the future to pursue a strategy of growth through acquisition. Effective as of June 1, 1998, the Company completed the acquisition of Century Parking and Sentry Parking for consideration consisting of $5.2 million in cash at closing and $1.0 million payable on the third anniversary of the closing date. The results of operations of Century Parking and Sentry Parking prior to acquisition were not material to the Company. The Company is currently in negotiations with respect to several possible acquisitions, none of which are "probable" as of the date hereof. There can be no assurance as to the Company's ability to effect future acquisitions, nor as to the effect of any such acquisition on the Company's operations, financial condition and profitability. On a pro forma basis, the Company would have had total indebtedness of $150.2 million as of March 31, 1998. The degree to which the Company is now leveraged and will continue to be leveraged following the Offering could have important consequences to holders of the New Notes, including, but not limited to, the following: (i) approximately $13.0 million of the Company's annual cash flow from operations will be required to service interest on the New Notes and will not be available for other purposes; (ii) the Company's ability to obtain additional financing in the future could be limited and (iii) the Indenture and the New Credit Facility contain financial and restrictive covenants that limit the ability of the Company to, among other things, borrow additional funds, dispose of assets or pay cash dividends. Failure by the Company to comply with such covenants could result in an event of default, which, if not cured or waived, could have a material adverse effect on the Company. IMPACT OF INFLATION AND CHANGING PRICES The primary sources of revenues to APCOA are parking revenues from leased locations and management contract revenue on managed parking facilities. APCOA believes that inflation has had a limited impact on its overall operations for fiscal years 1995, 1996 and 1997. YEAR 2000 The Company has tested its computer systems and applications for compliance with Year 2000 issues and believes that its computer systems and applications are Year 2000 compliant and that Year 2000 issues will not have a significant impact on its operations or liquidity. 43 46 SELECTED HISTORICAL FINANCIAL DATA OF STANDARD (DOLLARS IN THOUSANDS) The following table presents selected historical financial data of Standard at and for the fiscal years 1993, 1994, 1995, 1996 and 1997. The selected historical financial data of Standard at and for the fiscal years 1994, 1995, 1996 and 1997 have been derived from the audited financial statements of Standard, audited by Altschuler, Melvoin and Glasser LLP. The selected historical financial data of Standard at and for the fiscal year 1993 have been derived from the unaudited financial statements of Standard. The selected financial data set forth below should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations of Standard" and the historical consolidated financial statements of Standard and the notes thereto included elsewhere herein.
YEAR ENDED DECEMBER 31, -------------------------------------------------------- 1993 1994 1995 1996 1997 INCOME STATEMENT DATA: Parking services revenue.......... $ 21,537 $ 35,787 $ 45,201 $ 50,275 $ 63,652 Cost of parking services.......... 12,213 25,901 35,168 37,838 50,142 General and administrative expenses....................... 9,074 6,095 6,798 7,547 7,857 Depreciation and amortization..... 119 184 316 376 464 -------- -------- -------- -------- -------- Operating income.................. 131 3,607 2,919 4,514 5,189 Interest income, net.............. 16 9 59 56 85 -------- -------- -------- -------- -------- Net income........................ $ 147 $ 3,616 $ 2,978 $ 4,570 $ 5,274 ======== ======== ======== ======== ======== OTHER DATA: Gross customer collections........ $217,734 $250,081 $339,234 $412,114 $462,261 Capital expenditures.............. 196 306 547 336 492 Ratio of earnings to fixed charges(1)..................... 2.9x 41.6x 26.9x 35.9x 41.6x Number of managed locations....... 177 186 233 295 344 Number of leased locations........ 18 23 32 32 35 Number of total locations......... 195 209 265 327 379 Number of parking spaces.......... 155,000 174,000 192,000 235,000 249,000 BALANCE SHEET DATA (AT END OF PERIOD): Cash and cash equivalents......... $ 838 $ 2,774 $ 1,248 $ 2,968 $ 2,478 Working capital................... 2,305 2,615 1,697 3,453 3,449 Total assets...................... 5,642 6,672 6,956 9,130 10,176 Total debt........................ -- 248 529 470 590 Equity............................ 2,516 3,894 3,400 4,912 5,016
- ------------------------------ (1) For purposes of computing this ratio, earnings consist of net income plus fixed charges. Fixed charges consist of interest expense, amortization of deferred financing costs and one-third of the rent expense from operating leases, which management believes is a reasonable approximation of the interest factor of the rent. 44 47 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF STANDARD The following discussion of Standard's results of operations should be read in conjunction with the Standard Consolidated Financial Statements and Notes thereto. OVERVIEW For a general discussion of parking revenues, costs and expenses, see "Management's Discussion and Analysis of Financial Condition and Results of Operations of APCOA--Overview." As of December 31, 1997, Standard operated 344 facilities under management contracts and 35 facilities pursuant to leases. A summary of Standard's facilities is as follows:
FISCAL YEAR -------------------------------- 1995 1996 1997 Managed facilities......................................... 233 295 344 Leased facilities.......................................... 32 32 35 --- --- --- Total facilities (end of period)........................... 265 327 379 Contract retention rate.................................... 97% 97% 96%
RESULTS OF OPERATIONS The following table sets forth, for the periods indicated, Standard's results of operations expressed in thousands of dollars:
FISCAL YEAR -------------------------------- 1995 1996 1997 Gross customer collections................................. $339,234 $412,114 $462,261 ======== ======== ======== Parking services revenue: Leases................................................... $ 38,418 $ 41,770 $ 54,801 Management contracts..................................... 6,783 8,505 8,851 -------- -------- -------- 45,201 50,275 63,652 Cost of parking services: Leases................................................... 35,168 37,838 50,142 Management contracts..................................... -- -- -- -------- -------- -------- 35,168 37,838 50,142 General and administrative expenses........................ 6,798 7,547 7,857 Depreciation and amortization.............................. 316 376 464 -------- -------- -------- Operating income........................................... 2,919 4,514 5,189 Interest income, net....................................... 59 56 85 -------- -------- -------- Net income................................................. $ 2,978 $ 4,570 $ 5,274 ======== ======== ========
Standard does not incur any net expenses in providing services for management contracts. The facility owner pays all of the property-level expenses. Thus, Standard is fully reimbursed for any and all costs that it incurs in providing its management contract services. Such reimbursements include (but are not limited to) all payroll and related expenses for all supervisory, bookkeeping and accounting personnel performing services at the managed locations. FISCAL 1997 COMPARED TO FISCAL 1996 Gross customer collections. Gross customer collections increased $50.2 million, or 12.2%, to $462.3 million in fiscal 1997 from $412.1 million in fiscal 1996. This increase resulted primarily from the net addition of 45 48 52 leased and managed locations as well as from a combination of rate increases and higher utilization of parking spaces at existing facilities. Parking services revenue--leases. Lease revenue increased $13.0 million, or 31.1%, to $54.8 million in fiscal 1997 compared to $41.8 million in fiscal 1996. This increase resulted from the net addition of two large leased properties. Parking services revenue--management contracts. Revenue at managed locations increased $0.4 million, or 4.1%, to $8.9 million in fiscal 1997 from $8.5 million in fiscal 1996. This increase resulted from the net addition of 49 managed locations. Cost of parking services. Cost of parking services increased $12.3 million, or 32.5%, to $50.1 million in fiscal 1997 from $37.8 million in fiscal 1996. This increase resulted from a net addition of two large leased properties. There are no cost of parking services for management contracts because all such costs are reimbursed by the parking facility owner. General and administrative expenses. General and administrative expenses increased $0.4 million, or 4.1%, to $7.9 million in fiscal 1997 from $7.5 million in fiscal 1996. This modest increase was primarily due to an increase in employee compensation. Depreciation and amortization expenses. Depreciation and amortization expenses were $0.5 million in fiscal 1997 and $0.4 in fiscal 1996. Interest income, net. Interest income, net of interest expense, was $0.1 million in fiscal 1997 and fiscal 1996. FISCAL 1996 COMPARED TO FISCAL 1995 Gross customer collections. Gross customer collections increased $72.9 million, or 21.5%, to $412.1 million in fiscal 1996 from $339.2 million in fiscal 1995. This increase resulted primarily from the net addition of 62 leased and managed locations as well as from a combination of rate increases and higher utilization of parking spaces at existing facilities. Parking services revenue--leases. Lease revenue increased $3.4 million, or 8.7%, to $41.8 million in fiscal 1996 from $38.4 in fiscal 1995. This increase resulted from rate increases and increased volume. Parking services revenue--management contracts. Management contract revenue increased $1.7 million, or 25.4%, to $8.5 million in fiscal 1996 from $6.8 million in fiscal 1995. This increase resulted from the net addition of 62 managed locations. Cost of parking services. Cost of parking services increased $2.6 million, or 7.6%, to $37.8 million in fiscal 1996 from $35.2 million in fiscal 1995. This increase was due to increased volume. General and administrative expenses. General and administrative expenses increased $0.7 million, or 11.0%, to $7.5 million in fiscal 1996 from $6.8 million in fiscal 1995. This increase was primarily a result of increased compensation of key employees. Depreciation and amortization expenses. Depreciation and amortization expenses increased $0.1 million, or 19.0%, to $0.4 million in fiscal 1996 from $0.3 million in fiscal 1995. This increase resulted primarily from the headquarters office relocation late in 1995. Interest income, net. Interest income, net of interest expense, was $0.1 million in fiscal 1996 and fiscal 1995. LIQUIDITY AND CAPITAL RESOURCES During fiscal 1997, Standard generated cash flows from operating activities of $5.1 million compared to $5.3 million in fiscal 1996. This decrease in cash flow from operating activities resulted primarily from net changes in the components of working capital. 46 49 Net cash used in investing activities was $0.5 million for the years ended December 31, 1997 and December 31, 1996. The primary use of these funds was the acquisition of capital assets. Net cash used by financing activities was $5.0 million for the year ended December 31, 1997 and $3.1 million for the year ended December 31, 1996. The primary use of these funds was distributions to partners. During fiscal 1996, Standard generated cash flows from operating activities of $5.3 million compared to $2.8 million in fiscal 1995. This increase in cash flow from operating activities resulted primarily from an increase in net income and net changes in the components of working capital. Net cash used in investing activities was $0.5 million for the year ended December 31, 1996 and $1.3 million for the year ended December 31, 1995. This decrease in net cash used in investing activities was primarily due to the purchase of 19 management contracts in fiscal 1995. Net cash used by financing activities was $3.1 million for the years ended December 31, 1996 and December 31, 1995. The primary use of these funds was distributions to partners. Standard has lease commitments of $23.3 million for fiscal 1998. The lease commitments are in the form of a fixed base rent with the majority of leases on a year-to-year renewal. The leased properties generate sufficient cash flow in order to meet the base rent payments. YEAR 2000 Standard has considered the impact of Year 2000 issues on its computer systems and applications and believes the impact of the Year 2000 will not have a significant impact on its operations or liquidity. As part of the Combination, Standard will convert to the APCOA computer system which has been tested to comply with Year 2000 issues. 47 50 BUSINESS GENERAL The Company is a leading national provider of parking facility management services. The Company provides on-site management services at multi-level and surface parking facilities in the two major markets of the parking industry: urban parking and airport parking. Following consummation of the Combination, the Company manages approximately 1,100 parking facilities, containing approximately 580,000 parking spaces in over 45 cities across the United States and Canada. The Company's pro forma gross customer collections, pro forma parking services revenue, pro forma EBITDA and pro forma net loss for the year ended December 31, 1997 were $948.6 million, $186.1 million, $19.9 million and $2.8 million, respectively. The Company believes that its superior management services coupled with its focus on increasing market share in select core cities leads to higher profitability per parking facility than its competitors. The Company believes that it enhances its leading position by providing: (i) Ambiance in Parking(C), an approach to parking that includes a number of premium, on-site, value-added services and amenities; (ii) state-of-the-art information technology, including Client View(C), a proprietary client reporting system which allows the Company to provide clients with real-time access to site-level financial and operating information; and (iii) award-winning training programs for on-site employees that promote customer service and client retention. In addition, the Company believes that it distinguishes itself from its competitors because of its ability to leverage its long-standing experience in securing contracts, particularly with regard to the airport parking market. The Company's diversified client base includes some of the nation's largest owners and developers of major office building complexes, shopping centers, sports complexes, hotels and hospitals. In addition, the Company manages parking operations at many of the major airports in North America. In the urban parking market, the Company's clients include CB Commercial Real Estate Group, Equity Office Properties, the Taubman Company, Harvard Medical School, Northwestern University, Children's Memorial Medical Center in Chicago and Cedars Sinai Medical Center in Los Angeles. Parking facilities managed by the Company include the CNN Center in Atlanta, the Kennedy Center for the Performing Arts in Washington, D.C. and the Gateway Sports Complex in Cleveland. In the airport parking market, the Company's clients include Chicago O'Hare International and Chicago Midway, Cleveland-Hopkins International, Minneapolis-St. Paul International and Detroit Metropolitan airports. The Company operates its clients' parking properties through two types of arrangements: management contracts and leases. The Company does not own any parking facilities and, as a result, the Company assumes fewer of the risks of real estate ownership. Under a management contract, the Company typically receives a base monthly fee for managing the property, and may also receive an incentive fee based on the achievement of facility revenues above a base amount. In some instances, the Company also receives certain fees for ancillary services. Typically, all of the underlying revenues and expenses under a management contract flow through to the property owner, not to the Company. Under lease arrangements, the Company generally pays either a fixed annual rental, a percentage of gross customer collections, or a combination thereof to the property owner. The Company 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, 1998, the Company operated approximately 73% of its approximately 1,100 parking facilities under management contracts and approximately 27% under leases. Renewal rates for the Company's management contracts and leases were approximately 96% for each of the last three years. INDUSTRY OVERVIEW General. The International Parking Institute, a trade organization of parking professionals, estimates that there are 35,000 parking facilities in the United States generating over $26.0 billion in gross customer collections. The parking industry is highly fragmented, with over 1,700 commercial parking operators in the United States, as estimated by the Parking Market Research Company, an independent research company. Industry participants, the vast majority of which are privately-held companies, consist of a relatively few 48 51 nationwide companies and a large number of small regional or local operators, including a substantial number of companies providing parking as an ancillary service in connection with property management or ownership. Clients of parking facility managers include the owners of office buildings, major airports, shopping centers, sports complexes, hotels and hospitals, which provide parking to customers. Operating Arrangements. Parking facilities operate under three general types of arrangements: management contracts, leases and fee ownership. The general terms and benefits of these three types of arrangements are as follows: Management Contracts. Under a management contract, the facility manager generally receives a base monthly fee for managing the facilities and often receives an incentive fee based on the achievement of facility revenues above a base amount. Facility managers generally charge fees for various ancillary services such as accounting, equipment leasing and consulting. Responsibilities under a management contract include hiring, training and staffing parking personnel, and providing collections, accounting, record-keeping, insurance and facility marketing services. In general, the facility manager is not responsible for structural or mechanical repairs, and typically is not responsible for providing security or guard services. Under typical management contracts, the facility owner is responsible for operating expenses such as taxes, license and permit fees, insurance premiums, payroll and accounts receivable processing and wages of personnel assigned to the facility. In addition, the facility owner is responsible for non-routine maintenance, repair costs and capital improvements. The typical management contract is for a term of one to three years (though the owner often reserves the right to terminate, without cause, on 30 days' notice) and may contain a renewal clause. Leases. Under a lease arrangement, the parking facility operator generally pays either a fixed annual rent, a percentage of gross customer collections, or a combination thereof to the property owner. The parking facility operator collects all revenues and is responsible for most operating expenses, but is typically not responsible for major maintenance. In contrast to management contracts, lease arrangements are typically for terms of three to ten years and typically contain a renewal term, and provide for a fixed payment to the facility owner regardless of the operating earnings of the parking facility. As a result, the leased facilities generally require a longer commitment and a larger capital investment by the parking facility operator than do managed facilities. Fee Ownership. Under fee ownership arrangements, the parking facility operator owns the property and fixtures. Ownership of parking facilities, either independently or through joint ventures, typically requires a larger capital investment than managed or leased facilities but provides maximum control over the operation of the parking facility, and all increases in revenue flow directly to the owner. Ownership provides the potential for realizing capital gains from the appreciation in the value of the underlying real estate, but it also subjects the property owner to risks including reduction in value of the property and additional potential liabilities, as well as additional costs such as real estate taxes and structural, mechanical or electrical maintenance or repairs. Parking Industry Markets. The parking industry is comprised of two major markets: urban parking and airport parking. The urban parking market consists of many sub-markets with differing clients including commercial, office, residential, event, entertainment, retail, shopping centers, hospitals and hotels. In contrast, the airport parking market consists of a relatively small number of clients with large revenue-generating parking operations and similar needs that are unique to airport parking facilities. Industry Growth Dynamics. A number of opportunities for growth exist for parking facility operators: Industry Consolidation. There are many opportunities for industry consolidation, both domestically and abroad. Consolidation is essential to growth in the parking industry because of the limitations on growth in revenues of existing operations. While some growth in revenues from existing operations is possible through redesign, increased operational efficiency or increased facility use and prices, such growth is ultimately limited by the size of a facility and market conditions. The net effect of the consolidation in the urban parking market is that the typical buyer in this market is becoming larger and increasingly sophisticated. This increase in sophistication has placed greater demands on parking 49 52 management firms and has driven the trend toward management contracts where clients require high-level management and reporting systems, site-specific services and quality control. Privatization of Government-Owned and Operated Facilities. Additional growth in the industry has been a function of the trend for parking owners to move from owner-operation to outsourcing the management of operations to private operators. This is particularly true in the case of privatization of government operations and facilities, which is resulting in new opportunities for the parking industry. The Company believes that cities and municipal authorities are increasingly retaining private firms to operate facilities and parking-related services in an effort to reduce operating budgets and increase efficiency. Expanding Relationships with Large Property Managers, Owners and Developers. Generally, the overall parking industry expansion is created by new construction of parking facilities by property managers, owners and developers. While new construction in the United States slowed in the late 1980s and has only gradually begun to increase in recent years, growth for parking facility operators during such period generally resulted from more established parking facility operators leveraging their relationships with property managers and owners to take market share from smaller companies. As new construction of parking facilities increases, the Company believes that facility operators with established relationships with such parking facility developers can leverage such relationships to capture incremental market share. BUSINESS STRATEGY AND COMPETITIVE ADVANTAGES The Company believes its innovative parking facility amenities, services and management, coupled with its state-of-the-art information technology and reporting systems, position the Company to enhance its standing as a leading provider of parking services. Specific elements of the Company's business strategy and competitive advantages include: Focus on Core Cities. Part of the Company's business strategy is to focus on increasing system-wide profitability by maximizing operating leverage. As part of this strategy, the Company operates in certain core cities and realizes certain economies of scale, including the ability to spread administrative overhead costs across a large number of parking facilities in a single market. As a result, the Company has been able to increase significantly profitability per contract. For example, management estimates that in 1997 the Company's average profit per contract in cities in which it operated more than 35 parking locations was nearly double the Company's profit per contract in cities in which it operated fewer than 35 locations. Strong Operating Performance and Stable Cash Flow. From 1993 to 1997, the Company's EBITDA increased from $7.2 million to $15.0 million, representing a CAGR of 20.0%. The Company's cash flows from operating activities increased from $3.2 million to $6.0 million from 1993 to 1997. Over the same period, the Company's capital expenditures averaged less than $3.0 million per year. In addition, the Company reduced exposure to increasing cost of parking services by (i) increasing the proportion of its management contracts, which generally pass cost of parking services onto the Company's clients, and (ii) maintaining low minimum rental commitments under its non-cancelable leases. The Company's average management and lease contract renewal rate over the last three years was approximately 96%. As a result of the Company's operating performance, as well as the low capital expenditure requirements and low risk portfolio of management contracts and leases, the Company has been able to generate consistent cash flow. Strategic Growth Through Acquisitions. The parking industry is highly fragmented, with over 1,700 industry participants. In addition to pursuing individual contracts, the Company is seeking to capitalize on this industry fragmentation by pursuing a focused acquisition strategy which includes: (i) acquiring parking management companies within core cities and target cities where the Company believes it can attain a significant market share, and (ii) acquiring larger, regional parking management companies. As a part of this strategy, APCOA and Standard, combined, have successfully acquired and integrated 6 companies with 138 new facilities and also added 252 net individual contracts over the past five years. 50 53 Leading Client Base. The Company's diversified, long-standing customer base comprises many of the premier national property management and ownership organizations in the United States and Canada. The Company is a market leader in airport parking, operating approximately 100 parking facilities at airports in the United States and Canada. The Company's focus on select core cities enables the Company to maintain broader and stronger relationships with the local client base, which the Company believes improves its client retention rates and its ability to compete for new contracts. Value-Added Services and Award-Winning Information Systems. The Company believes that it can continue to increase profitability and attract new clients by providing: (i) Ambiance in Parking(R); (ii) state-of-the-art information technology, including Client View(C); and (iii) award-winning training programs for on-site employees. In addition, these capabilities facilitate development opportunities that typically lead to long-term lease and management contracts on new facilities. Also, the Company has developed state-of-the-art information technology systems which connect local offices across the country to its corporate office. These systems, which received the 1994 Esprit Award sponsored by Booz-Allen & Hamilton and CIO magazine, enable a centralized staff to eliminate inefficient duplication of administrative and accounting functions at the field level and also help provide key operational information to clients. Management believes that these systems will enable the Company to add many new clients without incurring additional administrative staff and expense. Experienced Management Team. Myron C. Warshauer, the Company's Chief Executive Officer and the third generation of his family to direct Standard, has over 35 years of industry experience. G. Walter Stuelpe, Jr., the Company's President, has been with APCOA for over 25 years, serving as Chief Executive Officer since 1986. The Company's other executive team members are comprised of the most experienced, talented executives from both companies. Overall, the members of the Company's executive team have an average of over 15 years of industry experience. AMBIANCE IN PARKING(R) The Company offers a comprehensive package of value-added, on-site parking services and amenities which the Company characterizes as Ambiance in Parking(R) which includes: Patented Musical Theme Floor Reminder System. The Company's patented musical theme floor reminder system is designed to help customers remember the garage level on which they had parked. A different song is played on each floor of the parking garage which also displays distinctive signs and graphics which correspond with the floor's theme. For example, in one garage with U.S. cities as a theme, songs played include "I Left My Heart in San Francisco" on one floor and "New York, New York" on a different floor. Other garages have themes such as college fight songs, broadway shows, classic movies and professional sports teams. Books-To-Go(R). Books-To-Go(R) is an audiotape library which is provided free-of-charge for monthly parkers. ParkNet(R). The ParkNet(R) traffic information system allows parking customers to obtain continuous, site-specific traffic reports relating to current traffic conditions on area expressways as well as the routes utilized to get from the specific parking facility to the expressways. CarCare(R). The CarCare(R) service program is provided in conjunction with Midas(R). Parking customers can have their cars picked up from the parking facility, serviced and returned before the end of the business day. Standard Parking Exchange(TM). The Standard Parking Exchange(TM) program entitles monthly parkers at participating locations to free parking for one hour per day at all other participating locations. Complimentary Windshield and Headlight Cleaning. During off-peak hours, the Company's parking attendants clean windshields and headlights of cars and place a card on the windshield informing the parking customer that this service has been provided. 51 54 Emergency Car Services. The Company offers complimentary services such as battery starts, lost car assistance, tire inflation, tire change, escort service and key retrieval. STATE-OF-THE-ART INFORMATION TECHNOLOGY The Company's information technology provides valuable benefits to the Company's clients. Client View(C), a proprietary Windows(R)-based client reporting system, allows the Company's clients to access, on a real-time basis, site-level financial and operating information. The Company has created advanced information systems that connect local offices across the country to its corporate office. A centralized staff provides accounting and administrative expertise and controls that eliminate duplication of administrative and accounting functions at the field level. ParkStat(C), one of the Company's proprietary software tools, enhances the performance of parking facilities managed by the Company. By automatically polling information from on-site collection devices, ParkStat(C) uses location-specific information to calculate the impact of pricing alternatives, optimize staffing levels, improve forecasting and assist in long-range planning. Technological innovations such as an automated credit card lane and a radio-activated hands-free parking access system allow fast and hassle-free service for parking customers. AWARDS In 1994, the Company received the prestigious Esprit Award sponsored by CIO magazine and Booz-Allen & Hamilton for its proprietary state-of-the-art information technology systems which connect local offices across the country to the Company's corporate office. These systems enable a centralized staff to eliminate inefficient duplication of administrative and accounting functions at the field level and also help provide key operational, financial and demographic information to clients. No other parking facility manager has ever received this award. Over the past five years various elements of the Company's training program have received industry awards for outstanding content and production, including: - National Association of Industrial and Office Properties' Outstanding Literature and Video Award; - two Telly Awards, a prestigious national award in the field of advertising, film and video productions; - BPAA Bronze Tower Award which recognizes business-to-business communications in Business/Professional Advertising; and - Great-Lakes Sho-Me Award which recognizes outstanding business communication in Greater Cleveland. 52 55 PARKING FACILITIES The Company operates parking facilities in 35 states, Washington D.C. and three provinces of Canada pursuant to management contracts or leases. The Company does not currently own any parking facilities. The following table summarizes certain information regarding the Company's facilities as of March 31, 1998, giving effect to the Combination and the Other Acquisitions:
NUMBER OF LOCATIONS NUMBER OF SPACES ------------------------- ----------------------------- STATES/PROVINCES AIRPORTS AND URBAN CITIES AIRPORT URBAN TOTAL AIRPORT URBAN TOTAL Alabama Airports 3 3 1,430 1,430 Arizona Phoenix 13 13 13,392 13,392 British Columbia Vancouver 5 5 2,236 2,236 California Los Angeles, San Diego, San 6 177 183 23,779 51,866 75,645 Francisco, San Jose, Santa Barbara and Airports Colorado Denver and Airports 3 13 16 363 7,625 7,988 Connecticut Stamford and Airport 1 6 7 4,351 4,332 8,683 Delaware Wilmington 1 1 500 500 District of Columbia Washington D.C. 10 10 7,577 7,577 Florida Miami, Orlando and Airports 4 13 17 4,340 6,085 10,425 Georgia Atlanta and Airports 2 33 35 2,142 9,405 11,547 Hawaii Honolulu 53 53 21,735 21,735 Idaho Airport 1 1 376 376 Illinois Chicago and Airport 2 150 152 26,800 86,116 112,916 Indiana Indianapolis and Airport 1 19 20 619 4,420 5,039 Kentucky Louisville and Airport 2 1 3 3,071 395 3,466 Louisiana New Orleans and Airport 2 42 44 984 8,546 9,530 Maine Airport 2 2 1,299 1,299 Maryland Baltimore, Bethesda 19 19 4,597 4,597 Massachusetts Boston and Airports 2 97 99 645 63,362 64,007 Michigan Detroit and Airports 6 1 7 1,412 132 1,544 Minnesota Minneapolis and Airports 8 36 44 13,495 11,219 24,714 Missouri Kansas City and Airports 2 74 76 9,848 13,367 23,215 Montana Great Falls and Airports 5 4 9 2,432 1,966 4,398 Nebraska Airport 1 1 1,361 1,361 Nevada Las Vegas 1 1 286 286 New York Buffalo, Hamburg, Hawthorne and 10 3 13 8,678 16,060 24,738 Airports North Dakota Airports 2 2 1,415 1,415 Ohio Cleveland, Columbus and Airports 9 96 105 7,492 39,515 47,007 Ontario East York, North York, Oshawa, 1 34 35 3,171 23,912 27,083 Scarsborough, Toronto and Airport Oregon Airport 1 1 433 433 Pennsylvania Philadelphia, Pittsburgh and 2 3 5 1,331 2,181 3,512 Airports Quebec Airports 3 3 8,591 8,591 South Carolina Airport 1 1 4,987 4,987 South Dakota Airport 2 2 1,508 1,508 Tennessee Memphis and Airports 2 13 15 3,077 5,226 8,303 Texas Houston, Dallas, Fort Worth and 4 57 61 2,862 29,176 32,038 Airports Virginia Richmond and Airport 5 36 41 3,468 8,776 12,244 Washington Seattle and Airports 2 3 5 822 1,195 2,017 Wisconsin Milwaukee and Airports 3 3 6 1,512 1,948 3,460 --- ----- ----- ------- ------- ------- TOTALS 100 1,016 1,116 148,094 447,148 595,242 === ===== ===== ======= ======= =======
The Company has interests in 18 joint ventures that each operate a single parking facility. The Company is the general partner of three limited partnerships which operate a single parking facility and one limited partnership which operates five parking facilities. See "Management's Discussion and Analysis of Financial Condition and Results of Operations of APCOA--Summary of Operating Facilities." 53 56 COMPETITION The parking industry is fragmented and highly competitive, with limited barriers to entry. The Company faces direct competition for additional facilities to manage or lease and the facilities currently operated by the Company face competition for employees and customers. The Company competes with a variety of other companies to add new operations. Although there are relatively few large, national parking companies that compete with the Company, developers, hotel companies, and national financial services companies also have the potential to compete with parking companies. Municipalities and other governmental entities also operate parking facilities that compete with the Company. The Company also faces competition from local owner-operators of facilities who are potential clients for the Company's management services. Construction of new parking facilities near the Company's existing facilities could adversely affect the Company's business. See "Risk Factors--Competition." REGULATION The Company's business is not substantially affected by direct governmental regulation, although parking facilities are sometimes directly regulated by both municipal and state authorities. The Company is affected by laws and regulations (such as zoning ordinances) that are common to any business that deals with real estate and by regulations (such as labor and tax laws) that affect companies with a large number of employees. In addition, several state and local laws have been passed in recent years that encourage car pooling and the use of mass transit, including, for example, a Los Angeles, California law prohibiting employers from reimbursing employee parking expenses. Laws and regulations that reduce the number of cars and vehicles being driven could adversely impact the Company's business. Under various federal, state and local environmental laws, ordinances and regulations, a current or previous owner or operator of real property may be liable for the costs of removal or remediation of hazardous or toxic substances on, under or in such property. Such laws typically impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. In connection with the operation of parking facilities, the Company may be potentially liable for any such costs. Although the Company is currently not aware of any material environmental claims pending or threatened against it or any of the parking facilities which it operates, there can be no assurance that a material environmental claim will not be asserted against the Company or against the parking facilities which it operates. The cost of defending against claims of liability, or of remediating a contaminated property, could have a material adverse effect on the Company's financial condition or result of operations. Various other governmental regulations affect the Company's operation of parking facilities, both directly and indirectly, including the ADA. Under the ADA, all public accommodations, including parking facilities, are required to meet certain federal requirements related to access and use by disabled persons. For example, the ADA requires parking facilities to include handicapped spaces, headroom for wheelchair vans, attendants' booths that accommodate wheelchairs, and elevators that are operable by disabled persons. When negotiating management contracts and leases with clients, the Company generally has the property owner contractually assume responsibility for any ADA liability in connection with the property; however, there can be no assurance that the property owner has assumed such liability for any given property and there can be no assurance that the Company would not be held liable despite assumption of responsibility for such liability by the property owner. Management believes that the parking facilities the Company operates are in substantial compliance with ADA requirements. EMPLOYEES As of March 31, 1998, the Company employed approximately 8,000 individuals, including approximately 4,200 full-time and 3,800 part-time employees. The Company believes that its employee relations are good. Approximately 2,600 employees are represented by unions. Most union employees are represented by the Teamsters Union. The largest union facilities are in the Chicago metropolitan area and in airport parking facilities located in Detroit, Michigan, San Jose, California, Minneapolis, Minnesota, Cleveland, Ohio and Hartford, Connecticut. 54 57 INTELLECTUAL PROPERTY The APCOA name and logo and the Standard name and logo are registered with the United States Patent and Trademark Office. In addition, the Company has registered the names and, as applicable, the logos of all material subsidiaries and divisions of the Company in the United States Patent and Trademark Office or the equivalent State registry, including the right to the exclusive use of the name Central Park in the Chicago metropolitan area. The Company has also obtained a United States patent for its Multi-Level Vehicle Parking Facility (the Musical Theme Floor Reminder System) and trademark protection for its proprietary parker programs, such as Books-To-Go(C) and Ambiance in Parking(C). Proprietary software developed by the Company, such as Client View(C), Hand Held Program(C), License Plate Inventory Program(C) and Parkstat(C) are registered in the United States Copyright Office. LITIGATION The provision of services to the public entails an inherent risk of liability. The Company is engaged in routine litigation incidental to its business. There is no legal proceeding to which the Company is a party which, if decided adversely, would be material to the Company's financial condition, liquidity, or results of operations. The Company attempts to disclaim liability for personal injury and property damage claims by printing disclaimers on its ticket stubs and by placing warning signs in the facilities it operates. The Company also carries liability insurance that management believes meets or exceeds industry standards; however, there can be no assurance that any future legal proceedings (including any related judgments, settlements or costs) will not have a material adverse effect on the financial condition, liquidity, or results of operations of the Company. INSURANCE The Company purchases comprehensive liability insurance covering the parking facilities that it leases and manages. The Company also purchases workers' compensation insurance with respect to all its employees, whether such persons are employed at leased or managed facilities. The Company's insurance program insulates its clients against any additional annual premium charges in the event of adverse claims experience. Due to the magnitude of the Company's parking operations, the Company's management believes that the rates at which it purchases such insurance represent a discount to the rates that would be charged to parking facility owners on a stand-alone basis. Recognizing the benefits and protection afforded by the Company's insurance program, a significant majority of the Company's clients historically have purchased liability insurance through the Company. However, the clients of the Company have the option of purchasing their own policies, provided that the Company is adequately protected. A significant reduction in the number of clients that purchase insurance through the Company could have a material adverse effect on operating earnings. In addition, although the cost of insurance has not fluctuated significantly in recent years for the Company, a material increase either in the Company's insurance costs or in the magnitude of its claims could have a material adverse effect on the Company's operating earnings. 55 58 MANAGEMENT EXECUTIVE OFFICERS AND DIRECTORS The following table sets forth certain information with respect to each person who is an executive officer or director of the Company following consummation of the Combination, as indicated below:
NAME AGE TITLE - ---- --- ----- John V. Holten................. 41 Director and Chairman Myron C. Warshauer............. 58 Director and Chief Executive Officer G. Walter Stuelpe, Jr.......... 53 Director and President Michael J. Celebrezze.......... 41 Executive Vice President -- Chief Financial Officer Douglas R. Warshauer........... 30 Executive Vice President -- Marketing/Business Development Steven A. Warshauer............ 43 Executive Vice President -- Operations Michael K. Wolf................ 48 Executive Vice President -- Chief Administrative Officer and Associate General Counsel James A. Wilhelm............... 44 Executive Vice President -- Operations Herbert W. Anderson, Jr. ...... 39 Executive Vice President -- Operations Robert N. Sacks................ 45 Executive Vice President -- General Counsel and Secretary James V. LaRocco, Jr........... 53 Executive Vice President -- Corporate Development Patrick J. Meara............... 35 Director Gunnar E. Klintberg............ 49 Director, Vice President A. Petter Ostberg.............. 36 Vice President
John V. Holten. Mr. Holten has served as Chairman and Chief Executive Officer of Holberg since its inception in 1986, and as a Director and Chairman of APCOA since 1989. Mr. Holten was Managing Director of DnC Capital Corporation, a merchant banking firm in New York City, from 1984 to 1986. Mr. Holten received his M.B.A. from Harvard University in 1982 and he graduated from the Norwegian School of Economics and Business Administration in 1980. Myron C. Warshauer. Mr. Warshauer has served as President and Chief Executive Officer of Standard since 1973, and has been associated with Standard since 1963. Mr. Warshauer received his B.S. Degree in Finance from the University of Illinois in 1962, and received a Masters Degree in Business Administration from Northwestern University in 1963. G. Walter Stuelpe, Jr. Mr. Stuelpe has been associated with APCOA for over 25 years, serving as the Company's President since 1986. His prior executive positions have included sales and marketing, corporate development and strategic planning, as well as having headed up different operational divisions in a variety of cities in the United States and Europe. Mr. Stuelpe is an alumnus of Indiana University, class of 1967. Mr. Stuelpe has since participated in numerous executive programs specifically designed to address managing business change and growth. He has also had an active leadership role in industry-related associations, having served as president, chairman and now as a member of the Board of the National Parking Association as well as the International Parking Institute, and is a full member of the Urban Land Institute. Michael J. Celebrezze. Mr. Celebrezze joined APCOA in 1984 as Manager, Treasury and Financial Planning. Since then he has held the positions of Vice President, Controller and, since 1995, Senior Vice President, Chief Financial Officer and Treasurer. His responsibilities included the operations of accounting, tax, management information systems, corporate security, financial planning, insurance and risk management, real estate finance and banking. Mr. Celebrezze graduated cum laude from Kent State University with a Degree in Business Administration, majoring in Accounting and he subsequently earned a Masters in Business Administration from John Carroll University. He is a Certified Public Accountant in the State of Ohio. Douglas R. Warshauer. Mr. Warshauer joined Standard in 1994, initially serving as Vice President. Upon receiving his Masters of Management Degree with distinction from the J.L. Kellogg School of Management at Northwestern University, Mr. Warshauer became Standard's Executive Vice President for 56 59 Finance. Mr. Warshauer also holds a Bachelors Degree with highest honors in Social Science from the University of California at Berkeley. Steven A. Warshauer. Mr. Warshauer joined Standard in 1982, initially serving as Vice President, then becoming Senior Vice President and, since January 1, 1998, serving as Executive Vice President. Mr. Warshauer is a Certified Public Accountant and a member of both the American Institute of Certified Public Accountants and the Illinois Society of Certified Public Accountants. Mr. Warshauer received his Bachelor of Science Degree from the University of Northern Colorado in 1976 with dual majors in Accounting and Finance. Prior to joining Standard, he practiced with a national accounting firm. Michael K. Wolf. Mr. Wolf joined Standard as Senior Vice President and General Counsel in 1990, after sixteen years in the private practice of law. Mr. Wolf was subsequently appointed Executive Vice President of Standard. Prior to joining Standard, Mr. Wolf was a partner of the international law firm of Jones, Day, Reavis & Pogue, resident in the Chicago office, where his primary concentration was in the field of real estate. Mr. Wolf received his B.A. Degree in 1971 from the University of Pennsylvania, and in 1974 received his J.D. Degree from Washington University, where he served as Notes and Comments editor of the Washington University Law Quarterly. Upon graduation from law school, Mr. Wolf was elected to the Order of the Coif. James A. Wilhelm. Mr. Wilhelm joined Standard in 1985, serving as Executive Vice President since January 1, 1998. Mr. Wilhelm is currently responsible for managing Standard's Midwest and Western Regions, which include parking facilities in Chicago and sixteen other cities throughout the United States and Canada. Mr. Wilhelm received his B.A. Degree from Northeastern Illinois University in 1976. Mr. Wilhelm is a member of the National Parking Association and the International Parking Institute. Herbert W. Anderson, Jr. Mr. Anderson joined APCOA in 1994, and has served as Corporate Vice President--Urban Properties since 1995. Mr. Anderson graduated from LaSalle University and began his career in the parking industry in 1984. Mr. Anderson is a member of the Board of the National Parking Association. Robert N. Sacks. Mr. Sacks joined APCOA in 1988, serving as General Counsel and Secretary since 1988, serving as Vice President, Secretary, and General Counsel since 1989 and serving as Senior Vice President, Secretary and General Counsel since 1997. Mr. Sacks has overall responsibility for the Legal Department, which includes negotiation, documentation and approval of parking and corporate contracts, financing documentation and coordination of outside counsel. In his position, Mr. Sacks is also responsible for maintaining field compliance with corporate legal and financial policies. Mr. Sacks received his B.A. Degree, cum laude, from Northwestern University in 1976 and, in 1979, received his J.D. Degree from Suffolk University. Mr. Sacks has spoken on legal issues concerning the parking industry at the National Parking Association National Convention and the Institutional and Municipal Parking Congress. James V. LaRocco, Jr. Mr. LaRocco has been associated with APCOA since 1962, starting in an operations position at the Los Angeles International Airport, and has served as Executive Vice President since 1995. His prior positions have included Division Manager, Regional Manager and Vice President. Patrick J. Meara. Mr. Meara became a director of the Company upon consummation of the Combination. Mr. Meara is a Senior Vice President of JMB Realty Corporation, which held an interest in Standard prior to the Combination, and acquired an interest in the Company as a result of the Combination. Gunnar E. Klintberg. Mr. Klintberg has served as Vice Chairman of Holberg since its inception in 1986, and as a Director of APCOA since 1989. Mr. Klintberg was a Managing Partner of DnC Capital Corporation, a merchant banking firm in New York City, from 1983 to 1986. From 1975 to 1983, Mr. Klintberg held various management positions with the Axel Johnson Group, headquartered in Stockholm, Sweden. Mr. Klintberg headed up the Axel Johnson Group's headquarters in Moscow from 1976 to 1979 and served as assistant to the President of Axel Johnson Group's $1 billion operation in the U.S., headquartered in New York City, from 1979 to 1983. Mr. Klintberg received his undergraduate degree from Dartmouth College in 1972 and a degree in Business Administration and Economics from the University of Uppsala, Sweden in 1974. 57 60 A. Petter Ostberg. Mr. Ostberg joined Holberg in 1994 and was appointed Chief Financial Officer of Holberg in 1997. Mr. Ostberg is currently a Vice President of APCOA. Prior to joining Holberg, Mr. Ostberg held various finance positions from 1990 to 1994 with New York Cruise Lines, Inc., including Group Vice President, Treasurer and Secretary. Prior to joining New York Cruise Lines, Inc., Mr. Ostberg was General Manager of Planter Technology Ltd. in Mountain View, California, and from 1985 to 1987, Mr. Ostberg was a Financial Analyst with Prudential Securities, Inc. in New York. Mr. Ostberg received a B.A. in International Relations and Economics from Tufts University in 1985, and an M.B.A. from Stanford University Graduate School of Business in 1989. EXECUTIVE COMPENSATION The following table sets forth information for 1995, 1996 and 1997 with regard to compensation for services rendered in all capacities (a) to APCOA by the Chief Executive Officer and the other four most highly compensated executive officers of APCOA and (b) to Standard by two executive officers of Standard for each of whom disclosure would have been provided but for the fact that he was not serving as an executive officer of APCOA at the end of the last completed fiscal year (collectively, the "Named Executive Officers"). Except as otherwise noted, information set forth in the table reflects compensation earned by such individuals for services with APCOA or its respective subsidiaries. SUMMARY COMPENSATION TABLE
OTHER ANNUAL ALL OTHER COMPEN- COMPEN- FISCAL SALARY BONUS SATION SATION NAME AND PRINCIPAL POSITION YEAR ($) $ $ ($) --------------------------- ------ ------- ------- ------- --------- G. Walter Stuelpe, Jr..................... 1997 420,942(1) 183,500 -- 21,000(2) Chief Executive Officer and 1996 405,129(1) 216,600 -- 17,000(2) President 1995 393,834(1) 222,100 -- 17,000(2) James V. LaRocco, Jr...................... 1997 189,396(1) 62,390 -- 22,000(2) Executive Vice President, 1996 172,006(1) 64,539 -- 19,300(2) Corporate Development 1995 164,063(1) 61,710 -- 19,300(2) Trevor R. Van Horn(4)..................... 1997 140,399(1) 45,741 -- -- Corporate Vice President, 1996 98,654(1) 29,798 17,033(3) -- Airport Properties 1995 -- -- -- -- Herbert W. Anderson, Jr................... 1997 130,250(1) 45,448 21,241(3) 7,900(2) Corporate Vice President, 1996 121,944(1) 49,050 17,695(3) -- Urban Properties 1995 101,334(1) 26,972 -- -- Michael J. Celebrezze..................... 1997 128,477(1) 43,750 -- 8,500(2) Senior Vice President, Chief 1996 116,386(1) 45,911 -- 7,900(2) Financial Officer and 1995 108,227(1) 38,304 -- 2,400(2) Treasurer Myron C. Warshauer(5)..................... 1997 98,265 -- 41,229(6) 42,102(7) Chief Executive Officer and 1996 53,290 -- 28,795(6) 41,630(7) President of Standard 1995 37,950 -- 18,740(6) 46,169(7) Michael K. Wolf(5)........................ 1997 376,400 -- -- -- Executive Vice President and 1996 313,800 -- -- -- General Counsel of Standard 1995 254,800 -- -- --
- --------------- (1) The amount shown includes amounts contributed by APCOA to its 401(k) plan under a contribution matching program. (2) The amount shown reflects deposits made by APCOA on behalf of Named Executive Officers into a supplemental pension plan pursuant to which the Named Executive Officers will be entitled to monthly cash retirement and death benefit payments. (3) The amount shown includes car allowances, club dues and moving expenses paid by APCOA. (4) As of February 26, 1998, Mr. Van Horn is no longer an employee of the Company. 58 61 (5) All compensation information set forth in the table for this individual reflects compensation earned for services with Standard or its respective subsidiaries. (6) The amount shown includes car allowances, club dues, health insurance premiums and legal fees related to estate planning paid by Standard. (7) The amount shown reflects premiums paid by Standard on behalf of Myron C. Warshauer for life insurance policies to which Mr. Warshauer is entitled to the cash surrender value. DIRECTOR COMPENSATION Directors of the Company do not receive compensation for serving on the Company's Board of Directors. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The Company did not have a Compensation Committee in the year ended December 31, 1997. The Company intends to form a Compensation Committee in 1998. The members of such committee have not yet been determined. During 1997, no executive officer of the Company served as a member of the Compensation Committee of another entity. EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS Mr. Stuelpe's current employment agreement with the Company provides for an initial four year term with default annual renewals, and is scheduled to lapse on December 31, 2000. The agreement also provides for an annual base salary of $423,306 in 1998, plus an annual bonus equal to eight percent of an amount substantially based on the amount by which the Company's EBITDA, subject to certain adjustments, exceeds a certain floor amount, as well as certain other benefits. Mr. Stuelpe agrees not to disclose confidential information if such disclosure would have a material adverse effect on the Company. During the term of the employment agreement, and for two years after its termination, or, under certain circumstances, until receipt of the final salary payment due under the terms of the agreement, Mr. Stuelpe shall not render services to, or have any ownership interest in, any business which is competitive with the Company. If Mr. Stuelpe's employment is terminated by reason of his death or Disability (as defined in the agreement), the Company is obligated to pay Mr. Stuelpe's designated beneficiary, in the case of termination by reason of death, and Mr. Stuelpe, in the case of termination by reason of Disability, (i) an amount equal to Mr. Stuelpe's annual base salary at the time of his death; (ii) the annual bonus for the year in which the termination of employment occurred, prorated for the numbers of days Mr. Stuelpe was employed during that year; and (iii) certain other benefits. If Mr. Stuelpe's employment is terminated other than for death or Disability, and without Cause (as defined in the agreement) or within six months following a Change of Control (as defined in the agreement), the Company is required to pay Mr. Stuelpe (a) his salary (i) through the date that the agreement was scheduled to terminate as if Mr. Stuelpe had continued to be employed by the Company, in the case of a termination without Cause and (ii) for a minimum period of twenty-four months after the termination of employment, in the case of a Change of Control; (b) the annual bonus for the year in which the termination of employment occurred, prorated for the number of days Mr. Stuelpe was employed during that year; and (c) certain other benefits. Mr. LaRocco's current employment agreement with the Company provides for an eighteen-month term, scheduled to lapse on September 30, 1999, and an annual base salary of not less than $190,000, subject to annual review and increases at the discretion of the Company's President, plus severance pay in the amount of $157,872, paid on April 10, 1998, a severance bonus of $66,500 payable on September 30, 1998, an annual bonus of $76,000 for 1998 and an annual bonus for 1999 of up to forty percent of annual base salary, as well as certain other benefits. Mr. LaRocco shall not disclose confidential information for any reason whatsoever. 59 62 During the term of the employment agreement, and for one year after its termination if Mr. LaRocco is terminated other than without Cause (as defined in the agreement), Mr. LaRocco shall not render services to, or have any ownership interest in, any business which is competitive with the Company. Mr. LaRocco's employment agreement does not contain change of control provisions. If Mr. LaRocco's employment is terminated by reason of his death or Disability (as defined in the agreement), the Company is obligated to pay Mr. LaRocco's designated beneficiary, in the case of termination by reason of death, and Mr. LaRocco, in the case of termination by reason of Disability, (i) an amount equal to Mr. LaRocco's annual base salary at the time of his death plus $9,600, which represents the estimated annual value of the right to use a company automobile, (ii) the annual bonus for the year of termination and (iii) certain other benefits. Mr. Van Horn's employment agreement with the Company terminated as of February 26, 1998. In connection with such termination, the Company provided Mr. Van Horn with a severance package the total value of which was $218,251 and pursuant to which the Company paid Mr. Van Horn (i) thirty weeks' severance pay; (ii) a thirty-five percent Severance Retention Bonus; and (iii) $25,000 in relocation and related expenses. In addition, the Company transferred to Mr. Van Horn the title to Mr. Van Horn's company automobile and company computer, and will continue providing insurance benefits to Mr. Van Horn for a certain time after such termination. Mr. Anderson's current employment agreement with the Company provides for a three-year term, scheduled to lapse on March 30, 2001, default annual renewals, and an annual base salary of not less than $175,000, subject to annual review, plus an annual bonus of up to forty percent of the annual base salary and a $250,000 housing differential loan bearing interest at an annual rate of 5.39% with a term of three years, of which one-third of the principal balance and the accrued interest due thereon shall be forgiven by the Company, and treated as additional compensation to Mr. Anderson in the year of such forgiveness, for each year Mr. Anderson remains in the continual employ of the Company (and the Company shall make Mr. Anderson whole with respect to the tax consequences of any such forgiveness), as well as certain other benefits. Mr. Anderson shall not communicate, divulge or disseminate confidential information at any time during or after his employment with the Company, except with the prior written consent of the Company or as required by law or legal process. During the term of the employment agreement and for one year after its termination, Mr. Anderson shall not render services to, or have any ownership interest in, any business which is competitive with the Company in geographic areas in which the Company, or its affiliates, is then conducting, or is in the process of developing prospects to conduct, business. Mr. Anderson's employment agreement does not contain change of control provisions. If Mr. Anderson's employment is terminated by reason of his death, the Company is obligated to pay Mr. Anderson's estate an amount equal to the sum of (i) Mr. Anderson's annual base salary through the end of the calendar month in which death occurs and (ii) any earned and unpaid annual bonus, vacation pay and other vested benefits. If Mr. Anderson's employment is terminated by reason of his Disability (as defined in the agreement), the Company is obligated to pay Mr. Anderson or his legal representative (a) Mr. Anderson's annual base salary for the duration of the employment period in effect on the date of termination, reduced by amounts received under any disability benefit program and (b) any earned and unpaid annual bonus and other vested benefits. If Mr. Anderson's employment is terminated by the Company other than for death, Disability or Cause (as defined in the agreement) or if Mr. Anderson terminates his employment for Good Reason (as defined in the agreement), the Company is required to continue (A) to pay Mr. Anderson for the remainder of the employment period in effect immediately before the date of termination his annual base salary and annual bonus(es) through the end of the then-current employment period and (B) to provide Mr. Anderson and/or his family with certain other benefits. If Mr. Anderson's employment is terminated by the Company for Cause, or by Mr. Anderson without Good Reason, Mr. Anderson shall be obligated to repay the remaining principal balance of, and any accrued 60 63 and unpaid interest on, the housing differential loan within thirty days from the date of such termination. If Mr. Anderson's employment is terminated by the Company for any reason other than Cause, or by Mr. Anderson for Good Reason, any remaining principal balance and any accrued and unpaid interest on the housing differential loan shall be forgiven by the Company, and the Company shall make Mr. Anderson whole for any tax consequences of such forgiveness. Mr. Celebrezze's current employment agreement with the Company provides for a three-year term, scheduled to lapse on March 30, 2001, default renewals for additional two year periods, an annual base salary of not less than $180,000, subject to annual review, plus an annual bonus of at least 35% of Mr. Celebrezze's annual base salary and a $250,000 housing differential loan bearing interest at an annual rate of 5.39% with a term of three years, of which one-third of the principal balance and the accrued interest due thereon shall be forgiven by the Company, and treated as additional compensation to Mr. Celebrezze in the year of such forgiveness, for each year Mr. Celebrezze remains in the continual employ of the Company (and the Company shall make Mr. Celebrezze whole with respect to the tax consequences of any such forgiveness), as well as certain other benefits. Mr. Celebrezze shall not communicate, divulge or disseminate confidential information at any time during or after his employment with the Company, except with the prior written consent of the Company or as required by law or legal process. During the term of the employment agreement and for two years after its termination, Mr. Celebrezze shall not render services to, or have any ownership interest in, any business which is competitive with the Company in geographic areas in which the Company, or its affiliates, is then conducting, or is in the process of developing prospects to conduct, business. Mr. Celebrezze's employment agreement does not contain change of control provisions. If Mr. Celebrezze's employment is terminated by reason of his death, the Company is obligated to pay Mr. Celebrezze's estate an amount equal to the sum of (i) Mr. Celebrezze's annual base salary through the end of the calendar month in which death occurs and (ii) any earned and unpaid annual bonus, vacation pay and other vested benefits. If Mr. Celebrezze's employment is terminated by reason of his Disability (as defined in the agreement), the Company is obligated to pay Mr. Celebrezze or his legal representative (a) Mr. Celebrezze's annual base salary for the duration of the employment period in effect on the date of termination, reduced by amounts received under any disability benefit program and (b) any earned and unpaid annual bonus and other vested benefits. If Mr. Celebrezze's employment is terminated by the Company other than for death, Disability or Cause (as defined in the agreement) or if Mr. Celebrezze terminates his employment for Good Reason (as defined in the agreement), the Company is required to continue (A) to pay Mr. Celebrezze for the remainder of the employment period in effect immediately before the date of termination his annual base salary and annual bonus(es) through the end of the then-current employment period and (B) to provide Mr. Celebrezze and/or his family with certain other benefits, provided that in the event of a termination of employment by Mr. Celebrezze for Good Reason, the annual base salary, annual bonus and benefit continuation period shall be two years from the date of such termination. In addition, under the foregoing circumstances, any remaining principal balance and any accrued and unpaid interest on the housing differential loan shall be forgiven by the Company, and the Company shall make Mr. Celebrezze whole for any tax consequences of such forgiveness. If Mr. Celebrezze's employment is terminated by the Company any time before the third anniversary of the employment agreement for any reason other than for Cause, or if the Company gives notice of its intention not to renew the agreement for an additional two-year term beginning on the third anniversary of the agreement, the Company is obligated to (x) pay Mr. Celebrezze his annual base salary and annual bonus for the remaining balance of the initial three-year term, if any, and for an additional two years and (y) to continue to provide Mr. Celebrezze with certain other benefits for the same period. Mr. Wolf's current employment agreement with the Company provides for a three-year term, scheduled to lapse on March 26, 2001, default annual renewals, and an annual base salary of not less than $376,400, subject to annual review, plus an annual bonus based on a percentage of the annual base salary to be mutually agreed upon by the Company and Mr. Wolf, as well as certain other benefits. Mr. Wolf shall hold all confidential information in strict confidence and not publish or otherwise disclose any portion thereof to any 61 64 person whatsoever except with the prior written consent of the Company. During the term of the employment agreement and for two years after its termination (or eighteen months if such termination follows a Change in Control (as defined in the agreement)), Mr. Wolf shall not render services to, or have any ownership interest in, any business which is competitive with the Company in certain geographic areas. If Mr. Wolf's employment is terminated by reason of his death, the Company is obligated to pay Mr. Wolf's estate an amount equal to the sum of (i) Mr. Wolf's annual base salary through the end of the calendar month in which death occurs and (ii) any earned and unpaid annual bonus, vacation pay and other vested benefits. If Mr. Wolf's employment is terminated by reason of his Disability (as defined in the agreement), the Company is obligated to pay Mr. Wolf or his legal representative (a) an amount equal to Mr. Wolf's annual base salary for the duration of the employment period in effect on the date of termination, reduced by amounts received under any disability benefit program and (b) any earned and unpaid annual bonus and other vested benefits. If Mr. Wolf's employment is terminated by the Company other than for death or Disability and without Cause (as defined in the agreement), the Company is required to continue (A) to pay Mr. Wolf for the remainder of the employment period in effect immediately before the date of termination his annual base salary and annual bonus(es) through the end of the then-current employment period and (B) to provide Mr. Wolf and/or his family with certain other benefits. If Mr. Wolf's employment is terminated by the Company for any reason other than Cause during the three-year period following a Change in Control (as defined in the agreement), the Company is obligated to (x) pay Mr. Wolf an amount ("Severance Pay") equal to the greater of (1) one and one-half times the sum of (I) Mr. Wolf's current annual base salary plus (II) the amount of any bonus paid to Mr. Wolf in the preceding twelve months and (2) the annual base salary and annual bonuses through the end of the then-current employment period and (y) continue to provide Mr. Wolf with certain other benefits for a certain period of time. If Mr. Wolf terminates his employment voluntarily following a Change in Control, he shall not be entitled to Severance Pay, provided, however, that any such termination by Mr. Wolf for Good Reason (as defined in the agreement) shall not be considered a voluntary termination and Mr. Wolf will be treated as if he had been terminated by the Company other than for Cause. Consummation of the Combination was conditioned, among other things, upon the execution of an employment agreement between the Company and Myron C. Warshauer. Employment Agreement with Myron C. Warshauer. The Employment Agreement between the Company and Myron C. Warshauer (the "Warshauer Employment Agreement") provides that Myron C. Warshauer serve as Chief Executive Officer of the Company, and be appointed as a member of the Board of Directors of the Company (the "Board") and each committee of the Board, for a period beginning on the date of the consummation of the Combination and ending on Myron C. Warshauer's 65th birthday (the "Employment Period"). Myron C. Warshauer will receive during the Employment Period an annual base salary of $600,000 ("Annual Base Salary"). The Warshauer Employment Agreement also provides for certain perquisites. Under the Warshauer Employment Agreement, if Myron C. Warshauer's employment were to be terminated by Myron C. Warshauer for Good Reason (as defined below), or by the Company other than for Cause (as defined below), death or Disability (as defined below), the Company would be obligated to (i) pay Myron C. Warshauer a lump sum cash payment in an amount equal to the aggregate Annual Base Salary that he would have received for the remainder of the Employment Period, reduced to present value using as a discount rate the "applicable federal rate," as defined in Section 1274(d) of the Internal Revenue Code of 1986, as amended, and (ii) continue to provide for the same period welfare benefits to Myron C. Warshauer and/or his family, at least as favorable as those that would have been provided to them under the Warshauer Employment Agreement if Myron C. Warshauer's employment had continued until the end of the Employment Period, provided, however, that during any period when Myron C. Warshauer is eligible to receive such benefits under another employer-provided plan, such benefits provided by the Company may be 62 65 made secondary to those provided under such other plan. If Myron C. Warshauer's employment were to be terminated by reason of his Disability during the Employment Period, the Company would be obligated to pay Myron C. Warshauer, or his legal representative, as applicable, the Annual Base Salary for the duration of the Employment Period in effect at the time of the termination of employment. In addition to the above compensation and benefits, if Myron C. Warshauer's employment were to be terminated for any reason other than by the Company for Cause, the Company would be obligated, beginning on the date of such termination in the case of a voluntary termination by Myron C. Warshauer, and beginning on Myron C. Warshauer's 65th birthday in all other cases, and ending on the first to occur of Myron C. Warshauer's 75th birthday and Myron C. Warshauer's death (such ending date, the "Cutoff Date"), to (i) pay Myron C. Warshauer $200,000 annually, adjusted for inflation and (ii) provide Myron C. Warshauer with an executive office and secretarial services. In consideration for such benefits, Myron C. Warshauer is obligated to provide reasonable consulting services to the Company from the date of termination of his employment through the Cutoff Date. As used in the Warshauer Employment Agreement: (i) "Cause" means (a) illegal conduct, or gross misconduct, that results in material damage to the business or reputation of the Company; or (b) any willful and continued failure by Myron C. Warshauer to perform his duties under the Warshauer Employment Agreement, (ii) "Disability" means that Myron C. Warshauer has been unable, for a period of 180 consecutive days, or for periods aggregating 180 business days in any period of twelve months, to perform a material portion of his duties under the Warshauer Employment Agreement, as a result of physical or mental illness or injury, and a physician selected by the Company has determined that Myron C. Warshauer's incapacity is total and permanent, and (iii) "Good Reason" means (a) the relocation of Myron C. Warshauer's principal place of business outside of the central business district and northern suburbs of Chicago; (b) a material reduction in Myron C. Warshauer's responsibilities; (c) the assignment to Myron C. Warshauer of duties inconsistent with his position as set forth in the Warshauer Employment Agreement; (d) a change in Myron C. Warshauer's title from that required under the Warshauer Employment Agreement; (e) a removal of Myron C. Warshauer from the Board or any committee thereof; (f) a requirement that Myron C. Warshauer report to anyone other than the Chairman of the Board; or (g) any material breach by the Company of any other term of the Warshauer Employment Agreement. The Warshauer Employment Agreement also provides that during the period beginning on the date of the consummation of the Combination and ending on Myron C. Warshauer's 75th birthday (the "Noncompetition Period"), Myron C. Warshauer shall not, without written consent of the Board, engage in or become associated with any business or other endeavor that engages in construction, ownership, leasing, design and/or management of parking lots, parking garages, or other parking facilities or consulting with respect thereto, provided, however, that Myron C. Warshauer may own or sell investments in certain parking facilities ("Permitted Investments") during the Noncompetition Period, and may own or sell any interest in any other real estate ("Other Real Estate") at any time after the Employment Period for the remainder of the Noncompetition Period. The Warshauer Employment Agreement provides that, if such Permitted Investment or Other Real Estate includes a parking facility, Myron C. Warshauer shall initiate negotiations, or, under certain circumstances, use reasonable and good-faith efforts to cause such negotiations, with the Company in an attempt to determine mutually agreeable terms pursuant to which the Company will manage or lease the parking facility and, if such negotiations fail, that, under certain circumstances, the Company shall have a right of first refusal with respect to any management agreement or lease that may be negotiated with any independent third party. Pursuant to the Warshauer Employment Agreement, within 120 days after the Closing Date, the Company shall establish a stock option or phantom stock option plan (the "Option Plan") providing for grants of actual or phantom options with respect to the common stock of the Company ("Company Common Stock"), under which Myron C. Warshauer will be granted options to purchase a number of shares of Company Common Stock equal to 1.0% of the total number of shares of Company Common Stock. All such options will have a term of 10 years from the date of the grant. 63 66 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS AND MANAGEMENT The following table sets forth certain information regarding the beneficial ownership of Company Common Stock by (i) each person known to the Company to own beneficially more than 5% of Company Common Stock, (ii) each director of the Company, (iii) each Named Executive Officer and (iv) all executive officers and directors of the Company, as a group. All information with respect to beneficial ownership has been furnished to the Company by the respective stockholders of the Company. Except as otherwise indicated in the footnotes, each beneficial owner has the sole power to vote and to dispose of all shares held by such holder.
PERCENT AMOUNT AND NATURE OF SHARES NAME AND ADDRESS OF BENEFICIAL OWNERSHIP OUTSTANDING ---------------- ----------------------- ----------- AP Holdings, Inc. ("AP Holdings")*........ 26.3 shares of Common Stock 84.0% John V. Holten**.......................... (1) Orkla ASA ("Orkla")**..................... (2) Delaware North Companies, Inc. ("Delaware North")***.............................. (3) Dosher Partners, L.P.+.................... 2.5 shares of Common Stock(4) 8.0 Myron C. Warshauer+....................... (4) SP Associates++........................... 2.5 shares of Common Stock(5) 8.0 G. Walter Stuelpe, Jr.* .................. (6) Michael J. Celebrezze*.................... (7) Robert N. Sacks*.......................... (8) James V. LaRocco, Jr.*.................... (9) Directors and Executive Officers as a Group................................... (1)(4)(6)(7)(8)(9)
- ------------------------------ * The address of AP Holdings and the business address of Messrs. Stuelpe, Celebrezze, Sacks and LaRocco is 800 Superior Avenue, Cleveland, Ohio 44114-2601. ** The address of Orkla and the business address of Mr. Holten is 545 Steamboat Road, Greenwich, Connecticut 06830. *** The address of Delaware North is 438 Main Street, Buffalo, New York 14202. + The address of Dosher Partners, L.P. and the business address of Mr. Warshauer is 200 East Randolph Drive, Suite 4800, Chicago, Illinois 60601. ++ The address of SP Associates is 900 North Michigan Avenue, Chicago, Illinois 60611. (1) Mr. Holten owns all of the outstanding common stock of the corporate parent of Holberg, which parent entity owns approximately 70.0% of the outstanding common stock of Holberg, which in turn owns 82.5% of the outstanding common stock of AP Holdings. The corporate parent of Holberg has an additional interest in the common stock of Holberg of approximately 25% through certain preferred stock convertible into common stock. The convertible interests described in this note have been computed based upon the outstanding common shares of Holberg, without taking into account any convertible interests of Holberg. (2) Orkla owns approximately 30.0% of the outstanding common stock of Holberg. Orkla has an additional interest in the common stock of Holberg of approximately 17% through certain preferred stock convertible into common stock. The convertible interests described in this note have been computed based upon the outstanding common shares of Holberg, without taking into account any convertible interests of Holberg. (3) Delaware North owns 10.0% of the outstanding common stock of AP Holdings. In accordance with an agreement (the "Put/Call Agreement"), between AP Holdings and Delaware North, AP Holdings has the right under certain circumstances to, and has the obligation under certain circumstances to, repurchase the shares of its common stock held by Delaware North. AP Holdings has exercised the right to repurchase the common stock held by Delaware North. 64 67 (4) All of the interests in Dosher Partners, L.P. are beneficially owned by Myron C. Warshauer and trusts for the benefit of certain members of his family. Mr. Warshauer disclaims beneficial ownership of the assets of Dosher Partners, L.P., including the shares of Common Stock held by it, to the extent those interests are held for the benefit of such trusts. (5) SP Associates is a general partnership controlled by affiliates of JMB Realty Corp. (6) Mr. Stuelpe owns approximately 3.1% of the common stock of AP Holdings. (7) Mr. Celebrezze owns less than 1.0% of the common stock of AP Holdings. (8) Mr. Sacks owns less than 1.0% of the common stock of AP Holdings. (9) Mr. LaRocco owns approximately 1.6% of the common stock of AP Holdings. 65 68 CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS COMPANY STOCKHOLDERS AGREEMENT Upon consummation of the Combination, the Company entered into a Stockholders Agreement (the "Stockholders Agreement") with Dosher Partners, L.P. ("Dosher"), and SP Associates (collectively, the "Standard Parties") and Holberg and AP Holdings (collectively with the Standard Parties, the "Stockholders"). The Stockholders Agreement provides, among other things, for (i) prior to the earliest of (a) the seventh anniversary of the consummation of the Combination, (b) the termination of Myron C. Warshauer's employment with the Company under certain circumstances and (c) the consummation of an initial public offering of Company Common Stock (as such offering will be defined in the Stockholders Agreement), certain obligations of Holberg to allow Dosher the opportunity to acquire all, but not less than all, of the Company Common Stock held by Holberg and/or its affiliates before Holberg may directly or indirectly sell an amount of Company Common Stock which would constitute a Control Transaction (as will be defined in the Stockholders Agreement); provided that, under certain circumstances, Holberg may sell such shares to a party other than Dosher if the terms of such other party's offer are more favorable to Holberg, (ii) until the consummation of an initial public offering of Company Common Stock, certain rights of each Standard Party to purchase shares of Company Common Stock to the extent necessary to maintain such Standard Party's percentage ownership of the Company, (iii) the right of the Standard Parties to participate in, and the right of Holberg to require the Standard Parties to participate in, certain sales of Company Common Stock, (iv) following the third anniversary of the consummation of the Combination and prior to an initial public offering of Company Common Stock, certain rights of the Company to purchase, and certain rights of the Standard Parties to require the Company to purchase, shares of Company Common Stock at prices determined in accordance with the Stockholders Agreement and (v) certain additional restrictions on the rights of the Standard Parties to transfer shares of Company Common Stock. The Stockholders Agreement also contains certain provisions granting the Stockholders certain rights in connection with registrations of Company Common Stock in certain offerings and provides for indemnification and certain other rights, restrictions and obligations in connection with such registrations. AP HOLDINGS STOCKHOLDERS AGREEMENT AP Holdings is party to a Stockholders Agreement with Holberg, Delaware North, and each of the members of APCOA management who is a stockholder of AP Holdings, and an ancillary Put/Call Option Agreement (the "Put/Call Agreement") between Holberg and Delaware North, which provide for, among other things, (i) a board of directors consisting of three or more Holberg nominees, one Delaware North nominee, and one management nominee, (ii) certain restrictions on the sale, assignment, transfer, encumbrance or other disposition of the common stock of AP Holdings, (iii) certain first offer, repurchase and put/call rights with respect to the AP Holdings common stock held by the management investors (a summary of which is set forth below), (iv) certain pre-emptive rights in favor of the management investors with respect to the issuance of AP Holdings common stock, and (v) certain put/call rights with respect to the AP Holdings common stock held by Delaware North (a summary of which is set forth below). AP Holdings has exercised the right to repurchase the AP Holdings common stock held by Delaware North, and is in negotiations with Delaware North with respect to the price of such repurchase. The AP Holdings Stockholders Agreement provides that, subject to any direct or indirect restrictions imposed by financing agreements or arrangements entered into by AP Holdings or the Company, upon the termination of employment of a management investor for death, retirement, complete disability, or otherwise, (a) such management investor, or his estate or heir (in the case of death, retirement or complete disability), shall have the right to cause AP Holdings to, and (b) AP Holdings shall have the right to, repurchase such management investor's AP Holdings common stock, at a purchase price, which, under some circumstances, is partially payable in subordinated notes, equal to, (X) in the case of a termination of employment for death, retirement or complete disability or by AP Holdings without Cause (as defined in the AP Holdings Stockholders Agreement) or a voluntary termination of employment by such management investor, the greatest of, or (Y) in the case of a termination of employment by AP Holdings for Cause, the lowest of, 66 69 (i) the price per share paid by such management investor for such AP Holdings common stock, (ii) the adjusted book value per share of AP Holdings common stock and (iii) the sum, on a per share basis, of (x) the product of the cash contribution from operations of AP Holdings for the immediately preceding four fiscal quarters multiplied by 6.84 minus (y) the amount of debt reflected in AP Holdings most recent consolidated financial statements. The Put/Call Agreement provides that AP Holdings shall have an option to purchase, and that Delaware North shall have an option to cause AP Holdings to purchase, the AP Holdings common stock held by Delaware North at certain times or upon the occurrence of certain events. Upon the exercise by either Delaware North or AP Holdings of its respective option described above, the parties shall, pursuant to a certain procedure, select a nationally recognized investment bank to determine the fair market value of the AP Holdings common stock held by Delaware North, which, subject to certain adjustments shall be the purchase price (which purchase price may at the option of AP Holdings be partially payable in the form of a promissory note) for such common stock. TAX SHARING AGREEMENT The Company is a party to the Tax Sharing Agreement, dated April 28, 1989, by and among Holberg, AP Holdings and the Company (the "Tax Sharing Agreement"), which applies to each of Holberg's consolidated return years beginning with 1989. The Tax Sharing Agreement provides that each member of Holberg's affiliated group, including the Company, will pay to Holberg the amount of federal income tax that such member would be required to pay on a separate return basis for the year in question, except that the amount that the Company is required to pay to Holberg will not exceed the tax liabilities of the Company on a separate return basis for all taxable years to which the Tax Sharing Agreement applies and for which the Company joined in the Holberg consolidated return, computed as if the Company had actually filed separate returns for all such years and taking into account any net operating loss carryforward the Company would have had if it had filed a separate return for all such years. Holberg is not required to make a payment to the Company by virtue of the utilization by the Holberg affiliated group of any net operating loss generated by the Company. In the event that the consolidated federal income tax liability of the Holberg affiliated group is adjusted for any taxable period, whether by means of an amended return, claim for refund, or tax audit by the Internal Revenue Service, the liability of the Company under the Tax Sharing Agreement will be recomputed to give effect to such adjustments. PREFERRED STOCK Prior to the consummation of the Combination, Holberg held $8.7 million of preferred stock of APCOA. A portion of the proceeds of the Offering was used to redeem $8.0 million of the preferred stock. The remaining $0.7 million was contributed to the capital of the Company. The preferred stock issued by the Company to AP Holdings in respect of the Preferred Stock Contribution has the same maturity as the debt securities of AP Holdings issued to finance the Preferred Stock Contribution, has an initial liquidation preference equal to the issue price of such debt securities, increases in liquidation preference at the same rate as such debt securities accrue interest, such that the liquidation preference of the preferred stock will at all times be equal to the then principal amount of such debt securities, and accrues cash dividends commencing at such times as such debt securities commence to accrue cash interest, at the same rate as such debt securities. MANAGEMENT CONTRACTS AND RELATED ARRANGEMENTS WITH AFFILIATES The Company has a management contract to operate one parking facility in Chicago with an Illinois land trust which is beneficially owned by a partnership in which Myron C. Warshauer, Steven A. Warshauer and Stanley Warshauer have an equity interest. All expenses that are typically borne by a facility owner under a management contract, such as salaries, wages and benefits associated with employees at the parking facility and an allocable portion of such costs for supervisory management personnel, the cost of uniforms, supplies, 67 70 insurance, utilities and other direct operating costs ("property-level expenses") are paid by the facility owner. Pursuant to the management contract, the Company is entitled to an annual management fee of approximately $40,700 in 1998. However, certain subordination provisions in the loan agreement between the facility owner and its lender have resulted in the non-payment of all or a portion of the management fee for the past four years. The Company estimates that the management fee to which it is entitled pursuant to this management contract is no less than would normally be obtained through arms-length negotiations. The Company has a management contract with the Buckingham Plaza Limited Partnership ("BPLP") to operate the parking facility at a condominium complex in Chicago of which BPLP was the developer. Myron C. Warshauer and SP Associates own an equity interest in one of BPLP's limited partners. The Company receives an annual management fee of $20,200 pursuant to such management contract. The Company estimates that such management fee is no less than would normally be obtained through arms-length negotiations. The Company has management contracts to operate two surface parking lots in Chicago. Myron C. Warshauer, Steven A. Warshauer, Stanley Warshauer, Michael K. Wolf and SP Associates own membership interests in a limited liability company that is a member of the limited liability companies that own such surface parking lots. The Company receives a total of $39,300 in management fees annually under such management contracts. The Company estimates that such management fees are no less than would normally be obtained through arms-length negotiations. The Company operates the Clark Fullerton Self Park, a parking facility in which Myron C. Warshauer has a 50% equity interest. The facility owner pays all of the property-level expenses. The Company does not receive a management fee. The Company estimates that in today's market, it reasonably could expect to receive an annual management fee ranging from $15,000 to $20,000 for providing such services. The Company provides office and related support services to Auditorium Garage, Inc. ("Auditorium"), an Illinois corporation owned by Stanley Warshauer and his wife, in conjunction with Auditorium's management of a parking facility. Auditorium reimburses the Company for the general and administrative costs associated with providing these services, which reimbursement totaled $32,200 in 1997. Myron C., Stanley and Steven A. Warshauer own an equity interest in two parking facilities in Chicago. One of those facilities is leased to the Company on terms that the Company believes are no less favorable to the Company than would normally be obtained through arms-length negotiations. The Company earned net lease income of $342,000 in 1997 at such facility. The other parking facility (the "Tremont Facility") is leased to Standard/Tremont Parking Corporation ("Standard Tremont"), an Illinois corporation that is owned by Stanley Warshauer, Steven A. Warshauer and Myron C. Warshauer. The Company provides office and related support services to Standard Tremont, in conjunction with Standard Tremont's management of the Tremont Facility. Standard Tremont reimburses the Company for the general and administrative costs associated with providing these services, which reimbursement totaled $13,900 in 1997. The Company pays 12.5% of the lease net operating income derived from one parking facility to Warshauer Management Corporation for services rendered in obtaining the right to operate the facility. LIABILITY INSURANCE The Company currently purchases a portion of its casualty insurance from an affiliate of Holberg. The Company estimates that the premiums paid for such insurance are comparable to premiums it would pay for comparable coverage from an unrelated third party. See Note H to the Historical Consolidated Financial Statements of APCOA included herein. The Company purchases liability insurance covering certain parking facilities from JMB Insurance Agency, Inc., an affiliate of JMB Realty Corp. The Company estimates that the premiums paid for such insurance are comparable to premiums it would pay for comparable coverage from an unrelated third party. 68 71 CONSULTING AGREEMENT WITH SIDNEY WARSHAUER Consummation of the Combination was conditioned, among other things, upon the execution of a consulting agreement between the Company and Sidney Warshauer, the father of Myron C. Warshauer. Sidney Warshauer is 83 years old. The Consulting Agreement between the Company and Sidney Warshauer (the "Consulting Agreement") provides that Sidney Warshauer render such services as may be requested, from time to time, by the Board of Directors of the Company (the "Board") and/or the Chief Executive Officer of the Company, consistent with Mr. Warshauer's past practices and experience, for a period beginning on the date of the consummation of the Combination and ending on Sidney Warshauer's death (the "Consulting Period"). Sidney Warshauer will receive, during the Consulting Period, an annual consulting fee of $552,000. The Consulting Agreement also provides that Sidney Warshauer will receive certain other benefits during the Consulting Period. The Consulting Agreement is not terminable by the Company for any reason other than the death of Sidney Warshauer, or a breach by Sidney Warshauer of his obligations under the Consulting Agreement with respect to non-disclosure of Company confidential information, or his obligation under the Consulting Agreement to refrain from engaging in competition with the Company, as described below. The Consulting Agreement provides that, during the Consulting Period, Sidney Warshauer will not, without written consent of the Board, engage in, or become associated with, any business or other endeavor that engages in construction, ownership, leasing, design and/or management of parking lots, parking garages, or other parking facilities or consulting with respect thereto. CERTAIN OTHER MATTERS RELATING TO HOLBERG Holberg has received customary investment banking and advisory fees from APCOA in connection with certain prior transactions, and received a $1.0 million advisory fee (and reimbursement of expenses) upon consummation of the Combination. The Company also may pay an annual management fee to Holberg and otherwise reimburse Holberg for certain expenses incurred by Holberg on behalf of the Company. In addition, the Company currently leases a plane on behalf of Holberg. Holberg pays all costs under the lease other than amounts that may be charged to the Company in connection with use of the plane and indemnifies the Company for all obligations under the lease. All of these fees and other amounts paid to Holberg are subject to the limits and restrictions imposed by the Indenture. See "Description of New Notes--Affiliate Transactions." APCOA and Holberg and its affiliates have periodically engaged in bi-lateral loans and advances. These loans and advances were interest bearing at a variable rate that approximated the prime interest rate. The accumulated interest was added to, or deducted from (as appropriate), the balance in the loan or advance account on a monthly basis. In connection with the Combination, APCOA made a $6.5 million non-cash distribution to Holberg of the receivable in such amount due from Holberg to APCOA, thereby eliminating all amounts due from Holberg to APCOA. The Company may from time to time enter into such bi-lateral loans and advances in the future as permitted under the Indenture. See Note 5 to the Unaudited Pro Forma Consolidated Balance Sheet and "Description of New Notes--Permitted Investments." 69 72 DESCRIPTION OF INDEBTEDNESS The following sets forth information concerning the Company's indebtedness. NEW CREDIT FACILITY The Company has entered into the New Credit Facility, pursuant to which the Company has available a new $40 million revolving credit facility with a six-year term. The New Credit Facility is available for working capital and general corporate purposes, including the issuance of letters of credit. At the Closing, the Company issued approximately $4.9 million of letters of credit under the New Credit Facility. The initial interest rate for borrowings under the New Credit Facility is, at the option of the Company, LIBOR plus 2.50% or the Alternate Base Rate (as defined below) plus 1.25%. The initial rates may be reduced or increased according to a pricing grid. The Company may elect interest periods of one, two, three or six months for LIBOR borrowings. The "Alternate Base Rate" is the higher of (i) the Agent's corporate base rate and (ii) the federal funds rate plus 1%. LIBOR will at all times include maximum statutory reserves. Indebtedness under the New Credit Facility may be prepaid in whole or in part without premium or penalty (subject in some cases to related breakage) and the Company may reduce or terminate the Lenders' commitments upon such notice and in such amounts as may be agreed upon. All of the Company's existing and future wholly-owned domestic subsidiaries guarantee indebtedness under the New Credit Facility. All extensions of credit under the New Credit Facility to the Company and the guarantees of subsidiaries of the Company's indebtedness under the New Credit Facility are secured, subject to certain exceptions, by all existing and after-acquired personal property of the Company and its subsidiaries, including all outstanding capital stock of the Company's subsidiaries, and any intercompany debt obligations, and all existing and after-acquired real property fee and leasehold interests and management contracts, subject to prohibitions in certain of such arrangements relating to collateral assignment. With certain exceptions, the Company and its subsidiaries are prohibited from pledging any of their assets other than under the New Credit Facility. Additionally, AP Holdings guarantees the Company's obligations under the New Credit Facility and such guarantee is secured by a first priority pledge of all the capital stock of the Company owned by AP Holdings. Under the New Credit Facility, the initial letter of credit fee is 2.50% per annum based upon the amount available for drawing under outstanding standby letters of credit plus customary and reasonable issuing fees. The issuing bank will retain 0.25% per annum from the fee for issuing the standby letters of credit. There may be adjustments in the letter of credit fees described above according to a pricing grid. The New Credit Facility contains customary and appropriate representations and warranties, including, without limitation, those relating to due organization and authorization, no conflicts, financial condition, no material adverse changes, title to properties, liens, litigation, payment of taxes, compliance with laws, and full disclosure. The New Credit Facility also contains customary and appropriate conditions including requirements relating to prior written notice of borrowing. The New Credit Facility also contains customary affirmative and negative covenants (including, where appropriate, certain exceptions and baskets), including but not limited to furnishing information and limitations on asset sales, other indebtedness, liens, investments, guarantees, restricted payments, mergers and acquisitions, capital expenditures, and affiliate transactions. The New Credit Facility also contains financial covenants including, without limitation, those relating to: minimum interest coverage; minimum fixed charge coverage; and maximum leverage. Events of default under the New Credit Facility include those relating to: (a) non-payment of interest, principal or fees payable under the New Credit Facility; (b) non-performance of certain covenants; (c) cross default to other material debt of the Company and its subsidiaries; (d) bankruptcy or insolvency; (e) judgments in excess of specified amounts; (f) materially inaccurate or false representations or warranties; and (g) change of control. 70 73 ANY NOTES WHICH REMAIN OUTSTANDING FOLLOWING THE EXCHANGE OFFER WILL HAVE THE SAME RIGHT, PRIVILEGES AND LIMITATIONS AS, AND WILL RANK PARI PASSU WITH, THE NEW NOTES. DESCRIPTION OF NEW NOTES GENERAL The New Notes will be issued pursuant to the indenture (the "Indenture") among the Company, the direct or indirect domestic Restricted Subsidiaries of the Company and State Street Bank and Trust Company, as trustee (the "Trustee"), under which the Notes were issued. The terms of the New Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). The New Notes are subject to all such terms, and Holders of New Notes are referred to the Indenture and the Trust Indenture Act for a statement thereof. The following summary of the material provisions of the Indenture does not purport to be complete and is qualified in its entirety by reference to the Indenture, including the definitions therein of certain terms used below. Copies of the proposed form of Indenture and Registration Rights Agreement are available as set forth below under "-- Additional Information." The definitions of certain terms used in the following summary are set forth below under "-- Certain Definitions." The New Notes will be general unsecured obligations of the Company, will rank subordinated in right of payment to all Senior Debt of the Company and senior or pari passu in right of payment to all existing and future subordinated indebtedness of the Company. The New Notes will be fully and unconditionally guaranteed (the "New Note Guarantees") on a joint and several basis by each of the following 12 wholly owned subsidiaries of the Company: Tower Parking, Inc., Graelic, Inc., APCOA Capital Corporation, A-1 Auto Park, Inc., Metropolitan Parking System, Inc., Events Parking Company, Inc., Standard Parking Corporation, Standard Parking Corporation IL, Standard Auto Park, Inc., S&S Parking, Inc., Century Parking, Inc. and Sentry Parking Corporation (the "Subsidiary Guarantors"). Effective as of July 1, 1998, the Company completed a reorganization of certain of its wholly owned subsidiaries pursuant to which, among other things, Standard Parking, L.P., Standard Parking Corporation MW, Standard/Wabash Parking Corporation, Standard Parking of Canada, L.P., Standard Parking I, L.L.C. and Standard Parking II, L.L.C. were merged with and into Standard Parking Corporation. Following the merger, the separate corporate or other existence of each such subsidiary ceased and as such these entities are no longer guarantors of any obligations of the Company. The New Note Guarantees will be general unsecured obligations of the Subsidiary Guarantors, will rank subordinate in right of payment to all Senior Debt of the Subsidiary Guarantors and senior or pari passu in right of payment to all existing and future subordinated indebtedness of the Subsidiary Guarantors. The New Notes and the New Note Guarantees will be effectively subordinated to all indebtedness, including trade payables, of the Company's subsidiaries that are not Subsidiary Guarantors. As of March 31, 1998, on a pro forma basis giving effect to the Combination, and the related financings and other transactions described herein, there was $0.5 million of Senior Debt outstanding. Upon the Closing, the Company entered into a $40.0 million revolving credit facility pursuant to which $4.9 million in letters of credit were issued as of the closing of the Offering. All borrowings and other obligations under the revolving credit facility constitute Senior Debt. The Company has 32 additional subsidiaries which will not be guarantors of the New Notes (the "Non-Guarantor Subsidiaries"). The aggregate pro forma total assets, net income (loss) and total stockholders' equity of the Non-Guarantor Subsidiaries for the year ended December 31, 1997 were $13.3 million, ($0.2 million) and $0.4 million, respectively, and for the three months ended March 31, 1998 were $14.1 million, $0.2 million and $1.0 million, respectively. Condensed consolidating financial information for the Company, the Subsidiary Guarantors and the Non-Guarantor Subsidiaries is set forth in Note M to the Consolidated Financial Statements of APCOA, Inc. presented herein. The operations of the Company are conducted in part through its Subsidiaries, and the Company may, therefore, be dependent upon the cash flow of its Subsidiaries to meet its debt obligations, including its obligations under the New Notes. All of the existing and future wholly owned domestic Restricted Subsidiaries with material assets are expected to be Subsidiary Guarantors. However, under certain 71 74 circumstances, the Company is able to designate current or future Subsidiaries as Unrestricted Subsidiaries. Unrestricted Subsidiaries will not be subject to many of the restrictive covenants set forth in the Indenture. PRINCIPAL, MATURITY AND INTEREST The New Notes will be limited in aggregate principal amount to $200.0 million, of which $140.0 million were issued in the Offering and will mature on March 15, 2008. Interest on the New Notes will accrue at the rate of 9 1/4% per annum and will be payable semi-annually in arrears on March 15 and September 15 of each year, commencing on September 15, 1998, to Holders of record on the immediately preceding March 1 and September 1. Additional New Notes may be issued from time to time, subject to the provisions of the Indenture described below under the caption "-- Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock." Interest on the New Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of original issuance. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. Principal, premium and Liquidated Damages, if any, and interest on the New Notes will be payable at the office or agency of the Company maintained for such purpose within the City and State of New York or, at the option of the Company, payment of interest and Liquidated Damages, if any, may be made by check mailed to the Holders of the New Notes at their respective addresses set forth in the register of Holders of New Notes; provided that all payments of principal, premium and Liquidated Damages, if any, and interest with respect to New Notes the Holders of which have given wire transfer instructions to the Company will be required to be made by wire transfer of immediately available funds to the accounts specified by the Holders thereof. Until otherwise designated by the Company, the Company's office or agency in New York will be the office of the Trustee maintained for such purpose. The Notes will be issued in denominations of $1,000 and integral multiples thereof. SUBORDINATION The payment of principal of, premium and Liquidated Damages, if any, and interest on the New Notes will be subordinated in right of payment, as set forth in the Indenture, to the prior payment in full in cash or cash equivalents of all Senior Debt and all other Obligations with respect thereto, whether outstanding on the date of the Indenture or thereafter created, incurred or assumed and all permissible renewals, extensions, refundings or refinancings thereof. The Indenture provides that, upon any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to creditors in any Insolvency or Liquidation Proceeding with respect to the Company all amounts due or to become due under or with respect to all Senior Debt will first be paid in full in cash or cash equivalents before any payment is made on account of the New Notes and all other Obligations with respect thereto, except that the Holders of New Notes may receive Reorganization Securities. Upon any such Insolvency or Liquidation Proceeding, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities (other than Reorganization Securities), to which the Holders of the New Notes or the Trustee would be entitled will be paid by the Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other person making such payment or distribution, or by the Holders of the New Notes or by the Trustee if received by them, directly to the holders of Senior Debt (pro rata to such holders on the basis of the amounts of Senior Debt held by such holders) or their Representative or Representatives, as their interests may appear, for application to the payment of the Senior Debt remaining unpaid until all such Senior Debt has been paid in full in cash, after giving effect to any concurrent payment, distribution or provision therefor to or for the holders of Senior Debt. The Indenture provides that (a) in the event of and during the continuation of any default in the payment of principal of, interest or premium, if any, on any Senior Debt, or any Obligation owing from time to time under or in respect of Senior Debt, or in the event that any event of default (other than a payment default) with respect to any Senior Debt will have occurred and be continuing and will have resulted in such Senior Debt becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable, or (b) if any event of default other than as described in clause (a) above with respect to any Designated Senior Debt will have occurred and be continuing permitting the holders of such Designated Senior Debt (or their Representative or Representatives) to declare such Designated Senior Debt due and 72 75 payable prior to the date on which it would otherwise have become due and payable, then no payment will be made, or redemption or acquisition will be effected, by or on behalf of the Company on account of the New Notes and all other Obligations with respect thereto (other than payments in the form of Reorganization Securities) (x) in case of any payment or nonpayment default specified in (a), unless and until such default will have been cured or waived in writing in accordance with the instruments governing such Senior Debt or such acceleration will have been rescinded or annulled, or (y) in case of any nonpayment event of default specified in (b), during the period (a "Payment Blockage Period") commencing on the date the Company or the Trustee receive written notice (a "Payment Notice") of such event of default (which notice will be binding on the Trustee and the Holders of New Notes as to the occurrence of such a payment default or nonpayment event of default) from the Credit Agent (or other holders of Designated Senior Debt or their Representative or Representatives) and ending on the earliest of (A) 179 days after such date, (B) the date, if any, on which such Designated Senior Debt to which such default relates is paid in full in cash or such default is cured or waived in writing in accordance with the instruments governing such Designated Senior Debt by the holders of such Designated Senior Debt and (C) the date on which the Trustee receives written notice from the Credit Agent (or other holders of Designated Senior Debt or their Representative or Representatives), as the case may be, terminating the Payment Blockage Period. During any consecutive 360-day period, the aggregate of all Payment Blockage Periods shall not exceed 179 days and there shall be a period of at least 181 consecutive days in each consecutive 360-day period when no Payment Blockage Period is in effect. No event of default which existed or was continuing with respect to the Senior Debt for which notice commencing a Payment Blockage Period was given on the date such Payment Blockage Period commenced shall be or be made the basis for the commencement of any subsequent Payment Blockage Period unless such event of default is cured or waived for a period of not less than 90 consecutive days. As a result of the subordination provisions described above, in the event of the Company's liquidation, dissolution, bankruptcy, reorganization, insolvency, receivership or similar proceeding or in an assignment for the benefit of the creditors or a marshalling of the assets and liabilities of the Company, Holders of New Notes may recover less ratably than creditors of the Company who are holders of Senior Debt. See "Risk Factors -- Subordination." The Indenture limits, subject to certain financial tests, the amount of additional Indebtedness, including Senior Debt, that the Company and its Restricted Subsidiaries can incur. See "-- Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock." NEW NOTE GUARANTEES The Company's payment obligations under the New Notes will be jointly and severally guaranteed by the Subsidiary Guarantors. The New Note Guarantees will be subordinated to the prior payment in full of all Senior Debt of each Subsidiary Guarantor (including such Subsidiary Guarantor's guarantee of the New Credit Facility, if any) to the same extent that the New Notes are subordinated to Senior Debt of the Company. The obligations of any Subsidiary Guarantor under its New Note Guarantee will be limited so as not to constitute a fraudulent conveyance under applicable law. The Indenture provides that no Subsidiary Guarantor may consolidate with or merge with or into (whether or not such Subsidiary Guarantor is the surviving Person), another corporation, Person or entity whether or not affiliated with such Subsidiary Guarantor unless, subject to the provisions of the following paragraph, (i) the Person formed by or surviving any such consolidation or merger (if other than such Subsidiary Guarantor) assumes all the obligations of such Subsidiary Guarantor pursuant to a supplemental indenture in form and substance reasonably satisfactory to the Trustee, under the New Senior Subordinated Notes and the Indenture; (ii) immediately after giving effect to such transaction, no Default or Event of Default exists; and (iii) the Company would be permitted by virtue of its pro forma Fixed Charge Coverage Ratio, immediately after giving effect to such transaction, to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the covenant described below under the caption "Incurrence of Indebtedness and Issuance of Preferred Stock." The requirements of clause (iii) of this paragraph will not apply in the case of a consolidation with or merger with or into (a) the Company or another Subsidiary Guarantor or (b) any other Person if the acquisition of all of the Equity Interests in such Person would have complied with the provisions of the covenants described below under the captions "-- Restricted Payments" and "-- Incurrence of Indebtedness and Issuance of Preferred Stock." 73 76 The Indenture provides that (a) in the event of a sale or other disposition of all of the assets of any Subsidiary Guarantor, by way of merger, consolidation or otherwise, or a sale or other disposition of all of the capital stock of any Subsidiary Guarantor, or (b) in the event that the Company designates a Subsidiary Guarantor to be an Unrestricted Subsidiary, or such Subsidiary Guarantor ceases to be a Subsidiary of the Company, then such Subsidiary Guarantor (in the event of a sale or other disposition, by way of such a merger, consolidation or otherwise, of all of the capital stock of such Subsidiary Guarantor or any such designation) or the entity acquiring the property (in the event of a sale or other disposition of all of the assets of such Subsidiary Guarantor) will be released and relieved of any obligations under its New Note Guarantee; provided that the Net Proceeds of such sale or other disposition are applied in accordance with the applicable provisions of the Indenture. See "Repurchase at the Option of Holders." In the case of a sale, assignment, lease, transfer, conveyance or other disposition of all or substantially all of the assets of a Subsidiary Guarantor, upon the assumption provided for in clause (ii) of the covenant described under the caption "Merger, Consolidation, or Sale of Assets," such Subsidiary Guarantor shall be discharged from all further liability and obligations under the Indenture. OPTIONAL REDEMPTION The New Notes will not be redeemable at the Company's option prior to March 15, 2003. Thereafter, the New Notes will be subject to redemption at any time at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice, at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the applicable redemption date, if redeemed during the twelve-month period beginning on March 15 of the years indicated below:
YEAR PERCENTAGE - ---- ---------- 2003.................................................... 104.625% 2004.................................................... 103.083% 2005.................................................... 101.542% 2006 and thereafter..................................... 100.000%
Notwithstanding the foregoing, at any time prior to March 15, 2001, the Company may redeem up to 35% of the original aggregate principal amount of New Notes at a redemption price of 109.25% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the redemption date, with the net cash proceeds of a Public Equity Offering; provided that at least 65% of the original aggregate principal amount of New Notes remains outstanding immediately after the occurrence of such redemption (excluding New Notes held by the Company and its Subsidiaries); and provided, further, that such redemption shall occur within 45 days of the date of the closing of such Public Equity Offering. SELECTION AND NOTICE If less than all of the New Notes are to be redeemed at any time, selection of New Notes for redemption will be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which the New Notes are listed, or, if the New Notes are not so listed, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate; provided that no New Notes of $1,000 or less shall be redeemed in part. Notices of redemption shall be mailed by first class mail at least 30 but not more than 60 days before the redemption date to each Holder of New Notes to be redeemed at its registered address. Notices of redemption may not be conditional. If any New Note is to be redeemed in part only, the notice of redemption that relates to such Note shall state the portion of the principal amount thereof to be redeemed. A new New Note in principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon cancellation of the original New Note. New Notes called for redemption become due on the date fixed for redemption. On and after the redemption date, interest ceases to accrue on New Notes or portions of them called for redemption. MANDATORY REDEMPTION Except as set forth below under "Repurchase at the Option of Holders," the Company is not required to make mandatory redemption or sinking fund payments with respect to the New Notes. 74 77 REPURCHASE AT THE OPTION OF HOLDERS CHANGE OF CONTROL Upon the occurrence of a Change of Control, each Holder of New Notes will have the right to require the Company to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such Holder's New Notes pursuant to the offer described below (the "Change of Control Offer") at an offer price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the date of purchase (the "Change of Control Payment"). Within 30 days following any Change of Control, the Company will mail a notice to each Holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase New Notes on the date specified in such notice, which date shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed (the "Change of Control Payment Date"), pursuant to the procedures required by the Indenture and described in such notice. The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of the New Notes as a result of a Change of Control. On the Change of Control Payment Date, the Company will, to the extent lawful, (1) accept for payment all New Notes or portions thereof properly tendered pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all New Notes or portions thereof so tendered and (3) deliver or cause to be delivered to the Trustee the New Notes so accepted together with an Officers' Certificate stating the aggregate principal amount of New Notes or portions thereof being purchased by the Company. The Paying Agent will promptly mail to each Holder of New Notes so tendered the Change of Control Payment for such New Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new New Note equal in principal amount to any unpurchased portion of the New Notes surrendered, if any; provided that each such new New Note will be in a principal amount of $1,000 or an integral multiple thereof. The Indenture provides that, prior to complying with the provisions of this covenant, but in any event within 90 days following a Change of Control, the Company will either repay all outstanding Senior Debt or obtain the requisite consents, if any, under all agreements governing outstanding Senior Debt to permit the repurchase of New Notes required by this covenant. The Company will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. The Change of Control provisions described above will be applicable whether or not any other provisions of the Indenture are applicable. Except as described above with respect to a Change of Control, the Indenture does not contain provisions that permit the Holders of the New Notes to require that the Company repurchase or redeem the New Notes in the event of a takeover, recapitalization or similar transaction. The New Credit Facility provides that certain change of control events with respect to the Company would constitute a default thereunder. Any future credit agreements or other agreements relating to Senior Debt to which the Company becomes a party may contain similar restrictions and provisions. In the event a Change of Control occurs at a time when the Company is prohibited from purchasing New Notes, the Company could seek the consent of its lenders to purchase the New Notes or could attempt to refinance the borrowings that contain such prohibition. If the Company does not obtain such consent or repay such borrowings, the Company will remain prohibited from purchasing New Notes. In such case, the Company's failure to purchase tendered New Notes would constitute an Event of Default under the Indenture which would, in turn, constitute a default under the New Credit Facility. In such circumstances, the subordination provisions in the Indenture would likely restrict payments to the Holders of New Notes. The Company will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by the Company and purchases all New Notes validly tendered and not withdrawn under such Change of Control Offer. The definition of Change of Control includes a phrase relating to the sale, lease, transfer, conveyance or other disposition of "all or substantially all" of the assets of the Company and its Subsidiaries taken as a whole. Although there is a developing body of case law interpreting the phrase "substantially all," there is no 75 78 precise established definition of the phrase under applicable law. Accordingly, the ability of a Holder of New Notes to require the Company to repurchase such New Notes as a result of a sale, lease, transfer, conveyance or other disposition of less than all of the assets of the Company and its Subsidiaries taken as a whole to another Person or group may be uncertain. ASSET SALES The Indenture provides that the Company will not, and will 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 (evidenced by a resolution of the Board of Directors set forth in an Officers' Certificate delivered to the Trustee) 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 or such Restricted Subsidiary is in the form of cash; provided that the amount of (x) 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 New 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 (y) 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, (a) to permanently repay Senior Debt (and to correspondingly reduce commitments with respect thereto in the case of revolving borrowings), or (b) 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 New Credit Facility or otherwise invest such Net Proceeds in any manner that is not prohibited by the Indenture. Any Net Proceeds from Asset Sales that are not applied or invested as provided in the first sentence of this paragraph will be deemed to constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $10.0 million, the Company will be required to make an offer to all Holders of New Notes (an "Asset Sale Offer") to purchase the maximum principal amount of New Notes that may be purchased out of the Excess Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the date of purchase, in accordance with the procedures set forth in the Indenture. To the extent that the aggregate amount of New Notes tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company may use any remaining Excess Proceeds for general corporate purposes. If the aggregate principal amount of New Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the New Notes to be purchased on a pro rata basis. Upon completion of such offer to purchase, the amount of Excess Proceeds shall be reset at zero. CERTAIN COVENANTS RESTRICTED PAYMENTS The Indenture provides that from and after the date of the Indenture the Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly: (i) 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); (ii) 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; (iii) make any payment 76 79 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 New Notes (other than New Notes), except a payment of interest or principal at Stated Maturity; or (iv) make any Restricted Investment (all such payments and other actions set forth in clauses (i) through (iv) above being collectively referred to as "Restricted Payments"), unless, at the time of and after giving effect to such Restricted Payment: (a) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; and (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 the first paragraph of the covenant described below under the caption "-- Incurrence of Indebtedness and Issuance of Preferred Stock"; 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 Indenture (excluding Restricted Payments permitted by clause (ii) and (iii) of the next succeeding paragraph), is less than the sum of (i) 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 Indenture 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 (ii) 100% of the aggregate net cash proceeds received by the Company from the issue or sale since the date of the Indenture 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 (iii) to the extent that any Restricted Investment that was made after the date of the Indenture is sold for cash or otherwise liquidated or repaid for cash, the lesser of (A) the cash return of capital with respect to such Restricted Investment (less the cost of disposition, if any) and (B) the initial amount of such Restricted Investment plus (iv) if any Unrestricted Subsidiary (A) is redesignated as a Restricted Subsidiary, the fair market value of such redesignated Subsidiary (as determined in good faith by the Board of Directors) as of the date of its redesignation or (B) 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 Indenture. The foregoing provisions will not prohibit (i) 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 the Indenture; (ii) 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); (iii) 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; (iv) the payment of any dividend by a Restricted Subsidiary of the Company to the holders of its Equity Interests on a pro rata basis; (v) 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 (v) that are at that time outstanding not to exceed $5.0 million; (vi) other Investments in Unrestricted Subsidiaries having an aggregate fair market value, taken together with all other Investments made pursuant to this clause (vi) that are at that time outstanding, not to exceed $2.0 million; (vii) payments to Holdings or Holberg pursuant to the tax sharing agreement among Holberg and other members of the affiliated corporations of which Holberg is the common parent; (viii) the designation of certain of the Company's Subsidiaries as Unrestricted Subsidiaries immediately prior to the date of the Indenture; (ix) the payment of a one-time dividend or distribution by the Company to pay fees, expenses, commissions and discounts in connection with the offering 77 80 by Holdings of debt securities used to finance the Preferred Stock Contribution; (x) the redemption in connection with the Transactions of the preferred stock of the Company held by Holberg; (xi) 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 Indenture 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 (xii) other Restricted Payments in an aggregate amount not to exceed $10.0 million. From and after the date of the Indenture, the Board of Directors may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if such designation would not cause a 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 the first paragraph of this covenant. 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 of Directors). 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 of Directors whose resolution with respect thereto shall be delivered to the Trustee such determination to be based upon an opinion or appraisal issued by an accounting, appraisal or investment banking firm of national standing if such fair market value exceeds $10.0 million. Not later than the date of making any Restricted Payment, the Company shall deliver to the Trustee an Officers' Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by the covenant "Restricted Payments" were computed, together with a copy of any fairness opinion or appraisal required by the Indenture. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK The Indenture provides that the Company will not, and will 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 that the Company will not issue any Disqualified Stock and will not permit any of its Subsidiaries to issue any shares of preferred stock; provided, however, 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. The provisions of the first paragraph of this covenant will not apply to the incurrence of any of the following items of Indebtedness (collectively, "Permitted Debt"): (i) the incurrence by the Company of revolving credit Indebtedness and letters of credit pursuant to New Credit Facility; provided that the aggregate principal amount of all revolving credit Indebtedness (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the 78 81 Company and its Subsidiaries thereunder) outstanding under the New Credit Facility after giving effect to such incurrence does not exceed $40.0 million less the aggregate amount of all Net Proceeds of Asset Sales applied to repay revolving credit Indebtedness under the New Credit Facility pursuant to the covenant described above under "-- Repurchase at the Option of Holders -- Asset Sales"; (ii) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness; (iii) the incurrence by the Company and the Subsidiary Guarantors of Indebtedness represented by the New Notes and the New Note Guarantees thereof, respectively; (iv) 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; (v) 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 (v), does not exceed $5.0 million; (vi) 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 by the Indenture to be incurred under the first paragraph hereof or clauses (i), (ii), (iii), (iv), (v) or (xv) of this paragraph; (vii) 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, however, that (i) 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 Notes and (ii)(A) 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 (B) any sale or 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; (viii) 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 Indenture to be outstanding; (ix) 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; (x) the incurrence by the Company's Unrestricted Subsidiaries of Non-Recourse Debt, provided, however, 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 (x); (xi) 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, 79 82 provided, however, 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; (xii) 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; (xiii) 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; (xiv) guarantees incurred in the ordinary course of business in an aggregate principal amount not to exceed $5.0 million; and (xv) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness, including Attributable Debt incurred after the date of the Indenture, 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 Indebtedness incurred pursuant to this clause (xv), not to exceed $25.0 million. For purposes of determining compliance with this covenant, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (i) through (xv) above or is entitled to be incurred pursuant to the first paragraph of this covenant, the Company shall, in its sole discretion, classify such item of Indebtedness in any manner that complies with this covenant and such item of Indebtedness will be treated as having been incurred pursuant to only one of such clauses or pursuant to the first paragraph hereof. The incurrence of Indebtedness pursuant to the first paragraph of the covenant described above shall not be classified as any of the Items in clauses (i) through (xv) above. Accrual of interest and the accretion of accreted value will not be deemed to be an incurrence of Indebtedness for purposes of this covenant. LIENS The Indenture provides that the Company will not and will not permit any of its Restricted Subsidiaries to, create, incur, assume or otherwise cause or suffer to exist or become effective any Lien of any kind securing Indebtedness or trade payables that do not constitute Senior Debt (other than Permitted Liens) upon any of their property or assets, now owned or hereafter acquired. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES The Indenture provides that the Company will not, and will 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 (i)(a) pay dividends or make any other distributions to the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or (2) with respect to any other interest or participation in, or measured by, its profits, or (b) pay any indebtedness owed to the Company or any of its Restricted Subsidiaries, (ii) make loans or advances to the Company or any of its Restricted Subsidiaries or (iii) transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries, except for such encumbrances or restrictions existing under or by reason of (a) Existing Indebtedness as in effect on the date of the Indenture, (b) the New Credit Facility as in effect as of the date of the Indenture, 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 New Credit Facility as in effect on the date of the Indenture, (c) the Indenture and the New Notes, (d) any applicable law, rule, regulation or order, (e) any instrument governing 80 83 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, so acquired; provided that, in the case of Indebtedness, such Indebtedness was permitted by the terms of the Indenture 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 (iii) 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. MERGER, CONSOLIDATION, OR SALE OF ASSETS The Indenture provides that the Company may not consolidate or merge with or into (whether or not the Company is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions, to another corporation, Person or entity unless (i) the Company is the surviving corporation or the entity or the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia; (ii) the entity or Person formed by or surviving any such consolidation or merger (if other than the Company) or the entity or Person to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made assumes all the obligations of the Company under the New Notes and the Indenture pursuant to a supplemental indenture in a form reasonably satisfactory to the Trustee; (iii) immediately after such transaction no Default or Event of Default exists; and (iv) except in the case of a merger of the Company with or into a Wholly Owned Restricted Subsidiary of the Company, the Company or the entity or Person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made will, at the time of such transaction and after giving pro forma effect thereto as if such transaction had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described above under the caption "-- Incurrence of Indebtedness and Issuance of Preferred Stock." TRANSACTIONS WITH AFFILIATES The Indenture provides that the Company will not, and will 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 (i) 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 and (ii) the Company delivers to the Trustee (a) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $5.0 million, a resolution of the Board of Directors set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with clause (i) above and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors and (b) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $10.0 million, an opinion as to the fairness to the Holders of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of 81 84 national standing; provided that the following shall not be deemed Affiliate Transactions: (q) 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, (r) transactions between or among the Company and/or its Restricted Subsidiaries, (s) Permitted Investments and Restricted Payments that are permitted by the provisions of the Indenture described above under the caption "-- Restricted Payments," (t) 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, (u) annual management fees paid to Holberg Industries, Inc. not to exceed $5.0 million in any one year, (v) transactions pursuant to any contract or agreement in effect on the date of the Indenture 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 Indenture or is approved by a majority of the disinterested directors of the Company, (w) transactions between the Company or its Restricted Subsidiaries on the one hand, and Holberg on the other hand, involving the provision of financial or advisory services by Holberg; provided that fees payable to Holberg do not exceed the usual and customary fees for similar services, (x) transactions between the Company or its Restricted Subsidiaries on the one hand, and Donaldson, Lufkin & Jenrette Securities Corporation or its Affiliates ("DLJ") on the other hand, involving the provision of financial, advisory, placement or underwriting services by DLJ; provided that fees payable to DLJ do not exceed the usual and customary fees of DLJ for similar services, (y) the insurance arrangements between the Company and its Subsidiaries and an Affiliate of Holberg that are not less favorable to the Company or any of its Subsidiaries than those that are in effect on the date hereof provided such arrangements are conducted in the ordinary course of business consistent with past practices and (z) payments under the tax sharing agreement among Holberg and other members of the affiliated group of corporations of which it is the common parent. ANTI-LAYERING The Indenture provides that (i) the Company will not incur, create, issue, assume, guarantee or otherwise become liable for any Indebtedness that is both (a) subordinate or junior in right of payment to any Senior Debt and (b) senior in any respect in right of payment to the Notes and (ii) no Subsidiary Guarantor will incur, create, issue, assume, guarantee or otherwise become liable for any Indebtedness that is both (a) subordinate or junior in right of payment to its Senior Debt and (b) senior in right of payment to its New Note Guarantee. SALE AND LEASEBACK TRANSACTIONS The Indenture provides that the Company will not, and will not permit any of its Restricted Subsidiaries to, enter into any sale and leaseback transaction; provided that the Company may enter into a sale and leaseback transaction if (i) the Company could have (a) incurred Indebtedness in an amount equal to the Attributable Debt relating to such sale and leaseback transaction pursuant to the covenant described above under the caption "-- Incurrence of Additional Indebtedness and Issuance of Preferred Stock" and (b) incurred a Lien to secure such Indebtedness pursuant to the covenant described above under the caption "-- Liens," (ii) the gross cash proceeds of such sale and leaseback transaction are at least equal to the fair market value (as determined in good faith by the Board of Directors and set forth in an Officers' Certificate delivered to the Trustee) of the property that is the subject of such sale and leaseback transaction and (iii) the transfer of assets in such sale and leaseback transaction is permitted by, and the Company applies the proceeds of such transaction in compliance with, the covenant described above under the caption "-- Asset Sales." LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK OF WHOLLY OWNED RESTRICTED SUBSIDIARIES The Indenture provides that the Company (i) will not, and will 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 82 85 such transfer, conveyance, sale, lease or other disposition are applied in accordance with the covenant described above under the caption "-- Asset Sales," and (ii) will not permit any Wholly Owned Restricted Subsidiary of the Company to issue any of its 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. LIMITATIONS ON ISSUANCES OF GUARANTEES OF INDEBTEDNESS The Indenture provides that the Company will not permit any Restricted Subsidiary, directly or indirectly, to Guarantee or pledge any assets to secure the payment of any other Indebtedness of the Company unless either such Restricted Subsidiary (x) is a Subsidiary Guarantor or (y) simultaneously executes and delivers a supplemental indenture to the Indenture providing for the Guarantee of the payment of the New Notes by such Restricted Subsidiary, which Guarantee shall be senior to or pari passu with such Restricted Subsidiary's Guarantee of or pledge to secure such other Indebtedness. Notwithstanding the foregoing, any such Guarantee by a Restricted Subsidiary of the New Notes shall provide by its terms that it shall be automatically and unconditionally released and discharged upon any sale, exchange or transfer, to any Person not an Affiliate of the Company, of all of the Company's stock in, or all or substantially all the assets of, such Restricted Subsidiary, which sale, exchange or transfer is made in compliance with the applicable provisions of the Indenture. The form of such Guarantee will be attached as an exhibit to the Indenture. BUSINESS ACTIVITIES The Company will not, and will 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. ADDITIONAL GUARANTEES The Indenture provides that (i) if the Company or any of its Restricted Subsidiaries shall, after the date of the Indenture, transfer or cause to be transferred, including by way of any Investment, in one or a series of transactions (whether or not related), any assets, businesses, divisions, real property or equipment having an aggregate fair market value (as determined in good faith by the Board of Directors) in excess of $1.0 million to any Restricted Subsidiary that is not a Subsidiary Guarantor or a Foreign Subsidiary, (ii) if the Company or any of its Restricted Subsidiaries shall acquire another Restricted Subsidiary other than a Foreign Subsidiary having total assets with a fair market value (as determined in good faith by the Board of Directors) in excess of $1.0 million, or (iii) if any Restricted Subsidiary other than a Foreign Subsidiary shall incur Acquired Debt in excess of $1.0 million, then the Company shall, at the time of such transfer, acquisition or incurrence, (i) cause such transferee, acquired Restricted Subsidiary or Restricted Subsidiary incurring Acquired Debt (if not then a Subsidiary Guarantor) to execute a New Note Guarantee of the Obligations of the Company under the New Notes in the form set forth in the Indenture and (ii) deliver to the Trustee an Opinion of Counsel, in form reasonably satisfactory to the Trustee, that such New Note Guarantee is a valid, binding and enforceable obligation of such transferee, acquired Restricted Subsidiary or Restricted Subsidiary incurring Acquired Debt, subject to customary exceptions for bankruptcy, fraudulent conveyance and equitable principles. Notwithstanding the foregoing, the Company or any of its Restricted Subsidiaries may make a Restricted Investment in any Wholly Owned Restricted Subsidiary of the Company without compliance with this covenant provided that such Restricted Investment is permitted by the covenant described under the caption "Restricted Payments." REPORTS The Indenture provides that, whether or not required by the rules and regulations of the Commission, so long as any New Notes are outstanding, the Company will furnish to the Holders of New Notes (i) all quarterly and annual financial information that would be required to be contained in a filing with the Commission on Forms 10-Q and 10-K if the Company were required to file such Forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" and, with respect 83 86 to the annual information only, a report thereon by the Company's certified independent accountants and (ii) all current reports that would be required to be filed with the Commission on Form 8-K if the Company were required to file such reports. In addition, whether or not required by the rules and regulations of the Commission, the Company will file a copy of all such information and reports with the Commission for public availability (unless the Commission will not accept such a filing) and make such information available to securities analysts and prospective investors upon request. In addition, the Company has agreed that, for so long as any New Notes remain outstanding, it will furnish to the Holders and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. EVENTS OF DEFAULT AND REMEDIES The Indenture provides that each of the following constitutes an Event of Default: (i) default for 30 days in the payment when due of interest on, or Liquidated Damages with respect to, the New Notes (whether or not prohibited by the subordination provisions of the Indenture); (ii) default in payment when due of the principal of or premium, if any, on the New Notes (whether or not prohibited by the subordination provisions of the Indenture); (iii) failure by the Company to comply with the provisions described under the captions "-- Change of Control," "-- Asset Sales," or "-- Merger, Consolidation, or Sale of Assets;" (iv) failure by the Company for 30 days after notice from the Trustee or at least 30% in principal amount of the New Notes then outstanding to comply with the provisions described under the captions "-- Restricted Payments" or "-- Incurrence of Indebtedness and Issuance of Preferred Stock;" (v) failure by the Company for 60 days after notice from the Trustee or at least 25% in principal amount of the New Notes then outstanding to comply with any of its other agreements in the Indenture or the New Notes; (vi) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Subsidiaries (or the payment of which is guaranteed by the Company or any of its Subsidiaries) whether such Indebtedness or Guarantee now exists, or is created after the date of the Indenture, which default (a) is caused by a failure to pay principal of or premium, if any, or interest on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a "Payment Default") or (b) results in the acceleration of such Indebtedness prior to its express maturity and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $15.0 million or more; (vii) failure by the Company or any of its Subsidiaries to pay final judgments aggregating in excess of $5.0 million, which judgments are not paid, discharged or stayed for a period of 60 days; and (viii) certain events of bankruptcy or insolvency with respect to the Company or any of its Subsidiaries. If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding New Notes may declare all the New Notes to be due and payable immediately; provided, however, that if any Indebtedness or Obligation is outstanding pursuant to the New Credit Facility, upon a declaration of acceleration by the holders of the New Notes or the Trustee, all principal and interest under the Indenture shall be due and payable upon the earlier of (x) the day which five Business Days after the provision to the Company, the Credit Agent and the Trustee of such written notice of acceleration or (y) the date of acceleration of any Indebtedness under the New Credit Facility; and provided, further, that in the event of an acceleration based upon an Event of Default set forth in clause (vi) above, such declaration of acceleration shall be automatically annulled if the holders of Indebtedness which is the subject of such failure to pay at maturity or acceleration have rescinded their declaration of acceleration in respect of such Indebtedness or such failure to pay at maturity shall have been cured or waived within 30 days thereof and no other Event of Default has occurred during such 30-day period which has not been cured, paid or waived. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to the Company or any of its Subsidiaries all outstanding New Notes will become due and payable without further action or notice. Holders of the New Notes may not enforce the Indenture or the New Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding New Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the New Notes notice of any continuing Default or 84 87 Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. In the case of any Event of Default occurring by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding payment of the premium that the Company would have had to pay if the Company then had elected to redeem the New Notes pursuant to the optional redemption provisions of the Indenture, an equivalent premium shall also become and be immediately due and payable to the extent permitted by law upon the acceleration of the New Notes. If an Event of Default occurs prior to March 15, 2003 by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding the prohibition on redemption of the New Notes prior to March 15, 2003, then the premium specified in the Indenture shall also become immediately due and payable to the extent permitted by law upon the acceleration of the New Notes. The Holders of a majority in aggregate principal amount of the New Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the New Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest on, or the principal of, the New Notes. The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Company is required upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS No director, officer, employee, incorporator or stockholder of the Company or the Subsidiary Guarantors, as such, shall have any liability for any obligations of the Company or any Subsidiary Guarantor under the New Notes, the Indenture, the New Note Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of New Notes by accepting a New Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the New Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy. LEGAL DEFEASANCE AND COVENANT DEFEASANCE The Company may, at its option and at any time, elect to have all of its obligations discharged with respect to the outstanding New Notes and all obligations of the Subsidiary Guarantors under the New Note Guarantees ("Legal Defeasance") except for (i) the rights of Holders of outstanding New Notes to receive payments in respect of the principal of, premium and Liquidated Damages, if any, and interest on such New Notes when such payments are due from the trust referred to below, (ii) the Company's obligations with respect to the New Notes concerning issuing temporary New Notes, registration of New Notes, mutilated, destroyed, lost or stolen New Notes and the maintenance of an office or agency for payment and money for security payments held in trust, (iii) the rights, powers, trusts, duties and immunities of the Trustee, and the Company's obligations in connection therewith and (iv) the Legal Defeasance provisions of the Indenture. In addition, the Company may, at its option and at any time, elect to have the obligations of the Company and the Subsidiary Guarantors released with respect to certain covenants that are described in the Indenture ("Covenant Defeasance") and thereafter any omission to comply with such obligations shall not constitute a Default or Event of Default with respect to the New Notes. In the event Covenant Defeasance occurs, certain events (not including non-payment, bankruptcy, receivership, rehabilitation and insolvency events) described under "Events of Default" will no longer constitute an Event of Default with respect to the New Notes. In order to exercise either Legal Defeasance or Covenant Defeasance: (i) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders of the New Notes, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium and Liquidated Damages, if any, and interest on the outstanding New Notes on the stated maturity or on the applicable redemption date, as the case may be, and the Company must specify whether the New Notes are 85 88 being defeased to maturity or to a particular redemption date; (ii) in the case of Legal Defeasance, the Company shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the date of the Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion of counsel shall confirm that, the Holders of the outstanding New Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (iii) in the case of Covenant Defeasance, the Company shall have delivered to the Trustee an opinion of counsel in the United States reasonably acceptable to the Trustee confirming that the Holders of the outstanding New Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (iv) no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit) or insofar as Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the 91st day after the date of deposit; (v) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under any material agreement or instrument (other than the Indenture) to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound; (vi) the Company must have delivered to the Trustee an opinion of counsel to the effect that after the 91st day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally; (vii) the Company must deliver to the Trustee an Officers' Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders of New Notes over the other creditors of the Company with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others; and (viii) the Company must deliver to the Trustee an Officers' Certificate and an opinion of counsel, each stating that all conditions precedent provided for relating to the Legal Defeasance or the Covenant Defeasance have been complied with. TRANSFER AND EXCHANGE A Holder may transfer or exchange New Notes in accordance with the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company is not required to transfer or exchange any New Note selected for redemption. Also, the Company is not required to transfer or exchange any Note for a period of 15 days before a selection of Notes to be redeemed. The registered Holder of a New Note will be treated as the owner of it for all purposes. AMENDMENT, SUPPLEMENT AND WAIVER Except as provided in the next two succeeding paragraphs, the Indenture or the New Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, New Notes), and any existing default or compliance with any provision of the Indenture or the New Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding New Notes (including consents obtained in connection with a tender offer or exchange offer for New Notes). Without the consent of each Holder affected, an amendment or waiver may not (with respect to any New Notes held by a non-consenting Holder): (i) reduce the principal amount of New Notes whose Holders must consent to an amendment, supplement or waiver, (ii) reduce the principal of or change the fixed maturity of any New Note or alter the provisions with respect to the redemption of the New Notes (other than provisions relating to the covenants described above under the caption "-- Repurchase at the Option of Holders"), 86 89 (iii) reduce the rate of or change the time for payment of interest on any New Note, (iv) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest on the New Notes (except a rescission of acceleration of the New Notes by the Holders of at least a majority in aggregate principal amount of the New Notes and a waiver of the payment default that resulted from such acceleration), (v) make any New Note payable in money other than that stated in the New Notes, (vi) make any change in the provisions of the Indenture relating to waivers of past Defaults or the rights of Holders of New Notes to receive payments of principal of or premium, if any, or interest on the New Notes, (vii) waive a redemption payment with respect to any New Note (other than a payment required by one of the covenants described above under the caption "-- Repurchase at the Option of Holders") or (viii) make any change in the foregoing amendment and waiver provisions. In addition, any amendment to the provisions of Article 10 of the Indenture (which relate to subordination) will require the consent of the Holders of at least 75% in aggregate principal amount of the New Notes then outstanding if such amendment would adversely affect the rights of Holders of New Notes. Notwithstanding the foregoing, without the consent of any Holder of New Notes, the Company, the Subsidiary Guarantors and the Trustee may amend or supplement the Indenture or the New Notes to cure any ambiguity, defect or inconsistency, to provide for uncertificated New Notes in addition to or in place of certificated New Notes, to provide for the assumption of the Company's and the Subsidiary Guarantors' obligations to Holders of New Notes in the case of a merger or consolidation, to make any change that would provide any additional rights or benefits to the Holders of New Notes or that does not adversely affect the legal rights under the Indenture of any such Holder, or to comply with requirements of the Commission in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act. CONCERNING THE TRUSTEE The Indenture contains certain limitations on the rights of the Trustee, should it become a creditor of the Company, to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The Trustee will be permitted to engage in other transactions; however, if it acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the Commission for permission to continue or resign. The Holders of a majority in principal amount of the then outstanding New Notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee, subject to certain exceptions. The Indenture provides that in case an Event of Default shall occur (which shall not be cured), the Trustee will be required, in the exercise of its power, to use the degree of care of a prudent man in the conduct of his own affairs. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any Holder of New Notes, unless such Holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense. ADDITIONAL INFORMATION Anyone who receives this Prospectus may obtain a copy of the Indenture and Registration Rights Agreement without charge by writing to APCOA/Standard Parking, Inc., 800 Superior Avenue, Cleveland, Ohio 44114; Attention: Robert N. Sacks. BOOK-ENTRY, DELIVERY AND FORM The New Notes initially being issued in exchange for the Notes generally will be represented by one or more fully-registered global notes without interest coupons (collectively the "Global New Notes"). Notwithstanding the foregoing, Notes held in certificated form will be exchanged solely for New Notes in certificated form as discussed below. The Global New Notes will be deposited upon issuance with the Depository Trust Company and registered in the name of DTC or its nominee (the "Global New Note Registered Owner"), in each case for credit to an account of a direct or indirect participant as described below. Except as set forth below, the Global New Notes may be transferred, in whole and not in part, only to another nominee of the 87 90 DTC or to a successor of the DTC or its nominee. See "-- Exchange of Book-Entry New Notes for Certificated New Notes." The New Notes may be presented for registration of transfer and exchange at the offices of the Registrar. DEPOSITARY PROCEDURES DTC has advised the Company that DTC is a limited-purpose trust company created to hold securities for its participating organizations (collectively, the "Participants") and to facilitate the clearance and settlement of transactions in those securities between Participants through electronic book-entry changes in accounts of Participants. The Participants include securities brokers and dealers (including the Initial Purchaser), banks, trust companies, clearing corporations and certain other organizations. Access to DTC's system is also available to other entities such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Participant, either directly or indirectly (collectively, the "Indirect Participants"). Persons who are not Participants may beneficially own securities held by or on behalf of DTC only through the Participants or Indirect Participants. The ownership interest and transfer of ownership interest of each actual purchaser of each security held by or on behalf of DTC are recorded on the records of the Participants and Indirect Participants. DTC has also advised the Company that pursuant to procedures established by it, (i) upon deposit of the Global New Notes, DTC will credit the accounts of Participants designated by the Initial Purchaser with portions of the principal amount of Global New Notes and (ii) ownership of such interests in the Global New Notes will be shown on, and the transfer ownership thereof will be effected only through, records maintained by DTC (with respect to Participants) or by Participants and the Indirect Participants (with respect to other owners of beneficial interests in the Global New Notes). EXCEPT AS DESCRIBED BELOW, OWNERS OF INTERESTS IN THE GLOBAL NEW NOTES WILL NOT HAVE NEW NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL DELIVERY OF NEW NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED OWNERS OR HOLDERS THEREOF UNDER THE INDENTURE FOR ANY PURPOSE. Payments in respect of the principal and premium and Liquidated Damages, if any, and interest on a Global New Note registered in the name of DTC or its nominee will be payable by the Trustee to DTC or its nominee in its capacity as the registered holder under the Indenture. Under the terms of the Indenture, the Company and the Trustee will treat the persons in whose names the New Notes, including the Global New Notes, are registered as the owners thereof for the purpose of receiving such payments and for any and all other purposes whatsoever. Consequently, none of the Company, the Trustee nor any agent of the Company or the Trustee has or will have any responsibility or liability for (i) any aspect of DTC's records or any Participant's or Indirect Participant's records relating to or payments made on account of beneficial ownership interests in the Global New Notes, or for maintaining, supervising or reviewing any of DTC's records or any Participant's or Indirect Participant's records relating to the beneficial ownership interests in the Global New Notes or (ii) any other matter relating to the actions and practices of DTC or any of its Participants or Indirect Participants. DTC has advised the Company that its current practice, upon receipt of any payment in respect of securities such as the New Notes (including principal and interest), is to credit the accounts of the relevant Participants with the payment on the payment date, in amounts proportionate to their respective holdings in principal amount of beneficial interests in the relevant security such as the Global New Notes as shown on the records of DTC. Payments by Participants and the Indirect Participants to the beneficial owners of New Notes will be governed by standing instructions and customary practices and will not be the responsibility of DTC, the Trustee or the Company. Neither the Company nor the Trustee will be liable for any delay by DTC or its Participants in identifying the beneficial owners of the New Notes, and the Company and the Trustee may conclusively rely on and will be protected in relying on instructions from DTC or its nominee as the registered owner of the New Notes for all purposes. DTC has advised the Company that it will take any action permitted to be taken by a holder of New Notes only at the direction of one or more Participants to whose account DTC interests in the Global New 88 91 Notes are credited and only in respect of such portion of the aggregate principal amount of the New Notes as to which such Participant or Participants have given direction. However, if there is an Event of Default under the New Notes, DTC reserves the right to exchange Global New Notes for legended New Notes in certificated form, and to distribute such New Notes to its Participants. The information in this section concerning DTC and its book-entry system has been obtained from sources that the Company believes to be reliable, but the Company takes no responsibility for the accuracy thereof. Although DTC has agreed to the foregoing procedures to facilitate transfers of interests in the Global New Notes among Participants in DTC, it is under no obligation to perform or to continue to perform such procedures, and such procedures may be discontinued at any time. None of the Company, the Initial Purchasers or the Trustee will have any responsibility for the performance by DTC, or its Participants or indirect Participants of its obligations under the rules and procedures governing their operations. EXCHANGE OF BOOK-ENTRY NEW NOTES FOR CERTIFICATED NEW NOTES A Global New Note is exchangeable for definitive New Notes in registered certificated form if (i) DTC (x) notifies the Company that it is unwilling or unable to continue as depositary for the Global New Note and the Company thereupon fails to appoint a successor depositary or (y) has ceased to be a clearing agency registered under the Exchange Act, (ii) the Company, at its option, notifies the Trustee in writing that it elects to cause the issuance of the New Notes in certificated form or (iii) there shall have occurred and be continuing to occur a Default or an Event of Default with respect to the New Notes. In addition, beneficial interests in a Global New Note may be exchanged for certificated New Notes upon request but only upon at least 20 days' prior written notice given to the Trustee by or on behalf of DTC in accordance with customary procedures. In all cases, certificated New Notes delivered in exchange for any Global New Note or beneficial interest therein will be registered in the names, and issued in any approved denominations, requested by or on behalf of the depositary (in accordance with its customary procedures). Subject to the restrictions on the transferability of the New Notes described in "Risk Factors -- Restrictions on Transfer," a New Note in definitive form will be issued (i) in the Exchange Offer solely in exchange for certificated Notes or (ii) following the Exchange Offer, upon the resale, pledge or other transfer of any New Note or interest therein to any person or entity that does not participate in the Depositary. The exchange of certificated Notes in the Exchange Offer may be made only by presentation of the Notes, duly endorsed, together with a duly completed Letter of Transmittal and other required documentation as described under "The Exchange Offer -- Procedures for Tendering" and "-- Guaranteed Delivery Procedures." Transfers of certificated New Notes may be made only by presentation of New Notes, duly endorsed, to the Trustees for registration of transfer on the Note Register maintained by the Trustees for such purposes. The information in this section concerning the Depositary and the Depositary's book-entry system has been obtained from sources that the Company believes to be reliable, but the Company takes no responsibility for the accuracy thereof. CERTIFICATED NEW NOTES Subject to certain conditions, any person having a beneficial interest in the Global New Notes may, upon request to the Trustee, exchange such beneficial interest for certificated New Notes ("Certificated New Notes"). Upon any such issuance, the Trustee is required to register such Certificated New Notes in the name of, and cause the same to be delivered to, such person or persons (or the nominee of any thereof). In addition, if (i) the Company notifies the Trustee in writing that the DTC is no longer willing or able to act as a depositary and the Company is unable to locate a qualified successor within 90 days or (ii) the Company, at its option, notifies the Trustee in writing that it elects to cause the issuance of New Notes in the form of Certificated New Notes under the Indenture, then, upon surrender by the Global New Note Holder of its Global New Note, New Notes in such form will be issued to each person that the Global New Note Holder and the DTC identify as being the beneficial owner of the related New Notes. 89 92 Neither the Company nor the Trustee will be liable for any delay by the Global New Note Holder or the DTC in identifying the beneficial owners of New Notes and the Company and the Trustee may conclusively rely on, and will be protected in relying on, instructions from the Global New Note Holder or the DTC for all purposes. SAME DAY SETTLEMENT AND PAYMENT The Indenture requires that payments in respect of the New Notes represented by the Global New Notes (including principal, premium, if any, interest and Liquidated Damages, if any) be made by wire transfer of immediately available next day funds to the accounts specified by the Global New Note Holder. With respect to Certificated New Notes, the Company will make all payments of principal, premium, if any, interest and Liquidated Damages, if any, by wire transfer of immediately available funds to the accounts specified by the Holders thereof or, if no such account is specified, by mailing a check to each such Holder's registered address. The Company expects that secondary trading in the Certificated New Notes will also be settled in immediately available funds. REGISTRATION RIGHTS; LIQUIDATED DAMAGES The Company, the Subsidiary Guarantors and the Initial Purchasers entered into the Registration Rights Agreement on the Closing date. Pursuant to the Registration Rights Agreement, the Company and the Subsidiary Guarantors agreed to file with the Commission the Registration Statement of which this Prospectus is a part on the appropriate form under the Securities Act with respect to the New Notes. Pursuant to the Exchange Offer, the Company is offering to the Holders of Transfer Restricted Securities who are able to make certain representations the opportunity to exchange their Transfer Restricted Securities for New Notes. If any Holder of Transfer Restricted Securities notifies the Company prior to the 20th day following consummation of the Exchange Offer that (i) it is prohibited by law or Commission policy from participating in the Exchange Offer or (ii) that it may not resell the New Notes acquired by it in the Exchange Offer to the public without delivering a prospectus and the Prospectus contained in the Registration Statement is not appropriate or available for such resales or (iii) that it is a broker-dealer and owns Notes acquired directly from the Company or an affiliate of the Company, the Company and the Subsidiary Guarantors will file with the Commission a Shelf Registration Statement to cover resales of the Notes by the Holders thereof who satisfy certain conditions relating to the provision of information in connection with the Shelf Registration Statement. The Company and the Subsidiary Guarantors will use their best efforts to cause the applicable registration statement to be declared effective as promptly as possible by the Commission. For purposes of the foregoing, "Transfer Restricted Securities" means each Note until (i) the date on which such Note has been exchanged by a person other than a broker-dealer for a New Note in the Exchange Offer, (ii) following the exchange by a broker-dealer in the Exchange Offer of a Note for a New Note, the date on which such New Note is sold to a purchaser who receives from such broker-dealer on or prior to the date of such sale a copy of the Prospectus contained in the Registration Statement, (iii) the date on which such Note has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement or (iv) the date on which such Note is distributed to the public pursuant to Rule 144 under the Act. The Registration Rights Agreement provides, among other things, that (i) unless the Exchange Offer would not be permitted by applicable law or Commission policy, the Company and the Subsidiary Guarantors will have commenced the Exchange Offer and used their best efforts to issue on or prior to 30 business days after the date on which the Registration Statement was declared effective by the Commission, New Notes in exchange for all Notes tendered prior thereto in the Exchange Offer and (ii) if obligated to file the Shelf Registration Statement, the Company and the Subsidiary Guarantors will use their best efforts to file the Shelf Registration Statement with the Commission on or prior to 45 days after such filing obligation arises and to cause the Shelf Registration to be declared effective by the Commission on or prior to 120 days after such obligation arises. If (a) the Company and the Subsidiary Guarantors fail to file any of the Registration Statements required by the Registration Rights Agreement on or before the date specified for such filing, (b) any of such Registration Statements is not declared effective by the Commission on or prior to the date specified for such effectiveness (the "Effectiveness Target Date"), (c) the Company and the Subsidiary 90 93 Guarantors fail to consummate the Exchange Offer within 30 business days of the Effectiveness Target Date with respect to the Registration Statement, or (d) the Shelf Registration Statement or the Registration Statement is declared effective but thereafter ceases to be effective or usable in connection with resales of Transfer Restricted Securities during the periods specified in the Registration Rights Agreement (each such event referred to in clauses (a) through (d) above a "Registration Default"), then the Company will pay liquidated damages to each Holder of Notes, with respect to the first 90-day period immediately following the occurrence of the first Registration Default in an amount equal to $.05 per week per $1,000 principal amount of Notes held by such Holder ("Liquidated Damages"). The amount of the Liquidated Damages will increase by an additional $.05 per week per $1,000 principal amount of Notes with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of Liquidated Damages of $.50 per week per $1,000 principal amount of Notes. All accrued Liquidated Damages will be paid by the Company on each Damages Payment Date to the Global Note Holder by wire transfer of immediately available funds or by federal funds check and to Holders of Certificated Notes by wire transfer to the accounts specified by them or by mailing checks to their registered addresses if no such accounts have been specified. Following the cure of all Registration Defaults, the accrual of Liquidated Damages will cease. Holders of Notes will be required to make certain representations to the Company (as described in the Registration Rights Agreement) in order to participate in the Exchange Offer and will be required to deliver information to be used in connection with the Shelf Registration Statement and to provide comments on the Shelf Registration Statement within the time periods set forth in the Registration Rights Agreement in order to have their Notes included in the Shelf Registration Statement and benefit from the provisions regarding Liquidated Damages set forth above. CERTAIN DEFINITIONS Set forth below are certain defined terms used in the Indenture. Reference is made to the Indenture for a full disclosure of all such terms, as well as any other capitalized terms used herein for which no definition is provided. "Acquired Debt" means, 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 means 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. "Asset Sale" means (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 (provided that the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole will be governed by the provisions of the Indenture described above under the caption "-- Change of Control" and/or the provisions described above under the caption "-- Merger, Consolidation or Sale of Assets" and not by the provisions of the Asset Sale covenant), and (ii) the issue or sale by the Company or any of its Restricted Subsidiaries of Equity Interests of any of the Company's Restricted Subsidiaries, in the case of either clause (i) or (ii), whether in a single transaction or a series of related transactions (a) that have a fair market value in excess of $3.0 million or (b) for net proceeds in excess of $3.0 million. Notwithstanding the foregoing: (i) a transfer of assets by the Company to a Wholly Owned Restricted Subsidiary or by a Wholly Owned Restricted Subsidiary to the Company or to another Wholly Owned Restricted Subsidiary, (ii) an issuance of Equity 91 94 Interests by a Wholly Owned Restricted Subsidiary to the Company or to another Wholly Owned Restricted Subsidiary, and (iii) a Restricted Payment that is permitted by the covenant described above under the caption "-- Restricted Payments" will not be deemed to be Asset Sales. "Attributable Debt" in respect of a sale and leaseback transaction means, 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). "Capital Lease Obligation" means, 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" means (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" means (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 maturities not exceeding six months and overnight bank deposits, in each case with any lender party to the New Credit Facility or with any domestic commercial bank having capital and surplus in excess of $500 million and a Thompson 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" means 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 (as defined below), (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, 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 of Directors of the Company 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). 92 95 "Consolidated Cash Flow" means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus (i) an amount equal to any extraordinary loss plus any net loss realized in connection with an Asset Sale (to the extent such losses were deducted in computing such Consolidated Net Income), plus (ii) provision for taxes based on income or profits of such Person and its Subsidiaries for such period, to the extent that such provision for taxes was included in computing such Consolidated Net Income, plus (iii) consolidated interest expense of such Person and its Subsidiaries for such period, whether paid or accrued and whether or not capitalized (including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, imputed interest with respect to Attributable Debt, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net payments (if any) pursuant to Hedging Obligations), to the extent that any such expense was deducted in computing such Consolidated Net Income, plus (iv) depreciation, amortization (including amortization of goodwill and other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash expenses were deducted in computing such Consolidated Net Income, plus (v) one-time charges related to the Combination, to the extent that such charges were deducted in computing Consolidated Net Income, plus (vi) in connection with any acquisition by the Company or a Restricted Subsidiary, projected quantifiable improvements in operating results (on an annualized basis) due to cost reductions calculated in good faith by the Company or one of its Restricted Subsidiaries, as evidenced by (A) in the case of cost reductions of less than $10.0 million, an Officers' Certificate delivered to the Trustee and (B) in the case of cost reductions of $10.0 million or more, a resolution of the Board of Directors set forth in an Officers' Certificate delivered to the Trustee, minus (vii) non-cash items increasing such Consolidated Net Income for such period. Notwithstanding the foregoing, the provision for taxes on the income or profits of, and the depreciation and amortization and other non-cash charges of, a Subsidiary of the referent Person shall be added to Consolidated Net Income to compute Consolidated Cash Flow only to the extent that a corresponding amount would be permitted at the date of determination to be dividended to the Company by such Subsidiary without prior governmental approval (that has not been obtained), and without direct or indirect restriction pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Subsidiary or its stockholders. "Consolidated Net Income" means, with respect to any 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 (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 shall be included only to the extent of the amount of dividends or distributions paid in cash to the referent Person or a Wholly Owned Restricted Subsidiary thereof, (ii) the Net Income of any Restricted Subsidiary shall 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 shall be excluded, (iv) the cumulative effect of a change in accounting principles shall be excluded and (v) the Net Income of any Unrestricted Subsidiary shall be excluded, whether or not distributed to the Company or one of its Restricted Subsidiaries for purposes of the covenant described under the covenant "Incurrence of Indebtedness and Issuance of Preferred Stock." "Continuing Directors" means, as of any date of determination, any member of the Board of Directors of the Company who (i) was a member of such Board of Directors on the date of the Indenture or (ii) 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. 93 96 "Credit Agent" means The First National Bank of Chicago, in its capacity as Administrative Agent for the lenders party to the New Credit Facility or any successor thereto or any person otherwise appointed. "Default" means any event that is or with the passage of time or the giving of notice or both would be an Event of Default. "Designated Senior Debt" means (i) any Indebtedness outstanding under the New Credit Facility and (ii) any other Senior Debt permitted under the Indenture the principal amount of which is $25.0 million or more and that has been designated by the Company as Designated Senior Debt. "Disqualified Stock" means 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 thereof, in whole or in part, on or prior to the date that is 91 days after the date on which the Notes mature; provided, however, that any Capital Stock that would not qualify as Disqualified Stock but for change of control provisions shall not constitute Disqualified Stock if the provisions are not more favorable to the holders of such Capital Stock than the provisions described under "-- Change of Control" applicable to the Holders of the Notes. "Equity Interests" means 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). "Existing Indebtedness" means Indebtedness of the Company and its Subsidiaries (other than Indebtedness under the New Credit Facility) in existence on the date of the Indenture, until such amounts are repaid. "Fixed Charges" means, with respect to any Person for any period, the sum, without duplication, of (i) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued (including, without limitation, original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, imputed interest with respect to Attributable Debt, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net payments (if any) pursuant to Hedging Obligations) and (ii) the consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period, and (iii) to the extent paid by such Person, any interest expense on Indebtedness of another Person that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries (whether or not such Guarantee or Lien is called upon) and (iv) the product of (a) all dividend payments, whether or not in cash, on any series of preferred stock of such Person or any of its Restricted Subsidiaries, other than dividend payments on Equity Interests payable solely in Equity Interests of the Company, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP. "Fixed Charge Coverage Ratio" means with respect to any Person for any period, the ratio of the Consolidated Cash Flow of such Person and its Restricted Subsidiaries for such period to the Fixed Charges of such Person and its Restricted Subsidiaries for such period. In the event that the Company or any of its Restricted Subsidiaries incurs, assumes, Guarantees or redeems any Indebtedness (other than revolving credit borrowings) or issues preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated but prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, Guarantee or redemption of Indebtedness, or such issuance or redemption of preferred stock, as if the same had occurred at the beginning of the applicable four-quarter reference period. In addition, for purposes of making the computation referred to above, (i) acquisitions that have been made by the Company or any of its Restricted Subsidiaries, including through mergers or consolidations and including any related financing transactions, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date shall be deemed to have occurred on the first day of the four-quarter reference period and Consolidated Cash Flow for 94 97 such reference period shall be calculated without giving effect to clause (iii) of the proviso set forth in the definition of Consolidated Net Income, and (ii) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded, and (iii) the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the Calculation Date, shall be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the referent Person or any of its Restricted Subsidiaries following the Calculation Date. "Foreign Subsidiary" means any Subsidiary organized and existing under the laws of a jurisdiction other than those of any state or commonwealth in the United States of America. "GAAP" means generally accepted accounting principles 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 Indenture. "Government Securities" means direct obligations of, or obligations guaranteed by, the United States of America for the payment of which guarantee or obligations the full faith and credit of the United States is pledged. "Guarantee" means 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. "Hedging Obligations" means, with respect to any Person, the obligations of such Person under (i) interest rate swap agreements, interest rate cap agreements and interest rate collar agreements and (ii) other agreements or arrangements designed to protect such Person against fluctuations in interest rates or currency rates. "Holdings" means AP Holdings, Inc., a Delaware corporation and the parent (but not 100% owner) of APCOA, Inc. "Indebtedness" means, with respect to any Person, any indebtedness of such Person, whether or not contingent, in respect of borrowed money or evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof) or banker's acceptances or representing Capital Lease Obligations or the balance deferred and unpaid of the purchase price of any property or representing any Hedging Obligations, except any such balance that constitutes an accrued expense or trade payable, 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 such 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 such 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. "Insolvency or Liquidation Proceedings" means (i) any insolvency or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding, relative to the Company or to the creditors of the Company, as such, or to the assets of the Company, or (ii) any liquidation, dissolution, reorganization or winding up of the Company, whether voluntary or involuntary and involving insolvency or bankruptcy, or (iii) any assignment for the benefit of creditors or any other marshalling of assets and liabilities of the Company. "Investments" means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the forms of direct or indirect loans (including guarantees of Indebtedness or other obligations), advances or capital contributions (excluding commission, travel and similar advances to officers 95 98 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 disposition, such Person is no longer a Restricted Subsidiary of the Company, the Company shall 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 final paragraph of the covenant described above under the caption " -- Restricted Payments." "Lien" means, 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" means, 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" means 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 thereof, taxes paid or payable as a result thereof (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 Credit Facility" means that certain Credit Agreement, dated as of the date of the Indenture, by and among the Company, the lenders and other parties thereto from time to time and The First National Bank of Chicago, as agent, together with all related documents executed or delivered pursuant thereto at any time (including, without limitation, all mortgages, guarantees, security agreements and all other collateral and security documents), in each case as such agreements may be amended (including any amendment and restatement thereof), supplemented or otherwise modified from time to time, including any agreement extending the maturity of, refinancing, replacing or otherwise restructuring (including increasing the amount of available borrowings thereunder provided that such increase in borrowings is within the definition of Permitted Indebtedness or is otherwise permitted under the covenant described "Incurrence of Indebtedness and Issuance of Preferred Stock") or adding Subsidiaries as additional borrowers or guarantors thereunder) all or any portion of the Indebtedness and other Obligations under such agreement or agreements or any successor or replacement agreement or agreements, and whether by the same or any other agent, lender or group of lenders. "Non-Recourse Debt" means 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 Notes being offered hereby) of the 96 99 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. "Obligations" means 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. "Permitted Business" means 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 Indenture. "Permitted Investments" means (a) any Investment in the Company or in a Wholly Owned Restricted Subsidiary of the Company that is engaged in a Permitted Business; (b) any Investment in Cash Equivalents; (c) any Investment by the Company or any Restricted Subsidiary of the Company in a Person, if as a result of such Investment (i) such Person becomes a Wholly Owned Restricted Subsidiary of the Company that is engaged in a Permitted Business or (ii) 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; (d) any Restricted 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 the covenant described above under the caption " -- Repurchase at the Option of Holders -- Asset Sales"; (e) any acquisition of assets solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company; (f) loans and advances made after the date of the Indenture to Holberg Industries, Inc. not to exceed $10.0 million at any time outstanding; (g) make and permit to remain outstanding travel and other like advances in the ordinary course of business consistent with past practices to officers and employees of the Company or a Subsidiary of the Company; (h) other Investments made after the date of the Indenture 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 (h) that are at the time outstanding, not to exceed $10 million; and (i) loans and advances made after the date of the Indenture to Holdings, not to exceed $9.0 million at any time outstanding. "Permitted Liens" means (i) Liens securing Senior Debt under the New Credit Facility that were permitted by the terms of the Indenture to be incurred; (ii) Liens in favor of the Company; (iii) Liens on property of a Person existing at the time such Person is merged into or consolidated with the Company or any Restricted Subsidiary of the Company; provided that such Liens were in existence prior to the contemplation of such merger or consolidation and do not extend to any assets other than those of the Person merged into or consolidated with the Company; (iv) Liens on property existing at the time of acquisition thereof by the Company or any Restricted Subsidiary of the Company, provided that such Liens were in existence prior to the contemplation of such acquisition; (v) Liens to secure the performance of bids, tenders, contracts, statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business; (vi) Liens existing on the date of the Indenture; (vii) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded, provided that any reserve or other appropriate provision as shall be required in conformity with GAAP shall have been made therefor; (viii) Liens incurred in the ordinary course of business of the Company or any Restricted Subsidiary of the Company with respect to obligations that do not exceed $5.0 million at any one time outstanding and that (a) are not incurred in connection with the borrowing of money or the obtaining of advances or credit (other than trade credit in the ordinary course of business) and (b) do not in the aggregate materially detract from the value of the property or materially impair the use thereof in the operation of business by the Company or such Restricted Subsidiary; (ix) Liens on assets of Unrestricted Subsidiaries that secure Non-Recourse Debt of Unrestricted Subsidiaries; (x) Liens on the daily revenues in favor of Persons other than the Company and its Restricted Subsidiaries who are parties to parking facility agreements for the amounts due to them 97 100 pursuant thereto; (xi) Liens arising by applicable law in respect of employees' wages, salaries or commissions not overdue; and (xii) Liens arising out of judgments or awards not in excess of $5.0 million with respect to which the Company or its Subsidiary with respect to which the Company or such Subsidiaries are prosecuting an appeal or a proceeding or review and the enforcement of such lien is stayed pending such appeal or review. "Permitted Refinancing Indebtedness" means 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 of (or accreted value, if applicable), plus accrued interest on, the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus the amount of 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 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 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 Notes on terms at least as favorable to the Holders of Notes 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. "Principals" means Holberg Industries, Inc., John V. Holten or, in the case of the Company, Holdings. "Public Equity Offering" means a public offering of Equity Interests (other than Disqualified Stock) of (i) the Company or (ii) Holdings, to the extent that the net proceeds thereof are contributed to the Company as a capital contribution, that, in each case, results in net proceeds to the Company of at least $25.0 million. "Receivables" means, with respect to any Person or entity, all of the following property and interests in property of such Person or entity, whether now existing or existing in the future or hereafter acquired or arising: (i) accounts, (ii) accounts receivable incurred in the ordinary course of business, including without limitation, all rights to payment created by or arising from sales of goods, leases of goods or the rendition of services no matter how evidenced, whether or not earned by performance, (iii) all rights to any goods or merchandise represented by any of the foregoing after creation of the foregoing, including, without limitation, returned or repossessed goods, (iv) all reserves and credit balances with respect to any such accounts receivable or account debtors, (v) all letters of credit, security, or guarantees for any of the foregoing, (vi) all insurance policies or reports relating to any of the foregoing, (vii) all collection or deposit accounts relating to any of the foregoing, (viii) all proceeds of the foregoing and (ix) all books and records relating to any of the foregoing. "Regulation S" means Regulation S promulgated under the Securities Act. "Regulation S Global Notes" means the Regulation S Temporary Global Notes or the Regulation S Permanent Global Notes as applicable. "Regulation S Permanent Global Notes" means the permanent global notes that are deposited with and registered in the name of the Depositary or its nominee, representing a series of Notes sold in reliance on Regulation S. "Regulation S Temporary Global Notes" means the temporary global notes that are deposited with and registered in the name of the Depositary or its nominee, representing a series of Notes sold in reliance on Regulation S. "Related Party" with respect to any Principal means (A) any controlling stockholder, 80% (or more) owned Subsidiary, or spouse or immediate family member (in the case of an individual) of such Principal or (B) or trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or 98 101 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 (A). "Reorganization Securities" means securities distributed to the Holders of the Notes in an Insolvency or Liquidation Proceeding pursuant to a plan of reorganization consented to by each class of the Senior Debt, but only if all of the terms and conditions of such securities (including, without limitation, term, tenor, interest, amortization, subordination, standstills, covenants and defaults), are at least as favorable (and provide the same relative benefits) to the holders of Senior Debt and to the holders of any security distributed in such Insolvency or Liquidation Proceeding on account of any such Senior Debt as the terms and conditions of the Notes and the Indenture are, and provide to the holders of Senior Debt. "Representative" means the Trustee, agent or representative for any Senior Debt. "Restricted Investment" means an Investment other than a Permitted Investment. "Restricted Subsidiary" of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary. "Rule 144A" means Rule 144A promulgated under the Securities Act. "Rule 144A Global Note" means a permanent global note that is deposited with and registered in the name of the Depositary or its nominee, representing a series of Notes sold in reliance on Rule 144A. "Senior Debt" means (i) all Indebtedness outstanding under the New Credit Facility, 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 the Indenture, 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 Notes and (iii) all Obligations with respect to the foregoing. Notwithstanding anything to the contrary in the foregoing, Senior Debt will not include (w) any liability for federal, state, local or other taxes owed or owing by the Company, (x) any Indebtedness of the Company to any of its Subsidiaries or other Affiliates, (y) any trade payables or (z) any Indebtedness that is incurred in violation of the Indenture. "Stated Maturity" means, 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. "Subsidiary" means, with respect to any 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 thereof is at the time owned or controlled, directly or indirectly, by such 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 such Person or of one or more Subsidiaries of such Person (or any combination thereof). "Subsidiary Guarantors" means all direct and indirect Restricted Subsidiaries of the Company. "Unrestricted Subsidiary" means (i) any Subsidiary that is designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution; but only to the extent that such Subsidiary: (a) has no Indebtedness other than Non-Recourse Debt; (b) 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 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; (c) is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation (x) to subscribe for additional Equity Interests or (y) to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results; and (d) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Company or any of its Restricted Subsidiaries. Any such designation by the Board of Directors shall be 99 102 evidenced to the Trustee by filing with the Trustee a certified copy of the Board Resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing conditions and was permitted by the covenant described above under the caption "Certain Covenants -- Restricted Payments." If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of the Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the Company as of such date (and, if such Indebtedness is not permitted to be incurred as of such date under the covenant described under the caption "Incurrence of Indebtedness and Issuance of Preferred Stock," the Company shall be in default of such covenant). The Board of Directors of the Company may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation shall only be permitted if (i) such Indebtedness is permitted under the covenant described under the caption "Certain Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock," and (ii) no Default or Event of Default would be in existence following such designation. "Voting Stock" of any Person as of any date means 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" means, 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 thereof, 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 means 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 and one or more Wholly Owned Subsidiaries of such Person. 100 103 DESCRIPTION OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES The following discussion is a summary of the material U.S. federal income tax considerations relevant to the purchase, ownership and disposition of the New Notes by the holders thereof. This summary does not purport to be a complete analysis of all the potential federal income tax effects relating to the purchase, ownership and disposition of the New Notes. There can be no assurance that the U.S. Internal Revenue Service will take a similar view of such consequences. Further, the discussion does not address all aspects of taxation that may be relevant to particular purchasers in light of their individual circumstances (including the effect of any foreign, state or local laws) or to certain types of purchasers (including dealers in securities, insurance companies, financial institutions, persons that hold New Notes that are a hedge or that are hedged against currency risks or that are part of a straddle or conversion transaction, persons whose functional currency is not the U.S. dollar and tax-exempt entities) subject to special treatment under U.S. federal income tax laws. The discussion below assumes that the New Notes are held as capital assets. The discussion of the U.S. federal income tax consequences set forth below is based upon currently existing provisions of the Internal Revenue Code of 1986, as amended (the "Code"), judicial decisions, and administrative interpretations. Because individual circumstances may differ, each prospective purchaser of the New Notes is strongly urged to consult its own tax advisor with respect to its particular tax situation and the particular tax effects of any state, local, non-U.S. or other tax laws and possible changes in the tax laws. As used herein, the term "U.S. Holder" means a beneficial owner of a New Note who or which is for U.S. federal income tax purposes either (i) a citizen or resident of the U.S., (ii) a corporation, partnership or other entity created or organized in or under the laws of the U.S. or of any political subdivision thereof, (iii) an estate or trust the income of which is subject to U.S. federal income taxation regardless of its source or (iv) a trust if a court within the U.S. is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust. The term also includes certain former citizens of the U.S. whose income and gain on the New Notes will be subject to U.S. taxation. As used herein, the term "U.S. Alien Holder" means a beneficial owner of a New Note that is not a U.S. Holder. PAYMENTS OF INTEREST Interest paid on a New Note will generally be taxable to a U.S. Holder as ordinary interest income at the time it accrues or is received, in accordance with the U.S. Holder's method of accounting for federal income tax purposes. MARKET DISCOUNT AND PREMIUM If a U.S. Holder that acquires a New Note has a tax basis in the New Note that is less than its "stated redemption price at maturity," the amount of the difference will be treated as "market discount" for U.S. federal income tax purposes, unless such difference is less than a specified de minimis amount. Under the market discount rules of the Code, a U.S. Holder will be required to treat any principal payment on, or any gain on the sale, exchange, retirement or other disposition of, a New Note as ordinary income to the extent of any accrued market discount that has not previously been included in income. Market discount generally accrues on a straight-line basis over the remaining term of a New Note. A U.S. Holder may not be allowed to deduct immediately all or a portion of the interest expense on any indebtedness incurred or continued to purchase or to carry such New Note. A U.S. Holder may elect to include market discount in income currently as it accrues (either on a straight-line basis or, if the United States Holder so elects, on a constant yield basis), in which case the interest deferral rule set forth in the preceding sentence will not apply. Such an election will apply to all bonds acquired by the U.S. Holder on or after the first day of the first taxable year to which such election applies and may be revoked only with the consent of the Internal Revenue Service. If a U.S. Holder purchases a New Note for an amount that is greater than the sum on all amounts payable on the New Note after the purchase date, other than stated interest, such holder will be considered to have purchased such New Note with "amortizable bond premium" equal in amount to such excess, and may elect (in accordance with applicable Code provisions) to amortize such premium, using a constant yield 101 104 method over the remaining term of the New Note. The amount amortized in any year will be treated as a reduction of the U.S. Holder's interest income from the New Note in such year. A U.S. Holder that elects to amortize bond premium must reduce its tax basis in the New Note by the amount of the premium amortized in any year. An election to amortize bond premium applies to all taxable debt obligations then owned and thereafter acquired by the U.S. Holder and may be revoked only with the consent of the Internal Revenue Service. SALE, EXCHANGE OR RETIREMENT OF NEW NOTES Upon the sale, exchange or retirement of a New Note, a U.S. Holder will recognize taxable gain or loss equal to the difference between the amount realized on the sale, exchange or retirement (not including any amount attributable to accrued but unpaid interest) and such holder's adjusted tax basis in the New Note. A U.S. Holder's adjusted tax basis in a New Note will equal the cost of the New Note to such holder, increased by the amount of any market discount previously included in income by such holder with respect to such New Note and reduced by any amortized bond premium and any principal payment received by such holder. Subject to the discussion of market discount above, gain or loss realized on the sale, exchange or retirement of a New Note by a U.S. Holder will be capital gain or loss, and will be long-term capital gain or loss if at the time of the sale, exchange or retirement the New Note has been held for more than one year. In the case of a U.S. Holder who is an individual, net capital gain will be taxed at a maximum rate of 28% if such U.S. Holder's holding period is more than one year but not more than 18 months and at a maximum rate of 20% if such U.S. Holder's holding period is more than 18 months. The distinction between capital gain or loss and ordinary income or loss is also relevant for purposes of, among other things, limitations on the deductibility of capital losses. If Liquidated Damages are paid, although not free from doubt, such payment should be taxable to a U.S. Holder as ordinary income at the time it accrues or is received in accordance with such holder's regular method of accounting. It is possible, however, that the Internal Revenue Service may take a different position, in which case the timing and amount of income inclusion may be different. A U.S. Holder will recognize no gain or loss on the exchange of a Note for a New Note pursuant to the Exchange Offer. TAX CONSEQUENCES TO U.S. ALIEN HOLDERS Under present U.S. federal income and estate tax law, and subject to the discussion below concerning backup withholding: (a) payments of principal or interest on the New Notes by the Company or any paying agent to a beneficial owner of a New Note that is a U.S. Alien Holder will not be subject to U.S. federal withholding tax, provided that, in the case of interest, (i) such Holder does not own, actually or constructively, 10% or more of the total combined voting power of all classes of stock of the Company entitled to vote, (ii) such Holder is not, for U.S. federal income tax purposes, a controlled foreign corporation related, directly or indirectly, to the Company through stock ownership, (iii) such Holder is not a bank receiving interest described in Section 881(c)(3)(A) of the Code, and (iv) the certification requirements under Section 871(h) or Section 881(c) of the Code and Treasury Regulations thereunder (summarized below) are met; (b) a U.S. Alien Holder of a New Note will not be subject to U.S. federal income tax on gains realized on the sale, exchange or other disposition of such New Note, unless (i) such Holder is an individual who is present in the U.S. for 183 days or more in the taxable year of sale, exchange or other disposition, and certain conditions are met; (ii) such gain is effectively connected with the conduct by such Holder of a trade or business in the U.S. and, if certain tax treaties apply, is attributable to a U.S. permanent establishment maintained by the U.S. Alien Holder or (iii) the U.S. Alien Holder is subject to tax pursuant to the Code provisions applicable to certain U.S. expatriates; and (c) a New Note held by an individual who is not a citizen or resident of the U.S. at the time of his death will not be subject to U.S. federal estate tax as a result of such individual's death, provided that, at 102 105 the time of such individual's death, the individual does not own, actually or constructively, 10% or more of the total combined voting power of all classes of stock of the Company entitled to vote and payments with respect to such New Note would not have been effectively connected with the conduct by such individual of a trade or business in the U.S. Sections 871(h) and 881(c) of the Code and currently effective Treasury Regulations thereunder require that, in order to obtain the exemption from withholding tax described in paragraph (a) above, either (i) the beneficial owner of a New Note must certify, under penalties of perjury, to the Company or paying agent, as the case may be, that such owner is a U.S. Alien Holder and must provide such owner's name and address, and U.S. taxpayer identification number ("TIN"), if any, or (ii) a securities clearing organization, bank or other financial institution that holds customers securities in the ordinary course of its trade or business (a "Financial Institution") and holds the New Note on behalf of the beneficial owner thereof must certify, under penalties of perjury, to the Company or paying agent, as the case may be, that such certificate has been received from the beneficial owner by it or by a Financial Institution between it and the beneficial owner and must furnish the payor with a copy thereof. A certificate described in this paragraph is effective only with respect to payments of interest made to the certifying U.S. Alien Holder after delivery of the certificate in the calendar year of its delivery and the two immediately succeeding calendar years. Under currently effective U.S. Treasury Regulations, such requirement will be fulfilled if the beneficial owner of a New Note certifies on Internal Revenue Service Form W-8, under penalties of perjury, that it is a U.S. Alien Holder and provides its name and address, and any Financial Institution holding the New Note on behalf of the beneficial owner files a statement with the withholding agent to the effect that it has received such a statement from the beneficial owner (and furnishes the withholding agent with a copy thereof). Treasury Regulations released on October 6, 1997 (the "New Regulations") and effective for payments made after December 31, 1998, will provide alternative methods for satisfying the certification requirement described herein. The New Regulations also will require, in the case of Notes held by a foreign partnership, that (x) the certification be provided by the partners rather than by the foreign partnership and (y) the partnership provide certain information, including a United States taxpayer identification number. A look through rule will apply in the case of tiered partnerships. If a U.S. Alien Holder of a New Note is engaged in a trade or business in the U.S., and if interest on the New Note, or gain realized on the sale, exchange or other disposition of the New Note, is effectively connected with the conduct of such trade or business and, if certain tax treaties apply, is attributable to a U.S. permanent establishment maintained by the U.S. Alien Holder, the U.S. Alien Holder, although exempt from U.S. withholding tax, will generally be subject to regular U.S. income tax on such interest or gain in the same manner as if it were a U.S. Holder. In lieu of the certificate described in the preceding paragraph, such a Holder will be required to provide the Company a properly executed Internal Revenue Service Form 4224 in order to claim an exemption from withholding tax. In addition, if such U.S. Alien Holder is a foreign corporation, it may be subject to a branch profits tax equal to 30% (or such lower rate provided by an applicable treaty) of its effectively connected earnings and profits for the taxable year, subject to certain adjustments. For purposes of the branch profits tax, interest on and any gain recognized on the sale, exchange or other disposition of a New Note will be included in the earnings and profits of such U.S. Alien Holder if such interest or gain is effectively connected with the conduct by the U.S. Alien Holder of a trade or business in the U.S. The New Regulations will change some of the withholding reporting requirements described above, effective for payments made after December 31, 1998, subject to certain grandfathering provisions. BACKUP WITHHOLDING Under current U.S. federal income tax law, a 31% backup withholding tax requirement applies to certain payments of interest on, and the proceeds of a sale, exchange or redemption of, the New Notes. Backup withholding will generally not apply with respect to payments made to certain exempt recipients, such as corporations or other tax-exempt entities. In the case of a non-corporate U.S. Holder, backup withholding will apply only if such Holder (i) fails to furnish its TIN, which, for an individual, would be his Social Security number, (ii) furnishes an incorrect TIN, (iii) is notified by the Internal Revenue Service that 103 106 it has failed to properly report payments of interest and dividends or (iv) under certain circumstances, fails to certify, under penalties of perjury, that it has furnished a correct TIN and has not been notified by the Internal Revenue Service that it is subject to backup withholding for failure to report interest and dividend payments. In the case of a U.S. Alien Holder, under currently effective Treasury Regulations, backup withholding will not apply to payments made by the Company or any paying agent thereof on a New Note if such holder has provided the required certification under penalties of perjury that it is not a U.S. Holder (as defined above) or has otherwise established an exemption, provided in each case that the Company or such paying agent, as the case may be, does not have actual knowledge that the payee is a U.S. Holder. Under currently effective Treasury Regulations, if payments on a New Note are made to or through a foreign office of a custodian, nominee or other agent acting on behalf of a beneficial owner of a New Note, such custodian, nominee or other agent acting will not be required to apply backup withholding to such payments made to such beneficial owner. However, under the New Regulations, backup withholding may apply to payments made after December 31, 1998 if such custodian, nominee or other agent has actual knowledge that the payee is a U.S. Holder. Under currently effective Treasury Regulations, payments on the sale, exchange or other disposition of a New Note made to or through a foreign office of a broker generally will not be subject to backup withholding. However, under the New Regulations, backup withholding may apply to payments made after December 31, 1998 if such broker has actual knowledge that the payee is a U.S. Holder. In the case of proceeds from a sale of a New Note by a U.S. Alien Holder paid to or through the foreign office of a U.S. broker or a foreign office of a foreign broker that is (i) a controlled foreign corporation for U.S. tax purposes or (ii) a person 50% or more of whose gross income for the three-year period ending with the close of the taxable year preceding the year of payment (or for the part of that period that the broker has been in existence) is effectively connected with the conduct of a trade or business within the U.S., information reporting is required unless the broker has documentary evidence in its files that the payee is not a U.S. person and certain other conditions are met, or the payee otherwise establishes an exemption. Payments to or through the U.S. office of a broker will be subject to backup withholding and information reporting unless the holder certifies, under penalties of perjury, that it is not a U.S. Holder and that certain other conditions are met or otherwise establishes an exemption. Holders of New Notes should consult their tax advisors regarding the application of backup withholding in their particular situations, the availability of an exemption therefrom, and the procedure for obtaining such an exemption, if available. Any amounts withheld from payment under the backup withholding rules will be allowed as a credit against a Holder's U.S. federal income tax liability and may entitle such holder to a refund, provided that the required information is furnished to the Internal Revenue Service. THE FOREGOING DISCUSSION IS NOT TAX ADVICE. ACCORDINGLY, EACH PROSPECTIVE HOLDER OF NEW NOTES SHOULD CONSULT ITS OWN TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO THE PROSPECTIVE HOLDER OF THE NEW NOTES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL, OR NON-U.S. INCOME TAX LAWS AND ANY RECENT OR PROSPECTIVE CHANGES IN APPLICABLE TAX LAWS AND THE EFFECT OF THE NEW REGULATIONS WITH RESPECT TO PAYMENTS MADE AFTER DECEMBER 31, 1998. PLAN OF DISTRIBUTION Each broker-dealer that receives New Notes for its own account ("Participating Broker-Dealer") pursuant to the Exchange Offer must acknowledge that it will deliver a Prospectus in connection with the initial sales of such New Notes. This Prospectus, as it may be amended or supplemented from time to time, may be used by a Participating Broker-Dealer in connection with the sales of New Notes received in exchange for Notes where such Notes were acquired as a result of market-making activities or other trading activities. The Company has agreed that it will make this Prospectus, as amended or supplemented, available to any Participating Broker-Dealer for use in connection with any such resale and Participating Broker-Dealers shall be authorized to deliver this prospectus for a period not exceeding 120 days after the Expiration Date. In 104 107 addition, until , 1998 (90 days after the date of this Prospectus), all dealers effecting transactions in the New Notes may be required to deliver a prospectus. The Company will not receive any proceeds from any sales of the New Notes by participating Broker-Dealers. New Notes received by Participating Broker-Dealers for their own account pursuant to the Exchange Offer may be sold from time to time, in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the New Notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or at negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such Participating Broker-Dealer that resells the New Notes that were received by it for its own account pursuant to the Exchange Offer. Any broker or dealer that participates in a distribution of such New Notes may be deemed to be an "underwriter" within the meaning of the Securities Act and may profit on any such resale of New Notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a Participating Broker-Dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. The Company will promptly send additional copies of this Prospectus and any amendment or supplement to this prospectus to any Participating Broker-Dealer that requests such documents in the Letter of Transmittal. See "The Exchange Offer." DLJ has, from time to time, including in connection with the Combination, provided investment banking and other financial advisory services to APCOA and affiliates of APCOA for which it has received customary compensation. The First National Bank of Chicago, an affiliate of First Chicago, is the agent under the New Credit Facility and First Chicago is the arranger under the New Credit Facility. See "Description of Indebtedness." LEGAL MATTERS Certain legal matters in connection with the New Notes offered hereby will be passed upon for the Company by Wachtell, Lipton, Rosen & Katz, New York, New York. EXPERTS The consolidated financial statements of APCOA at December 31, 1996 and 1997 and for each of the three years in the period ended December 31, 1997, appearing in this Prospectus and in the Registration Statement, and the financial statement schedule for each of the three years in the period ended December 31, 1997 included in the Registration Statement have been audited by Ernst & Young LLP, independent auditors, as set forth in their reports thereon appearing elsewhere herein and in the Registration Statement, and are included herein in reliance upon such reports given upon the authority of such firm as experts in accounting and auditing. The financial statements of Standard at December 31, 1996 and 1997 and for each of the three years in the period ended December 31, 1997, appearing in this Prospectus and in the Registration Statement have been audited by Altschuler, Melvoin and Glasser LLP, independent auditors, as set forth in their report thereon appearing elsewhere herein, and are included herein in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. 105 108 INDEX OF CERTAIN DEFINED TERMS
PAGE NO. ADA............................... 20 Affiliate Transaction............. 81 Agent............................. 31 Alternate Base Rate............... 70 Annual Base Salary................ 62 APCOA............................. 5 AP Holdings....................... 6 Asset Sale Offer.................. 76 Auditorium........................ 68 Board............................. 62 BPLP.............................. 68 CAGR.............................. 8 Calculation Date.................. 94 Cause............................. 63 Century Parking................... 6 Certificate of Incorporation...... 20 Certificated New Notes............ 89 Change of Control Offer........... 75 Change of Control Payment......... 75 Change of Control Payment Date.... 75 Closing........................... 2 Code.............................. 101 Combination....................... 7 Combination Agreement............. 31 Commission........................ 4 Company........................... 1 Company Common Stock.............. 31 Consulting Agreement.............. 69 Consulting Period................. 69 Covenant Defeasance............... 85 Cutoff Date....................... 63 Delaware North.................... 64 Depositary........................ 3 Depositor......................... 27 Disability........................ 63 DLJ............................... 3 Dosher............................ 66 DTC............................... 3 Effectiveness Target Date......... 90 Eligible Institution.............. 25 Employment Period................. 62 EPI............................... 6 Excess Proceeds................... 76 Exchange Act...................... 4 Exchange Agent.................... 2 Exchange Offer.................... 1
PAGE NO. Expiration Date................... 2 Financial Institution............. 103 Financing......................... 31 First Chicago..................... 3 Global New Note Registered Owner........................... 87 Global New Notes.................. 87 Good Reason....................... 63 Holberg........................... 20 incur............................. 78 Indenture......................... 1 Indirect Participants............. 88 Initial Purchasers................ 3 IRS............................... 30 Legal Defeasance.................. 85 Lenders........................... 18 Letter of Transmittal............. 1 Liquidated Damages................ 91 Named Executive Officers.......... 58 New Credit Facility............... 31 New Notes......................... 1 New Note Guarantees............... 1 New Regulations................... 103 Noncompetition Period............. 63 Non-Guarantor Subsidiaries........ 13 Notes............................. 1 Offering.......................... 10 Option Plan....................... 63 Orkla............................. 64 Other Acquisitions................ 7 Other Real Estate................. 63 Participants...................... 88 Participating Broker-Dealer....... 104 Payment Blockage Period........... 73 Payment Default................... 84 Payment Notice.................... 73 Permitted Debt.................... 78 Permitted Investments............. 63 PORTAL............................ 23 Preferred Stock Contribution...... 6 Property-level expenses........... 68 Put/Call Agreement................ 64 Registration Default.............. 91 Registration Rights Agreement..... 1 Registration Statement............ 4 Restricted Payments............... 77 S&S Parking....................... 6
106 109
PAGE NO. SEC............................... 4 Securities Act.................... 1 Sentry Parking.................... 6 Severance Pay..................... 62 Shelf Registration Statement...... 14 Standard.......................... 31 Standard Owners................... 31 Standard Parties.................. 66 Standard Tremont.................. 68 Stockholders...................... 66 Stockholders Agreement............ 66
PAGE NO. Subsidiary Guarantors............. 1 Tax Sharing Agreement............. 67 TIN............................... 103 Transactions...................... 31 Transfer Restricted Securities.... 90 Tremont Facility.................. 68 Trustee........................... 1 Trust Indenture Act............... 71 U.S. Alien Holder................. 101 U.S. Holder....................... 101 Warshauer Employment Agreement.... 62
107 110 APCOA/STANDARD PARKING, INC. INDEX TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
PAGE ---- Description of Unaudited Pro Forma Consolidated Financial Statements................................................ P-2 Unaudited Pro Forma Consolidated Balance Sheet as of March 31, 1998.................................................. P-3 Notes to Unaudited Pro Forma Consolidated Balance Sheet as of March 31, 1998......................................... P-4 Unaudited Pro Forma Consolidated Statement of Operations for the Year Ended December 31, 1997 and the Three Months Ended March 31, 1998...................................... P-5 Notes to Unaudited Pro Forma Consolidated Statement of Operations for the Year Ended December 31, 1997 and the Three Months Ended March 31, 1998......................... P-7
P-1 111 APCOA/STANDARD PARKING, INC. UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS The following Unaudited Pro Forma Consolidated Balance Sheet as of March 31, 1998 and Unaudited Pro Forma Consolidated Statements of Operations for the year ended December 31, 1997 and the three months ended March 31, 1998 are based on the historical consolidated financial statements of APCOA. The Unaudited Pro Forma Consolidated Balance Sheet is adjusted to give effect to the acquisition of EPI as if this event had occurred on March 31, 1998. The Unaudited Pro Forma Consolidated Statements of Operations is adjusted to give effect to (1) the acquisition of Standard, (2) the Other Acquisitions, including the acquisition of EPI, (3) the Preferred Stock Contribution, (4) the sale of the Notes and (5) the application of the net proceeds therefrom, as if these events had occurred as of January 1, 1997. The Unaudited Pro Forma Consolidated Statements of Operations combine the historical operations of APCOA with the historical operations of the acquired businesses prior to the date APCOA made such acquisitions, using the purchase method of accounting. The actual allocation of purchase price for each acquisition will be based on management's final determination of the fair value of assets acquired or to be acquired and liabilities assumed or to be assumed. Management believes that the final allocation of the purchase price will not materially differ from the preliminary estimated amounts. The pro forma operating results are not necessarily indicative of the operating results that would have been achieved had the acquisitions actually occurred at January 1, 1997, nor do they purport to indicate the results of future operations. The Unaudited Pro Forma Consolidated Financial Statements are based on the assumptions set forth in the notes to such statements and should be read in conjunction with the related consolidated financial statements and notes thereto of APCOA and Standard included elsewhere in this Prospectus. P-2 112 APCOA/STANDARD PARKING, INC. UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1998 (IN THOUSANDS)
PRO FORMA HISTORICAL ADJUSTMENTS ------------------ FOR EPI COMBINED APCOA EPI ACQUISITION(1) PRO FORMA -------- ------ --------------- --------- ASSETS Current assets: Cash....................................................... $ 60,480 $ 598 $ (7,000) $ 54,078 Notes and accounts receivable, net......................... 19,461 434 -- 19,895 Prepaid expenses........................................... 1,595 235 -- 1,830 -------- ------ -------- -------- Total current assets................................. 81,536 1,267 (7,000) 75,803 Equipment and leasehold improvements, net................... 9,749 408 -- 10,157 Cost of parking contracts, net.............................. 12,558 -- 935 13,493 Cost in excess of net assets acquired, net.................. 95,504 -- 6,424 101,928 Intangible and other assets, net............................ 12,197 -- (414) 11,783 Advances and deposits....................................... 1,966 6 -- 1,972 -------- ------ -------- -------- $213,510 $1,681 $ (55) $215,136 ======== ====== ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable........................................... $ 16,578 $ 952 $ -- $ 17,530 Accrued expenses........................................... 36,184 576 -- 36,760 Current portion of long-term debt.......................... 1,083 98 -- 1,181 -------- ------ -------- -------- Total current liabilities............................ 53,845 1,626 -- 55,471 Long-term liabilities: New credit facility........................................ 497 -- -- 497 9 1/4% Senior Subordinated Notes due 2008.................. 140,000 -- -- 140,000 Other debt................................................. 5,293 -- -- 5,293 Seller notes............................................... 3,250 -- -- 3,250 Other liabilities.......................................... 11,059 -- -- 11,059 -------- ------ -------- -------- Total long-term liabilities.......................... 160,099 -- -- 160,099 Redeemable preferred stock.................................. 40,683 -- -- 40,683 Common stock subject to put/call rights..................... 4,589 -- -- 4,589 Stockholders' equity (deficit): Common stock............................................... 1 -- -- 1 Additional paid in capital................................. 11,422 -- -- 11,422 Retained earnings (deficit)................................ (57,129) -- -- (57,129) Owners' equity............................................. -- 55 (55) -- -------- ------ -------- -------- Total stockholders' equity (deficit)................. (45,706) 55 (55) (45,706) -------- ------ -------- -------- $213,510 $1,681 $ (55) $215,136 ======== ====== ======== ========
See accompanying notes to unaudited pro forma consolidated balance sheet. P-3 113 APCOA/STANDARD PARKING, INC. NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1998 (IN THOUSANDS) (1) Represents the following adjustments to reflect the acquisition of EPI on May 1, 1998 (the final purchase price allocation will be based upon a final determination of fair values of the net assets acquired): Historical net assets of EPI................................ $ 55 Less: Current APCOA investment in EPI....................... (414) ------- Net deficit acquired................................... (359) Cost of parking contracts................................... 935 Cost in excess of net assets acquired....................... 6,424 ------- Cash consideration payable from excess cash................. $ 7,000 =======
P-4 114 APCOA/STANDARD PARKING, INC. UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1997 (IN THOUSANDS)
PRO FORMA ADJUSTMENTS HISTORICAL FOR COMBINED ------------------------------------- STANDARD ADJUSTMENTS PRO FORMA OTHER AND OTHER COMBINED FOR ADJUSTED APCOA STANDARD ACQUISITIONS(1) ACQUISITIONS PRO FORMA OFFERING FOR OFFERING -------- -------- --------------- ------------ --------- ----------- ------------ Parking services revenue..... $115,676 $63,652 $6,750 $ -- $186,078 $ -- $186,078 Cost and expenses: Cost of parking services... 92,818 50,142 3,205 -- 146,165 -- 146,165 General and administrative.......... 13,528 7,857 3,566 (2,987)(2) 20,045 -- 20,045 (1,919)(3) Depreciation and amortization............ 3,767 464 -- 1,302(4) 7,676 (180)(8) 7,496 2,143(5) -------- ------- ------ ------- -------- ------- -------- Total costs and expenses......... 110,113 58,463 6,771 (1,461) 173,886 (180) 173,706 -------- ------- ------ ------- -------- ------- -------- Operating income............. 5,563 5,189 (21) 1,461 12,192 180 12,372 Other expense (income): Interest expense........... 3,713 45 -- 7,124(6) 10,882 4,102(9) 14,984 Interest income............ (470) (130) -- 351(7) (249) -- (249) -------- ------- ------ ------- -------- ------- -------- Income (loss) before income taxes and minority interest................... 2,320 5,274 (21) (6,014) 1,559 (3,922) (2,363) Minority interest............ 321 -- -- -- 321 -- 321 Income tax expense........... 140 -- -- -- 140 -- 140 -------- ------- ------ ------- -------- ------- -------- Net income (loss)............ $ 1,859 $ 5,274 $ (21) $(6,014) $ 1,098 $(3,922) $ (2,824) ======== ======= ====== ======= ======== ======= ========
See accompanying notes to unaudited pro forma consolidated statements of operations. P-5 115 APCOA/STANDARD PARKING, INC. UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS THREE MONTHS ENDED MARCH 31, 1998 (IN THOUSANDS)
PRO FORMA ADJUSTMENTS HISTORICAL FOR COMBINED ------------------------------------- STANDARD ADJUSTMENTS PRO FORMA OTHER AND OTHER COMBINED FOR ADJUSTED APCOA STANDARD ACQUISITIONS(1) ACQUISITIONS PRO FORMA OFFERING FOR OFFERING -------- -------- --------------- ------------ --------- ----------- ------------ Parking services revenue..... $ 28,804 $14,590 $1,375 $ -- $ 44,769 $ -- $ 44,769 Cost and expenses: Cost of parking services... 23,576 11,212 783 -- 35,571 -- 35,571 General and administrative.......... 3,460 2,012 494 (575)(2) 5,131 -- 5,131 (260)(3) Restructuring charge....... 14,500 -- -- -- 14,500 -- 14,500 Depreciation and amortization............ 1,055 52 -- 290(4) 1,908 (48)(8) 1,860 511(5) -------- ------- ------ ------- -------- ------- -------- Total costs and expenses......... 42,591 13,276 1,277 (34) 57,110 (48) 57,062 -------- ------- ------ ------- -------- ------- -------- Operating income (loss)...... (13,787) 1,314 98 34 (12,341) 48 (12,293) Other expense (income): Interest expense........... 1,037 5 -- 1,687(6) 2,729 982(9) 3,711 Interest income............ (149) (7) -- 113(7) (43) -- (43) -------- ------- ------ ------- -------- ------- -------- Income (loss) before income taxes, minority interest and extraordinary item..... (14,675) 1,316 98 (1,766) (15,027) (934) (15,961) Minority interest............ 143 -- -- -- 143 -- 143 Income tax expense........... 30 -- -- -- 30 -- 30 -------- ------- ------ ------- -------- ------- -------- Income (loss) before extraordinary item......... $(14,848) $ 1,316 $ 98 $(1,766) $(15,200) $ (934) $(16,134) ======== ======= ====== ======= ======== ======= ========
See accompanying notes to unaudited pro forma consolidated statements of operations. P-6 116 APCOA/STANDARD PARKING, INC. NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS YEAR ENDED DECEMBER 31, 1997 AND THREE MONTHS ENDED MARCH 31, 1998 (IN THOUSANDS) (1) The historical consolidated statement of operations data for the Other Acquisitions for the year ended December 31, 1997 represents the results of operations of such companies from January 1, 1997 to the earlier of their respective dates of acquisition or December 31, 1997. The historical consolidated statement of operations data for the Other Acquisitions for the three months ended March 31, 1998 represents the results of operations of such companies (to the extent the company was acquired in 1998) from January 1, 1998 to the earlier of their respective dates of acquisition or March 31, 1998. The Other Acquisitions and their respective acquisition dates include: (i) Colonial Richmond (March 1, 1997); (ii) Metropolitan Parking (June 1, 1997); (iii) the remaining 50% interest in APCOA Parking Management & Development, Ltd. (November 1, 1997); (iv) Dixie Parking (January 22, 1998); and (v) the remaining 76% interest in EPI (May 1, 1998). Each of the Other Acquisitions has been or will be accounted for as a purchase. Accordingly, the results of the operations of each such acquired company are or will be included in APCOA's results of operations from the date of acquisition. (2) Represents the net reduction in costs in accordance with the Company's business plan to integrate Standard:
FISCAL THREE MONTHS 1997 1998 ------ ------------ Payroll reductions for the elimination of duplicative administrative and operations personnel............. $1,461 $365 Reduction in salaries of certain Standard executives pursuant to post-acquisition employment agreements.......................................... 1,139 113 Reductions in management information systems costs.... 387 97 ------ ---- $2,987 $575 ====== ====
In addition, there are $3,289 of anticipated annual cost savings ($1,883 represents personnel reduction savings at APCOA and $1,406 represents purchasing efficiencies) that have not been reflected in the pro forma statements of operations because they are not directly attributable to the acquisition of Standard. APCOA recorded a $14,500 charge in the first quarter of 1998 related to its planned restructuring of existing operations. This charge is composed of $10,800 in employee severance and relocation costs, $2,400 in writedowns of long-term assets to current fair value, and $1,300 in other restructuring costs. See Note L to the historical financial statements of APCOA included elsewhere herein. (3) Represents the net reduction in costs in accordance with APCOA's business plans to integrate the Other Acquisitions:
FISCAL THREE MONTHS 1997 1998 ------ ------------ Payroll reductions for the elimination of duplicative administrative and operations personnel: EPI............................................ $ 331 $ 83 Other.......................................... 428 12 Reduction in salaries of certain EPI executives pursuant to post-acquisition employment agreements.......................................... 577 144 Reduction in management fees paid to third parties which will be eliminated upon acquisition........... 583 21 ------ ---- $1,919 $260 ====== ====
(4) Represents the incremental depreciation and amortization due to the application of purchase accounting. Equipment and leasehold improvements and cost of parking contracts are being amortized over 3 to 7 years. The cost of parking contracts are being amortized over their contract term. Depreciation and P-7 117 APCOA/STANDARD PARKING, INC. NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS--(CONTINUED) amortization has been increased to reflect each acquisition as if it had occurred on January 1, 1997 as follows:
FISCAL THREE MONTHS 1997 1998 ------ ------------ Amortization of cost of parking contracts acquired from Standard....................................... $1,014 $254 Amortization of cost of parking contracts acquired from the Other Acquisitions......................... 347 51 Net reduction in depreciation of property and equipment acquired from Standard.................... (59) (15) ------ ---- $1,302 $290 ====== ====
(5) Represents the incremental amortization, due to the application of purchase accounting, for amortization of the excess cost over the fair value of net assets acquired over 40 years. Amortization has been increased to reflect each acquisition as if it had occurred on January 1, 1997 as follows:
FISCAL THREE MONTHS 1997 1998 ------ ------------ Amortization of excess cost over fair value of net assets acquired for Standard.......................................... $1,854 $464 Amortization of excess cost over fair value of net assets acquired for the Other Acquisitions............ 289 47 ------ ---- $2,143 $511 ====== ====
(6) Represents the incremental interest expense for the additional financing required for the acquisitions. Interest expense has been increased to reflect each acquisition as if it had occurred on January 1, 1997. The interest rate used for the additional financing for the Standard acquisition and the EPI acquisition was 9 1/4%, the actual rate of the Senior Subordinated Notes, the proceeds from which were partially used to finance such acquisitions. The interest expense is as follows:
INCREMENTAL INTEREST EXPENSE ------------------------------- PRINCIPAL FISCAL THREE MONTHS AMOUNT RATE 1997 1998 --------- ----------- ----------- ---------------- Standard................. $65,000 9 1/4% $6,013 $1,503 EPI...................... 7,000 9 1/4% 648 162 Seller notes for Dixie acquisition............ 3,250 8 1/4% 268 22 Other borrowings (pro- rated)................. 3,128 8.0% - 9.0% 195 -- ------ ------ $7,124 $1,687 ====== ======
(7) Represents the elimination of interest income from Holberg Industries, Inc. on the outstanding amount due from Holberg Industries, Inc. (8) Represents the elimination of historical amortization expense related to the deferred financing costs on the existing credit facilities. P-8 118 APCOA/STANDARD PARKING, INC. NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS--(CONTINUED) (9) Represents the change in interest expense related to the Offering:
PRINCIPAL AMOUNT FISCAL THREE MONTHS OF DEBT 1997 1998 --------- ----------- ------------ Recording of pro forma interest expense: 9 1/4% Senior Subordinated Notes due 2008........ $140,000 $12,950 $3,238 Nonrecourse third party debt at 11.0% to 15.0%... 5,523 660 150 Seller notes for Dixie acquisition at 8.25%...... 3,250 268 67 Letters of credit................................ 4,905 123 31 Capital leases................................... 168 29 Other debt....................................... 56 6 ------- ------ Cash interest expense............................ 14,225 3,521 Amortization of deferred financing costs......... 759 190 ------- ------ Total interest expense................... 14,984 3,711 Less: Combined pro forma interest expense.......... 10,882 2,729 ------- ------ Pro forma interest adjustment after the Offering... $ 4,102 $ 982 ======= ======
P-9 119 INDEX TO HISTORICAL FINANCIAL STATEMENTS APCOA, INC. Report of Ernst & Young LLP, Independent Auditors........... F-2 Consolidated Balance Sheets as of December 31, 1996 and 1997, and as of March 31, 1998 (unaudited)................ F-3 Consolidated Statements of Operations for each of the three years in the period ended December 31, 1997, and for the three months ended March 31, 1997 and 1998 (unaudited).... F-4 Consolidated Statements of Stockholders' Equity (Deficit) for each of the three years in the period ended December 31, 1997, and for the three months ended March 31, 1998 (unaudited)............................................... F-5 Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 1997, and for the three months ended March 31, 1997 and 1998 (unaudited).... F-6 Notes to Consolidated Financial Statements.................. F-7 STANDARD PARKING Report of Altschuler, Melvoin and Glasser LLP, Independent Auditors.................................................. F-18 Balance Sheets as of December 31, 1996 and 1997............. F-19 Statements of Income for each of the three years in the period ended December 31, 1997............................ F-20 Statements of Changes in Equity for each of the three years in the period ended December 31, 1997..................... F-21 Statements of Cash Flows for each of the three years in the period ended December 31, 1997............................ F-22 Notes to Financial Statements............................... F-23
F-1 120 REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS Board of Directors APCOA, Inc. Cleveland, Ohio We have audited the accompanying consolidated balance sheets of APCOA, Inc., as of December 31, 1996 and 1997, and the related consolidated statements of operations, stockholders' equity (deficit) and cash flows for each of the three years in the period ended December 31, 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of APCOA, Inc. at December 31, 1996 and 1997, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1997, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Cleveland, Ohio February 3, 1998 F-2 121 APCOA, INC. CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT FOR SHARE DATA)
DECEMBER 31 ------------------ MARCH 31, 1996 1997 1998 ------- ------- ----------- (UNAUDITED) ASSETS Current assets: Cash...................................................... $ 2,532 $ 3,322 $ 60,480 Notes and accounts receivable, less allowances of $315 in 1996 and $443 in 1997.................................. 10,241 13,806 19,461 Prepaid expenses and supplies............................. 1,343 1,126 1,595 ------- ------- --------- Total current assets........................................ 14,116 18,254 81,536 Leaseholds and equipment: Equipment................................................. 9,296 10,024 10,153 Leasehold improvements.................................... 15,804 13,981 14,214 Leaseholds................................................ 31,446 31,293 38,543 Construction in progress.................................. 36 417 2,611 ------- ------- --------- 56,582 55,715 65,521 Less accumulated depreciation and amortization............ 44,906 43,375 43,214 ------- ------- --------- 11,676 12,340 22,307 Other assets: Advances and deposits..................................... 1,011 1,509 1,966 Cost in excess of net assets acquired, less accumulated amortization of $2,979 and $3,412 in 1996 and 1997, respectively........................................... 17,118 18,457 95,504 Intangible and other assets, less accumulated amortization of $3,081 and $3,433 in 1996 and 1997, respectively.... 3,381 4,013 12,197 Due from affiliate........................................ 5,521 4,522 -- ------- ------- --------- 27,031 28,501 109,667 ------- ------- --------- Total assets...................................... $52,823 $59,095 $ 213,510 ======= ======= ========= LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable.......................................... $15,742 $16,401 $ 16,578 Accrued rent.............................................. 6,023 5,649 5,578 Compensation and payroll withholdings..................... 2,057 1,924 2,275 Property, payroll and other taxes......................... 3,004 3,111 3,454 Accrued insurance and expenses............................ 6,079 4,126 8,377 Accrued restructuring costs............................... -- -- 16,500 Current portion of long-term borrowings................... 666 4,102 1,083 ------- ------- --------- Total current liabilities................................... 33,571 35,313 53,845 Long-term borrowings, excluding current portion: Obligation under credit agreements........................ 25,261 27,729 140,497 Other..................................................... 6,868 6,452 8,543 ------- ------- --------- 32,129 34,181 149,040 Other long-term liabilities................................. 2,513 3,132 11,059 Redeemable preferred stock.................................. 7,841 8,728 40,683 Common stock subject to put/call rights..................... -- -- 4,589 Stockholders' equity (deficit): Common stock, par value $1.00 per share, 1,000 shares authorized; 26.3 shares issued and outstanding......... 1 1 1 Additional paid-in capital................................ 17,205 17,205 11,422 Accumulated deficit....................................... (40,437) (39,465) (57,129) ------- ------- --------- Total stockholders' equity (deficit)........................ (23,231) (22,259) (45,706) ------- ------- --------- Total liabilities and stockholders' equity (deficit)....................................... $52,823 $59,095 $ 213,510 ======= ======= =========
See Notes to Consolidated Financial Statements. F-3 122 APCOA, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS)
THREE MONTHS YEARS ENDED DECEMBER 31 ENDED MARCH 31 -------------------------------- ------------------- 1995 1996 1997 1997 1998 ---- ---- ---- ---- ---- (UNAUDITED) Parking services revenue: Lease contracts.................... $128,745 $120,286 $ 99,594 $23,371 $ 24,663 Management contracts............... 12,795 15,466 16,082 3,648 4,141 -------- -------- -------- ------- -------- 141,540 135,752 115,676 27,019 28,804 Costs and expenses: Cost of parking services: Lease contracts................. 113,337 104,718 83,327 20,158 21,315 Management contracts............ 6,878 8,783 9,491 2,389 2,261 -------- -------- -------- ------- -------- 120,215 113,501 92,818 22,547 23,576 General and administrative......... 12,121 13,017 13,528 2,940 3,460 Restructuring charge............... -- -- -- -- 14,500 Depreciation and amortization...... 8,772 4,888 3,767 1,110 1,055 -------- -------- -------- ------- -------- Total costs and expenses............. 141,108 131,406 110,113 26,597 42,591 -------- -------- -------- ------- -------- Operating income (loss).............. 432 4,346 5,563 422 (13,787) Other expenses (income): Interest expense................... 3,101 3,409 3,713 869 1,037 Interest income.................... (396) (532) (470) (102) (149) -------- -------- -------- ------- -------- 2,705 2,877 3,243 767 888 -------- -------- -------- ------- -------- Income (loss) before minority interest, income taxes and extraordinary item................. (2,273) 1,469 2,320 (345) (14,675) Minority interest.................... 604 424 321 38 143 Income tax expense................... 240 106 140 60 30 -------- -------- -------- ------- -------- Income (loss) before extraordinary item............................... (3,117) 939 1,859 (443) (14,848) Extraordinary loss................... -- -- -- -- 2,816 -------- -------- -------- ------- -------- Net income (loss).................... $ (3,117) $ 939 $ 1,859 $ (443) $(17,664) ======== ======== ======== ======= ========
See Notes to Consolidated Financial Statements. F-4 123 APCOA, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (IN THOUSANDS, EXCEPT FOR SHARE DATA)
COMMON STOCK ------------------ ADDITIONAL NUMBER PAR PAID-IN ACCUMULATED OF SHARES VALUE CAPITAL DEFICIT TOTAL --------- ----- ---------- ----------- -------- Balance (deficit) at January 1, 1995.... 26.3 $1 $17,205 $(36,748) $(19,542) Net loss................................ (3,117) (3,117) Preferred stock dividend................ (715) (715) ----- -- ------- -------- -------- Balance (deficit) at December 31, 1995.................................. 26.3 1 17,205 (40,580) (23,374) Net income.............................. 939 939 Preferred stock dividend................ (796) (796) ----- -- ------- -------- -------- Balance (deficit) at December 31, 1996.................................. 26.3 1 17,205 (40,437) (23,231) Net income.............................. 1,859 1,859 Preferred stock dividend................ (887) (887) ----- -- ------- -------- -------- Balance (deficit) at December 31, 1997.................................. 26.3 1 17,205 (39,465) (22,259) Net loss (unaudited).................... (17,664) (17,664) Non-cash distribution to affiliate (unaudited)........................... (6,511) (6,511) Contribution to capital (unaudited)..... 728 728 ----- -- ------- -------- -------- Balance (deficit) at March 31, 1998 (unaudited)........................... 26.3 $1 $11,422 $(57,129) $(45,706) ===== == ======= ======== ========
See Notes to Consolidated Financial Statements. F-5 124 APCOA, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
THREE MONTHS YEARS ENDED DECEMBER 31 ENDED MARCH 31, ------------------------------ ------------------- 1995 1996 1997 1997 1998 ---- ---- ---- ---- ---- (UNAUDITED) OPERATING ACTIVITIES Net income (loss)...................... $(3,117) $ 939 $ 1,859 $ (443) (17,664) Adjustment to reconcile net income (loss) to net cash provided by (used in) operations: Depreciation and amortization........ 8,772 4,888 3,767 1,110 1,055 Restructuring charge................. 14,500 Changes in operating assets and liabilities: (Increase) decrease in notes and accounts receivable............. (686) 1,041 (3,495) (1,120) (2,968) (Increase) decrease in prepaid assets.......................... (2) 163 273 (88) (319) (Increase) decrease in other assets.......................... (452) (1,071) 216 95 (1,321) Increase (decrease) in accounts payable......................... 2,067 (845) 294 (3,661) 176 Increase (decrease) in accrued liabilities..................... (1,340) (1,209) (2,982) 960 3,413 (Increase) decrease in due from affiliate....................... (902) (1,864) 999 (1,069) (1,889) ------- -------- ------- ------- -------- Net cash provided by (used in) operating activities................. 4,340 2,042 931 (4,216) (5,017) INVESTING ACTIVITIES Purchase of leaseholds and equipment... (2,782) (2,552) (2,357) (257) (1,600) Purchase of leaseholds and equipment by joint ventures....................... (1,930) (1,181) (480) (24) Increase in other assets............... (100) (906) (270) (491) Businesses acquired, net of cash, and including direct acquisition costs... (227) 151 (131) (70,754) Proceeds from disposition of leaseholds and equipment........................ 122 384 ------- -------- ------- ------- -------- Net cash used in investing activities........................... (4,917) (3,349) (3,592) (658) (72,869) FINANCING ACTIVITIES Proceeds from refinancing.............. 11,217 Payments due to refinancing............ (11,071) Proceeds from long-term borrowings..... 1,027 4,269 6,508 148,949 Payments on long-term borrowings....... (1,183) (412) (829) (85) (40,584) Proceeds from joint venture borrowings........................... 2,430 2,665 400 Payments on joint venture borrowing.... (140) (1,414) (389) (119) (105) Payments of debt issuance costs........ (724) (5,899) Proceeds from issuance of preferred stock................................ 40,683 Redemption of redeemable preferred stock................................ (8,000) ------- -------- ------- ------- -------- Net cash provided by financing activities........................... 1,107 1,288 3,451 6,304 135,044 ------- -------- ------- ------- -------- Increase (decrease) in cash............ 530 (19) 790 1,430 57,158 Cash at beginning of period............ 2,021 2,551 2,532 2,532 3,322 ------- -------- ------- ------- -------- CASH AT END OF PERIOD.................. $ 2,551 $ 2,532 $ 3,322 $ 3,962 $ 60,480 ======= ======== ======= ======= ========
See Notes to Consolidated Financial Statements. F-6 125 APCOA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997 (IN THOUSANDS) NOTE A. ORGANIZATION APCOA, Inc. (the Company), its subsidiaries and affiliates manage, operate and develop parking properties throughout the United States and Canada. The Company is a wholly owned subsidiary of AP Holdings, Inc. NOTE B. SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION--The consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries, and joint ventures in which the Company has more than 50% ownership interest. Minority interest recorded in the consolidated statement of operations is the Company's noncontrolling interest in consolidated joint ventures. Minority interest included in the consolidated balance sheet was $49 and $276 at December 31, 1996 and 1997, respectively. Investments in joint ventures of 50% or less ownership interest are reported on the equity method. Investments in joint ventures accounted for using the equity method in the consolidated balance sheet was $217 and $273 at December 31, 1996 and 1997, respectively. All significant intercompany profits, transactions and balances have been eliminated in consolidation. GROSS CUSTOMER COLLECTIONS--Gross customer collections represent gross receipts collected at all leased and managed properties, including unconsolidated affiliates. Gross customer collections were $408,952, $430,696 and $476,183 in 1995, 1996 and 1997. PARKING REVENUE--The Company recognizes gross receipts from leased locations and management fees earned from management contract properties as parking revenue as the related services are provided. Also included in parking revenue is $850 in 1995, $147 in 1996 and $1,207 in 1997 from gains on sales of parking contracts in the ordinary course of business. COST OF PARKING SERVICES--The Company recognizes costs for leases and nonreimbursed costs from managed facilities as cost of parking services. Cost of parking services consists primarily of rent and payroll related costs. LEASEHOLDS AND EQUIPMENT--Leaseholds, equipment and leasehold improvements are stated at cost. Leaseholds (cost of parking contracts) are amortized on a straight-line basis over the average contract life of 7 years. Equipment is depreciated on the straight-line basis over the estimated useful lives of approximately 5 years on average. Leasehold improvements are amortized on the straight-line basis over the terms of the respective leases or the service lives of the improvements, whichever is shorter (average of approximately 7 years). Depreciation and amortization includes losses on abandonments of leaseholds of $184, $481 and $478 in 1995, 1996 and 1997, respectively. ADVERTISING COSTS--Advertising costs are expensed as incurred and are included in general and administrative expenses. Advertising expenses were $246, $414 and $440 for 1995, 1996 and 1997, respectively. COST IN EXCESS OF NET ASSETS ACQUIRED (GOODWILL)--Cost in excess of net assets acquired arising from acquisitions is amortized using the straight-line method over 40 years. The carrying value of goodwill is evaluated if circumstances indicate a possible impairment in value. If undiscounted cash flows over the remaining amortization period indicate that goodwill may not be recoverable, the carrying value of goodwill will be reduced by the estimated shortfall of cash flows on a discounted basis. INTANGIBLE ASSETS--Organization and start-up costs of $633 and $1,296 at December 31, 1996 and 1997, respectively, are amortized over 7 years using the straight-line method. Debt issuance costs of $900 and $775 F-7 126 APCOA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED at December 31, 1996 and 1997, respectively, are amortized over the terms of the credit agreements using the straight-line method. FINANCIAL INSTRUMENTS--The carrying values of cash, accounts receivable and accounts payable are reasonable estimates of their fair value due to the short-term nature of these financial instruments. Other long-term assets and debt have a carrying value that approximates fair value. USE OF ESTIMATES--The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. NEW ACCOUNTING PRONOUNCEMENT--In June 1997, the Financial Accounting Standards Board issued Statement No. 131, Disclosures about Segments of an Enterprise and Related Information. Statement No. 131, which becomes effective in 1998, establishes standards for reporting segment information in annual and interim financial statements including disclosures about services, geographic areas and major customers. The Company has not yet determined the impact of adopting Statement No. 131 on its financial statement disclosures. Effective January 1, 1998, the Company adopted Statement No. 130, Reporting Comprehensive Income, which establishes the standards for reporting and displaying comprehensive earnings and its components as part of a full set of financial statements. Since this statement applies only to the presentation of comprehensive income, it did not have any impact on the Company's results of operations, financial position or cash flows. In addition, the Company does not have any elements of comprehensive income. INTERIM FINANCIAL DATA--The unaudited consolidated balance sheet as of March 31, 1998, and the related consolidated statements of operations and cash flows for the three months ended March 31, 1997 and 1998 and the consolidated statement of stockholders' equity (deficit) for the three months ended March 31, 1998, have been prepared in accordance with generally accepted accounting principles for interim financial information and with Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles 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 months ended March 31, 1998 are not necessarily indicative of the results that might be expected for the year ending December 31, 1998. NOTE C. BORROWING ARRANGEMENTS Long-term borrowings consist of:
AMOUNT OUTSTANDING DECEMBER 31 INTEREST DUE ------------------ RATE(S) DATE 1996 1997 Prudential term note.................. 9.18% April, 2003 $18,000 $18,000 Prudential term note.................. 8.92% March, 2005 5,000 5,000 Key Bank revolver..................... 7.82--8.75% April, 2000 2,261 6,529 Joint venture debentures.............. 11.00--15.00% December, 2006 5,512 5,523 Capital leases and other.............. Various Various 2,022 3,231 ------- ------- 32,795 38,283 Less current portion.................. 666 4,102 ------- ------- $32,129 $34,181 ======= =======
The Company has a term facility with the Prudential Insurance Company of America in the amount of $23 million. The facility, with semi-annual principal payments beginning in 1998 contains two term notes. In March 1996, the Company refinanced its revolving credit facility with KeyBank, as agent, which provides for F-8 127 APCOA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED borrowings and letters of credit of up to $20 million and bears interest at LIBOR plus 2% or prime plus .25% as selected by the Company. These facilities are secured by substantially all of the assets of the Company. The terms of the credit agreements call for, among other things, meeting defined net worth, income and debt coverage ratios as well as restrictions on the payment of dividends on common stock and capital expenditures. Consolidated joint ventures have entered into four agreements for stand-alone development projects providing nonrecourse funding. These joint venture debentures are collateralized by the specific contracts that were funded and approximate the net book value of the related assets. The Company has entered into capital leases and various financing agreements, which were used for the purchase of equipment and on November 1, 1997, the Company signed interest free promissory notes in the amount of $1,123 to purchase the remaining interest of an unconsolidated subsidiary. The notes were paid in January, 1998. The Company paid interest of $3,174, $3,230 and $3,878 in 1995, 1996, and 1997, respectively. The aggregate maturities of borrowings outstanding at December 31, 1997 are as follows: 1998............................................... $ 4,102 1999............................................... 4,849 2000............................................... 11,162 2001............................................... 4,466 2002............................................... 4,587 2003 and thereafter................................ 9,117 ------- $38,283 =======
NOTE D. INCOME TAXES The Company is included in the consolidated federal income tax return filed with its affiliates and has a tax sharing agreement with the affiliates. The Company's income tax provision is determined on a separate return basis. Income tax expense consists of state and local taxes. At December 31, 1997, the Company has net operating loss carryforwards of $23.2 million for income tax purposes that expire in years 2004 through 2012. Net operating loss carryforwards have been utilized to eliminate federal income tax expense in 1996 and 1997. A reconciliation of the Company's reported income tax expense to the amount computed by multiplying income (loss) before minority interest and income taxes by the effective federal income tax rate is as follows:
1995 1996 1997 ---- ---- ---- Statutory amount (benefit)............. $(773) $ 499 $ 789 Benefit from carryforward of net operating losses..................... -- (499) (789) Reduction in benefit due to inability to carryback operating losses........ 773 -- -- State and local income taxes........... 240 106 140 ----- ----- ----- Income tax expense..................... $ 240 $ 106 $ 140 ===== ===== =====
Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant F-9 128 APCOA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED components of the Company's deferred tax assets and liabilities as of December 31, 1996 and 1997 are as follows:
1996 1997 ---- ---- Net operating loss carryforwards......................... $ 7,736 $ 8,111 Book over tax depreciation and amortization.............. 2,042 1,234 Casualty/liability insurance............................. 674 699 Accrued compensation..................................... 433 (55) Other, net............................................... 280 361 ------- ------- 11,165 10,350 Less: valuation allowance for deferred tax assets........ 11,165 10,350 ------- ------- Net deferred tax assets.................................. $ 0 $ 0 ======= =======
For financial reporting purposes, a valuation allowance for deferred tax assets will continue to be recorded until realization is certain. NOTE E. BENEFIT PLANS The Company offers deferred compensation arrangements for certain key executives and sponsors an employees' savings and retirement plan in which certain employees are eligible to participate. Subject to their continued employment by the Company, employees offered deferred compensation arrangements will receive a defined monthly benefit upon attaining age 65. At December 31, 1996 and 1997, the Company has accrued $1,668 and $1,733, respectively, representing the present value of the future benefit payments. Participants in the savings and retirement plan may elect to contribute a portion of their compensation to the plan. The Company, in turn, contributes an amount in cash or other property as required by the plan. Expenses related to these plans amounted to $441, $473 and $461 in 1995, 1996 and 1997, respectively. The Company also contributes to two multi-employer defined contribution and nine multi-employer defined benefit plans which cover certain union employees. Expenses related to these plans were $562, $561 and $418 in 1995, 1996 and 1997, respectively. NOTE F. LEASES The Company operates parking facilities under operating leases expiring on various dates, generally prior to the year 2012. Certain of the leases contain options to renew at the Company's discretion. At December 31, 1997, the Company was committed to install in future years, at an estimated cost of $1,063, certain capital improvements at leased facilities. Future annual rent expense is not determinable due to the application of percentage factors based on revenues. At December 31, 1997, the Company's minimum rental commitments, under all non-cancelable leases with remaining terms of more than one year, are as follows: 1998............................................... $28,036 1999............................................... 16,117 2000............................................... 12,301 2001............................................... 7,925 2002............................................... 6,443 2003 and thereafter................................ 25,216 ------- $96,038 =======
F-10 129 APCOA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED Rent expense, including percentage rents, was $97,343, $90,419 and $69,113 in 1995, 1996 and 1997, respectively. NOTE G. REDEEMABLE PREFERRED STOCK The Company has 400 shares of preferred stock authorized, of which 78 and 87 shares are outstanding at December 31, 1996 and 1997, respectively. The preferred shareholder, an affiliate -- Holberg Industries, Inc. (Holberg), was issued 60 shares of preferred stock in 1994 for $6,000. Holberg is entitled to 11% annual dividends payable semiannually in cash or additional preferred shares. The preferred stock is recorded at its $100,000 per share liquidation value plus unpaid dividends. Subject to the approval of the Board of Directors, the Company has the right to redeem for cash all or any part of the preferred shares then outstanding at a redemption price equal to the per share liquidation value. All of the then outstanding preferred shares will be mandatorily redeemed for cash on February 25, 2004 at a redemption price equal to the per share liquidation value. NOTE H. RELATED PARTIES TRANSACTIONS Due from affiliate represents amounts due from Holberg as the result of various transactions between the Company and Holberg including net cash transferred, investment income and insurance premiums. Interest is recorded on amounts due based on current investment rates of return. The Company participates in a master insurance program with Holberg which serves to reduce the insurance costs of the combined group. The program provides the Company with a stop loss for each insurance policy year. Insurance premium for the coverage is included in the cost of parking services and reflects the Company's estimated cost indicative of the ongoing entity on a stand alone basis through the purchase of insurance and related costs for self-insured retention amounts consistent with the limits used in the 1997 policy year and expected to be followed in the future. NOTE I. ACQUISITIONS During the year ended December 31, 1997, the Company completed three acquisitions. In January 1998, the Company acquired Dixie Parking Services, Inc. located in New Orleans, Louisiana. The aggregate purchase price of the four acquisitions was $2.0 million in cash and $4.4 million in notes payable. Additional consideration of up to $875 for one acquisition is contingent upon the operating results of the acquired company. The excess purchase price over the fair value of the net assets acquired, primarily cost of contracts, was recorded as goodwill for all acquisitions. All acquisitions have been accounted for under the purchase method of accounting, and the consolidated results of operations include the results of each business from the date of acquisition. Unaudited pro forma data for the year ended December 31, 1996 and 1997 as though the Company had purchased all of the above businesses at the beginning of 1996 and 1997 are set forth below. The pro forma operating results are not necessarily indicative of what would have occurred had the transactions taken place on January 1, 1996.
1996 1997 Parking revenue........................................ $142,091 $116,935 Net income............................................. 1,454 2,025
NOTE J. COMMITMENTS AND CONTINGENCIES As a result of its day-to-day operations, the Company is involved in several disputes, generally regarding the terms of lease agreements. In the opinion of management, the outcome of these disputes and litigation will not have a material adverse effect on the consolidated financial position or operating results of the Company. F-11 130 APCOA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED NOTE K. SUBSEQUENT ACQUISITIONS AND FINANCINGS (UNAUDITED) In January 1998, the Company entered into a definitive Combination Agreement to acquire all of the outstanding capital stock, partnership and other equity interests of Standard Parking Corporation and certain affiliates (Standard). On March 30, 1998, the Company acquired Standard for consideration consisting of $65 million in cash, 16% of the common stock of the Company outstanding as of January 15, 1998 and the assumption of certain liabilities. In addition, on March 30, 1998, the Company paid to the Standard owners $2.8 million, generally representing Standard's earnings through the date of the acquisition and Standard's cash on hand at such time. Financing of the acquisition included a contribution from AP Holdings, Inc., and other transactions as described below. The acquisition has been accounted for under the purchase method; accordingly, its results are included in the consolidated financial statements of the Company from the date of acquisition. Following is the preliminary purchase price allocation (the final purchase price allocation will be based on a final determination of the fair value of assets acquired and liabilities assumed). Management believes that the final allocation of the purchase price will not materially differ from the preliminary estimated amounts. Cash consideration.......................................... $65,000 5.0095230 shares of common stock issued, at calculated put/call value............................................ 4,589 Closing distribution to the Standard owners................. 2,822 Direct acquisition costs.................................... 5,219 ------- Total purchase price........................................ $77,630 ======= Cash........................................................ $ 1,711 Notes and accounts receivable............................... 2,687 Prepaid expenses............................................ 150 Property and equipment...................................... 1,118 Cost of parking contracts................................... 6,853 Cost in excess of net assets acquired....................... 74,162 Other assets................................................ 991 Accounts payable and accrued expenses....................... (1,872) Restructuring reserves...................................... (2,000) Long-term severance liabilities............................. (5,000) Other liabilities........................................... (1,170) ------- $77,630 =======
The put/call value is based primarily upon a multiple of EBITDA of the Company. For financial reporting purposes the Company believes that the put/call value is the best measure of fair value of the common stock issued in connection with the acquisition because such value was negotiated at arms' length and there is no active market for the Company's common stock. Direct acquisition costs incurred in connection with the acquisition include investment banking fees of $3,289 and legal and other professional fees of $1,930. The restructuring reserves represent the estimated costs to integrate existing information and operating systems of Standard in connection with the Company's business plans. In connection with the Standard acquisition, on March 30, 1998, the Company (i) issued $140 million principal amount of 9 1/4% Senior Subordinated Notes due 2008 in a Rule 144A private placement, (ii) received a contribution of $40.7 million from AP Holdings, Inc., in exchange for redeemable preferred stock and (iii) entered into a $40 million senior credit facility. The net proceeds from the offering and the preferred stock contribution were used by the Company to fund the cash portion of the consideration for the F-12 131 APCOA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED acquisition of Standard, to repay certain existing debt of the Company and Standard, for general corporate purposes and to redeem preferred stock held by an affiliate. In connection with the early extinguishment of debt in March 1998, the Company recorded an extraordinary loss of $2,816. The extraordinary loss represents the unamortized balance of debt issuance costs related to the Company's previous credit agreement of $727 and a prepayment penalty of $2,089 related to the Company's previous credit agreement. The following unaudited pro forma results of operations for the year ended December 31, 1997 and the three months ended March 31, 1998 assume the acquisition of Standard and related transactions occurred at the beginning of each period presented:
YEAR ENDED THREE MONTHS DECEMBER 31, ENDED MARCH 31, 1997 1998 ------------ --------------- Net sales................................................ $186,078 $ 44,769 Loss before extraordinary item........................... (2,824) (16,134)
This pro forma information does not purport to be indicative of the results that actually would have been obtained if the combined operations had been conducted during the periods presented and is not intended to be a projection of future results. On May 1, 1998, the Company acquired the remaining 76% interest in Executive Parking Industries LLC (EPI), through the acquisition of all of the outstanding capital stock of S&S Parking, Inc., the sole asset of which was such 76% interest in EPI, for $7.0 million in cash. In addition, on June 1, 1998, the Company acquired all of the outstanding capital stock of Century Parking, Inc., and Sentry Parking Corporation, for $5.2 million in cash at closing and $1.0 million payable on the third anniversary of the closing date. These acquisitions will be accounted for under the purchase method. The operating results of the businesses are not material to the consolidated results of the Company. NOTE L. RESTRUCTURING CHARGE Included in the "restructuring charge" in the accompanying consolidated statements of operations for the three months ended March 31, 1998 are the following: Employee severance costs.................................... $ 5,800 Employee relocation costs................................... 5,000 Impairment of assets that will no longer be used............ 2,400 Other restructuring costs................................... 1,300 ------- $14,500 =======
During the first quarter of 1998, management performed a thorough analysis of the costs associated with implementing the business plan of consolidating the Company's headquarters in Chicago and costs related to Company staff reductions. During the first quarter of 1998, all affected employees were notified of the Company's plans. It is expected that substantially all actions related to the restructuring will be completed during 1998. F-13 132 APCOA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED NOTE M. SUBSIDIARY GUARANTORS All of the Company's direct or indirect wholly owned domestic subsidiaries, including Standard, other than inactive subsidiaries, fully, unconditionally, jointly and severally guarantee the Senior Subordinated Notes discussed in Note K. Separate 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 and inactive subsidiaries, all of which are included in the consolidated financial statements. The following is summarized combining financial information for APCOA, Inc., the guarantor subsidiaries of the Company and the non-guarantor subsidiaries of the Company:
APCOA, GUARANTOR NON-GUARANTOR INC. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL ------ ------------ ------------- ------------ ----- 1995 Income Statement Data: Parking revenue............................. $73,720 $ 1,901 $65,919 $ -- $141,540 Gross profit................................ 17,588 360 3,377 -- 21,325 Depreciation and amortization............... 7,996 51 725 -- 8,772 Operating income (loss)..................... (1,828) 182 2,078 -- 432 Interest expense (income), net.............. 2,289 (34) 450 -- 2,705 Equity in earnings of subsidiaries.......... 1,240 -- -- (1,240) -- Net income (loss)........................... (3,117) 216 1,024 (1,240) (3,117) Statement of Cash Flows Data: Net cash provided by (used in) operating activities................................ 4,515 10 (185) -- 4,340 Investing activities: Purchase of leaseholds and equipment...... (2,769) (13) (1,930) -- (4,712) Other..................................... (205) -- -- -- (205) -------- -------- ------- -------- -------- Net cash used in investing activities....... (2,974) (13) (1,930) -- (4,917) Financing activities: Proceeds from long-term borrowings........ -- -- 2,430 -- 2,430 Payments on long-term borrowings.......... (1,183) -- (140) -- (1,323) -------- -------- ------- -------- -------- Net cash provided by (used in) financing activities................................ (1,183) -- 2,290 -- 1,107 1996 Balance Sheet Data: Notes and accounts receivable............... 7,489 (146) 2,898 -- 10,241 Current assets.............................. 10,327 93 3,696 -- 14,116 Leaseholds and equipment, net............... 5,925 146 5,605 -- 11,676 Cost in excess of net assets acquired, net....................................... 16,479 639 -- -- 17,118 Investment in subsidiaries.................. 3,357 -- -- (3,357) -- Total assets................................ 44,186 977 11,017 (3,357) 52,823 Accounts payable............................ 13,603 241 1,898 -- 15,742 Current liabilities......................... 26,303 377 6,891 -- 33,571 Long-term borrowings, excluding current portion................................... 27,006 -- 5,123 -- 32,129 Redeemable preferred stock.................. 7,841 -- -- -- 7,841 Total stockholders' equity (deficit)........ (19,053) 600 (1,421) (3,357) (23,231) Total liabilities and stockholders' equity.................................... 44,186 977 11,017 (3,357) 52,823 Income Statement Data: Parking revenue............................. 73,140 2,914 59,698 -- 135,752 Gross profit................................ 18,412 669 3,170 -- 22,251 Depreciation and amortization............... 3,745 166 977 -- 4,888 Operating income............................ 2,722 198 1,426 -- 4,346 Interest expense (income), net.............. 2,340 (18) 555 -- 2,877 Equity in earnings of subsidiaries.......... 663 -- -- (663) -- Net income (loss)........................... 939 216 447 (663) 939 Statement of Cash Flows Data: Net cash provided by (used in) operating activities................................ 2,012 286 (256) -- 2,042 Investing activities: Purchase of leaseholds and equipment...... (2,481) (71) (1,181) -- (3,733)
F-14 133 APCOA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
APCOA, GUARANTOR NON-GUARANTOR INC. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL ------ ------------ ------------- ------------ ----- Other..................................... $ 384 $ -- $ -- $ -- $ 384 -------- -------- ------- -------- -------- Net cash used in investing activities....... (2,097) (71) (1,181) -- (3,349) Financing activities: Proceeds from refinancing................. 11,217 -- -- -- 11,217 Payments due to refinancing............... (11,071) -- -- -- (11,071) Proceeds from long-term borrowings........ 1,027 -- 2,665 -- 3,692 Payments on long-term borrowings.......... (412) -- (1,414) -- (1,826) Payments of debt issuance costs........... (724) -- -- -- (724) -------- -------- ------- -------- -------- Net cash provided by financing activities... 37 -- 1,251 -- 1,288 1997 Balance Sheet Data: Notes and accounts receivable............... 10,587 326 2,893 -- 13,806 Current assets.............................. 12,801 1,292 4,161 -- 18,254 Leaseholds and equipment, net............... 6,246 227 5,867 -- 12,340 Cost in excess of net assets acquired, net....................................... 16,190 1,432 835 -- 18,457 Investment in subsidiaries.................. 3,652 -- -- (3,652) -- Total assets................................ 46,000 3,477 13,270 (3,652) 59,095 Accounts payable............................ 13,574 1,756 1,071 -- 16,401 Current liabilities......................... 26,593 2,178 6,542 -- 35,313 Long-term borrowings, excluding current portion................................... 28,747 -- 5,434 -- 34,181 Redeemable preferred stock.................. 8,728 -- -- -- 8,728 Total stockholders' equity (deficit)........ (20,229) 1,219 403 (3,652) (22,259) Total liabilities and stockholders' equity.................................... 46,000 3,477 13,270 (3,652) 59,095 Income Statement Data: Parking revenue............................. 78,051 3,439 34,186 -- 115,676 Gross profit................................ 18,400 940 3,518 -- 22,858 Depreciation and amortization............... 2,836 65 866 -- 3,767 Operating income............................ 4,451 419 693 -- 5,563 Interest expense (income), net.............. 2,654 -- 589 -- 3,243 Equity in earnings of subsidiaries.......... 202 -- -- (202) -- Net income (loss)........................... 1,859 419 (217) (202) 1,859 Statement of Cash Flows Data: Net cash provided by (used in) operating activities................................ (173) 704 400 -- 931 Investing activities: Purchase of leaseholds and equipment...... (2,357) -- (480) -- (2,837) Other..................................... (1,467) 81 631 -- (755) -------- -------- ------- -------- -------- Net cash provided by (used in) investing activities................................ (3,824) 81 151 -- (3,592) Financing activities: Proceeds from long-term borrowings........ 4,269 -- 400 -- 4,669 Payments on long-term borrowings.......... (685) -- (533) -- (1,218) -------- -------- ------- -------- -------- Net cash provided by (used in) financing activities................................ 3,584 -- (133) -- 3,451 THREE MONTHS ENDED MARCH 31, 1997 Income Statement Data: Parking revenue............................. 17,437 524 9,058 -- 27,019 Gross profit................................ 3,600 27 845 -- 4,472 Depreciation and amortization............... 928 12 170 -- 1,110 Operating income (loss)..................... 260 (85) 247 -- 422 Interest expense (income), net.............. 612 -- 155 -- 767 Equity in earnings of subsidiaries.......... (31) -- -- 31 -- Net income (loss)........................... (443) (85) 54 31 (443) Statement of Cash Flows Data: Net cash provided by (used in) operating activities................................ (4,686) 125 345 -- (4,216)
F-15 134 APCOA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
APCOA, GUARANTOR NON-GUARANTOR INC. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL ------ ------------ ------------- ------------ ----- Investing activities: Purchase of leaseholds and equipment...... $ (213) $ (44) $ -- $ -- $ (257) Other..................................... (243) (158) -- -- (401) -------- -------- ------- -------- -------- Net cash provided by (used in) investing activities................................ (456) (202) -- -- (658) Financing activities: Proceeds from long-term borrowings........ 6,508 -- -- -- 6,508 Payments on long-term borrowings.......... (85) -- (119) -- (204) -------- -------- ------- -------- -------- Net cash provided by (used in) financing activities................................ 6,423 -- (119) -- 6,304 THREE MONTHS ENDED MARCH 31, 1998 Balance Sheet Data: Cash and cash equivalents................... 56,537 2,961 982 -- 60,480 Notes and accounts receivable............... 10,929 4,458 4,074 -- 19,461 Current assets.............................. 68,698 7,535 5,303 -- 81,536 Leaseholds and equipment, net............... 8,551 8,203 5,553 -- 22,307 Cost in excess of net assets acquired, net....................................... 19,470 75,204 830 -- 95,504 Investment in subsidiaries.................. 90,472 -- -- (90,472) -- Total assets................................ 196,981 92,925 14,076 (90,472) 213,510 Accounts payable............................ 13,955 1,483 1,140 -- 16,578 Current liabilities......................... 43,786 3,957 6,102 -- 53,845 Long-term borrowings, excluding current portion................................... 142,615 321 6,104 -- 149,040 Redeemable preferred stock.................. 40,683 -- -- -- 40,683 Common stock subject to put/call rights..... 4,589 -- -- -- 4,589 Total stockholders' equity (deficit)........ (43,939) 87,727 978 (90,472) (45,706) Total liabilities and stockholders' equity.................................... 196,981 92,925 14,076 (90,472) 213,510 Income Statement Data: Parking revenue............................. 17,847 1,054 9,903 -- 28,804 Gross profit................................ 3,673 331 1,224 -- 5,228 Restructuring charge........................ 14,500 -- -- -- 14,500 Depreciation and amortization............... 766 28 261 -- 1,055 Operating income (loss)..................... (14,466) 194 485 -- (13,787) Interest expense (income), net.............. 732 -- 156 -- 888 Equity in earnings of subsidiaries.......... 383 -- -- (383) -- Net income (loss)........................... (17,664) 194 189 (383) (17,664) Statement of Cash Flows Data: Net cash provided by (used in) operating activities................................ (5,311) 231 63 -- (5,017) Investing activities: Purchase of leaseholds and equipment...... (1,600) -- (24) -- (1,624) Businesses acquired....................... (72,465) 1,711 -- -- (70,754) Other..................................... (491) -- -- -- (491) -------- -------- ------- -------- -------- Net cash provided by (used in) investing activities................................ (74,556) 1,711 (24) -- (72,869) Financing activities: Proceeds from long-term borrowings........ 148,949 -- -- -- 148,949 Payments on long-term borrowings.......... (40,584) -- (105) -- (40,689) Payments of debt issuance costs........... (5,899) -- -- -- (5,899) Proceeds from issuance of preferred stock................................... 40,683 -- -- -- 40,683 Redemption of redeemable preferred stock................................... (8,000) -- -- -- (8,000) -------- -------- ------- -------- -------- Net cash provided by (used in) financing activities................................ 135,149 -- (105) -- 135,044
F-16 135 APCOA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED The following pro forma income statement data reflects the Combination with Standard and the Other Acquisitions as if they had occurred as of the beginning of the periods presented. The pro forma balance sheet data as of March 31, 1998 reflects the acquisition of EPI as if it had occurred on that date.
APCOA, GUARANTOR NON-GUARANTOR INC. SUBSIDIARIES SUBSIDIARIES ELIMINATIONS TOTAL ------ ------------ ------------- ------------ ----- 1997 (PRO FORMA) Income Statement Data: Parking revenue............................. 78,051 73,841 34,186 -- 186,078 Gross profit................................ 18,400 17,995 3,518 -- 39,913 Depreciation and amortization............... 2,656 3,974 866 -- 7,496 Operating income............................ $ 4,631 $ 7,048 $ 693 $ -- $ 12,372 Interest expense (income), net.............. 14,245 (130) 620 -- 14,735 Equity in earnings of subsidiaries.......... 6,930 -- -- (6,930) -- Net income (loss)........................... (2,824) 7,178 (248) (6,930) (2,824) THREE MONTHS ENDED MARCH 31, 1998 (PRO FORMA) Balance Sheet Data: Cash and cash equivalents................... 49,537 3,559 982 -- 54,078 Notes and accounts receivable............... 10,929 4,892 4,074 -- 19,895 Current assets.............................. 61,698 8,802 5,303 -- 75,803 Leaseholds and equipment, net............... 8,551 9,546 5,553 -- 23,650 Cost in excess of net assets acquired, net....................................... 19,470 81,628 830 -- 101,928 Investment in subsidiaries.................. 97,886 -- -- (97,886) -- Total assets................................ 196,981 101,965 14,076 (97,886) 215,136 Accounts payable............................ 13,955 2,435 1,140 -- 17,530 Current liabilities......................... 43,786 5,583 6,102 -- 55,471 Long-term borrowings, excluding current portion................................... 142,615 321 6,104 -- 149,040 Redeemable preferred stock.................. 40,683 -- -- -- 40,683 Common stock subject to put/call rights..... 4,589 -- -- -- 4,589 Total stockholders' equity (deficit)........ (43,939) 95,141 978 (97,886) (45,706) Total liabilities and stockholders' equity.................................... 196,981 101,965 14,076 (97,886) 215,136 Income Statement Data: Parking revenue............................. 17,847 17,019 9,903 -- 44,769 Gross profit................................ 3,673 4,301 1,224 -- 9,198 Restructuring charge........................ 14,500 -- -- -- 14,500 Depreciation and amortization............... 737 862 261 -- 1,860 Operating income (loss)..................... (14,404) 1,626 485 -- (12,293) Interest expense (income), net.............. 3,519 (7) 156 -- 3,668 Equity in earnings of subsidiaries.......... 1,822 -- -- (1,822) -- Income (loss) before extraordinary item..... (16,134) 1,633 189 (1,822) (16,134)
F-17 136 REPORT OF ALTSCHULER, MELVOIN AND GLASSER LLP, INDEPENDENT AUDITORS To the Owners of Standard Parking We have audited the accompanying balance sheets of STANDARD PARKING as of December 31, 1996 and 1997 and the related statements of income, changes in equity and cash flows for each of the three years in the period ended December 31, 1997. These financial statements are the responsibility of the management of Standard Parking. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Standard Parking as of December 31, 1996 and 1997, and the combined results of its operations, changes in equity and cash flows for each of the three years in the period ended December 31, 1997 in conformity with generally accepted accounting principles. Altschuler, Melvoin and Glasser LLP Chicago, Illinois February 3, 1998 F-18 137 STANDARD PARKING BALANCE SHEETS DECEMBER 31, 1996 AND 1997 (IN THOUSANDS)
1996 1997 ASSETS Current Assets: Cash and cash equivalents................................. $2,968 $ 2,478 Management fees receivable and due from managed facilities............................................. 1,357 1,843 Accounts receivable--other................................ 1,143 2,041 Current maturities of notes receivable.................... 60 116 Due from related parties.................................. 879 919 Prepaid expenses.......................................... 168 150 ------ ------- Total current assets.............................. 6,575 7,547 ------ ------- Property and Equipment (at cost, net of accumulated depreciation)............................................. 1,014 1,170 ------ ------- Other Assets: Management contracts (net of accumulated amortization of $58 and $85)........................................... 456 328 Due from related parties.................................. 168 218 Notes receivable--long term............................... 296 184 Cash value of life insurance.............................. 621 729 ------ ------- Total other assets................................ 1,541 1,459 ------ ------- Total Assets................................. $9,130 $10,176 ====== ======= LIABILITIES AND EQUITY Current Liabilities: Accounts payable and accrued expenses..................... $1,608 $ 2,413 Due to related parties.................................... 70 75 Key card security and lease deposits...................... 167 198 Accrued basic and percentage rents........................ 755 792 Deferred rent............................................. 136 28 Line of credit borrowings................................. 0 330 Current maturities of long-term debt...................... 185 133 Funds held on behalf of managed facilities................ 201 129 ------ ------- Total current liabilities......................... 3,122 4,098 ------ ------- Long-term Liabilities: Deferred rent............................................. 265 395 Deferred compensation..................................... 423 417 Long-term debt............................................ 203 70 Long-term related party debt.............................. 82 57 Other..................................................... 123 123 ------ ------- Total long-term liabilities....................... 1,096 1,062 ------ ------- Total Liabilities........................................... 4,218 5,160 ------ ------- Equity...................................................... 4,912 5,016 ------ ------- Total Liabilities and Equity................. $9,130 $10,176 ====== =======
The accompanying notes are an integral part of this statement. F-19 138 STANDARD PARKING STATEMENTS OF INCOME YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997 (IN THOUSANDS)
1995 1996 1997 Revenue: Leased facilities......................................... $38,418 $41,770 $54,801 Management and consulting fees and other parking services revenue................................................ 6,783 8,505 8,851 ------- ------- ------- Total revenue............................................... 45,201 50,275 63,652 Cost and expenses: Cost of parking services -- leased facilities............. 35,168 37,838 50,142 General and administrative expenses....................... 6,390 7,547 7,857 Depreciation and amortization............................. 316 376 464 Loss on office relocation................................. 408 ------- ------- ------- Total costs and expenses.................................... 42,282 45,761 58,463 ------- ------- ------- Operating income............................................ 2,919 4,514 5,189 Other expense (income): Interest income........................................... (96) (110) (130) Interest expense.......................................... 37 54 45 ------- ------- ------- (59) (56) (85) ------- ------- ------- Net income.................................................. $ 2,978 $ 4,570 $ 5,274 ======= ======= ======= Pro Forma Data (unaudited): Income before provision for income taxes (from above)..... $ 2,978 $ 4,570 $ 5,274 Income tax provision...................................... 1,191 1,828 2,110 ------- ------- ------- Net income................................................ $ 1,787 $ 2,742 $ 3,164 ======= ======= =======
The accompanying notes are an integral part of this statement. F-20 139 STANDARD PARKING STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997 (IN THOUSANDS) Equity, January 1, 1995..................................... $ 3,894 Capital Contribution........................................ 10 Net Income for Year......................................... 2,978 Distributions............................................... (3,482) ------- Equity, December 31, 1995................................... 3,400 Net Income for Year......................................... 4,570 Distributions............................................... (3,058) ------- Equity, December 31, 1996................................... 4,912 Net Income for Year......................................... 5,274 Distributions............................................... (5,170) ------- Equity, December 31, 1997................................... $ 5,016 =======
The accompanying notes are an integral part of this statement. F-21 140 STANDARD PARKING STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997 (IN THOUSANDS)
1995 1996 1997 OPERATING ACTIVITIES Net income................................................ $ 2,978 $ 4,570 $ 5,274 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization.......................... 316 376 464 Increase (decrease) in cash arising from changes in: Management fees receivable and amounts due from managed facilities................................ 275 (166) (486) Accounts receivable and prepaid expenses............. 292 (407) (881) Related party receivables/payables................... (1,375) 287 (103) Accrued basic and percentage rents................... (441) 236 37 Deferred compensation................................ 141 149 (6) Deferred rent........................................ 377 24 22 Other current liabilities............................ 280 262 765 ------- ------- ------- Net cash provided by operating activities................... 2,843 5,331 5,086 ------- ------- ------- INVESTING ACTIVITIES Increase in cash value of life insurance.................. (120) (31) (108) Management contracts acquired............................. (561) 0 0 Capital expenditures...................................... (547) (336) (492) Proceeds from sale of fixed assets........................ 0 100 0 Increase in notes receivable.............................. (50) (305) 0 Other, net................................................ (25) 76 71 ------- ------- ------- Net cash used in investing activities....................... (1,303) (496) (529) ------- ------- ------- FINANCING ACTIVITIES Principal payments on debt................................ (70) (187) (207) Proceeds from bank loans.................................. 476 130 330 Distributions............................................. (3,472) (3,058) (5,170) ------- ------- ------- Net cash used in financing activities....................... (3,066) (3,115) (5,047) ------- ------- ------- Net increase (decrease) in cash and cash equivalents........ (1,526) 1,720 (490) Cash at beginning of year................................... 2,774 1,248 2,968 ------- ------- ------- Cash at end of year......................................... $ 1,248 $ 2,968 $ 2,478 ======= ======= =======
The accompanying notes are an integral part of this statement. F-22 141 STANDARD PARKING NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997 (IN THOUSANDS) NOTE 1--NATURE OF ACTIVITIES AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Basis of Presentation--The financial statements of Standard Parking have been prepared in connection with the Combination Agreement dated January 15, 1998 between the owners of Standard Parking and APCOA, Inc. The financial statements include the accounts and activities of the following entities, exclusive of certain assets not included in the acquisition, as specified and defined in the Combination Agreement: Standard Parking, L.P. and consolidated entities: Central Parking Entities: Standard Parking I, L.L.C. Standard Parking II, L.L.C. Standard Parking/Marina, L.L.C. (ceased operations during 1997) Standard Parking of Canada, L.P. Standard Parking Corporation Standard Auto Park, Inc. Standard Parking Corporation, MW Standard Parking Corporation, IL Standard/Wabash Parking Corporation Certain business interests, defined as excluded assets in the Combination Agreement, have not been included in these financial statements as follows: Standard Parking, L.P.: Interests in Buckingham Investors Partnership (a partnership) and Standard Parking/Courthouse, L.L.C. (a limited liability company), including associated debt of $142. Standard Parking Corporation: All assets and liabilities, except for investments in Standard Parking L.P., Standard Parking I, L.L.C., Standard Parking II, L.L.C., Standard Parking/Marina L.L.C. and Standard Parking of Canada, L.P. Because all of the above entities are under the common control and management of Standard Parking, the financial statements have been combined based on the historical costs of the underlying entities. All significant intercompany balances and transactions have been eliminated in the combined presentation. In addition, certain other entities under common control are not subject to the Combination Agreement and have not been included in these financial statements. The Combination Agreement states that APCOA, Inc. will acquire the defined business for $65 million plus 16% of APCOA, Inc.'s common stock. Standard Parking leases and manages parking facilities located throughout North America from regional offices in Chicago, Houston, Boston, Los Angeles and Canada. Standard Parking, L.P. (the "Partnership") was formed pursuant to an Agreement of Limited Partnership dated January 1, 1994 between Standard Parking Corporation, as general (and a limited) partner, and SP Associates, as a limited partner. On formation, the partners contributed to the Partnership cash and certain assets, net of assumed liabilities, including the rights to management contracts and parking facility leases previously owned by the general partner. At December 31, 1997, Standard Parking leased and managed 379 parking facilities. Revenue consists primarily of gross receipts from facilities leased by Standard Parking with terms varying from one to several years and basic and incentive management fees received from managing parking facilities owned by related and third parties. F-23 142 STANDARD PARKING NOTES TO FINANCIAL STATEMENTS--(CONTINUED) In preparing financial statements in conformity with generally accepted accounting principles, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. A summary of other significant accounting policies is as follows: Depreciation--For both financial and tax reporting purposes, depreciation is computed using both the straight-line and accelerated methods over the estimated useful lives of the assets. Amortization of Management Contracts--Management contracts acquired valued at acquisition cost of $561 in accordance with the purchase agreement are being amortized on the straight-line basis over the average 15 years of expected economic lives of the contracts. The management contracts are reviewed for impairment based on an assessment of future operations. Statement of Cash Flows--For purposes of the statement of cash flows, all highly liquid debt instruments purchased with a maturity of three months or less are reflected as cash equivalents. Deferred Compensation--Standard Parking is contractually committed to pay additional compensation to certain key employees for a defined period of time after retirement. The liability for deferred compensation represents the present value of the payments required to meet the contractual requirements earned by the employees. Funds Held on Behalf of Managed Facilities--Standard Parking holds funds as a deposit for certain managed facilities which usually represents one month's payroll to be incurred by Standard Parking on behalf of the facility. Financial Instruments--Standard Parking believes the book value of its cash equivalents, current receivables, accounts payable and accrued expenses and other current liabilities approximates fair value due to their short-term nature. The book value of its long-term receivables and obligations approximates their fair value as the current interest rates approximate rates at which similar types of borrowing arrangements could be currently obtained. NOTE 2--PROPERTY AND EQUIPMENT: Office and parking facility equipment and leasehold improvements consisted of the following:
ESTIMATED USEFUL LIFE 1996 1997 Furniture, fixtures and vehicles.................... 1 to 7 years $ 570 $ 577 Machinery and equipment............................. 1 to 5 years 359 395 Computer equipment and software..................... 1 to 5 years 500 878 Improvements........................................ 1 to 13 years 281 268 ------ ------ 1,710 2,118 Accumulated depreciation............................ 696 948 ------ ------ $1,014 $1,170 ====== ======
Depreciation expense was $273 in 1995, $314 in 1996 and $336 in 1997. Depreciation expense includes loss on sale/abandonment of fixed assets of $40 in 1995, $15 in 1996 and $53 in 1997. F-24 143 STANDARD PARKING NOTES TO FINANCIAL STATEMENTS--(CONTINUED) NOTE 3--NOTES RECEIVABLE: Notes receivable at December 31, 1996 and 1997 were as follows:
1996 1997 (a) Relating to the financing of parking facility maintenance equipment utilized at facilities managed by Standard Parking. The notes, secured by the equipment, call for monthly payments of principal and interest (at rates ranging from 7.5% to 10.5%) with final payments being due in 2001....................................... $306 $250 (b) Unsecured note from a third party calling for monthly payments of interest (at 7%) with entire balance being due in 1998............................................. 50 50 ---- ---- 356 300 Less current portion........................................ 60 116 ---- ---- $296 $184 ==== ====
Future scheduled receipts are $76 in 1999, $78 in 2000 and $30 in 2001. NOTE 4--ACCOUNTS RECEIVABLE--OTHER: Accounts receivable--other at December 31, 1996 and 1997 were as follows:
1996 1997 Customer receivables........................................ $ 165 $ 588 Insurance receivables....................................... 715 885 Other accounts receivable................................... 263 568 ------ ------ $1,143 $2,041 ====== ======
NOTE 5--ACCOUNTS PAYABLE AND ACCRUED EXPENSES: Accounts payable and accrued expenses at December 31, 1996 and 1997 were as follows:
1996 1997 Accrued payroll............................................. $ 412 $ 673 Accrued payroll--managed facilities......................... 0 633 Parking tax withheld........................................ 288 387 Accrued real estate tax..................................... 277 199 Other accounts payable and accrued expenses................. 631 521 ------ ------ $1,608 $2,413 ====== ======
Accrued payroll for managed facilities represents funds held by Standard Parking as of December 31, 1997 which were expended in January 1998 on behalf of its managed facilities. NOTE 6--DEBT ARRANGEMENTS: During 1995, Standard Parking borrowed $476 from LaSalle National Bank to finance the acquisition of management contracts. The note is payable in monthly installments of $13, plus interest at the prime rate over three years, with the final payment being due in 1998. Additionally, Standard Parking borrowed $130 from Amalgamated Bank of Chicago during 1996. The proceeds were loaned to one of Standard Parking's managed facilities to finance the purchase of equipment (see Note 3). The unsecured note is payable in monthly installments of $2 plus interest at the prime rate over five years, with the final payment being due in 2001. F-25 144 STANDARD PARKING NOTES TO FINANCIAL STATEMENTS--(CONTINUED) During 1997, Standard Parking borrowed $330 from LaSalle National Bank under a $500 line of credit. The line is due on July 8, 1998 with payments of interest at the prime rate, which was 8.5% during 1997, being due monthly. The prime rates of interest in effect pertaining to the above bank debt at December 31, 1996 and 1997 were 8.25% and 8.5%, respectively. Future payments on the installment loans are $26 in 1999 and 2000 and $18 in 2001. NOTE 7--RELATED-PARTY TRANSACTIONS: Amounts due from related parties were as follows:
1996 1997 Relating to the financing of parking facility maintenance equipment utilized at a facility managed by Standard Parking and owned by a related party. The note, secured by the equipment, calls for monthly payments of principal and interest at 9.25%, with a final payment being due in 1999...................................................... $ 30 $ 15 Advances to affiliates and employees, no stated repayment terms..................................................... 153 211 Management fees and other amounts due from related party managed and leased facilities, due currently.............. 864 911 ------ ------ 1,047 1,137 Less current maturities..................................... 879 919 ------ ------ $ 168 $ 218 ====== ======
Amounts due to related parties were as follows:
1996 1997 Short term operating advances payable....................... $ 48 $ 50 Unsecured loan payable. The loan terms call for monthly repayment of principal and interest at 12% per year with final payment being due in 2000........................... 104 82 ---- ---- 152 132 Less current maturities..................................... 70 75 ---- ---- $ 82 $ 57 ==== ====
Future payments pertaining to the unsecured loan payable are $27 in 1999 and $30 in 2000. Management and consulting fee income relating to management of facilities controlled by related parties amounted to $1,801, $1,332 and $1,329 during 1995, 1996 and 1997, respectively. These amounts are included with "management and consulting fees and other parking services revenue" on the statement of income. Rent expense incurred relating to parking facilities leased from related parties under short term leases renewable annually amounted to $5,464, $7,628 and $13,403 during 1995, 1996 and 1997, respectively. These expenses are included with cost of parking services on the statement of income. Minimum lease payments relating to these leases will approximate $15,808 during 1998. F-26 145 STANDARD PARKING NOTES TO FINANCIAL STATEMENTS--(CONTINUED) NOTE 8--LEASE COMMITMENTS: Standard Parking leases several parking and office facilities throughout North America from both related and third parties under leases expiring over various dates through 2010. Future minimum lease payments are approximately as follows: 1998............................................... $23,326 1999............................................... 5,555 2000............................................... 997 2001............................................... 413 2002............................................... 333 Thereafter......................................... 1,887 ------- $32,511 =======
In addition to the minimum rental payments, Standard Parking, as designated in certain of the leases, is responsible for the payment of percentage rent, real estate taxes, maintenance and operating costs. Total rent expense for 1995, 1996 and 1997 was $20,969, $24,428, and $34,589, respectively, of which $5,173, $6,753 and $7,634, respectively, related to percentage rent. Standard Parking relocated its Chicago administrative headquarters to new leased offices in November 1995. The loss on vacating the old leased space of approximately $408, which includes rent due until the scheduled lease expiration date, net of sublease income, was charged to operations during 1995. The new headquarters office lease requires minimum annual rentals (exclusive of escalation charges) on an increasing scale. Such total minimum rentals payable for the lease period from October 1, 1995 through September 30, 2010 are being amortized to expense in approximately equal installments each month. A summary of deferred rent as of December 31, 1996 and 1997 relating to the old and new facilities is as follows:
1996 1997 Rent accrued on the vacated leased space net of sublease income.................................................... $205 $ 69 Deferred rent on new leased space........................... 196 354 ---- ---- 401 423 Less amount due currently................................. 136 28 ---- ---- Deferred rent--long-term portion............................ $265 $395 ==== ====
NOTE 9--EMPLOYEE BENEFIT PLAN: Standard Parking maintains a qualified Section 401(k) Plan which benefits all eligible employees. Under the plan, Standard Parking partially matches employee contributions. For 1995, 1996 and 1997, management authorized an employer match of employee contributions at the rate of 50% of the first 4% of eligible wages. Standard Parking contributions to the plan were $41, $42 and $53 for 1995, 1996 and 1997, respectively. NOTE 10--INCOME TAXES: Under the provisions of the Internal Revenue Code, the affiliated companies combined herein, which are all partnerships or Subchapter S corporations, pay no federal income taxes and their net income and losses (including the distributive shares resulting from its ownership as a member in the subsidiary limited liability companies, which file partnership income tax returns) are reportable in the tax returns of the respective partners and shareholders. However, the partnerships and the affiliated companies are subject to state income taxes. F-27 146 STANDARD PARKING NOTES TO FINANCIAL STATEMENTS--(CONTINUED) Unaudited Pro Forma Net Income. The unaudited pro forma net income represents the results of operations adjusted to reflect a provision for income tax on historical income as if Standard Parking were a C corporation. The difference between the pro forma income tax rates utilized and federal statutory rate of 34% relates primarily to state income taxes (approximately 6%, net of federal tax benefit). F-28 147 ========================================================= NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE INITIAL PURCHASERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. ------------------------ TABLE OF CONTENTS
PAGE ---- Available Information.................... 4 Prospectus Summary....................... 5 Risk Factors............................. 17 The Exchange Offer....................... 23 Certain Federal Income Tax Consequences of the Exchange Offer.................. 30 The Transactions......................... 31 Use of Proceeds.......................... 32 Capitalization........................... 33 Selected Historical Financial Data of APCOA.................................. 34 Management's Discussion and Analysis of Financial Condition and Results of Operations of APCOA.................... 36 Selected Historical Financial Data of Standard............................... 44 Management's Discussion and Analysis of Financial Condition and Results of Operations of Standard................. 45 Business................................. 48 Management............................... 56 Security Ownership of Certain Beneficial Holders and Management................. 64 Certain Relationships and Related Party Transactions........................... 66 Description of Indebtedness.............. 70 Description of New Notes................. 71 Description of Certain Federal Income Tax Consequences........................... 101 Plan of Distribution..................... 104 Legal Matters............................ 105 Experts.................................. 105 Index of Certain Defined Terms........... 106 Index to Unaudited Pro Forma Consolidated Financial Statements................... P-1 Index to Historical Financial Statements............................. F-1
--------------------------------------------------------- - --------------------------------------------------------- ========================================================= $140,000,000 APCOA, INC. --------------------------------------------- OFFER TO EXCHANGE --------------------------------------------- 9 1/4% NEW SENIOR SUBORDINATED NOTES DUE 2008 , 1998 --------------------------------------------------------- - --------------------------------------------------------- 148 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 102(b)(7) of the General Corporation Law of the State of Delaware (the "DGCL"), provides that a corporation (in its original certificate of incorporation or an amendment thereto) may eliminate or limit the personal liability of a director (or certain persons who, pursuant to the provisions of the certificate of incorporation, exercise or perform duties conferred or imposed upon directors by the DGCL) to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided that such provisions shall not eliminate or limit the liability of a director (i) for any breach of the director's duty of loyalty to the corporation or its stockbrokers, (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 DGCL (providing for liability of directors for unlawful payment of dividends or unlawful stock purchases or redemptions) or (iv) for any transaction from which the director derived an improper personal benefit. Article VIII, Section 1 of the Company's Certificate of Incorporation limits the liability of directors thereof to the extent permitted by Section 102(b)(7) of the DGCL. Under Section 145 of the DGCL, in general, a corporation may indemnify its directors, officers, employees or agents against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by them in connection with any action, suit or proceeding brought by third parties to which they may be made parties by reason of their being or having been directors, officers, employees or agents and shall so indemnify such persons if they acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interest of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe their conduct was unlawful. Article VIII, Section 2(a) of the Certificate of Incorporation of the Company provides that the Company shall indemnify its officers, directors, employees and agents to the full extent permitted by Delaware law. Article VIII, Section 2(a) of the Company's Certificate of Incorporation also provides that the Company shall indemnify any such person seeking indemnification in connection with a proceeding initiated by such person only if such proceeding was authorized by the Board. Any rights to indemnification conferred in Section 2 are contract rights, and include the right to be paid by the Company the expenses incurred in defending any such proceeding in advance of its final disposition, except that, if the DGCL requires, the payment of such expenses incurred by a director or officer in such capacity in advance of final disposition shall be made only upon delivery to the Company of an undertaking by or on behalf of such director or officer, to repay all amounts so advanced if it is ultimately determined that such director or officer is not entitled to be indemnified under Section 2 or otherwise. By action of the board of directors, the Company may extend such indemnification to employees and agents of the Company. ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (a) Exhibits. 1.1 Purchase Agreement, by and among the Company, the Subsidiary Guarantors, Donaldson, Lufkin & Jenrette Securities Corporation and First Chicago Capital Markets, Inc., dated as of March 25, 1998.* 2.1 Combination Agreement, dated as of January 15, 1998, by and between APCOA, Inc. and the Standard Owners.* 3.1 Amended and Restated Certificate of Incorporation of the Company.** 3.2 Amended and Restated By-Laws of the Company.** 3.3 Articles of Incorporation of Tower Parking, Inc.* 3.4 Code of Regulations of Tower Parking, Inc.* 3.5 Articles of Incorporation of Graelic, Inc.*
II-1 149 3.6 Code of Regulations of Graelic, Inc.* 3.7 Certificate of Incorporation of APCOA Capital Corporation.* 3.8 By-Laws of APCOA Capital Corporation.* 3.9 Articles of Incorporation of A-1 Auto Park, Inc.* 3.10 Amended and Restated By-Laws of A-1 Auto Park, Inc.* 3.11 Articles of Organization of Metropolitan Parking System, Inc.* 3.12 By-Laws of Metropolitan Parking System, Inc.* 3.13 Articles of Organization of Events Parking Company, Inc.* 3.14 By-Laws of Events Parking Company, Inc.* 3.15 Articles of Incorporation of Standard Parking Corporation.* 3.16 Amended and Restated By-laws of Standard Parking Corporation.* 3.17 Articles of Incorporation of Standard Parking Corporation IL.* 3.18 By-laws of Standard Parking Corporation IL.* 3.19 Articles of Incorporation of Standard Auto Park, Inc.* 3.20 Amended and Restated By-laws of Standard Auto Park, Inc.* 3.21 Articles of Incorporation of S&S Parking, Inc. *** 3.22 By-laws of S&S Parking, Inc.*** 3.23 Articles of Incorporation of Century Parking, Inc.*** 3.24 By-laws of Century Parking, Inc.*** 3.25 Restated Articles of Incorporation of Sentry Parking Corporation*** 3.26 By-laws of Sentry Parking Corporation*** 4.1 Indenture, dated as of March 30, 1998, amended as of , 1998, by and among the Company, the Subsidiary Guarantors and State Street Bank and Trust Company, with respect to the New Notes.** 4.2 Form of New Note (included as Exhibit A to Exhibit 4.1).* 4.3 Form of New Note Guarantee (included as Exhibit D to Exhibit 4.1).* 5.1 Opinion of Wachtell, Lipton, Rosen & Katz.** 10.1 Registration Rights Agreement, dated as of March 30, 1998, by and among the Company, the Subsidiary Guarantors, Donaldson, Lufkin & Jenrette Securities Corporation and First Chicago Capital Markets, Inc.*** 10.2 Credit Agreement, dated as of March 30, 1998, by and among the Company, The First National Bank of Chicago, as Agent and Lender, and the Other Institutions party thereto.* 10.3 Stockholders Agreement, dated as of March 30, 1998, by and among Dosher Partners, L.P. and SP Associates and Holberg, Holdings and the Company.*** 10.4 Stockholders Agreement, dated as of April 14, 1989, by and among Holdings, Holberg, Delaware North and each member of the management of the Company who is a stockholder of Holdings.* 10.5 Tax Sharing Agreement, dated as of April 28, 1989, as amended as of March 30, 1998, by and among Holberg, Holdings and the Company.* 10.6 Employment Agreement between the Company and Myron C. Warshauer.* 10.7 Employment Agreement between the Company and G. Walter Stuelpe, Jr.* 10.8 Executive Transition Employment Agreement between the Company and James V. LaRocco, Jr.*** 10.9 Severance Agreement between the Company and Trevor R. Van Horn.*** 10.10 Employment Agreement between the Company and Herbert W. Anderson, Jr.***
II-2 150 10.11 Employment Agreement between the Company and Michael J. Celebrezze.* 10.12 Employment Agreement between the Company and Michael K. Wolf.* 10.13 Deferred Compensation Agreement between the Company and Michael K. Wolf.* 10.14 Company Retirement Plan For Key Executive Officers.* 10.15 Consulting Agreement between the Company and Sidney Warshauer.* 12.1 Statements re computation of ratios.*** 21.1 Subsidiaries of the Company.*** 23.1 Consent of Ernst & Young LLP.*** 23.2 Consent of Altschuler, Melvoin and Glasser LLP.*** 23.3 Consent of Wachtell, Lipton, Rosen & Katz (contained in Exhibit 5.1).*** 24.1 Power of Attorney (see signature pages).* 25.1 Statement of Eligibility and Qualification of Trustee on Form T-1 of State Street Bank and Trust Company under the Trust Indenture Act of 1939.* 27.1 Financial Data Schedule.*** 99.1 Form of Letter of Transmittal for the 9 1/4% New Senior Subordinated Notes due 2008.*** 99.2 Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.* 99.3 Form of Notice of Guaranteed Delivery.***
- --------------- * Previously filed. ** To be filed by amendment. *** Filed herewith. (b) Financial Statement Schedule. ITEM 22. UNDERTAKINGS. The undersigned Registrant hereby undertakes: (a)(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933. (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high and of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement. (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-3 151 (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) To respond to requests for information that is incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. (c) To supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. (d) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore unenforceable. In the event that a claim for indemnification against such liabilities (other than payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-4 152 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Cleveland, State of Ohio, on June 9, 1998. APCOA, INC. By ** ------------------------------------ Myron C. Warshauer Chief Executive Officer and Director KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Robert N. Sacks and Michael K. Wolf his attorney-in-fact with power of substitution for him in any and all capacities, to sign any amendments, supplements, subsequent registration statements relating to the offering to which this Registration Statement relates, or other instruments he deems necessary or appropriate, and to file the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact or his substitute may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated and on June 9, 1998.
NAME TITLE ---- ----- ** Chief Executive Officer and Director - ----------------------------------------------------- (Principal Executive Officer) Myron C. Warshauer * President and Director - ----------------------------------------------------- G. Walter Stuelpe, Jr. * Chief Financial Officer and Executive Vice - ----------------------------------------------------- President (Principal Financial and Accounting Michael J. Celebrezze Officer) * Chairman and Director - ----------------------------------------------------- John V. Holten * Vice President and Director - ----------------------------------------------------- Gunnar E. Klintberg ** Director - ----------------------------------------------------- Patrick J. Meara *By: /s/ ROBERT N. SACKS ------------------------------------------------ Robert N. Sacks Attorney-in-Fact **By: /s/ MICHAEL K. WOLF ----------------------------------------------- Michael K. Wolf Attorney-in-Fact
II-5 153 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Cleveland, State of Ohio, on June 9, 1998. TOWER PARKING, INC. By * ------------------------------------ G. Walter Stuelpe, Jr. President and Director KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Robert N. Sacks and Michael K. Wolf his attorney-in-fact with power of substitution for him in any and all capacities, to sign any amendments, supplements, subsequent registration statements relating to the offering to which this Registration Statement relates, or other instruments he deems necessary or appropriate, and to file the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact or his substitute may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated and on June 9, 1998.
NAME TITLE ---- ----- * President and Director - ----------------------------------------------------- (Principal Executive Officer) G. Walter Stuelpe, Jr. * Vice President and Treasurer - ----------------------------------------------------- (Principal Financial and Accounting Officer) Michael J. Celebrezze * Director - ----------------------------------------------------- John V. Holten * Director - ----------------------------------------------------- Gunnar E. Klintberg *By: /s/ ROBERT N. SACKS ------------------------------------------------ Robert N. Sacks Attorney-in-Fact
II-6 154 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Cleveland, State of Ohio, on June 9, 1998. APCOA CAPITAL CORPORATION By * ------------------------------------ G. Walter Stuelpe, Jr. President and Director KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Robert N. Sacks and Michael K. Wolf his attorney-in-fact with power of substitution for him in any and all capacities, to sign any amendments, supplements, subsequent registration statements relating to the offering to which this Registration Statement relates, or other instruments he deems necessary or appropriate, and to file the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact or his substitute may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated and on June 9, 1998.
NAME TITLE ---- ----- * President and Director (Principal Executive - ----------------------------------------------------- Officer) G. Walter Stuelpe, Jr. * Vice President and Treasurer (Principal - ----------------------------------------------------- Financial and Accounting Officer) Michael J. Celebrezze * Director - ----------------------------------------------------- John V. Holten * Director - ----------------------------------------------------- Gunnar E. Klintberg *By: /s/ ROBERT N. SACKS ------------------------------------------------ Robert N. Sacks Attorney-in-Fact
II-7 155 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Cleveland, State of Ohio, on June 9, 1998. GRAELIC, INC. By * ------------------------------------ James V. LaRocco, Jr. President KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Robert N. Sacks and Michael K. Wolf his attorney-in-fact with power of substitution for him in any and all capacities, to sign any amendments, supplements, subsequent registration statements relating to the offering to which this Registration Statement relates, or other instruments he deems necessary or appropriate, and to file the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact or his substitute may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated and on June 9, 1998.
NAME TITLE ---- ----- * President - ----------------------------------------------------- (Principal Executive Officer) James V. LaRocco, Jr. * Vice President and Director - ----------------------------------------------------- G. Walter Stuelpe, Jr. * Vice President, Treasurer and Director - ----------------------------------------------------- (Principal Financial and Accounting Officer) Michael J. Celebrezze /s/ ROBERT N. SACKS Secretary and Director - ----------------------------------------------------- Robert N. Sacks *By: /s/ ROBERT N. SACKS ------------------------------------------------ Robert N. Sacks Attorney-in-Fact
II-8 156 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Cleveland, State of Ohio, on June 9, 1998. A-I AUTO PARK, INC. By * ------------------------------------ G. Walter Stuelpe, Jr. President and Director KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Robert N. Sacks and Michael K. Wolf his attorney-in-fact with power of substitution for him in any and all capacities, to sign any amendments, supplements, subsequent registration statements relating to the offering to which this Registration Statement relates, or other instruments he deems necessary or appropriate, and to file the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact or his substitute may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated and on June 9, 1998.
NAME TITLE ---- ----- * President and Director - ----------------------------------------------------- (Principal Executive Officer) G. Walter Stuelpe, Jr. * Vice President, Treasurer and Director - ----------------------------------------------------- (Principal Financial and Accounting Officer) Michael J. Celebrezze /s/ ROBERT N. SACKS Secretary and Director - ----------------------------------------------------- Robert N. Sacks *By: /s/ ROBERT N. SACKS ------------------------------------------------ Robert N. Sacks Attorney-in-Fact
II-9 157 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Cleveland, State of Ohio, on June 9, 1998. EVENTS PARKING COMPANY, INC. By * ------------------------------------------ Edward P. Settino, Jr. President KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Robert N. Sacks and Michael K. Wolf his attorney-in-fact with power of substitution for him in any and all capacities, to sign any amendments, supplements, subsequent registration statements relating to the offering to which this Registration Statement relates, or other instruments he deems necessary or appropriate, and to file the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact or his substitute may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated and on June 9, 1998.
NAME TITLE ---- ----- * President - ----------------------------------------------------- (Principal Executive Officer) Edward P. Settino, Jr. * Vice President and Director - ----------------------------------------------------- G. Walter Stuelpe, Jr. * Treasurer and Director - ----------------------------------------------------- (Principal Financial and Accounting Officer) Michael J. Celebrezze /s/ ROBERT N. SACKS Director - ----------------------------------------------------- Robert N. Sacks *By: /s/ ROBERT N. SACKS ------------------------------------------------ Robert N. Sacks Attorney-in-Fact
II-10 158 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Cleveland, State of Ohio, on June 9, 1998. METROPOLITAN PARKING SYSTEM, INC. By * ------------------------------------------ Edward P. Settino, Jr. President KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Robert N. Sacks and Michael K. Wolf his attorney-in-fact with power of substitution for him in any and all capacities, to sign any amendments, supplements, subsequent registration statements relating to the offering to which this Registration Statement relates, or other instruments he deems necessary or appropriate, and to file the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact or his substitute may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated and on June 9, 1998.
NAME TITLE ---- ----- * President - ----------------------------------------------------- (Principal Executive Officer) Edward P. Settino, Jr. * Vice President and Director - ----------------------------------------------------- G. Walter Stuelpe, Jr. * Treasurer and Director - ----------------------------------------------------- (Principal Financial and Accounting Officer) Michael J. Celebrezze /s/ ROBERT N. SACKS Director - ----------------------------------------------------- Robert N. Sacks *By: /s/ ROBERT N. SACKS ------------------------------------------------ Robert N. Sacks Attorney-in-Fact
II-11 159 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Chicago, State of Illinois, on June 9, 1998. STANDARD PARKING CORPORATION By * ------------------------------------ Myron C. Warshauer President and Director KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Robert N. Sacks and Michael K. Wolf his attorney-in-fact with power of substitution for him in any and all capacities, to sign any amendments, supplements, subsequent registration statements relating to the offering to which this Registration Statement relates, or other instruments he deems necessary or appropriate, and to file the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact or his substitute may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following person in the capacities indicated and on June 9, 1998.
NAME TITLE ---- ----- * President and Director - ----------------------------------------------------- (Principal Executive Officer) Myron C. Warshauer ** Assistant Treasurer - ----------------------------------------------------- (Principal Financial and Accounting Officer) Michael J. Celebrezze *By: /s/ MICHAEL K. WOLF ------------------------------------------------ Michael K. Wolf Attorney-in-Fact **By: /s/ ROBERT N. SACKS ----------------------------------------------- Robert N. Sacks Attorney-in-Fact
II-12 160 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Chicago, State of Illinois, on June 9, 1998. STANDARD PARKING CORPORATION IL By /s/ MYRON C. WARSHAUER ------------------------------------ Myron C. Warshauer President and Director KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Robert N. Sacks and Michael K. Wolf his attorney-in-fact with power of substitution for him in any and all capacities, to sign any amendments, supplements, subsequent registration statements relating to the offering to which this Registration Statement relates, or other instruments he deems necessary or appropriate, and to file the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact or his substitute may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated and on June 9, 1998.
NAME TITLE ---- ----- /s/ MYRON C. WARSHAUER President and Director - ----------------------------------------------------- (Principal Executive Officer) Myron C. Warshauer /s/ MICHAEL J. CELEBREZZE Assistant Treasurer - ----------------------------------------------------- (Principal Financial and Accounting Officer) Michael J. Celebrezze
II-13 161 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Chicago, State of Illinois, on June 9, 1998. STANDARD AUTO PARK, INC. By * ---------------------------------------- Myron C. Warshauer President and Director KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Robert N. Sacks and Michael K. Wolf his attorney-in-fact with power of substitution for him in any and all capacities, to sign any amendments, supplements, subsequent registration statements relating to the offering to which this Registration Statement relates, or other instruments he deems necessary or appropriate, and to file the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact or his substitute may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated and on June 9, 1998.
NAME TITLE ---- ----- * President and Director - ----------------------------------------------------- (Principal Executive Officer) Myron C. Warshauer ** Assistant Treasurer - ----------------------------------------------------- (Principal Financial and Accounting Officer) Michael J. Celebrezze *By: /s/ MICHAEL K. WOLF - ----------------------------------------------------- Michael K. Wolf Attorney-in-Fact **By: /s/ ROBERT N. SACKS ----------------------------------------------- Robert N. Sacks Attorney-in-Fact
II-14 162 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Chicago, State of Illinois, on June 9, 1998. S&S PARKING, INC. By /s/ MYRON C. WARSHAUER ---------------------------------------- Myron C. Warshauer Chief Executive Officer and Director KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Robert N. Sacks and Michael K. Wolf his attorney-in-fact with power of substitution for him in any and all capacities, to sign any amendments, supplements, subsequent registration statements relating to the offering to which this Registration Statement relates, or other instruments he deems necessary or appropriate, and to file the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact or his substitute may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated and on June 9, 1998.
NAME TITLE ---- ----- /s/ MYRON C. WARSHAUER Chief Executive Officer and Director - ----------------------------------------------------- (Principal Executive Officer) Myron C. Warshauer /s/ MICHAEL J. CELEBREZZE Vice President and Treasurer - ----------------------------------------------------- (Principal Financial and Accounting Officer) Michael J. Celebrezze
II-15 163 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Chicago, State of Illinois, on June 9, 1998. CENTURY PARKING, INC. By /s/ MYRON C. WARSHAUER ---------------------------------------- Myron C. Warshauer Chief Executive Officer and Director KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Robert N. Sacks and Michael K. Wolf his attorney-in-fact with power of substitution for him in any and all capacities, to sign any amendments, supplements, subsequent registration statements relating to the offering to which this Registration Statement relates, or other instruments he deems necessary or appropriate, and to file the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact or his substitute may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated and on June 9, 1998.
NAME TITLE ---- ----- /s/ MYRON C. WARSHAUER Chief Executive Officer and Director - ----------------------------------------------------- (Principal Executive Officer) Myron C. Warshauer /s/ MICHAEL J. CELEBREZZE Vice President and Treasurer - ----------------------------------------------------- (Principal Financial and Accounting Officer) Michael J. Celebrezze
II-16 164 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Chicago, State of Illinois, on June 9, 1998. SENTRY PARKING CORPORATION By /s/ MYRON C. WARSHAUER ---------------------------------------- Myron C. Warshauer Chief Executive Officer and Director KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Robert N. Sacks and Michael K. Wolf his attorney-in-fact with power of substitution for him in any and all capacities, to sign any amendments, supplements, subsequent registration statements relating to the offering to which this Registration Statement relates, or other instruments he deems necessary or appropriate, and to file the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact or his substitute may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated and on June 9, 1998.
NAME TITLE ---- ----- /s/ MYRON C. WARSHAUER Chief Executive Officer and Director - ----------------------------------------------------- (Principal Executive Officer) Myron C. Warshauer /s/ MICHAEL J. CELEBREZZE Vice President and Treasurer - ----------------------------------------------------- (Principal Financial and Accounting Officer) Michael J. Celebrezze
II-17 165 REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We have audited the consolidated financial statements of APCOA, Inc. (the Company) as of December 31, 1996 and 1997, and for each of the three years in the period ended December 31, 1997, and have issued our report thereon dated February 3, 1998 (included elsewhere in this Registration Statement). Our audit also included the financial statement schedule for each of the three years in the period ended December 31, 1997, listed in Item 21(b) of this Registration Statement. This schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. Cleveland, Ohio ERNST & YOUNG LLP February 3, 1998 II-18 166 SCHEDULE II APCOA, INC. VALUATION AND QUALIFYING ACCOUNTS (IN THOUSANDS)
ADDITIONS ----------------------- BALANCE AT CHARGED TO CHARGED TO BALANCE BEGINNING COSTS AND OTHER AT END DESCRIPTION OF YEAR EXPENSES ACCOUNTS DEDUCTIONS(1) OF YEAR ----------- ---------- ---------- ---------- ------------- ------- Year ended December 31, 1995: Deducted from asset accounts Allowance for doubtful accounts............. $369 $101 $ -- $(68) $402 ==== ==== ==== ==== ==== Year ended December 31, 1996: Deducted from asset accounts Allowance for doubtful accounts............. $402 $ 7 $ -- $(94) $315 ==== ==== ==== ==== ==== Year ended December 31, 1997: Deducted from asset accounts Allowance for doubtful accounts............. $315 $139 $ -- $(11) $443 ==== ==== ==== ==== ====
- --------------- (1) Represents uncollectible accounts written off, net of recoveries. II-19 167 INDEX TO EXHIBITS
SEQUENTIALLY EXHIBIT NUMBERED NUMBER DESCRIPTION PAGE - ------- ----------- ------------ 1.1 Purchase Agreement, by and among the Company, the Subsidiary Guarantors, Donaldson, Lufkin & Jenrette Securities Corporation and First Chicago Capital Markets, Inc., dated as of March 25, 1998.* 2.1 Combination Agreement, dated as of January 15, 1998, by and between APCOA, Inc. and the Standard Owners.* 3.1 Amended and Restated Certificate of Incorporation of the Company.** 3.2 Amended and Restated By-Laws of the Company.** 3.3 Articles of Incorporation of Tower Parking, Inc.* 3.4 Code of Regulations of Tower Parking, Inc.* 3.5 Articles of Incorporation of Graelic, Inc.* 3.6 Code of Regulations of Graelic, Inc.* 3.7 Certificate of Incorporation of APCOA Capital Corporation.* 3.8 By-Laws of APCOA Capital Corporation.* 3.9 Articles of Incorporation of A-1 Auto Park, Inc.* 3.10 Amended and Restated By-Laws of A-1 Auto Park, Inc.* 3.11 Articles of Organization of Metropolitan Parking System, Inc.* 3.12 By-Laws of Metropolitan Parking System, Inc.* 3.13 Articles of Organization of Events Parking Company, Inc.* 3.14 By-Laws of Events Parking Company, Inc.* 3.15 Articles of Incorporation of Standard Parking Corporation.* 3.16 Amended and Restated By-laws of Standard Parking Corporation.* 3.17 Articles of Incorporation of Standard Parking Corporation IL.* 3.18 By-laws of Standard Parking Corporation IL.* 3.19 Articles of Incorporation of Standard Auto Park, Inc.* 3.20 Amended and Restated By-laws of Standard Auto Park, Inc.* 3.21 Articles of Incorporation of S&S Parking, Inc. *** 3.22 By-laws of S&S Parking, Inc.*** 3.23 Articles of Incorporation of Century Parking, Inc.*** 3.24 By-laws of Century Parking, Inc.*** 3.25 Restated Articles of Incorporation of Sentry Parking Corporation*** 3.26 By-laws of Sentry Parking Corporation*** 4.1 Indenture, dated as of March 30, 1998, amended as of , 1998, by and among the Company, the Subsidiary Guarantors and State Street Bank and Trust Company, with respect to the New Notes.** 4.2 Form of New Note (included as Exhibit A to Exhibit 4.1).* 4.3 Form of New Note Guarantee (included as Exhibit D to Exhibit 4.1).* 5.1 Opinion of Wachtell, Lipton, Rosen & Katz.** 10.1 Registration Rights Agreement, dated as of March 30, 1998, by and among the Company, the Subsidiary Guarantors, Donaldson, Lufkin & Jenrette Securities Corporation and First Chicago Capital Markets, Inc.***
168
SEQUENTIALLY EXHIBIT NUMBERED NUMBER DESCRIPTION PAGE - ------- ----------- ------------ 10.2 Credit Agreement, dated as of March 30, 1998, by and among the Company, The First National Bank of Chicago, as Agent and Lender, and the Other Institutions party thereto.* 10.3 Stockholders Agreement, dated as of March 30, 1998, by and among Dosher Partners, L.P. and SP Associates and Holberg, Holdings and the Company.*** 10.4 Stockholders Agreement, dated as of April 14, 1989, by and among Holdings, Holberg, Delaware North and each member of the management of the Company who is a stockholder of Holdings.* 10.5 Tax Sharing Agreement, dated as of April 28, 1989, as amended as of March 30, 1998, by and among Holberg, Holdings and the Company.* 10.6 Employment Agreement between the Company and Myron C. Warshauer.* 10.7 Employment Agreement between the Company and G. Walter Stuelpe, Jr.* 10.8 Executive Transition Employment Agreement between the Company and James V. LaRocco, Jr.*** 10.9 Severance Agreement between the Company and Trevor R. Van Horn.*** 10.10 Employment Agreement between the Company and Herbert W. Anderson, Jr.*** 10.11 Employment Agreement between the Company and Michael J. Celebrezze.* 10.12 Employment Agreement between the Company and Michael K. Wolf.* 10.13 Deferred Compensation Agreement between the Company and Michael K. Wolf.* 10.14 Company Retirement Plan For Key Executive Officers.* 10.15 Consulting Agreement between the Company and Sidney Warshauer.* 12.1 Statements re computation of ratios.*** 21.1 Subsidiaries of the Company.*** 23.1 Consent of Ernst & Young LLP.*** 23.2 Consent of Altschuler, Melvoin and Glasser LLP.*** 23.3 Consent of Wachtell, Lipton, Rosen & Katz (contained in Exhibit 5.1).*** 24.1 Power of Attorney (see signature pages).* 25.1 Statement of Eligibility and Qualification of Trustee on Form T-1 of State Street Bank and Trust Company under the Trust Indenture Act of 1939.* 27.1 Financial Data Schedule.*** 99.1 Form of Letter of Transmittal for the 9 1/4% New Senior Subordinated Notes due 2008.*** 99.2 Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.* 99.3 Form of Notice of Guaranteed Delivery.***
- --------------- * Previously filed. ** To be filed by amendment. *** Filed herewith. EX-3.21 2 ARTICLES OF INCORPORATION: S&S PARKING, INC. 1 Exhibit 3.21 A485831 ================================================================================ STATE OF CALIFORNIA [GRAPHIC OMITTED] [SEAL OMITTED] SECRETARY OF STATE I, BILL JONES, Secretary of State of the State of California, hereby certify: That the annexed transcript has been compared with the corporate record on file in this office, of which it purports to be a copy, and that same is full, true and correct. IN WITNESS WHEREOF, I execute this certificate and affix the Great Seal of the State of California this JAN 07 1997 ------------------------------------ THE GREAT SEAL OF THE STATE OF EUREKA CALIFORNIA /s/ Bill Jones Secretary of State SEC/STATE FORM CE-107 (REV.11/96) BG 34095 ================================================================================ 2 A485831 ENDORSED FILED In the office of the Secretary of State of the State of California DEC 30 1996 /s/ Bill Jones BILL JONES, Secretary of State CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION OF EXECUTIVE PARKING INC. The undersigned certify that: 1. They are the President and the Chief Financial Officer, respectively, of Executive Parking Inc., a California corporation (Corporation Number 912380). 2. Article One of the Articles of Incorporation of this corporation is amended to read as follows: "The name of this corporation is S & S Parking, Inc." 4. The foregoing amendment of Articles of Incorporation has been duly approved by the Board of Directors. 5. The foregoing amendment of Articles of Incorporation has been duly approved by the required vote of shareholders in accordance with Section 902 of the Corporations Code. The total number of outstanding shares of the corporation is 1,000. The number of shares voting in favor of the amendment equaled or exceeded the vote required. The percentage vote required was more than 50%. We further declare under penalty of perjury under the laws of the State of California that the matters set forth in this certificate are true and correct of our own knowledge. Date: December 26, 1996 /s/ Ed Simmons -------------------------------------- Edward Simmons, President /s/ Dale Stark -------------------------------------- Dale Stark, Chief Financial Officer 2723.00020 12/15/96/CLH:CLH/66989.1 CERT OF AMENDMENT 66989 3 SEC/STATE FORM Cl-4 (REV. 1-77) RECEIPT DUP (1) OSP Issuing Certificate of Reservation For Corporate Name ______ $4.00 Special Handling: L.A. CONSTRUCTION AND SERVICES, INC. 1100 Glendon Avenue Suite 1651 Los Angeles, CA 90024 Attn: ED Simmons No. 286458 ================================================================================ State of California [GRAPHIC OMITTED] Office of the No. 286458 Secretary of State I, MARCH FONG EU, Secretary of State of the State of California, do hereby certify that the name: EXECUTIVE PARKING, INC. is not one which is likely to mislead the public and is not the same as, and does not resemble, so closely as to tend to deceive the name of a corporation formed under the laws of this State, or the name of a corporation not incorporated under the laws of this State which is authorized to transact intrastate business in this State, or a name which is under reservation, as provided in Section 201 of the Corporations Code of this State, and that this name is hereby reserved for a period of sixty days commencing on the date hereof for the use of the applicant for this certificate. Issued August 18, 1983 be THE GREAT SEAL OF THE STATE OF EUREKA CALIFORNIA /s/ March Fong Eu Secretary of State ================================================================================ 4 ================================================================================ [GRAPHIC OMITTED] State of California OFFICE OF THE SECRETARY OF STATE I, MARCH FONG EU, Secretary of State of the State of California, hereby certify: That the annexed transcript has been compared with the record on file in this office, of which it purports to be a copy, and that same is full, true and correct. IN WITNESS WHEREOF, I execute this certificate and affix the Great Seal of the State of California this OCT 20 1983 ------------------------------------ THE GREAT SEAL OF THE STATE OF EUREKA CALIFORNIA /s/ March Fong Eu Secretary of State ================================================================================ 5 ENDORSED FILED In the office of the Secretary of State of the State of California OCT 14 1983 MARCH FONG EU, Secretary of State By JAMES E. HARRIS Deputy [LOGO] EXECUTIVE PARKING SERVICE CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION EDWARD E. SIMMONS AND DALE G. STARK certify that: 1. They are the president and secretary, respectively, of L.A. CONSTRUCTION & SERVICES, Incorporated, a California Corporation. 2. Article One (1) of the atticles of incorporation of this corporation is amended to read as follows: The name of the corporation is Executive Parking Inc. 3. The foregoing amendment of articles of incorporation has been duly approved by the board of directors. 4. The foregoing amendment of articles of incorporation has been duly approved by the required vote of shareholders in accordance with Section 902 of the Corporation Code. The total number of outstanding shares of the corporation is 1000. The total number of shares voting in favor of the amendment equaled or exceeded the vote required. The percentage vote required was more than 50%. /s/ Edward E. Simmons -------------------------------------- EDWARD E. SIMMONS, President /s/ Dale G. Stark -------------------------------------- DALE G. STARK, Secretary The undersigned declare under penalty of perjury that the matters set forth in the foregoing certificate are true of their own knowledge: Executed at Los Angeles on 9/8/83. /s/ Edward E. Simmons -------------------------------------- EDWARD E. SIMMONS /s/ Dale G. Stark -------------------------------------- DALE G. STARK ========1100 Glendon Ave., Suite 1515, Westwood, CA 90024 (213) 208-1172======== 6 912380 ENDORSED FILED In the office of the Secretary of State of the State of California MAR 5 1979 MARCH-FONG EU, Secretary of State By BILL HOLDEN Deputy ARTICLES OF INCORPORATION OF L.A. CONSTRUCTION & SERVICES, INCORPORATED ONE: The name of this Corporation is L.A. CONSTRUCTION & SERVICES, INCORPORATED. TWO: The purpose of this corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of California other than the banking business, the trust company business or the practice of a profession permitted to be incorporated by the California Corporations Code. THREE: The name and address in this state of the corporation's initial agent for service of process is EDWARD E. SIMMONS, 4322 Morro Drive, Woodland Hills, CA. FOUR: The total number of shares with the corporation is authorized to issue is One Thousand Shares (1000). FIVE: This corporation is a close corporation. The issued shares of this corporation of all classes shall be held of record by not more than ten (10) persons. Dated: February __ , 1979 /s/ DALE GLENN STARK ---------------------------------- DALE GLENN STARK - Incorporator /s/ EDWARD EARL SIMMONS ---------------------------------- EDWARD EARL SIMMONS - Incorporator -1- 7 We declare that we are the persons who executed the above Articles of Incorporation, and such instrument is our act and deed. /s/ DALE GLENN STARK ---------------------------------- DALE GLENN STARK /s/ EDWARD EARL SIMMONS ---------------------------------- EDWARD EARL SIMMONS -2- EX-3.22 3 BY-LAWS OF S&S PARKING, INC. 1 Exhibit 3.22 BY-LAWS OF ARTICLE I PLACE OF BUSINESS The principal office for the transaction of the business of the corporation shall be located at such place or places within the County of Los Angeles, State of California, as the Board of Directors shall from time to time determine. ARTICLE II DIRECTORS - MANAGEMENT Section 1. POWERS. Subject to the limitation of the Articles of Incorporation, of the By-Laws and of the Laws of the State of California as to actions to be authorized or approved by the shareholders, all corporate powers shall be exercised by or under authority of, and the business and affairs of this corporation shall be controlled by, a Board of Directors. a. Exception for Close Corporation. Notwithstanding the provisions of Section 1, in the event that this corporation shall elect to become a close corporation, its Shareholders may enter into a Shareholders' Agreement. Said agreement may provide for the exercise of corporate powers and the management of the business and affairs of this corporation by the Shareholders, provided however such agreement shall, to the extent and so long as the discretion or the powers of the Board in its management of corporate affairs is controlled by such agreement, impose upon each Shareholder who is a party thereof, liability for managerial acts performed or omitted by such person pursuant thereto otherwise imposed upon Directors. Section 2. NUMBER OF DIRECTORS AND QUALIFICATIONS. The authorized number of directors of the corporation shall be two until changed by amendment to the Articles of Incorporation or by an amendment to this Section 2, Article I of these By-Laws, adopted by the vote or written assent of the shareholders entitled to exercise the majority of the voting power of the corporation. Section 3. ELECTION AND TENURE OF OFFICE. The directors shall be elected by ballot at the annual meeting of the shareholders, to serve for one year and until their successors are elected and have qualified. Their term of office shall begin immediately after election. Section 4. VACANCIES. Vacancies in the Board of Directors may be filled by a majority of the remaining directors, though less than a quorum, or by a sole remaining director, and, each director so elected shall hold office until his successor is elected at an annual meeting of shareholders or at a special meeting called for that purpose. 1 2 The Shareholders may at any time elect a director to fill any vacancy not filled by the directors, and may elect the additional directors at the meeting at which an amendment of the By-Laws is voted authorizing an increase in the number of directors. A vacancy or vacancies shall be deemed to exist in case of the death, resignation or removal of any director, of if the shareholders shall increase the authorized number of directors but shall fail at the meeting at which such increase is authorized, or at an adjournment thereof, to elect the additional director so provided for, or in case the shareholders fail at any time to elect the full number of authorized directors. If the Board of Directors accepts the resignation of a Director tendered to take effect at a future time, The Board, or the shareholders, shall have power to elect a successor to take office when the resignation shall become effective. No reduction of the number of directors shall have the effect of removing any director prior to the expiration of his term or office. The entire Board of Directors or any individual director may be removed from office as provided in the Corporations Code. In such case, the remaining Board members may elect a successor Director to fill such vacancy for the remaining unexpired term of the Director so removed. Section 5. NOTICE, PLACE AND MANNER OF MEETINGS. Meetings of the Board of Directors may be called by the Chairman of the Board, or the President, or any Vice President, or the Secretary, or any two (2) Directors and shall be held at the principal executive office of the corporation in the State of California, unless some other place is designated in the notice of the meeting. Members of the Board may participate in a meeting through use of a conference telephone or similar communications equipment so long as all members participating in such a meeting can hear one another. Accurate minutes of any meeting of the Board or any committee thereof, shall be maintained as required by the Corporations Code by the Secretary or other Officer designated for that purpose. Section 6. ORGANIZATION MEETINGS. The organization meetings of the Board of Directors shall be held immediately following the adjournment of the annual meetings of the Shareholders. SECTION 7. OTHER REGULAR MEETINGS. Regular meetings of the Board of Directors shall be held at the corporate offices, or such other place as may be designated by the Board of Directors, on the 15th day of each month at 9:00 AM. If said day shall fall upon a holiday, such meeting shall be held on the next succeeding business day thereafter. No notice need be given at such regular meetings. Section 9. SPECIAL MEETINGS - NOTICES - WAIVERS. Special meetings of the Board may be called at any time by the President or, if he is absent or unable or refuses to act, by any Vice President or the Secretary or by any two Directors, or by one Director if only one is provided. 2 3 At least forty-eight (48) hours notice of the time and place of special meetings shall be delivered personally to the Directors or personally communicated to them by a corporate Officer by telephone or telegraph. If the notice is sent to a Director by letter, it shall be addressed to him at his address as it is shown upon the records of the corporation, (or if it is not so shown on such records or is not readily ascertainable at the place in which the meetings of the Directors are regularly held). In case such notice is mailed, it shall be deposited in the United States mail, postage prepaid, in the place in which the principal executive office of the corporation is located at least four (4) days prior to the time of the holding of the meeting. Such mailing, telegraphing, telephoning or delivery as above provided shall be due, legal and personal notice to such Director. When all of the Directors are present at any Directors' meeting, however called or noticed, and either (i) sign a written consent thereto on the records of such meeting, or, (ii) if a majority of the Directors are present and if those not present sign a waiver of notice of such meeting or a consent to holding the meeting or an approval of the minutes thereof, whether prior to or after the holding of such meeting, which said waiver, consent or approval shall be filed with the Secretary of the corporation or (iii) if a Director attends a meeting without notice but without protesting, prior thereto or at its commencement, the lack of notice to him, then the transactions thereof are as valid as if had at a meeting regularly called and noticed. Section 10. SOLE DIRECTOR PROVIDED BY ARTICLES OF INCORPORATION. In the event only one Director is required by the By-Laws or Articles of Incorporation, then any reference herein to notices, waivers, consents, meetings or other actions by a majority or quorum of the Directors shall be deemed to refer to such notice, waiver, etc., by such sole Director, who shall have all the rights and duties and shall be entitled to exercise all of the powers and shall assume all the responsibilities otherwise herein described as given to a Board of Directors. Section 11. DIRECTORS ACTING BY UNANIMOUS WRITTEN CONSENT. Any action required or permitted to be taken by the Board of Directors may be taken without a meeting and with the same force and effect as if taken by a unanimous vote of Directors, if authorized by a writing signed individually or collectively by all members of the Board. Such consent shall be filed with the regular minutes of the Board. Section 12. A majority of the number of Directors as fixed by the Articles of Incorporation or By-Laws shall be necessary to constitute a quorum for the transaction of business, and the action of a majority of the Directors present at any meeting at which there is a quorum, when duly assembled, is valid as a corporate act; provided that a minority of the Directors, in the absence of a quorum, may adjourn from time to time, but may not transact any business. A meeting at which a quorum is initially present may continue to transact business, notwithstanding the withdrawal of Directors, if any action taken is approved by a majority of the required quorum for such meeting. 3 4 Section 13. NOTICE OF ADJOURNMENT. Notice of the time and place of holding an adjourned meeting need not be given to absent Directors if the time and place be fixed at the meeting adjourned and held within twenty-four (24) hours, but if adjourned more than twenty-four (24) hours, notice shall be given to all Directors not present at the time of the adjournment. Section 14. COMPENSATION OF DIRECTORS. Directors, as such, shall not receive any stated salary for their services, but by resolution of the Board a fixed sum and expense of attendance, if any, may be allowed for attendance at each regular and special meeting of the Board; provided that nothing herein contained shall be construed to preclude any Director from serving the company in any other capacity and receiving compensation therefor. Section 15. COMMITTEES. Committees of the Board may be appointed by resolution passed by a majority of the whole Board. Committees shall be composed of two or more members of the Board, and shall have such powers of the Board as may be expressly delegated to it by resolution of the Board of Directors, except those powers expressly made non-delegable by the Corporations Code. Section 16. ADVISORY DIRECTORS. The Board of Directors from time to time may elect one or more persons to be Advisory Directors who shall not by such appointment be members of the Board of Directors Advisory Directors shall be available from time to time to perform special assignments specified by the President, to attend meetings of the Board of Directors upon invitation and to furnish consultation to the Board. The period during which the title shall be held may be prescribed by the Board of Directors. If no period is prescribed, the title shall be held at the pleasure of the Board. Section 17. RESIGNATIONS. Any Director may resign effective upon giving written notice to the Chairman of the Board, the President, the Secretary or the Board of Directors of the corporation, unless the notice specifies a later time for the effectiveness of such resignation. If the resignation is effective at a future time, a successor may be elected to take office when the resignation becomes effective. ARTICLE III OFFICERS Section 1. OFFICERS. The officers of the corporation shall be a Chairman of the Board or a President or both, a Secretary and a Chief Financial Officer. The corporation may also have, at the discretion of the Board of Directors, one or more Vice Presidents, one or more Assistant Secretaries and such other officers as may be appointed in accordance with the provisions of Section 3 of this Article. One person may hold two or more offices. 4 5 Section 2. ELECTION. The Officers of the corporation, except such Officers as may be appointed in accordance with the provisions of Section 3 or Section 5 of this Article shall be chosen annually by the Board of Directors, and each shall hold his office until he shall resign or shall be removed or otherwise disqualified to serve, or his successor shall be elected and qualified. Section 3. SUBORDINATE OFFICERS, ETC. The Board of Directors may appoint such other Officers as the business of the corporation may require, each of whom shall hold office for such period, have such authority and perform such duties as are provided in the By-Laws or as the Board of Directors may from time to time determine. Section 4. REMOVAL AND RESIGNATION. Any Officer may be removed, either with or without cause, by a majority of the Directors at the time in office, at any regular or special meeting of the Board, or, except in case of an Officer chosen by the Board of Directors, by any Officer upon whom such power of removal may be conferred by the Board of Directors. Any Officer may resign at any time by giving written notice to the Board of Directors, or to the President, or to the Secretary of the corporation. Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified therein; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 5. VACANCIES. A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled in the manner prescribed in the By-Laws for regular appointments to such office. Section 6. CHAIRMAN OF THE BOARD. The Chairman of the Board, if there shall be such an Officer, shall, if present, preside at all meetings of the Board of Directors, and exercise and perform such other powers and duties as may be from time to time assigned to him by the Board of Directors or prescribed by the By-Laws. Section 7. PRESIDENT. Subject to such supervisory powers, if any, as may be given by the Board of Directors to the Chairman of the Board, if there be such an Officer, the President shall be the Chief Executive Officer of the corporation and shall, subject to the control of the Board of Directors, have general supervision, direction and control of the business and Officers of the corporation. He shall preside at all meetings of the Shareholders and in the absence of the Chairman of the Board, or if there be none, at all meetings of the Board of Directors. He shall be ex officio a member of all the standing committees, including the Executive Committee, if any, and shall have the general powers and duties of management usually vested in the office of President of a corporation, and shall have such other powers and duties as may be prescribed by the Board of Directors or the By-Laws. 5 6 Section 8. VICE PRESIDENT. In the absence or disability of the President, the Vice Presidents, in order of their rank as fixed by the Board of Directors, or if not ranked, the Vice President designated by the Board of Directors, shall perform all the duties of the President, and when so acting shall have all the powers of, and be subject to, all the restrictions upon, the President. The Vice Presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the Board of Directors or the By-Laws. Section 9. SECRETARY. The Secretary shall keep, or cause to be kept, a book of minutes at the principal office or such other place as the Board of Directors may order, of all meetings of Directors and Shareholders, with the time and place of holding, whether regular or special, and if special, how authorized, the notice thereof given, the names of those present at Directors' meetings, the number of shares present or represented at Shareholders' meetings and the proceedings thereof. The Secretary shall keep, or cause to be kept, at the principal office or at the office of the corporation's transfer agent, a share register, or duplicate share register, showing the names of the Shareholders and their addresses; the number and classes of shares held by each; the number and date of certificates issued for the same; and the number and date of cancellation of every certificate surrendered for cancellation. The Secretary shall give, or cause to be given, notice of all the meetings of the Shareholders and of the Board of Directors required by the By-Laws or by law to be given, and he shall keep the seal of the corporation in safe custody, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or by the By-Laws. Section 10. CHIEF FINANCIAL OFFICER. This Officer shall keep and maintain, or cause to be kept and maintained in accordance with generally accepted accounting principles, adequate and correct accounts of the properties and business transactions of the corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, earnings (or surplus) and shares. The books of account shall at all reasonable times be open to inspection by any Director. This Officer shall deposit all moneys and other valuables in the name and to the credit of the corporation with such depositaries as may be designated by the Board of Directors. He shall disburse the funds of the corporation at may be ordered by the Board of Directors, shall render to the President and Directors, whenever they request it, an account of all of his transactions and of the financial condition of the corporation, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors of the By-Laws. 6 7 ARTICLE IV SHAREHOLDERS' MEETINGS Section 1. PLACE OF MEETINGS. Meetings of the Shareholders shall be held at the principal executive office of the corporation, in the State of California, unless some other appropriate and convenient location be designated for that purpose from time to time by the Board of Directors. Section 2. ANNUAL MEETINGS. The annual meetings of the Shareholders shall be held, each year, as follows: on the 1st day of April of each year commencing 1979. If this day shall be a legal holiday, then the meeting shall be held on the next succeeding business day, at the same hour. At the annual meeting, the Shareholders shall elect a Board of Directors, consider reports of the affairs of the corporation and transact such other business as may be properly brought before the meeting. Section 3. SPECIAL MEETINGS. Special meetings of the Shareholders may be called at any time by the Board of Directors, the Chairman of the Board, the President, a Vice President, the Secretary, or by one or more Shareholders holding not less than one-tenth (1/10) of the voting power of the corporation, except as next provided, notice shall be given as for the annual meeting. Upon receipt of a written request addressed to the Chairman, President, Vice President, or Secretary, mailed or delivered personally to such Officer by any person (other than the Board) entitled to call, a special meeting of Shareholders, such Officer shall cause notice to be given to the Shareholders entitled to vote, that a meeting will be held at a time requested by the person or persons calling the meeting, not less than twenty-five nor more than sixty days after the receipt of such request. If such notice is not given within twenty days after receipt of such request, the persons calling the meeting may give notice thereof in the manner provided by these By-Laws or apply to the Superior Court as provided in the Corporations Code. Section 4. NOTICE OF MEETINGS - REPORTS. Notice of meetings, annual or special, shall be given in writing not less than ten nor more than sixty days before the date of the meeting, to Shareholders entitled to vote thereat by the Secretary or the Assistant Secretary, or if there be no such Officer, or in the case of his neglect or refusal, by any Director or Shareholder. Such notices or any reports shall be given personally or by mail or other means of written communication as provided in the Corporations Code and shall be sent to the Shareholder's address appearing on the books of the corporation, or supplied by him to the corporation for the purpose of notice, and in the absence thereof, as provided in the Corporations Code. Notice of any meeting of Shareholders shall specify the place, the day and the hour of meeting, and (1) in case of a special meeting, the general nature of the business to be transacted and no other business may be transacted, or (2) in the case of an annual meeting, 7 8 ARTICLE IV AMENDMENT TO BY-LAWS OF EXECUTIVE PARKING INC. by Joint Action by Shareholders and Directors by Unanimous Written Consent, dated 1/21/87. Section 1.1. TELEPHONIC MEETINGS. Any meeting, annual or special, may be held by conference telephone or similar communication equipment, so long as all shareholders participating in such meeting can hear one another, and all such shareholders shall be deemed to be present in person at such meeting. 7 9 those matters which the Board at date of mailing, intends to present for action by the Shareholders. At any meetings where Directors are to be elected, notice shall include the names of the nominees, if any, intended at date of Notice to be presented by management for election. If a Shareholder supplies no address, notice shall be deemed to have been given to him if mailed to the place where the principal executive office of the company, in California, is situated, or published at least once in some newspaper of general circulation in the County of said principal office. Notice shall be deemed given at the time it is delivered personally or deposited in the mail or sent by other means of written communication. The Officer giving such notice or report shall prepare and file an affidavit or declaration thereof. When a meeting is adjourned for forty-five days or more, notice of the adjourned meeting shall be given as in case of an original meeting. Save, as aforesaid, it shall not be necessary to give any notice of adjournment or of the business to be transacted at an adjourned meeting other than by announcement at the meeting at which such adjournment is taken. Section 5. VALIDATION OF SHAREHOLDERS' MEETINGS. The transactions of any meeting of Shareholders, however called and noticed, shall be valid as though had at a meeting duly held after regular call and notice, if a quorum be present either in person or by proxy, and if, either before or after the meeting, each of the Shareholders entitled to vote, not present in person or by proxy, sign a written waiver of notice, or a consent to the holding of such meeting or an approval of the minutes thereof. All such waivers, consents or approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Attendance shall constitute a waiver of notice, unless objection shall be made as provided in the Corporations Code. Section 6. SHAREHOLDERS ACTING WITHOUT A MEETING - DIRECTORS. Any action which may be taken at a meeting of the Shareholders, may be taken without a meeting or notice of meeting if authorized by a writing signed by all of the Shareholders entitled to vote at a meeting for such purpose, and filed with the Secretary of the corporation, provided further that while ordinarily Directors can only be elected by unanimous written consent as provided in the Corporations Code, if the Directors fail to file a vacancy, then a Director to fill that vacancy may be elected by the written consent of persons holding a majority of shares entitled to vote for the election of Directors. Section 7. OTHER ACTIONS WITHOUT A MEETING. Unless otherwise provided in the Corporations Code or the Articles, any action which may be taken at any annual or special meeting of Shareholders may be taken without a meeting and without prior notice of a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding shares having not less than the minimum number 8 10 ARTICLE IV AMENDMENT TO BY-LAWS OF EXECUTIVE PARKING INC. by Joint Action by Shareholders and Directors by Unanimous Written Consent, dated 1/21/87. Section 4.1. The notice of any meeting of shareholders shall specify... (3) in the case of both special and annual meetings, if such is to be held by telephonic communication, the notice thereof shall so state. 8 11 of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Unless the consents of all Shareholders entitled to vote have been solicited in writing, (1) Notice of any Shareholder approval pursuant to the Corporations Code without a meeting by less than unanimous written consent shall be given at least 10 days before the consummation of the action authorized by such approval, and (2) Prompt notice shall be given of the taking of any other corporate action approved by Shareholders without a meeting by less than unanimous written consent, to each of those Shareholders entitled to vote who have not consented in writing. Any Shareholder giving a written consent, or the Shareholder's proxyholders, or a transferee of the shares of a personal representative of the Shareholder or their respective proxyholders, may revoke the consent by a writing received by the corporation prior to the time that written consents of the number of shares required to authorize the proposed action have been filed with the Secretary of the corporation, but may not do so thereafter. Such revocation is effective upon its receipt by the Secretary of the corporation. Section 8. QUORUM. The holders of a majority of the share entitled to vote thereat, present in person, or represented by proxy, shall constitute a quorum at all meetings of the Shareholders for the transaction of business except as otherwise provided by law, by the Articles of Incorporation, or by these By-Laws. If, however, such majority shall not be present or represented at any meeting of the Shareholders, the Shareholders entitled to vote thereat, present in person, or by proxy, shall have the power to adjourn the meeting from time to time, until the requisite amount of voting shares shall be present. At such adjourned meeting at which the requisite amount of voting shares shall be represented, any business may be transacted which might have been transacted at a meeting as originally notified. If a quorum be initially present, the Shareholders may continue to transact business until adjournment, notwithstanding the withdrawal of enough Shareholders to leave less then a quorum, if any action taken is approved by a majority of the Shareholders required to initially constitute a quorum. Section 9. VOTING RIGHTS; CUMULATIVE VOTING. Only persons in whose names shares entitled to vote stand on the stock records of the corporation on the day of any meeting of Shareholders, unless some other day be fixed by the Board of Directors for the determination of Shareholders of record, and then on such other day, shall be entitled to vote at such meeting. Provided the candidate's name has been placed in nomination prior to the voting and one or more Shareholder has given notice at the meeting prior to the voting of the Shareholder's intent to cumulate the Shareholder's votes, every Shareholder entitled to vote at any election for Directors of any corporation for profit may cumulate his votes and give one candidate a number of votes equal to the number of Directors to be elected multiplied by the number of votes 9 12 ARTICLE X INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES, AND OTHER AGENTS The Corporation shall, to the maximum extent permitted by the California Corporation Code indemnify each of its directors and officers against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with any proceeding arising by reason of the fact that any such person is or was a director or officer of the Corporation and shall advance to such director or officer expenses incurred in defending any such proceeding to the maximum extent permitted by law. For purposes of this Article X, a "director" or "officer" of the Corporation includes any person who is or was a director or officer of the Corporation, or is or was serving at the request of the corporation as a director or officer of another Corporation, or other enterprise, or was a director or officer of a Corporation which was a predecessor corporation of the Corporation or of another enterprise at the request of such predecessor corporation. The board of directors may in its discretion provide by resolution for such indemnification of, or advance of expenses to, other agents of the Corporation, and likewise may refuse to provide for such indemnification or advance of expenses except to the extent such indemnification is mandatory under the California Corporation Code. (As added to the By-Laws of Executive Parking, Inc. by Amendment by Resolution adopted by Unanimous Written Consent of the Shareholders and Directors dated 1/21/87.) 9 13 to which his shares are entitled, or distribute his votes on the same principle among as many candidates as he thinks fit. The candidates receiving the highest number of votes up to the number of Directors to be elected are elected. The Board of Directors may fix a time in the future not exceeding thirty days preceding the date of any meeting of Shareholders or the date fixed for the payment of any dividend or distribution, or for the allotment of rights, or when any change or conversion or exchange of shares shall go into effect, as a record date for the determination of the Shareholders entitled to notice of and to vote at any such meeting, or entitled to receive any such dividend or distribution, or any allotment of rights, or to exercise the rights in respect to any such change, conversion or exchange of shares, in such case only Shareholders of record on the date so fixed shall be entitled to notice of and to vote at such meeting, or to receive such dividends, distribution or allotment of rights, or to exercise such rights, as the case may be, notwithstanding any transfer of any share on the books of the company after any record date fixed as aforesaid. The Board of Directors may close the books of the company against transfers of shares during the whole or any part of such period. Section 10. PROXIES. Every Shareholder entitled to vote, or to execute consents, may do so, either in person or by written proxy, executed in accordance with the provisions of the Corporations Code and filed with the Secretary of the corporation. Section 11. ORGANIZATION. The President, or in the absence of the President, any Vice President, shall call the meeting of the Shareholders to order, and shall act as chairman of the meeting. In the absence of the President and all of the Vice Presidents, Shareholders shall appoint a chairman for such meeting. The Secretary of the company shall act as Secretary of all meetings of the Shareholders, but in the absence of the Secretary at any meeting of the Shareholders, the presiding Officer may appoint any person to act as Secretary of the meeting. Section 12. INSPECTORS OF ELECTION. In advance of any meeting of Shareholders the Board of Directors may, if they so elect, appoint inspectors of election to act at such meeting or any adjournments thereof. If inspectors of election be not so appointed, the chairman of any such meeting may, and on the request of any Shareholder or his proxy shall, make such appointment at the meeting in which case the number of inspectors shall be either one or three as determined by a majority of the Shareholders represented at the meeting. Section 13. SHAREHOLDERS' AGREEMENTS. Notwithstanding the above provisions in the event this corporation elects to become a close corporation, an agreement between two or more Shareholders thereof, if in writing and signed by the parties thereof, may provide that in exercising any voting rights the shares held by them shall be voted as provided therein or as provided by the Corporations Code, and may otherwise modify these provisions as to Shareholders' meetings and actions. 10 14 ARTICLE VI (As added by amendment to the By-Laws of Executive Parking, Inc.) by Resolution adopted by Unanimous Written Consent of the Shareholders and Directors dated 1/21/87.) Section 6. FINANCIAL STATEMENTS. A copy of any annual financial statement and any income statement of the Corporation for each quarterly period of each fiscal year, and any accompanying balance sheet of the Corporation as of the end of each such period, that has been prepared by the Corporation shall be kept on file in the principal executive office of the Corporation for twelve (12) months and each such statement shall be exhibited at all reasonable times to any shareholder demanding an examination of any such statement or a copy shall be mailed to any such shareholder upon written request to the chief financial officer therefore. If a shareholder or shareholders holding at least five percent (5%) of the outstanding shares of any class of shares of the Corporation make a written request to the Corporation for an income statement of the Corporation for a three-month, six-month or nine-month period of the current fiscal year ended more than thirty (30) days prior to the date of the request, and a balance sheet of the Corporation as of the end of such period, the chief financial officer shall cause such statement to be prepared, if not already prepared, and shall deliver personally or mail such statement or statements to the person making the request within thirty (30) days after the receipt of such request. If the Corporation has not sent to the shareholders its annual report for the last fiscal year, this report shall likewise be delivered or mailed to such shareholder or shareholders within thirty (30) days after such request. The Corporation also shall, upon the written request of any shareholder, mail to the shareholder a copy of the last annual, semi-annual or quarterly income statement which it has prepared and a balance sheet as of the end of such period. The quarterly income statements and balance sheets referred to in this section shall be accompanied by the report thereon, if any, of any independent accountant engaged by the Corporation or the certificate of an authorized officer of the Corporation that such financial statements were prepared without audit from the books and records of the Corporation. 10 15 ARTICLE V CERTIFICATES AND TRANSFER OF SHARES Section 1. CERTIFICATES FOR SHARES. Certificates for shares shall be of such form and device as the Board of Directors may designate and shall state the name of the record holder of the shares represented thereby; its number; date of issuance; the number of shares for which it is issued; a statement of the rights, privileges, preferences and restrictions, if any; a statement as to the redemption or conversion, it any; a statement of liens or restrictions upon transfer or voting, if any; if the shares be assessable or, if assessments are collectible by personal action, a plain statement of such facts. Every certificate for shares must be signed by the President or a Vice President and the Secretary or an Assistant Secretary or must be authenticated by facsimiles of the signatures of the President and Secretary or by a facsimile of the signature of its President and the written signature of its Secretary or an Assistant Secretary. (Before it becomes effective every certificate for shares authenticated by a facsimile of a signature must be countersigned by a transfer agent or transfer clerk and must be registered by an incorporated bank or trust company, either domestic or foreign, as registrar of transfers. OPTIONAL) Section 2. TRANSFER ON THE BOOKS. Upon surrender to the Secretary or transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Section 3. LOST OR DESTROYED CERTIFICATES. Any person claiming a certificate of stock to be lost or destroyed shall make an affidavit or affirmation of that fact and shall if the Directors so require give the corporation a bond of indemnity, in form and with one or more sureties satisfactory to the Board, in at least double the value of the stock represented by said certificate, whereupon a new certificate may be issued in the same tenor and for the same number of shares as the one alleged to be lost or destroyed. Section 4. TRANSFER AGENTS AND REGISTRARS. The Board of Directors may appoint one or more transfer agents or transfer clerks, and one or more registrars, which shall be an incorporated bank or trust company -- either domestic or foreign, who shall be appointed at such times and places as the requirements of the corporation may necessitate and the Board of Directors may designate. Section 5. CLOSING STOCK TRANSFER BOOKS - RECORD DATE. In order that the corporation may determine the Shareholders entitled to notice of any meeting or to vote or entitled to receive payment of any dividend or other distribution or allotment of any rights or entitled to exercise any rights in respect of any other lawful action, 11 16 the Board may fix, in advance, a record date, which shall not be more than sixty nor less then ten days prior to the date of such meeting nor more than sixty days prior to any other action. If no record date is fixed: The record date for determining Shareholders entitled to notice of or to vote at a meeting of Shareholders shall be at the close of business on the business day next preceding the day on which notice is given or, if notice is waived, at the close of business on the business day next preceding the day on which the meeting is held. The record date for determining Shareholders entitled to give consent to corporate action in writing without a meeting, when no prior action by the Board is necessary, shall be the day on which the first written consent is given. The record date for determining Shareholders for any other purpose shall be it the close of business on the day on which the Board adopts the resolution relating thereto, or the 60th day prior to the date of such other action, whichever is later. Section 6. LEGEND CONDITION. In the event any shares of this corporation are issued pursuant to a permit or exemption therefrom requiring the imposition of a legend condition the person or persons issuing or transferring said shares shall make sure said legend appears on the certificate and on the stub relating thereto in the stock record book and shall not be required to transfer any shares free of such legend unless an amendment to such permit or a new permit be first issued so authorizing such a deletion. Section 7. CLOSE CORPORATION CERTIFICATES. All certificates representing shares of this corporation, in the event it shall elect to become a close corporation, shall contain the legend required by the Corporations Code. ARTICLE VI CORPORATE RECORDS AND REPORTS -- INSPECTION Section 1. RECORDS. The corporation shall maintain, in accordance with generally accepted accounting principles, adequate and correct accounts, books and records of its business and properties. All of such books, records and, accounts shall be kept at its principal executive office in the State of California, as fixed by the Board of Directors from time to time. Section 2. INSPECTION OF BOOKS AND RECORDS. All books and records provided for in the Corporations Code shall be open to inspection of the Directors and Shareholders from time to time and in the manner provided in said Corporations Code. Section 3. CERTIFICATION AND INSPECTION OF BY-LAWS. The original or a copy of these By-Laws, as amended or otherwise altered to date, certified by the Secretary, shall be kept at the corporation's 12 17 principal executive office and shall be open to inspection by the Shareholders of the company, at all reasonable times during office hours, as provided in the Corporations Code. Section 4. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for payment of money, notes or other evidences of indebtedness, issued in the name of or payable to the corporation, shall be signed or endorsed by such person or persons and in such manner as shall be determined from time to time by resolution of the Board of Directors. Section 5. CONTRACTS, ETC. -- HOW EXECUTED. The Board of Directors, except as in the By-Laws otherwise provided, may authorize any officer or officers, agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the corporation. Such authority may be general or confined to specific instances. Unless so authorized by the Board of Directors, no Officer, agent or employee shall have any power or authority to bind the corporation by any contract or agreement, or to pledge its credit, or to render it liable for any purpose or to any amount, except as provided in the Corporations Code. ARTICLE VII ANNUAL REPORTS Section 1. DUE DATE, CONTENTS. The Board of Directors shall cause an annual report or statement to be sent to the Shareholders of this corporation not later than 120 days after the close of the fiscal or calendar year in accordance with the provisions of the Corporations Code. Such report shall be sent to Shareholders at least fifteen days prior to the annual meeting of Shareholders. Such report shall contain a balance sheet as of the end of the fiscal year, an income statement and a statement of report thereon of independent accountant, or if there is no such report, a certificate of the Chief Financial Officer or President that such statements were prepared without audit from the books and records of the corporation. Section 2. WAIVER. The foregoing requirement of an annual report may be waived by the Board so long as this corporation shall have less than 100 Shareholders. ARTICLE VIII AMENDMENTS TO BY-LAWS Section 1. BY SHAREHOLDERS. New By-Laws may be adopted or these By-Laws may be repealed or amended at their annual meeting, or at any other meeting of the Shareholders called for that purpose, by a vote of Shareholders entitled to exercise a majority of the voting power of the corporation, or by written assent of such Shareholders. 13 18 Section 2. POWER OF DIRECTORS. Subject to the right of the Shareholders to adopt, amend or repeal By-Laws, as provided in Section 1 of this Article VII, and the limitations of the Corporations Code, the Board of Directors may adopt, amend or repeal any of these By-Laws other than a By-Law or amendment thereof changing the authorized number or Directors. Section 3. RECORD OF AMENDMENTS. Whenever an amendment or new By-Law is adopted, it shall be copied in the book of By-Laws with the original By-Laws, in the appropriate place. If any By-Law is repealed, the fact of repeal with the date of the meeting at which the repeal was enacted or written assent was filed shall be stated in said book. ARTICLE IX SEAL The corporation shall adopt and use a corporate seal setting forth the name of the corporation and showing the State and date of incorporation. KNOW ALL MEN BY THESE PRESENTS: That we, the undersigned, being all the directors of L.A. Construction & Services, a corporation incorporated, organized and existing under the laws of the State of California, do hereby certify that the foregoing By-Laws, were duly adopted as the By-Laws of the said corporation. IN WITNESS WHEREOF, we have hereunto subscribed our names this 21 day of March, 1979. /s/ Dale Stark /s/ Ed Simmons ----------------------- ------------------------ ----------------------- ------------------------ 14 19 CERTIFICATE OF ADOPTION OF BY-LAWS Adoption by Incorporator(s) or First Director(s). The undersigned person(s) appointed in the Articles of Incorporation to act as the Incorporator(s) or First Director(s) of the above named corporation hereby adopt the same as the By-Laws of said corporation. Executed this 21 day of March, 1979. /s/ Dale Stark /s/ Ed Simmons - ----------------------- ------------------------ Certificate by Secretary. I DO HEREBY CERTIFY AS FOLLOWS: That I am the duly elected, qualified and acting Secretary of the above named corporation; that the foregoing By-Laws were adopted as the By-Laws of said corporation on the date set forth above by the person(s) appointed in the Articles of Incorporation to act as the Incorporator(s) or First Director(s) of said corporation. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the corporate seal this 21 day of March, 1979. /s/ Dale Stark Certificate by Secretary of Adoption by Shareholders' Vote. THIS IS TO CERTIFY: That I am the duly elected, qualified and acting Secretary of the above named corporation and that the above and foregoing Code of By-Laws was submitted to the shareholders at their first meeting held on the date set forth in the By-Laws and recorded in the minutes thereof, was ratified by the vote of shareholders entitled to exercise the majority of the voting power of said corporation. IN WITNESS WHEREOF, I have hereunto set my hand this _______ day of _____________________, 19__. 15 EX-3.23 4 ARTICLES OF INCORPORATION: CENTURY PARKING, INC. 1 Exhibit 3.23 ================================================================================ A402723 [GRAPHIC OMITTED] State of California OFFICE OF THE SECRETARY OF STATE CORPORATION DIVISION I, MARCH FONG EU, Secretary of State of the State of California, hereby certify: That the annexed transcript has been compared with the corporate record on file in this office, of which it purports to be a copy, and that same is full, true and correct. IN WITNESS WHEREOF, I execute this certificate and affix the Great Seal of the State of California this MAY -6 1991 ------------------------------------ THE GREAT SEAL OF THE STATE OF EUREKA CALIFORNIA /s/ March Fong Eu Secretary of State ================================================================================ 2 A402723 CERTIFICATE OF AMENDMENT OF ENDORSED ARTICLES OF INCORPORATION FILED OF In the office of the Secretary of State CENTURY PARKING, INC. of the State of California APR 25 1991 MARCH FONG EU, Secretary of State The undersigned certify that: 1. They are the president and secretary, respectively, of: CENTURY PARKING, INC. 2. The board of directors of the corporation has approved the amendment of Article Fifth of the corporation's Articles of Incorporation to read in full as follows: "This corporation is authorized to issue only one class of shares of capital stock, and the total number of shares of capital stock which this corporation is authorized to issue is ten thousand (10,000). On the amendment of this article to read as hereinabove set forth, each outstanding share is split up, divided, and converted into 100 shares." 3. The amendment was approved by the required vote of shareholders in accordance with Section 902 of the California Corporation Code. The total number of outstanding 3 shares entitled to vote with respect to the amendment, the number of favorable votes required, and the number of such shares voting in favor of the amendment were as follows: Outstanding voting shares: 90 Number of favorable votes required: 46 Shares voting in favor of amendment: 90 The number of shares voting in favor of the amendment equaled or exceeded the vote required. /s/ Raymond T. Liesegang ------------------------------------ RAYMOND T. LIESEGANG, President /s/ Veldree R. Liesegang ------------------------------------ VELDREE R. LIESEGANG, Secretary Each of the undersigned declares under penalty of perjury that the statements contained in the foregoing certificate are true and correct of his or her own knowledge, and that this declaration was executed as follows: Date: April 18, 1991 Place: Los Angeles, California /s/ Raymond T. Liesegang ------------------------------------ RAYMOND T. LIESEGANG, President /s/ Veldree R. Liesegang ------------------------------------ VELDREE R. LIESEGANG, Secretary -2- 4 ================================================================================ STATE OF CALIFORNIA THE GREAT SEAL OF THE STATE OF EUREKA CALIFORNIA DEPARTMENT OF STATE To all whom these presents shall come, Greetings: I, FRANK M. JORDAN, Secretary of State of the State of California, hereby certify; That the annexed transcript has been compared with the RECORD on file in my office, of which it purports to be a copy, and that the same is full, true and correct. In testimony whereof, I, FRANK M. JORDAN, Secretary of State, have hereunto caused the Great Seal of the State of California to be affixed and my name subscribed, at the City of Sacramento, in the State of California, this JUL 31 1968 THE GREAT SEAL OF THE STATE OF EUREKA CALIFORNIA /s/ Frank M. Jordan Secretary of State By /s/ [Illegible] ------------------------ Assistant Secretary of State ================================================================================ 5 ARTICLES OF INCORPORATION OF CENTURY PARKING, INC. * * * * * KNOW ALL MEN BY THESE PRESENTS: That we, the undersigned, have this day voluntarily associated ourselves together for the purpose of forming a corporation under the laws of the State of California, AND WE HEREBY CERTIFY: FIRST: That the name of the corporation is CENTURY PARKING, INC. SECOND: That the specific business in which the said corporation will primarily engage is: To engage in the business of owning, operating, leasing, managing, buying, selling or otherwise dealing in lots, real estate, garages, or other facilities used to park or store motor vehicles or other similar equipment. The general purposes and powers of the corporation are: To manufacture, purchase or otherwise acquire own, mortgage, pledge, sell, assign and transfer, or otherwise dispose of, to invest, trade, deal in and deal with, goods, wares and merchandise and real and personal property of every 6 class and description. To acquire and pay for in cash, stock or bonds of this corporation or otherwise, the good will, rights, assets and property and to undertaKe or assume the whole or any part of the obligations or liabilities of any person, firm, association or corporation. To acquire, hold, use, sell, assign, lease, grant licenses in respect of, mortgage or otherwise dispose of letters patent of the United States or any foreign country, patent rights, licenses and privileges, inventions, improvements and processes, copyrights, trade-marks and trade names, relating to or useful in connection with any business of this corporation. To acquire, subscribe for, hold, own, pledge and otherwise dispose of and vote shares of stock, bonds and securities of any other corporation, domestic or foreign. To enter into, make and perform contracts of every kind and description with any person, firm, association, corporation, municipality, county, state, body politic or government or colony or dependency thereof, conducive to the attainment of any of the objects or purposes of the corporation. To borrow money and issue bonds, debentures, notes and evidences of indebtedness and to secure the payment or performance of its obligations by mortgage, deed of trust, 7 pledge or otherwise. To purchase, hold, sell and transfer the shares of its own capital stock so far as may be permitted by the laws of the State of California. To have one or more offices within or without the State of California, to carry on all or any of its operations and business and, without restriction or limit as to amount, to purchase or otherwise acquire, hold, own, mortgage, sell, convey or otherwise dispose of real and personal property of every class and description in any of the states, districts, territories or colonies of the United States, and in any and all foreign countries, subject to the laws of such state, district, territory, colony or country. The foregoing clauses shall be construed both as objects and powers and it is hereby expressly provided that the foregoing enumeration of specific powers shall not be held to limit or restrict in any manner the powers of the corporation. In general, to carry on any other business in connection with the foregoing, and to have and exercise all the powers conferred by the State of California upon corporations formed under the laws of the State of California. THIRD: That the county in which the principal office for the transaction of the business of said corporation 8 is located is Los Angeles County, State of California. FOURTH: The number of its directors is three (3). The names and addresses of the persons who are appointed to act as the first directors are as follows: NAMES ADDRESSES ----- --------- Gordon O. Larson 16661 Charmel Lane Pacific Palisades, Calif. 9027 Ray Liesegang 5741 Corbin Avenue Tarzana, California Fred Riscen 8639 Columbus Avenue Apt # 10 Sepulveda, California The number of directors may be changed from time to time by a by-law fixing or changing the number duly adopted by the shareholders. FIFTH: the total number of shares which the corporation is authorized to issue is one hundred (100) of the par value of Ten Dollars ($10.00) so that the aggregate par value of all shares amounts to One Thousand Dollars ($1,000). SIXTH: Subject to the right of shareholders to adopt, amend or repeal by-laws, by-laws may be adopted, amended, or repealed by the board of directors, except a by-law or amendment thereof changing the authorized number of directors. SEVENTH: This corporation reserves the right to 9 to amend, alter, change or repeal any provision contained in these articles or incorporation in the manner now or hereafter prescribed by statute, and all rights conferred upon shareholders herein are granted subject to this reservation. IN WITNESS WHEREOF, we have hereunto set our hands and seals this 26th day of July A.D. 1968. GORDON O. LARSON (SEAL) ---------------------- Gordon O. Larson RAY LIESEGANG (SEAL) ---------------------- Ray Liesegang FRED RISCEN (SEAL) ---------------------- Fred Riscen 10 STATE OF CALIFORNIA ) ) ss: COUNTY OF LOS ANGELES ) On this 26th day of July, 1968, before me, a notary pub1ic in and for the county and state aforesaid, personally appeared, Gordon O. Larson, Ray Liesegang and Fred Riscen, known to me to be the persons whose names are subscribed to and who executed the within instrument, and acknowledged to me that they executed the same, and that they are the directors named therein. IN WITNESS WHEREOF, I have hereto set my hand and affixed my official seal the day and year above written. ALLAN STORMS -------------------- Notary Public My commission expires Oct. 21, 1969 EX-3.24 5 BY-LAWS OF CENTURY PARKING, INC. 1 Exhibit 3.24 CERTIFICATE OF SECRETARY The undersigned, being the duly elected Secretary of CENTURY PARKING, INC., a California corporation, does hereby certify that the following is a true, full and correct copy of resolutions concerning a Bylaw amendment adopted by the shareholder and Board of Directors of said corporation on July 15, 1987, by unanimous written consent in lieu of the annual meeting, which consent was filed with the minutes of the proceedings of the shareholder and Board of Directors in conformity with the provisions of Sections 603(a) and 307(b) of the California Corporations Code: Bylaw Amendment WHEREAS, the condition of the corporation's Bylaws was brought to the attention of the shareholder and Board of Directors and it was deemed desirable and in the best interest of this corporation to amend the Bylaws to change the annual meeting date from July 15 to January 20 each year, in connection with the corporation's change in its accounting year. NOW, THEREFORE, BE IT RESOLVED, that the first paragraph of ARTICLE II, SECTION 2.02, of the Bylaws of this corporation is hereby amended, in order to change the annual meeting date, to read as follows: "SECTION 2.02 ANNUAL MEETINGS. The annual meetings of shareholders shall be held on the 20th day of January at 2:00 o'clock P.M. each year; provided, however, that should said day fall upon a legal holiday, then any such annual meeting of shareholders shall be held at the same time and place on the next day thereafter ensuing which is a full business day. At such meetings, Directors shall be elected, reports of the affairs of the corporation shall be considered, and any other business may be transacted which is within the powers of the shareholders." The foregoing resolutions are in conformity with the Articles of Incorporation and Bylaws of this corporation, have never been modified or repealed, and are now in full force and effect. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the corporate seal of said corporation this 15th day of July, 1967. /s/ Veldree Liesegang ---------------------------- VELDREE LIESEGANG, Secretary 2 CERTIFICATE OF SECRETARY I, the undersigned, do hereby certify: 1. That I am the duly elected and acting Secretary of CENTURY PARKING, INC., a California corporation; 2. That the foregoing Bylaws, consisting of twenty (20) pages, are a true and correct copy of the duly adopted bylaws of said corporation duly adopted by the Board of Directors on July 15, 1982. IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the seal of said corporation this 15th day of July, 1982. /s/ Veldree Liesegang ---------------------------- VELDREE LIESEGANG, Secretary [SEAL] 3 BYLAWS FOR THE REGULATION, EXCEPT AS OTHERWISE PROVIDED BY STATUTE OR ITS ARTICLES OF INCORPORATION, OF CENTURY PARKING, INC. (A California Corporation) ARTICLE I OFFICES SECTION 1.01 PRINCIPAL EXECUTIVE OFFICE. The principal executive office of the Corporation is hereby fixed and located at: 706 South Hill Street, 8th Floor, Los Angeles, California 90014. The Board of Directors is hereby granted full power and authority to change said principal executive office from one location to another. Any such change shall be noted on the Bylaws by the Secretary, opposite this section, or this section may be amended to state the new location. If the principal executive office is located outside California, and the corporation has one or more business offices in California, the Board of Directors shall fix and designate a principal business office in the State of California. SECTION 1.02 OTHER OFFICES. Other business offices may at any time be established by the Board of Directors at any place or places where the corporation is qualified to do business. ARTICLE II MEETINGS OF SHAREHOLDERS SECTION 2.01 PLACE OF MEETINGS. All annual or other meetings of shareholders shall be held at the principal executive office of the corporation, or at any other place within or without the State of California which may be designated either by the Board of Directors or by the written consent of all persons entitled to vote thereat and not present at the meeting, given either before or after the meeting and filed with the Secretary of the corporation. SECTION 2.02 ANNUAL MEETINGS. The annual meetings of shareholders shall be held on the 15th day of July, at 2:00 o'clock P.M.; provided, however, that should said day fall upon a legal holiday, then any such annual meeting of shareholders shall be held at the same time and place on the next day thereafter ensuing which is a full business day. At such meetings, Directors shall be elected, reports of the affairs of the corporation shall be considered, and any other business may be transacted which is within the powers of the shareholders. 4 Written notice of each annual meeting shall be given to each shareholder entitled to vote, either personally or by mail or other means of written communication, charges prepaid, addressed to such shareholder at his address appearing on the books of the corporation or given by him to the corporation for the purpose of notice. If any notice or report addressed to the shareholder at the address of such shareholder appearing on the books of the corporation is returned to the corporation by the United States Postal Service marked to indicate that the United States Postal Service is unable to deliver the notice or report to the shareholder at such address, all future notices or reports shall be deemed to have been duly given without further mailing if the same shall be available for the shareholder upon written demand of the shareholder at the principal executive office of the corporation for a period of one year from the date of the giving of the notice or report to all other shareholders. If a shareholder gives no address, notice shall be deemed to have been given if sent by mail or telegraphic or other means of written communication addressed to the place where the principal executive office of the corporation is situated, or if published at least once in some newspaper of general circulation in the county in which said principal executive office is located. All such notices shall be given to each shareholder entitled thereto not lees than ten (10) days nor more than sixty (60) days before each annual meeting. Any such notice shall be deemed to have been given at the time when delivered personally, or deposited in the mail or sent by telegram or other means of written communication. An affidavit of mailing of any such notice in accordance with the foregoing provisions, executed by the Secretary, Assistant Secretary, or any transfer agent of the corporation shall be prima facie evidence of the giving of the notice. Such notices shall specify (a) the place, the date, and the hour of such meeting; (b) those matters which the Board, at the time of the mailing of the notice, intends to present for action by the shareholders; (c) if Directors are to be elected, the names of nominees intended at the time of the notice to be presented by management for election; (d) the general nature of a proposal, if any, to take action with respect to approval of (i) a contract or other transaction with an interested Director, (ii) amendment of the articles of incorporation, (iii) a reorganization of the corporation as defined in Section 181 of the California General Corporation Law, (iv) voluntary dissolution of the corporation, or (v) a distribution in 2 5 dissolution other than in accordance with the rights of outstanding preferred shares, if any; and (e) such other matters, if any, as may be expressly required by statute. SECTION 2.03 SPECIAL MEETINGS. Special Meetings of the shareholders, for the purpose of taking any action permitted by the shareholders under the California General Corporation Law and the articles of incorporation of this corporation, may be called at any time by the Chairman of the Board or. the President, or by the Board of Directors, or by one or more shareholders holding not less than ten percent (10%) of the votes at the meeting. Upon request in writing that a special meeting of shareholders be called for any proper purpose, directed to the Chairman of the Board, President, Vice-President or Secretary by any person (other than the Board) entitled to call a special meeting of shareholders, the officer forthwith shall cause notice to be given to shareholders entitled to vote that a meeting will be held at a time requested by the person or persons calling the meeting, not less than thirty-five (35) nor more than sixty (60) days after receipt of the request. Except in special cases where other express provision is made by statute, notice of such special meetings shall be given in the same manner as for annual meetings of shareholders. In addition to the matters required by items (a) and, if applicable, (c) of the preceding section, notice of any special meeting shall specify the general nature of the business to be transacted, and no other business may be transacted at such meeting. SECTION 2.04 QUORUM. The presence in person or by proxy of the persons entitled to vote a majority of the voting shares at any meeting shall constitute a quorum for the transaction of business. The shareholders present at a duly called or held meeting at which a quorum is present may continue to do business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum, if any action taken (other than adjournment) is approved by at least a majority of the shares required to constitute a quorum. SECTION 2.05 ADJOURNED MEETING AND NOTICE THEREOF. Any shareholders' meeting, annual or special, whether or not a quorum is present, may be adjourned from time to time by the vote of a majority of the shares, the holders of which are either present in person or represented by proxy thereat, but in the absence of a quorum no other business may be transacted at such meeting, except as provided in Section 2.04 above. When any shareholders' meeting, either annual or special, is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place thereof are announced at 3 6 the meeting at which the adjournment is taken, unless after the adjournment a new record date is fixed for the adjourned meeting or unless the adjournment is for more than forty-five (45) days from the date set for the original meeting, in which case the Board of Directors shall set a new record date. Notice of any such adjourned meeting shall be given to each shareholder of record entitled to vote at the adjourned meeting in accordance with the provisions of Section 2.02 above. At any adjourned meeting the corporation may transact any business which might have been transacted at the original meeting. SECTION 2.06 VOTING. Unless a record date for voting purposes be fixed as provided in Section 5.01 of Article V of these Bylaws then, subject to the provisions of Sections 702 through 704, inclusive, of the California General Corporation Law (relating to voting of shares held by a fiduciary, in the name of a corporation, or in joint ownership), only persons in whose names shares entitled to vote stand on the stock records of the corporation at the close of business on the business day next preceding the day on which notice of the meeting is given or if such notice is waived, at the close of business on the business day next preceding the day on which the meeting of shareholders is held, shall be entitled to vote at such meeting, and such day shall be the record date of such meeting. Such vote may be viva voce or by ballot; provided, however, that all elections for Directors must be by ballot upon demand made by a shareholder at any election and before the voting begins. On any matter other than election of Directors, any shareholder may vote part of his shares in favor of the proposal and refrain from voting the remaining shares or vote them against the proposal, but, if the shareholder fails to specify the number of shares which the shareholder is voting affirmatively, it will be conclusively presumed that the shareholder's approving vote is with respect to all shares such shareholder is entitled to vote. If a quorum is present, except with respect to election of Directors, the affirmative vote of the majority of the shares represented at the meeting and entitled to vote on any matter shall be the act of the shareholders, unless the vote of a greater number of voting by classes is required by the California General Corporation Law or the articles of incorporation. Subject to the requirements of the next sentence, every shareholder entitled to vote at any election for Directors shall have the right to cumulate his votes and give one candidate a number of votes equal to the number of Directors to be elected multiplied by the number of votes to which his shares are entitled, or to distribute his votes on the same principle among as many candidates as he shall think fit. No shareholder shall be entitled to cumulate votes unless the name of the candidate or candidates for whom such votes would be cast has been placed in nomination prior to the voting, and any shareholder has given notice at the meeting prior to the voting of such shareholder's intention to cumulate his votes. The candidates 4 7 receiving the highest number of votes of shares entitled to be voted for them, up to the number of Directors to be elected, shall be elected. SECTION 2.07 VALIDATION OF DEFECTIVELY CALLED OR NOTICED MEETINGS. The transactions of any meeting of shareholders, either annual or special, however called and noticed, if a quorum be present either in person or by proxy, and if, either before or after the meeting, each of the persons entitled to vote, not present in person or by proxy, or who though present, has, at the beginning of the meeting, properly subjected to the transaction of any business because the meeting was not lawfully called or convened, or to particular matters of business legally required to be included in the notice, but not so included, signs a written waiver of notice, or a consent to the holding of such meeting, or an approval of the minutes thereof. All such waivers, consents or approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Neither the business to be transacted at nor the purpose of any regular or special meeting of shareholders need be specified in the written waiver of notice, consent to the holding of the meeting, or approval of the minutes thereof, unless otherwise provided in the articles of incorporation, these Bylaws, or by statute. SECTION 2.08 ACTION WITHOUT MEETING. Directors may be elected without a meeting by a consent in writing, setting forth the action so taken, signed by all of the persons who would be entitled to vote for the election of Directors, provided that, without notice except as hereinafter set forth, a Director may be elected at any time to fill a vacancy not filled by the Board of Directors by the written consent of persons holding a majority of the outstanding shares entitled to vote for the election of Directors. Any other action which, under any provision of the California General Corporation Law, may be taken at a meeting of the shareholders, may be taken without a meeting, and without notice except as hereinafter set forth, if a consent in writing, setting forth the action so taken, is signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Unless the consents of all shareholders entitled to vote have been solicited in writing, (a) Notice of any proposed shareholder approval of, (i) a contract or other transaction with an interested Director, (ii) indemnification of an agent of the corporation as authorized by Section 5.08 of Article V of these Bylaws, (iii) a reorganization of the corporation as defined in Section 181 of the California 5 8 General Corporation Law, or (iv) a distribution in dissolution other than in accordance with the rights of outstanding preferred shares, if any, without a meeting by less than unanimous written consent, shall be given at least ten (10) days before the consummation of the action authorized by such approval; and (b) Prompt notice shall be given of the taking of any other corporate action approved by shareholders without a meeting by less than unanimous written consent, to those shareholders entitled to vote who have not consented in writing. Such notices shall be given in the manner and shall be deemed to have been given as provided in Section 2.02 of Article II of these Bylaws. Unless, as provided in Section 5.01 of Article V of these Bylaws, the Board of Directors has fixed a record date for the determination of shareholders entitled to give such written consent, the record date for such determination shall be the day on which the first written consent is given, when no prior action by the Board of Directors has been taken. In all other cases in which the Board of Directors has not fixed a record date for the determination of shareholders entitled to give such written consent as provided in Section 5.01 of Article V of these Bylaws, the record date shall be determined as set forth in such Section 5.01. Any shareholder giving a written consent, or the shareholder's proxyholders, or a transferee of the shares or a personal representative of the shareholder or their respective proxyholders, may revoke the consent by a writing received by the corporation prior to the time that written consents of the number of shares required to authorize the proposed action have been filed with the Secretary of the corporation, but may not do so thereafter. Such revocation is effective upon its receipt by the Secretary of the corporation. SECTION 2.09 PROXIES. Every person entitled to vote or execute consents shall have the right to do so either in person or by one or more agents authorized by a written proxy executed by such person or his duly authorized agent and filed with the Secretary of the Corporation. Any proxy duly executed is not revoked and continues in full force and effect until, (i) an instrument revoking it or a duly executed proxy bearing a later date is filed with the Secretary of the corporation prior to the vote pursuant thereto, (ii) the person executing the proxy attends the meeting and votes in person, or (iii) written notice of the death or incapacity of the maker of such proxy is received by the corporation before the vote pursuant thereto is counted; provided that no such proxy shall be valid after the expiration of eleven (11) months from the date of its execution, unless the person 6 9 executing it specifies therein the length of time for which such proxy is to continue in force. SECTION 2.10 INSPECTORS OF ELECTION. In advance of any meeting of shareholders, the Board of Directors may appoint any persons other than nominees for office as inspectors of election to act at such meeting or any adjournment thereof. If inspectors of election be not so appointed, the Chairman of any such meeting may, and on the request of any shareholder or his proxy shall, make such appointment at the meeting. The number of inspectors shall be either one or three. If appointed at a meeting on the request of one or more shareholders or proxies, the majority of shares represented in person or by proxy shall determine whether one or three inspectors are to be appointed. In case any person appointed as inspector fails to appear or fails or refuses to act, the vacancy may, and on the request of any shareholder or a shareholder's proxy shall, be filled by appointment by the Board of Directors in advance of the meeting, or at the meeting by the Chairman of the meeting. The duties of such inspectors shall be as prescribed in Section 707 of the California General Corporation Law and shall include: determining the number of shares outstanding and the voting power of each; the shares represented at the meeting; the existence of a quorum; the authenticity, validity and effect of proxies; receiving votes, ballots or consents; hearing and determining all challenges and questions in any way arising in connection with the right to vote; counting and tabulating all votes or consents; determining when the polls shall close; determining the result; and such acts as may be proper to conduct the election or vote with fairness to all shareholders. In the determination of the validity and effect of proxies the dates contained on the forms of proxy shall presumptively determine the order of execution of the proxies, regardless of the postmark dates on the envelopes in which they are mailed. The inspectors of election shall perform their duties impartially, in good faith, to the best of their ability and as expeditiously as is practical. If there are three inspectors of election, the decision, act or certificate of a majority is effective in all respects as the decision, act or certificate of all. Any report or certificate made by the inspectors of election is prima facia evidence of the facts stated therein. ARTICLE III DIRECTORS SECTION 3.01 POWERS. Subject to limitations of the articles of incorporation and of the California General Corporation Law as 7 10 to action to be authorized or approved by the shareholders, and subject to the duties of Directors as prescribed by these Bylaws, all corporate powers shall be exercised by or under the authority of, and the business and affairs of the corporation shall be controlled by, the Board of Directors. Without prejudice to such general powers, but subject to the same limitations, it is hereby expressly declared that the Directors shall have the following powers: First - To select and remove all the officers, agents and employees of the corporation, prescribe such powers and duties for them as may not be inconsistent with law, with the articles of incorporation or these Bylaws, fix their compensation and require from them security for faithful service. Second - To conduct, manage and control the affairs and business of the corporation, and to make such rules and regulations therefor not inconsistent with law, or with the articles of incorporation or these Bylaws, as they may deem best. Third - To change the principal executive office and principal office for the transaction of the business of the corporation from one location to another as provided in Article I, Section 1.01 of these Bylaws; to fix and locate from time to time one or more subsidiary offices of the corporation within or without the State of California, as provided in Article I, Section 1.02 of these Bylaws; to designate any place within or without the State of California for the holding of any shareholders' meeting or meetings; and to adopt, make and use a corporate seal, and to prescribe the forms of certificates of stock, and to alter the form of such seal and of such certificates from time to time, as in their judgment they may deem best, provided such seal and such certificates shall at all times comply with the provisions of law. Fourth - To authorize the issue of shares of stock of the corporation from time to time, upon such terms as may be lawful. Fifth - To borrow money and incur indebtedness for the purposes of the corporation, and to cause to be executed and delivered therefor, in the corporate name, promissory notes, bonds, debentures, deeds of trust, mortgages, pledges, hypothecations or other evidences of debt and securities therefor. Sixth - By resolution adopted by a majority of the authorized number of Directors, to designate an executive and other committees, each consisting of two or more Directors, to serve at the pleasure of the Board, and to prescribe the manner in which proceedings of such committee shall be conducted. Unless the Board of Directors shall otherwise prescribe the manner of proceedings of any such committee, meetings of such committee may be regularly 8 11 scheduled in advance and may be called at any time by any two members thereof; otherwise, the provisions of these Bylaws with respect to notice and conduct of meetings of the Board shall govern. Any such committee, to the extent provided in a resolution of the Board, shall have all of the authority of the Board, except with respect to: (i) the approval of any action for which the California General Corporation Law or the articles of incorporation also require shareholder approval; (ii) the filling of vacancies on the Board or in any committee; (iii) the fixing of compensation of the Directors for serving on the Board or on any committee; (iv) the adoption, amendment or repeal of Bylaws; (v) the amendment or repeal of any resolution of the Board; (vi) any distribution to the shareholders, except at a rate or in a periodic amount or within a price range determined by the Board; and (vii) the appointment of other committees of the Board or the members thereof. SECTION 3.02 NUMBER AND QUALIFICATION OF DIRECTORS. The authorized number of directors shall be not less than three (3) nor more than five (5) until changed by amendment of the articles of incorporation or by a Bylaw amending this Section 3.02, duly adopted by the vote or written consent of holders of a majority of the outstanding shares entitled to vote; provided, however, that if the number of Directors should ever be increased to five (5) or more, an amendment to this Section 3.02 or an amendment to the articles of incorporation, either of which would reduce the fixed number of Directors to a number less than five (5), cannot be adopted if the votes cast against its adoption at a meeting, or the shares not consenting in the case of action by written consent, are equal to more than 16-2/3% of the outstanding shares entitled to vote. SECTION 3.03 ELECTION AND TERM OF OFFICE. The Directors shall be elected at each annual meeting of shareholders but, if any such annual meeting is not held or the Directors are not elected thereat, the Directors may be elected at any special meeting of shareholders held for that purpose. All Directors shall hold office until their respective successors are elected, subject to the General Corporation Law and the provisions of these Bylaws with respect to vacancies on the Board. 9 12 SECTION 3.04 VACANCIES. A vacancy in the Board of Directors shall be deemed to exist in case of the death, resignation or removal of any Director, if a Director has been declared of unsound mind by order of court or convicted of a felony, if the authorized number of Directors be increased, or if the shareholders fail, at any annual or special meeting of shareholders at which any Director or Directors are elected, to elect the full authorized number of Directors to be voted for at that meeting. Vacancies in the Board of Directors, except for a vacancy created by the removal of a Director, may be filled by a majority of the remaining Directors, though less than a quorum, or by a sole remaining Director, and each Director so elected shall hold office until his successor is elected at an annual or a special meeting of the shareholders. A vacancy in the Board of Directors created by the removal of a Director may only be filled by the vote of a majority of the shares entitled to vote represented at a duly held meeting at which a quorum is present, or by the written consent of the holders of a majority of the outstanding shares. The shareholders may elect a Director or Directors at any time to fill any vacancy or vacancies not filled by the remaining Directors. Any such election by written consent shall require the consent of holders of a majority of the outstanding shares entitled to vote. Any Director may resign effective upon giving written notice to the Chairman of the Board, the President, the Secretary or the Board of Directors of the corporation, unless the notice specifies a later time for the effectiveness of such resignation. If the Board of Directors accepts the resignation of a Director tendered to take effect at a future time, the Board or the shareholders shall have power to elect a successor to take office when the resignation is to become effective. No reduction of the authorized number of Directors shall have the effect of removing any Director prior to the expiration of his term of office. SECTION 3.05 PLACE OF MEETING. Regular meetings of the Board of Directors shall be held at any place within or without the State which has been designated from time to time by resolution of the Board or by written consent of all members of the Board. In the absence of such designation regular meetings shall be held at the principal executive office of the corporation. Special meetings of the Board may be held either at a place so designated or at the principal executive office. SECTION 3.06 ORGANIZATION MEETING. Immediately following each annual meeting of shareholders the Board of Directors shall 10 13 hold a regular meeting at the place of said annual meeting or at such other place as shall be fixed by the Board of Directors, for the purpose of organization, election of officers, and the transaction of other business. Call and notice of such meetings are hereby dispensed with. SECTION 3.07 OTHER REGULAR MEETINGS. Other regular meetings of the Board of Directors shall be held without call or notice on such dates and times as shall be fixed by the Board of Directors from time to time. SECTION 3.08 SPECIAL MEETINGS. Special meetings of the Board of Directors for any purpose or purposes may be called at any time by the Chairman of the Board, the President, any Vice-President, the Secretary or by any two (2) Directors. Written notice of the time and place of special meetings shall be delivered personally to each Director or communicated to each Director by telephone, or by telegraph or mail, charges prepaid, addressed to him at his address as it is shown upon the records of the corporation or, if it is not so shown on such records or is not readily ascertainable, at the place at which the meetings of the Directors are regularly held. In case such notice is mailed, it shall be deposited in the United States mail in the place in which the principal executive office of the corporation is located at least four (4) days before the time of the holding of the meeting. In case the notice is delivered personally, or by telephone or telegram, it shall be delivered personally or by telephone or to the telegraph company, at least forty-eight (48) hours before the time of the holding of the meeting. Any oral notice given personally or by telephone may be communicated either to the Director or to a person at the office or residence of the Director whom the person giving the notice has reason to believe will promptly communicate it to the Director. Such mailing, telegraphing or delivery, personally or by telephone, as above provided, shall constitute due, legal and personal notice to such Director. Any notice shall state the date, place and hour of the meeting. However, the notice need not specify the purpose of the meeting. SECTION 3.09 ACTION WITHOUT MEETING. Any action by the Board of Directors may be taken without a meeting if all members of the Board shall individually or collectively consent in writing to such action. Such written consent or consents shall be filed with the minutes of the proceedings of the Board and shall have the same force and effect as a unanimous vote of such Directors. 11 14 SECTION 3.10 ACTION AT A MEETING; QUORUM AND REQUIRED VOTE. Presence of a majority of the authorized number of Directors at a meeting of the Board of Directors constitutes a quorum for the transaction of business, except as hereinafter provided. Members of the Board may participate in a meeting through use of conference telephone or similar communications equipment, so long as all members participating in such meeting can hear one another. Participation in a meeting as permitted in the preceding sentence constitutes presence in person at such meeting. Every act or decision done or made by a majority of the Directors present at a meeting duly held at which a quorum is present shall be regarded as the act of the Board of Directors, unless a greater number, or the same number after disqualifying one or more Directors from voting, is required by law, by the articles of incorporation or by these Bylaws. A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of a Director, provided that any action taken is approved by at least a majority of the required quorum for such meeting. SECTION 3.11 VALIDATION OF DEFECTIVELY CALLED OR NOTICED MEETINGS. The transactions of any meeting of the Board of Directors, however called and noticed or wherever held shall be as valid as though had at a meeting duly held after regular call and notice, if a quorum is present and if, either before or after the meeting, each of the Directors not present or who, though present, has prior to the meeting or at its commencement, protested the lack of proper notice to him, signs a written waiver of notice or a consent to holding such meeting or an approval of the minutes thereof. All such waivers, consents or approvals shall be filed with the corporate records or made a part of the minutes of the meeting. The waiver of notice or consent need not specify the purpose of the meeting. SECTION 3.12 ADJOURNMENT. A quorum of the Directors may adjourn any Directors' meeting to meet again at a stated day and hour; provided, however, that in the absence of a quorum a majority of the Directors present at any Directors' meeting, either regular or special, may adjourn from time to time until the time fixed for the next regular meeting of the Board. SECTION 3.13 NOTICE OF ADJOURNMENT. If the meeting is adjourned for more than twenty-four (24) hours, notice of any adjournment to another time or place shall be given prior to the time of the adjourned meeting to the Directors who were not present at the time of adjournment. Otherwise notice of the time and place of holding an adjourned meeting need not be given to absent Directors if the time and place be fixed at the meeting adjourned. 12 15 ARTICLE IV OFFICERS SECTION 4.01 OFFICERS. The officers of the corporation shall be a President, a Secretary and a Treasurer. The corporation may also have, at the discretion of the Board of Directors, a Chairman of the Board, one or more Vice-Presidents, one or more Assistant Secretaries, one or more Assistant Treasurers, and such other officers as may be appointed in accordance with the provisions of Section 4.03 of this Article. Any two (2) or more offices may be held by the same person. SECTION 4.02 ELECTION. The officers of the corporation, except such officers as may be appointed in accordance with the provisions of Section 4.03 or Section 4.05 of this Article, shall be chosen annually by the Board of Directors, and each shall hold his office until he shall resign or shall be removed or otherwise disqualified to serve, or his successor shall be elected and qualified. SECTION 4.03 SUBORDINATE OFFICERS, ETC. The Board of Directors may appoint, and may empower the President to appoint, such other officers as the business of the corporation may require, each of whom shall hold office for such period, have such authority, and perform such duties as are provided in these Bylaws or as the Board of Directors may from time to time determine. SECTION 4.04 REMOVAL AND RESIGNATION. Any officer may be removed, either with or without cause, by the Board of Directors at any regular or special meeting thereof, or, except in case of an officer chosen by the Board of Directors, by any officer upon whom such power of removal may be conferred by the Board of Directors (subject, in each case, to the rights, if any, of an officer under any contract of employment). Any officer may resign at any time by giving written notice to the Board of Directors or to the President, or to the Secretary of the corporation, without prejudice however, to the rights, if any, of the corporation under any contract to which such officer is a party. Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified therein; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. SECTION 4.05 VACANCIES. A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled in the manner prescribed in these Bylaws for regular appointments to such office. 13 16 SECTION 4.06 CHAIRMAN OF THE BOARD. The Chairman of the Board, if there shall be such an officer, shall, if present, preside at all meetings of the Board of Directors and exercise and perform such other powers and duties as may be from time to time assigned to him by the Board of Directors or prescribed by these Bylaws. SECTION 4.07 PRESIDENT. Subject to such supervisory powers, if any, as may be given by the Board of Directors to the Chairman of the Board, if there be such an officer, the President shall be the Chief Executive Officer of the corporation and shall, subject to the control of the Board of Directors, have general supervision, direction and control of the business and officers of the corporation. He shall preside at all meetings of the shareholders and, in the absence of the Chairman of the Board, or if there be none, at all meetings of the Board of Directors. He shall be ex officio a member of all the standing committees, including the executive committee, if any, and shall have the general powers and duties of management usually vested in the office of the President of a corporation, and shall have such powers and duties as may be prescribed by the Board of Directors or these Bylaws. SECTION 4.08 VICE-PRESIDENT. In the absence or disability of the President, the Vice-Presidents in order of their rank as fixed by the Board of Directors or, if not ranked, the Vice-President designated by the Board of Directors, shall perform all the duties of the President, and when so acting shall have all the powers of, and be subject to all the restrictions upon, the President. The Vice-Presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the Board of Directors or these Bylaws. SECTION 4.09 SECRETARY. The Secretary shall record or cause to be recorded, and shall keep or cause to be kept, at the principal executive office and such other place as the Board of Directors may order, a book of minutes of actions taken at all meetings of Directors and shareholders, with the time and place of holding, whether regular or special, and, if special, how authorized, the notice thereof given, the names of those present at Directors' meetings, the number of shares present or represented at shareholders' meetings, and the proceedings thereof. The Secretary shall keep, or cause to be kept, at the principal executive office or at the office of the corporation's transfer agent, a share register, or a duplicate share register, showing the names of the shareholders and their addresses, the number and classes of shares held by each, the number and date of certificates issued for the same, and the number and date of cancellation of every certificate surrendered for cancellation. 14 17 The Secretary shall give, or cause to be given, notice of all the meetings of the shareholders and of the Board of Directors required by these Bylaws or by law to be given, and he shall keep the seal of the corporation in safe custody, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or by these Bylaws. SECTION 4.10 TREASURER. The Treasurer shall be the Chief Financial Officer of the corporation and shall keep and maintain, or cause to be kept and maintained, adequate and correct accounts of the properties and business transactions of the corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, surplus and shares. Any surplus, including earned surplus, paid-in surplus and surplus arising from a reduction of stated capital, shall be classified according to source and shown in a separate account. The books of account shall at all reasonable times be open to inspection by any Director. The Treasurer shall deposit all monies and other valuables in the name and to the credit of the corporation with such depositaries as may be designated by the Board of Directors. He shall disburse the funds of the corporation as may be ordered by the Board of Directors, shall render to the President and Directors, whenever they request it, an account of all of his transactions as Treasurer and of the financial condition of the corporation, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or these Bylaws. ARTICLE V MISCELLANEOUS SECTION 5.01 RECORD DATE. The Board of Directors may fix a time in the future as a record date for the determination of the shareholders entitled to notice of and to vote at any meeting of shareholders or entitled to give consent to corporate action in writing without a meeting, to receive any report, to receive any dividend or distribution, or any allotment of rights, or to exercise rights in respect to any change, conversion, or exchange of shares. The record date so fixed shall be not more than sixty (60) days nor less than ten (10) days prior to the date of any meeting, nor more than sixty (60) days prior to any other event for the purposes of which it is fixed. When a record date is so fixed, only shareholders of record on that date are entitled to notice of and to vote at any such meeting, to give consent without a meeting, to receive any report, to receive a dividend, distribution, or allotment of rights, or to exercise the rights, as the case may be, notwithstanding any transfer of any shares on the books of the corporation after the record date, except as otherwise provided in the articles of incorporation or Bylaws. 15 18 If no record date is fixed, (a) the record date for determining shareholders entitled to notice of or to vote at a meeting of shareholders shall be at the close of business on the business day next preceding the day on which notice is given or, if notice is waived, at the close of business on the business day next preceding the day on which the meeting is held; (b) the record date for determining shareholders entitled to give consent to corporate action in writing without a meeting, when no prior action by the Board of Directors has been taken, shall be the day on which the first written consent is given; and (c) the record date for determining shareholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto, or the sixtieth (60th) day prior to the date of such other action, whichever is later. SECTION 5.02 INSPECTION OF CORPORATE RECORDS. The accounting books and records, the record of shareholders, and minutes of proceedings of the shareholders and the Board and committees of the Board of this corporation and any subsidiary of this corporation shall be open to inspection upon the written demand on the corporation of any shareholder or holder of a voting trust certificate at any reasonable time during usual business hours, for a purpose reasonably related to such holder's interests as a shareholder or as the holder of such voting trust certificate. Such inspection by a shareholder or holder of a voting trust certificate may be made in person or by agent or attorney, and the right of inspection includes the right to copy and make extracts. A shareholder or shareholders holding at least five percent (5%) in the aggregate of the outstanding voting shares of the corporation or who hold at least one percent (1%) of such voting shares and have filed a Schedule 14B with the United States Securities and Exchange Commission relating to the election of Directors of the corporation shall have (in person, or by agent or attorney) the right to inspect and copy the record of shareholders' names and addresses and shareholdings during usual business hours upon five (5) business days' prior written demand upon the corporation and to obtain from the transfer agent for the corporation, upon written demand and upon the tender of its usual charges, a list of the shareholders' names and addresses, who are entitled to vote for the election of Directors, and their shareholdings, as of the most recent record date for which it has been compiled or as of a date specified by the shareholder subsequent to the date of demand. The list shall be made available on or before the later of five (5) business days after the demand is received or the date 16 19 specified therein as the date as of which the list is to be compiled. Every Director shall have the absolute right at any reasonable time to inspect and copy all books, records and documents of every kind and to inspect the physical properties of the corporation and each of its subsidiary corporations. Such inspection by a Director may be made in person or by agent or attorney and the right of inspection includes the right to copy and make extracts. SECTION 5.03 CHECKS, DRAFTS, ETC. All checks, drafts or other orders for payment of money, notes or other evidences of indebtedness, issued in the name of or payable to the corporation, shall be signed or endorsed by such person or persons and in such manner as, from time to time, shall be determined by resolution of the Board of Directors SECTION 5.04 ANNUAL AND OTHER REPORTS. The annual report to shareholders referred to in Section 1501 of the California General Corporation Law is expressly waived, but nothing herein shall be interpreted as prohibiting the Board from issuing annual or other periodic reports to shareholders. SECTION 5.05 CONTRACTS, ETC., HOW EXECUTED. The Board of Directors, except as in these Bylaws otherwise provided, may authorize any officer or officers, agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the corporation, and such authority may be general or confined to specific instances; and, unless so authorized by the Board of Directors, no officer, agent or employee shall have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or to any amount. SECTION 5.06 CERTIFICATE FOR SHARES. Every holder of shares in the corporation shall be entitled to have a certificate signed in the name of the corporation by the Chairman or Vice Chairman of the Board or the President or a Vice-President and by the Chief Financial Officer or an Assistant Treasurer or the Secretary or any Assistant Secretary, certifying the number of shares and the class or series of shares owned by the shareholder. Any of the signatures on the certificate may be facsimile, provided that in such event at least one signature, including that of either officer or the corporation's registrar or transfer agent, if any, shall be manually signed. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if such person were an officer, transfer agent or registrar at the date of issue. 17 20 Any such certificate shall also contain such legend or other statement as may be required by Section 418 of the California General Corporation Law, the Corporate Securities Law of 1968, the federal securities laws, or any agreement between the corporation and the issuee of such certificate. Certificates for shares may be issued prior to full payment under such restrictions and for such purposes as the Board of Directors or the Bylaws may provide; provided, however, that any such certificate so issued prior to full payment shall state on the face thereof the amount remaining unpaid and the terms of payment thereof. No new certificate for shares shall be issued in lieu of an old certificate unless the latter is surrendered and cancelled at the same time; provided, however, that a new certificate will be issued without the surrender and cancellation of the old certificate if (1) the old certificate is lost, apparently destroyed or wrongfully taken; (2) the request for the issuance of the new certificate is made within a reasonable time after the owner of the old certificate has notice of its loss, destruction, or theft; (3) the request for the issuance of a new certificate is made prior to the receipt of notice by the corporation that the old certificate has been acquired by a bona fide purchaser; (4) the owner of the old certificate files a sufficient indemnity bond with or provides other adequate security to the corporation; and (5) the owner satisfies any other reasonable requirements imposed by the corporation. In the event of the issuance of a new certificate, the rights and liabilities of the corporation, and of the holders of the old and new certificates, shall be governed by the provisions of Sections 8104 and 8405 of the California Commercial Code. SECTION 5.07 REPRESENTATION OF SHARES OF OTHER CORPORATIONS. The President or any Vice-President and the Secretary or any Assistant Secretary of this corporation are authorized to vote, represent and exercise on behalf of this corporation all rights incident to any and all shares of any other corporation or corporations standing in the name of this corporation. The authority herein granted to said officers to vote or represent on behalf of this corporation any and all shares held by this corporation in any other corporation or corporations may be exercised either by such officers in person or by any other person authorized so to do by proxy or power of attorney duly executed by said officers. SECTION 5.08 INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND OTHER AGENTS. The corporation shall, to the maximum extent permitted by the California General Corporation Law, indemnify each of its agents against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in 18 21 connection with any proceeding arising by reason of the fact any such person is or was an agent of the corporation. For purposes of this section, an "agent" of the corporation includes any person who is or was a Director, officer, employee, or other agent of the corporation, or is or was serving at the request of the corporation as a Director, officer, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise, or was a Director, officer, employee, or agent of a foreign or domestic corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation; "proceeding" means any threatened, pending or completed action or proceeding, whether civil, criminal, administrative, or investigative; and "expenses" includes, without limitation, attorneys' fees and any expenses of establishing a right to indemnification from the corporation. SECTION 5.09 INSPECTION OF BYLAWS. The corporation shall keep in its principal executive office in California, or if its principal executive office is not in California, then at its principal business office in California (or otherwise provide upon written request of any shareholder) the original or a copy of the Bylaws as amended or otherwise altered to date, certified by the Secretary, which shall be open to inspection by the shareholders at all reasonable times during office hours. If the principal executive office of the corporation is outside California and the corporation has no principal business office in California, the Secretary shall, upon the written request of any shareholder, furnish to that shareholder a copy of the Bylaws as amended to date. SECTION 5.10 CONSTRUCTION AND DEFINITIONS. Unless the context otherwise requires, the general provisions, rules of construction and definitions contained in the California General Corporation Law shall govern the construction of these Bylaws. Without limiting the generality of the foregoing, the masculine gender includes the feminine and neuter, the singular number includes the plural and the plural number includes the singular, and the term "person" includes a corporation as well as a natural person. ARTICLE VI AMENDMENTS SECTION 6.01 POWER OF SHAREHOLDERS. New Bylaws may be adopted or these Bylaws may be amended or repealed by the affirmative vote or written consent of holders of a majority of the outstanding shares entitled to vote; provided, however, that if the articles of incorporation of the corporation set forth the number of authorized directors of the corporation, the authorized number 19 22 of directors may be changed only by an amendment of the articles of incorporation. SECTION 6.02 POWER OF DIRECTORS. Subject to the right of shareholders as provided in Section 6.01 of this Article to adopt, amend or repeal Bylaws, Bylaws, other than a Bylaw or amendment thereof changing the authorized number of Directors, may be adopted, amended or repealed by the Board of Directors. 23 CENTURY PARKING, INC * * * * * BY-LAWS * * * * * ARTICLE I OFFICES Section 1. The principal office shall be located in Los Angeles, California. Section 2. The corporation may also have offices at such other places both within and without the State of California as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II ANNUAL MEETINGS OF SHAREHOLDERS Section 1. All meetings of shareholders for the election of directors shall be held in 5471 Corbin Avenue, Tarzana, State of California, at such place as may be fixed from time to time by the board of directors. Section 2. Annual meetings of shareholders, com- 24 mencing, with the year 1969, shall be held on the fifteenth day of July, if not a legal holiday, and if a legal holiday, then on the next secular day following, at 2:00 P.M., at which they shall elect by a plurality vote a board of directors, and transact such other business as may properly be brought before the meeting. Section 3. Written or printed notice of the annual meeting stating the place, day and hour of the meeting shall be given to each shareholder entitled to vote thereat not less than ten days before the date of the meeting. ARTICLE III SPECIAL MEETINGS OF SHAREHOLDERS Section 1. Special meetings of shareholders for any purpose other than the election of directors may be held at such time and place within or without the State of California as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Special meetings of the shareholders, for any purpose or purposes, unless otherwise prescribed by statute or by the articles of incorporation, may be called by the president, the board of directors, or the holders of not less than one-fifth of all the shares entitled to vote at the meeting. Section 3. Written or printed notice of a special meeting of shareholders, stating the time, place and purpose 25 or purposes thereof, shall be given to each shareholder entitled to vote thereat, at least ten days before the date fixed for the meeting. Section 4. The business transacted at any special meeting of shareholders shall be limited to the purposes stated in the notice. ARTICLE IV QUORUM AND VOTING 0F STOCK Section 1. The holders of a majority of the shares of stock issued and outstanding and entitled to vote, represented in person or by proxy, shall constitute a quorum at all meetings of the shareholders for the transaction of business except as otherwise provided by statute or by the articles of incorporation. If, however, such quorum shall not be present or represented at any meeting of the shareholders, the shareholders present in person or represented by proxy shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. Section 2. If a quorum is present, the affirmative vote of a majority of the shares of stock represented at the meeting shall be the act of the shareholders unless the vote 26 of a greater number of shares of stock is required by law or the majority of incorporation. Section 3. Each outstanding share of stock, having voting powers, shall be entitled to one vote on each matter submitted to a vote at a meeting of shareholders. A shareholder may vote either in person or by proxy executed in writing by the shareholder or by his duly authorized attorney-in-fact. In all elections for directors every shareholder, entitled to vote, shall have the right to vote, in person or by proxy, the number of shares of stock owned by him, for as many persons as there are directors to be elected, or to cumulate the vote of said shares, and give one candidate as many votes as the number of directors multiplied by the number of his shares of stock shall equal, or to distribute the votes on the same principle among as many candidates as he may see fit. Section 4. Any action required to be taken at a meeting of the shareholders may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the shareholders entitled to vote with respect to the subject matter thereof. 27 ARTICLE V DIRECTORS Section 1. The number of directors shall be not more than five nor less than three. Directors need not be residents of the State of California nor shareholders of the corporation. The directors, other than the first board of directors, shall be elected at the annual meeting of the shareholders, and each director elected shall serve until the next succeeding annual meeting and until his successor shall have been elected and qualified. The first board of directors shall hold office until the first annual meeting of shareholders. Section 2. Vacancies and newly created directorships resulting from any increase in the number of directors may be filled by a majority of the directors then in office, though less than a quorum, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify. Section 3. The business affairs of the corporation shall be managed by its board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the article of incorporation or by these by-laws directed or required to be exercised or done by the shareholders. 28 Section 4. The directors may keep the books of the corporation, except such as are required by law to be kept within the state, outside of the State of California, at such place or places as they may from time to time determine. Section 5. The board of directors, by the affirmative vote of a majority of the directors then in office, and irrespective of any personal interest of any of its members, shall have authority to establish reasonable compensation of all directors for services to the corporation as directors, officers or otherwise. ARTICLE VI MEETINGS 0F THE BOARD OF DIRECTORS Section 1. Meetings of the board of directors, regular or special, may be held either within or without the State of California. Section 2. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the shareholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meetings provided a quorum shall be present, or it may convene at such place and time as shall be fixed by the consent in writing of all the directors. Section 3. Regular meetings of the board of directors may be held upon such notice, or without notice, and at 29 such time and at such place as shall from time to time be determined by the board. Section 4. Special meetings of the board of directors may be called by the president on 5 days' notice to each director, either personally or by mail or by telegram; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two directors. Section 5. Attendance of a director at any meeting shall constitute a waiver of notice of such meeting, except where a director attends for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the board of directors need be specified in the notice or waiver of notice of such meeting. Section 6. Two thirds of the directors shall constitute a quorum for the transaction of business unless a greater number is required by law or by the articles of incorporation. The act of a majority of the directors present at any meeting at which a quorum is present shall be the act of the board of directors, unless the act of a greater number is required by statute or by the articles of incorporation. If a quorum shall not be present at any meeting of directors, the directors present thereat may adjourn the meeting from 30 time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 7. Any action required or permitted to be taken at a meeting of the directors may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the directors entitled to vote with respect to the subject matter thereof. ARTICLE VII EXECUTIVE COMMITTEE Section 1. The board of directors, by resolution adopted by a majority of the number of directors fixed by the by-laws or otherwise, may designate two or more directors to constitute an executive committee, which committee, to the extent provided in such resolution, shall have and exercise all of the authority of the board of directors in the management of the corporation, except as otherwise required by law. Vacancies in the membership of the committee shall be filled by the board of directors at a regular or special meeting of the board of directors. The executive committee shall keep regular minutes of its proceedings and report the same to the board when required. ARTICLE VIII NOTICES Section 1. Whenever, under the provisions of the statutes or of the article of incorporation or of these 31 by-laws, notice is required to be given to any director or shareholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or shareholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram. Section 2. Whenever any notice whatever is required to be given under the provisions of the statutes or under the provisions of the articles of incorporation or these bylaws, a waiver thereof in writing signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. ARTICLE IX OFFICERS Section 1. The officers of the corporation shall be chosen by the board of directors and shall be a president, a vice-president, a secretary and a treasurer. The board of directors may also choose additional vice-presidents, and one or more assistant secretaries and assistant treasurers. 32 Any two or more offices, except those of President and Secretary, may be held by the same person. Section 2. The board of directors at its first meeting after each annual meeting of shareholders shall choose a president, one or more vice-presidents, a secretary and a treasurer, none of whom need be a member of the board. Section 3. The board of directors nay appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board of directors. Section 4. The salaries of all officers and agents of the corporation shall be fixed by the board of directors. Section 5. The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the board of directors may be removed at any time by the affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. THE PRESIDENT Section 6. The president shall be the chief executive officer of the corporation, shall preside at all meetings or of the shareholders and the board of directors, shall have 33 general and active management of the business of the corporation and shall see that all orders and resolutions of the board of directors are carried into effect. Section 7. He shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. THE VICE-PRESIDENTS Section 8. The vice-president, or if there shall be more than one, the vice-presidents in the order determined by the board of directors, shall, in the absence or disability of the president, perform the duties and exercise the powers of the president and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARIES Section 9. The secretary shall attend all meetings of the board of directors and all meetings of the shareholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be 34 given, notice of all meetings of the shareholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors, shall, in the absence or disability of the secretary, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURERS Section 11. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the 35 board of directors. Section 12. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 13. If required by the board of directors, he shall give the corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the board of directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The assistant treasurer, or, if there shall be more than one, the assistant treasurers in the order determined by the board of directors, shall, in the absence or disability of the treasurer, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. 36 ARTICLE X CERTIFICATES FOR SHARES Section 1. The shares of the corporation shall be represented by certificates signed by the president or a vice-president and the secretary or an assistant secretary of the corporation, and may be sealed with the seal of the corporation or a facsimile thereof. When the corporation is authorized to issue shares of more than one class there shall be set forth upon the face or back of the certificate, or the certificate shall have a statement that the corporation will furnish to any shareholder upon request and without charge, a full or summary statement of the designations, preferences, limitations, and relative rights of the shares of each class authorized to be issued and, if the corporation is authorized to issue any preferred or special class in series, the variations in the relative rights and preferences between the shares of each such series so far as the same have been fixed and determined and the authority or the board of directors to fix and determine the relative rights and preferences of subsequent series. Section 2. The signatures of the officers of the corporation upon a certificate may be facsimiles if the certificate is countersigned by a transfer agent, or registered by a registrar, other than the corporation itself or an employee of the corporation. In case any officer who has 37 signed or whose facsimile signature has been placed upon such certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer at the date of its issue. LOST CERTIFICATES Section 3. The board of directors may direct a new certificate to be issued in place of any certificate theretofore issued by the corporation alleged to have been lost or destroyed. When authorizing such issue of a new certificate, the board of directors, in its discretion and as a condition precedent to the issuance thereof, may prescribe such terms and conditions as it deems expedient, and may require such indemnities as it deems adequate, to protect the corporation from any claim that may be made against it with respect to any such certificate alleged to have been lost or destroyed. TRANSFERS OF SHARES Section 4. Upon surrender to the corporation or the transfer agent of the corporation of a certificate representing shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, a new certificate shall be issued to the person entitled thereto, and the old certificate cancelled and the transaction recorded upon the books of the corporation. 38 CLOSING OF TRANSFER BOOKS Section 5. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders, or any adjournment thereof or entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the board of directors may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, fifty days. If the stock transfer books shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least ten days immediately preceding such meeting. In lieu of closing the stock transfer books, the board of directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than fifty days and, in case of a meeting of shareholders, not less than ten days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken. If the stock transfer books are not closed and no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the board of directors declaring such dividend is adopted, as 39 the case may be, shall be the record date for such determination of shareholders. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof. REGISTERED SHAREHOLDERS Section 6. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of California. ARTICLE XI GENERAL PROVISIONS DIVIDENDS Section 1. Subject to the provisions of the articles of incorporation relating thereto, if any, dividends may be declared by the board of directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property or in shares of the capital stock, subject to any provisions of the articles of 40 incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve fund to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. CHECKS Section 3. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. FISCAL YEAR Section 4. The fiscal year of the corporation shall be fixed by resolution of the board of directors. SEAL Section 5. The corporate seal shall have inscribed thereon the name of the corporation, the date of its incorporation and the words "Corporate Seal California". 41 ARTICLE XII AMENDMENTS Section 1. These by-laws may be altered, amended or repealed or new by-laws may be adopted (a) at any regular or special meeting of shareholders at which a quorum is present or represented, by the affirmative vote of a majority of the stock entitled to vote, provided notice of the proposed alteration, amendment or repeal be contained in the notice of such meeting, or (b) by the affirmative vote of a majority of the board of directors at any regular or special meeting of the board. The board of directors shall not make or alter any by-law fixing their number. ARTICLE XIII DIRECTORS' ANNUAL REPORT Section 1. The directors shall cause to be sent to the shareholders not later than one hundred twenty days after the close of the fiscal year, a report which shall include a balance sheet as of the closing date of the last fiscal year, and a statement of income or profit and loss, for the year ended on that date, certified by the president, secretary, treasurer or a public accountant. The balance sheet shall set forth the bases employed in stating the valuation of the assets and any changes in such bases during the preceding year; the amount of the surplus, the sources 42 thereof and any changes therein during the past year; the number of shares of each class authorized and outstanding and the number of shares, if any, carried as treasury shares, the cost thereof and the source from which such cost was paid; and the amounts, if any, of loans or advances to or from officers, shareholders and employees. The statement of income or profit and loss shall disclose the amount of income or loss, setting forth in particular the amounts of depreciation, depletion, amortization, interest and extraordinary income or charges, and the amount of income from subsidiary corporations, if any. In case no adequate written or printed statement of its affairs has been given to the shareholders for six months and shareholders holding at least ten per cent of the number of outstanding shares make a written request to the secretary, assistant secretary or treasurer of the corporation therefor, a statement, including a balance sheet as of the end of the preceding calendar month and a statement of income or profit and loss for the period from the end of the preceding fiscal year to the end of the preceding calendar month, shall be delivered to the person or persons making the request within thirty days thereafter and a copy thereof shall be kept on file in the principal office of the corporation for a period of twelve months for inspection by any shareholder demanding an examination thereof or a copy thereof shall be mailed to such shareholder. 43 KNOW ALL MEN BY THESE PRESENTS: That we, the undersigned, being all of the persons appointed in the Articles of Incorporation to act as the first Board of Directors of CENTURY PARKING, INC. hereby assent to the foregoing By-Laws, and adopt the same as the By-Laws of said corporation. IN WITNESS WHEREOF, we have hereunto set our hands this 1st day of August 1968. /s/ RAY LIESEGANG ) - ------------------------------ ) RAY LIESEGANG ) ) ) /s/ GORDON O. LARSON ) - ------------------------------ ) Directors. GORDON O. LARSON ) ) ) /s/ FRED RISCEN ) - ------------------------------ ) FRED RISCEN ) ) THIS IS TO CERTIFY: That I am the duly elected, qualified and acting Secretary of CENTURY PARKING, INC. and that the above and foregoing By-Laws were adopted as the By-Laws of said corporation on the 1st day of August 1968, by the persons appointed in the Articles of Incorporation to act as the first directors of said corporation. IN WITNESS WHEREOF, I have hereunto set my hand this 1st day of August 1968. /s/ GORDON O. LARSON ------------------------------ GORDON O. LARSON Secretary. THIS IS TO CERTIFY: That I am the duly elected, qualified and acting Secretary of CENTURY PARKING, INC. and that the above and foregoing Code of By-Laws was submitted to the shareholders at their first meeting held on the 1st day of August 1968, and was ratified by the vote of shareholders entitled to exercise the majority of the voting power of said corporation. IN WITNESS WHEREOF, I have hereunto set my hand this 1st day of August 1968. ------------------------------ GORDON O. LARSON, Secretary. EX-3.25 6 ARTICLES OF INCORPORATION: SENTRY PARKING CORP. 1 Exhibit 3.25 ================================================================================ A477951 State of California [GRAPHIC OMITTED] THE GREAT SEAL OF THE STATE OF EUREKA CALIFORNIA SECRETARY OF STATE CORPORATION DIVISION I, BILL JONES, Secretary of State of the State of California hereby certify: That the annexed transcript has been compared with the corporate record on file in this office, of which it purports to be a copy, and that same is full, true and correct. IN WITNESS WHEREOF, I execute this certificate and affix the Great Seal of the State of California this Jun 28 1996 ----------------------------- /s/ Bill Jones Secretary of State THE GREAT SEAL OF THE STATE OF EUREKA CALIFORNIA Sec/State Form CE-107(rev 9/95) ================================================================================ 2 A477951 ENDORSED FILED in the office of the Secretary of State of the State of California JUN 21 1996 /s/ Bill Jones BILL JONES, Secretary of State RESTATED ARTICLES OF INCORPORATION OF SENTRY PARKING CORPORATION RICHARD E. WILSON, JR., and VELDREE R. LIESEGANG certify that: 1. They are the President and the Secretary, respectively, of SENTRY PARKING CORPORATION, a California corporation. 2. The Articles of Incorporation of this corporation are amended and restated to read as follows: FIRST: The name of this corporation is: SENTRY PARKING CORPORATION. SECOND: The purpose of the corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of California other than the banking business, the trust company business or the practice of a profession permitted to be incorporated by the California Corporations Code. THIRD: This corporation is authorized to issue only one class of shares of stock, which shall be designated "Common shares", and the total number of shares which the corporation is authorized to issue is One Hundred Thousand (100,000). FOURTH: The liability of the directors of the corporation for monetary damages shall be eliminated to the fullest extent permissible under California law. FIFTH: The corporation is authorized to indemnify the directors and officers of the corporation to the fullest extent permissible under California law. SIXTH: This corporation elects to be governed by all of the provisions of the General Corporation Law of 1977 not otherwise applicable to it under Chapter 23 thereof. 3. The foregoing amendment and restatement of Articles of Incorporation has been duly approved by the Board of Directors. 3 4. The foregoing amendment and restatement of Articles of Incorporation has been duly approved by the required vote of shareholders in accordance with Section 902 of the Corporations Code. The total number of outstanding shares of the corporation is 500. The number of shares voting in favor of the amendment equaled or exceeded the vote required. The percentage vote required was more than 50%. We further declare under penalty of perjury under the laws of the State of California, that the matters set forth in this Certificate are true and correct of our own knowledge. DATED: March 27, 1996. /s/ Richard E. Wilson ----------------------- RICHARD E. WILSON, JR., President /s/ Veldree R. Liesegang ------------------------ VELDREE R. LIESEGANG, Secretary 2 4 ================================================================================ STATE OF CALIFORNIA THE GREAT SEAL OF THE STATE OF EUREKA CALIFORNIA OFFICE OF THE SECRETARY OF STATE I, MARCH FONG EU, Secretary of State of the State of California, hereby certify: That the annexed transcript has been compared with the RECORD on file in this office, of which it purports to be a copy, and that same is full, true and correct. IN WITNESS WHEREOF, I execute this certificate and affix the Great Seal of the Slate of California this MAR 4 - 1975 ------------------------------------- /s/ March Fong Eu Secretary of State THE GREAT SEAL OF THE STATE OF EUREKA CALIFORNIA ================================================================================ 5 731834 ENDORSED FILED in the office of the Secretary of State of the State of California MAR 3 - 1975 MARCH FONG EU, Secretary of State Janet E. Jauregui Deputy ARTICLES OF INCORPORATION OF SENTRY PARKING CORPORATION FIRST: The name of this corporation shall be: SENTRY PARKING CORPOPATION SECOND: The purposes for which this corporation is formed are: (a) Primarily to engage in the specific business of leasing and operating parking facilities. (b) To acquire, buy, sell, construct, hold, own, encumber, improve, lease, let, hire, exchange and generally deal in real property, personal property, goods, wares and merchandise of any and every kind, and description, and all rights thereto and interests therein, in every manner permitted by law. (c) To enter into joint ventures, partnerships, trust or other forms of business organization which such joint venture, partnership, trust or other form of business organization is used to carry on and transact any and all business which this corporation itself could carry on and transact; to enter into such form of business organization as general partner, limited partner or otherwise; to participate in any transaction in such joint venture, 6 partnership, trust or other business organization by and through officers, agents, employees, attorneys or other persons delegated by this corporation to act for it in such business venture. (d) To borrow money in any manner and amount authorized by law, and to evidence such indebtedness by bonds, notes, debentures or other appropriate instruments, and to execute mortgages, deeds of trust, security agreements or pledges of and upon the whole or any part of the real and personal property of this corporation for the purpose of securing the payment of such indebtedness, to guarantee the obligations of persons, firms, and corporations whenever expedient or convenient to promote the interests of this corporation. (e) To engage in any business related or unrelated to those described in clauses (a) through (d) of this Article SECOND and from time to time authorized or approved by the Board of Directors of this corporation. (f) To have and exercise all rights and powers from time to time granted to a corporation by law. The above purpose clauses shall not be limited by reference to or inference from one another, but each such purpose clause shall be construed as a separate statement conferring independent purposes and powers upon the corporation. 2. 7 THIRD: The county in the State of California where the principal office for the transaction of the business of the corporation is located in the County of Los Angeles. FOURTH: (a) The number of directors of the corporation is three (3). (b) The names and addresses of the persons who are appointed to act as first directors are: RICHARD C. GREENBERG 515 South Flower Street, Suite 4400 Los Angeles, California 90071 JEAN SAVASKY 515 South Flower Street, Suite 4400 Los Angeles, California 90071 CAROLYN BAUGH 515 South Flower Street, Suite 4400 Los Angeles, California 90071 FIFTH: This corporation is authorized to issue only one class of shares of stock. The total number of shares which the corporation is authorized to issue is One Hundred Thousand (100,000) shares. The aggregate par value of said shares is One Hundred Thousand Dollars ($100,000), and the par value of each share is One Dollar ($1.00). No distinction shall exist between the shares of the corporation or the holders thereof. 3. 8 IN WITNESS WHEREOF, the undersigned and above named incorporators and first directors of this corporation have executed these Articles of Incorporation this 21st day of February, 1975. /s/ Richard C. Greenberg ------------------------ RICHARD C. GREENBERG /s/ Jean Savasky ------------------------ JEAN SAVASKY /s/ Carolyn Baugh ------------------------ CAROLYN BAUGH STATE OF CALIFORNIA ) ) ss. COUNTY OF LOS ANGELES ) On this day, the 21st day of February, 1975, before me, the undersigned, a notary public in and for said County and State, personally appeared RICHARD C. GREENBERG, JEAN SAVASKY and CAROLYN BAUGH known to me to be the persons whose names are subscribed to the foregoing Articles of Incorporation and acknowledged to me that they executed the same. WITNESS my hand and official seal. [NOTARIAL SEAL] /s/ [ILLEGIBLE] ------------------------ Notary Public in and for said County and State EX-3.26 7 BY-LAWS OF SENTRY PARKING CORPORATION 1 Exhibit 3.26 BY-LAWS of SENTRY PARKING CORPORATION ---------------------------------- a California corporation ARTICLE I SHAREHOLDERS' MEETING Section 1. Place of Meetings. All meetings of the shareholders shall be held at the office of the corporation, in the State of California, or at some other appropriate and convenient location as may be designated for that purpose from time to time by the Board of Directors. Section 2. Annual Meetings. The annual meeting of the shareholders shall be held, each year, at the time and on the day following: Time of Meeting: 10:00 a.m. Date of Meeting: March 25 If this day shall be a legal holiday, then the meeting shall be held on the next succeeding business day, at the same hour. At the annual meeting, the shareholders shall elect a Board of Directors, consider reports of the affairs of the corporation and transact such other business as may properly be brought before the meeting. Section 3. Special Meetings. Special meetings of the shareholders for any purpose or purposes may be called at any time by the president, a vice president, the secretary, an assistant secretary, or by the Board of Directors, or by one or more shareholders holding not less than one-fifth (1/5) of the voting power of the corporation. Upon request in writing by registered mail to the president, a vice president, the secretary or an assistant secretary, directed to such officers at the principal office 2 of the corporation, in California, or delivered to such officer in person by any person entitled to call a meeting of shareholders, it shall be the duty of such officer forthwith to cause notice to be given to the shareholders entitled to vote of a meeting to be held at such time as such officer may fix not less than ten nor more than sixty days after the receipt of such request. If such notice shall not be given within seven days after the date of mailing or date of delivery of such request, the person or persons calling the meeting may fix the time of meeting and given notice thereof in the manner provided by these By-laws. Section 4. Notice of Meetings. Notices of meetings, annual or special, shall be given in writing to shareholders entitled to vote by the secretary or the assistant secretary, or if there be no such officer, or in the case of his neglect or refusal, by any director or shareholder. Such notices shall be sent to the shareholder's address appearing on the books of the corporation, or supplied by him to the corporation for the purpose of notice, but not less than seven days before such meeting. Notice of any meeting of shareholders shall specify the place, the day and the hour of meeting, and in case of special meeting, as provided by the Corporations Code of California, the general nature of the business to be transacted. If a shareholder supplies no address, notice shall be deemed to have been given to him if mailed to the place where principal office of the company, in California, is situated, or published at least once in some newspaper of general circulation in the County of said principal office. Such notice shall specify the place, the day and hour of the meeting, and in the case of special meetings, the general nature of the business to be transacted. When a meeting is adjourned for thirty days or more, notice of the adjourned meeting shall be given as in case of an original meeting. Save, as aforesaid, it shall not be necessary to give any notice of the adjournment or of the business to be transacted at an adjourned meeting other than by announcement at the meeting at which such adjournment is taken. 3 Section 5. Consent to Shareholders' Meetings. The transactions of any meeting of shareholders, however called and noticed, shall be valid as though had at a meeting duly held after regular call and notice, if a quorum be present either in person or by proxy, and if, either before or after the meeting, each of the shareholders entitled to vote, not present in person or by proxy, sign a written waiver of notice, or a consent to the holding of such meeting, or an approval of the minutes thereof. All such waivers, consents or approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Section 6. Shareholders Acting Without a Meeting. Any action which may be taken at a meeting of the shareholders, may be taken without a meeting if authorized by a writing signed by all of the shareholders entitled to vote at a meeting for such purpose, and filed with the secretary of the corporation. Section 7. Quorum. The holders of a majority of the shares entitled to vote thereat, present in person, or represented by proxy, shall be requisite and shall constitute a quorum at all meetings of the shareholders for the transaction of business except as otherwise provide by law, by the Articles of Incorporation, or by these By-laws. If, however, such majority shall not be present or represented at any meeting of the shareholders, the shareholders entitled to vote thereat, present in person, or by proxy, shall have the power to adjourn the meeting from time to time, until the requisite amount of voting shares shall be present. At such adjourned meeting at which the requisite amount of voting shares shall be represented, any business may be transacted which might have been transacted at the meeting as originally notified. Section 8. Voting Rights; Cumulative Voting. Only persons in whose names shares entitled to vote stand on the stock records of the corporation on the day of any meeting of shareholders, unless some other day be fixed by the Board of Directors for the determination of shareholders of record, and then on such other day, shall be entitled to vote at such meeting. Every shareholder entitled to vote at any election for directors of any corporation for profit may cumulate his votes and give one candidate a number of votes equal to the number of directors to be elected multiplied by the number of votes to which his shares are entitled, or distribute his votes on the same principle among as many candidates as he thinks fit. 4 The candidates receiving the highest number of votes up to the number of directors to be elected are elected. The Board of Directors may fix a time in the future not exceeding thirty days preceding the date of any meeting of shareholders or the date fixed for the payment of any dividend or distribution, or for the allotment of rights, or when any change or conversion or exchange of shares shall go into effect, as a record date for the determination of the shareholders entitled to notice of and to vote at any such meeting, or entitled to receive any such dividend or distribution, or any allotment of rights, or to exercise the rights in respect to any such change, conversion or exchange of shares. In such case only shareholders of record on the date so fixed shall be entitled to notice of and to vote at such meeting, or to receive such dividends, distribution or allotment of rights, or to exercise such rights, as the case may be, notwithstanding any transfer of any share on the books of the company after any record date fixed as foresaid. The Board of Directors may close the books of the company against transfers of shares during the whole or any part of such period. Section 9. Proxies. Every shareholder entitled to vote, or to execute consents, may do so, either in person or by written proxy, executed in accordance with the provisions of Section 2225 of the Corporations Code of California and filed with the secretary of the corporation. Section 10. Organization. The president, or in the absence of the president, any vice president, shall call the meeting of the shareholders to order, and shall act as chairman of the meeting. In the absence of the president and all of the vice presidents, shareholders shall appoint a chairman for such meeting. The secretary of the company shall act as secretary of all meetings of the shareholders, but in the absence of the secretary at any meeting of the shareholders, the presiding officer may appoint any person to act as secretary of the meeting. Section 11. Inspectors of Election. In advance of any meeting of shareholders the Board of Directors may, if they so elect, appoint inspectors of election to act at such meeting of any adjournments thereof. If inspectors of elected be not so appointed, the chairman of any meeting may, and on the 5 request of any shareholder or his proxy shall, make such appointment at the meeting. The number of inspectors shall be either one or three. ARTICLE II DIRECTORS; MANAGEMENT Section 1. Powers. Subject to the limitation of the Articles of Incorporation, of the By-laws, and of the laws of the State of California as to action to be authorized or approved by the shareholders, all corporate powers shall be exercised by or under authority of, and the business and affairs of this corporation shall be controlled by, a Board of Directors. Section 2. Number and Qualification. The authorized number of directors of the corporation shall be as follows: Three (3) This number may be changed by amendment to the Articles of Incorporation or by an amendment to this Section 2., ARTICLE II, of these By-laws, adopted by the vote or written assent of the shareholders entitled to exercise majority voting power. Section 3. Election and Tenure of Office. The directors shall be elected by ballot at the annual meeting of shareholders, to serve for one year or until their successors are elected and have qualified. Their term of office shall begin immediately after election. Section 4. Vacancies. Vacancies in the Board of Directors may be filled by a majority of the remaining directors, though not less than a quorum, or by a sole remaining director, and each director so elected shall hold office until his successor is elected at an annual meeting of shareholders or at a special meeting called for that purpose. The shareholders may at any time elect a director to fill any vacancy not filled by the directors, and may elect the additional directors at the meeting at which an amendment of the By-laws is voted authorizing an increase in the number of directors. 6 A vacancy or vacancies shall be deemed to exist in case of the death, resignation or removal of any director, or if the shareholders shall increase the authorized number of directors but shall fail at the meeting at which such increase is authorized, or at an adjournment thereof, to elect the additional director so provided for, or in case the shareholders fail at any time to elect the full number of authorized directors. If the Board of Directors accepts the resignation of a director tendered to take effect at a future time, the Board, or the shareholders, shall have power to elect a successor to take office when the resignation shall become effective. No reduction of the number of directors shall have the effect of removing any director prior to the expiration of his term of office. Section 5. Removal of Directors. The entire Board of Directors or any individual director may be removed from office as provided by Section 810 of the Corporations Code of the State of California. Section 6. Place of Meetings. Meetings of the Board of Directors shall be held at the office of the corporation in the State of California, as designated for that purpose, from time to time, by resolution of the Board of Directors or written consent of all of the members of the Board of Directors, given either before or after the meeting and filed with the secretary of the corporation. Section 7. Organization Meetings. The organization meetings of the Board of Directors shall be held immediately following the adjournment of the annual meetings of the shareholders. Section 8. Other Regular Meetings. Regular meetings of the Board of Directors shall be held at the corporate offices, or such other place as may be designated by the Board of Directors, as follows: Time of Regular Meeting: Directly after shareholders' meeting. Date of Regular Meeting: March 25 If said day shall fall upon a holiday, such meeting shall be held on the next succeeding business day thereafter. No notice need be given of such regular meeting. 7 Section 9. Special Meetings - Notices. Special meetings of the Board of Directors for any purpose or purposes shall be called at any time by the president or if he is absent or unable or refuses to act, by any vice president or by any two directors. Written notice of the time and place of special meetings shall be delivered personally to the directors or sent to each director by letter or by telegram, charges prepaid, addressed to him at his address as it is shown upon the records of the corporation, or if it is not so shown on such records or is not readily ascertainable, at the place in which the meetings of the directors are regularly held. In case such notice is mailed or telegraphed, it shall be deposited in the United States mail or delivered to the telegraph company in the place in which the principal office of the corporation is located at least forty-eight (48) hours prior to the time of holding of the meeting. In case such notice is delivered as above provided, it shall be so delivered at least twenty-four (24) hours prior to the time of the holding of the meeting. Such mailing, telegraphing or delivery as above provided shall be due, legal and personal notice to such director. Section 10. Waiver of Notice. When all of the directors are present at any directors' meeting, however called or noticed, and sign a written consent thereto on the records of such meeting, or, if a majority of the directors are present, and if those not present sign in writing a waiver of notice of such meeting, whether prior to or after the holding of such meeting, which said waiver shall be filed with the secretary of the corporation, the transactions thereof are as valid as if had at a meeting regularly called and noticed. Section 11. Directors Acting Without a Meeting by Unanimous Written Consent. Any action required or permitted to be taken by the Board of Directors may be taken without a meeting and with the same force and effect as if taken by a unanimous vote of directors, if authorized by a writing signed by all members of the Board. Such consent shall be filed with the regular minutes of the Board. Section 12. Notice of Adjournment. Notice of the time and place of holding an adjourned meeting need not be given to absent directors if the time and place be fixed at the meeting adjourned. 8 Section 13. Quorum. A majority of the number of directors as fixed by the Articles of Incorporation or By-laws shall be necessary to constitute a quorum for the transaction of business, and the action of a majority of the directors present at any meeting at which there is a quorum, when duly assembled, is valid as a corporate act; provided that a minority of the directors, in the absence of a quorum, may adjourn from time to time, but may not transact any business. Section 14. Compensation of Directors. Directors, as such, shall not receive any stated salary for their services, but by resolution of the Board a fixed sum and expense of attendance, if any, may be allowed for attendance at each regular and special meeting of the Board; provided that nothing herein contained shall be construed to preclude any director from serving the company in any other capacity and receiving compensation therefor. Section 15. Executive Committee. An executive committee may be appointed by resolution passed by a majority of the whole Board. The executive committee shall be composed of members of the Board, and shall have such powers as may be expressly delegated to it by resolution of the Board of Directors. It shall act only in the intervals between meetings of the Board of Directors and shall be subject at all times to the control of the Board of Directors. ARTICLE III OFFICERS Section 1. Officers. The officers of the corporation shall be a president, a vice president, a secretary and a treasurer. The corporation may also have, at the discretion of the Board of Directors, a chairman of the board, one or more additional vice presidents, one or more assistant secretaries, one or more assistant treasurers, and such other officers as may be appointed in accordance with the provisions of Section 3 of this Article. One person may hold two or more offices, except those of president and secretary. 9 Section 2. Election. The officers of the corporation, except such officers as may be appointed in accordance with the provisions of Section 3 or Section 5 of this Article shall be chosen annually by the Board of Directors, and each shall hold his office until he shall resign or shall be removed or otherwise disqualified to serve, or his successor shall be elected and qualified. Section 3. Subordinate Officers, Etc. The Board of Directors may appoint such other officers as the business of the corporation may require, each of whom shall hold office for such period, have such authority and perform such duties as are provided in the By-laws or as the Board of Directors may from time to time determine. Section 4. Removal and Resignation. Any officer may be removed, either with or without cause, by a majority of the directors at the time in office, at any regular or special meeting of the Board, or, except in case of an officer chosen by the Board of Directors, by any officer upon whom such power of removal may be conferred by the Board of Directors. Any officer may resign at any time by giving written notice to the Board of Directors, or to the president, or to the secretary of the corporation. Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified therein; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 5. Vacancies. A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled in the manner prescribed in the By-laws for regular appointments to such office. Section 6. Chairman of the Board. The Chairman of the Board, if there shall be such an officer shall, if present, preside at all meetings of the Board of Directors, and exercise and perform such other powers and duties as may be from time to time assigned to him by the Board of Directors or prescribed by the By-laws. 10 Section 7. President. Subject to such supervisory powers, if any, as may be given by the Board of Directors to the Chairman of the Board, if there be such an officer, the president shall be the chief executive officer of the corporation and shall, subject to the Control of the Board of Directors, have general supervision, direction and control of the business and officers of the corporation. He shall preside at all meetings of the shareholders and in the absence of the Chairman of the Board, or if there be none, at all meetings of the Board of Directors. He shall be ex officio a member of all the standing committees, including the executive committee, it any, and shall have the general powers and duties of management usually vested in the office of president of a corporation, and shall have such other powers and duties as may be prescribes by the Board of Directors or the By-laws. Section 8. Vice President. In the absence or disability of the president, the vice presidents, in order of their rank as fixed by the Board of Directors, or if not ranked, the vice president designated by the Board of Directors, shall perform all the duties of the president, and when acting shall have all the powers of, and be subject to, all the restrictions upon, the president. The vice presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the Board of Directors or the By-laws. Section 9. Secretary. The secretary shall keep, or cause to be kept, a book of minutes at the principal office or such other place as the Board of Directors may order, of all meetings of directors and shareholders, with the time and place of holding, whether regular or special, and if special, how authorized, the notice thereof given, the names of those present at directors' meetings, the number of shares present or represented at shareholders' meetings and the proceedings thereof. The secretary shall keep, or cause to be kept, at the principal office or at the office of the corporation's transfer agent, a share register, or duplicate share register, showing the names of the shareholders and their addresses; the number and classes of shares held by each; the number and date of certificates issued for the same; and the number and date of cancellation of every certificate surrendered for cancellation. 11 The secretary shall give, or cause to be given, notice of all the meetings of the shareholders and of the Board of Directors required by the By-laws or by law to be given, and he shall keep the seal of the corporation in safe custody, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or by the By-laws. Section 10. Treasurer. The treasurer shall keep and maintain, or cause to be kept and maintained, adequate and correct accounts of the properties and business transactions of the corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, surplus and shares. Any surplus, including earned surplus, paid-in surplus and surplus arising from a reduction of stated capital, shall be classified according to source and shown in a separate account. The books of account shall at all reasonable times be open to inspection by any director. The treasurer shall deposit all moneys and other valuables in the name and to the credit of the corporation with such depositaries as may be designated by the Board of Directors. He shall disburse the funds of the corporation as may be ordered by the Board of Directors, shall render to the president and directors, whenever they request it, an account of all of his transactions as treasurer and of the financial condition of the corporation, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or the By-laws. ARTICLE IV CORPORATE RECORDS AND REPORTS -- INSPECTION Section 1. Records. The corporation shall maintain adequate and correct accounts, books and records of its business and properties. All of such books, records and accounts shall be kept at its principal place of business in the State of California, as fixed by the Board of Directors from time to time. Section 2. Inspection of Books and Records. All books and records provided for in Section 3003 of the Corporations Code of California shall be open to inspection of the directors and shareholders from time to time and in the manner provided in said Section 3003. 12 Section 3. Certification and Inspection of By-laws. The original or a copy of these By-laws, as amended or otherwise altered to date, certified by the secretary, shall be open to inspection by the shareholders of the company, as provided in Section 502 of the Corporations Code of California. Section 4. Checks, Drafts, Etc. All checks, drafts or other orders for payment of money, notes or other evidences of indebtedness, issued in the name of or payable to the corporation, shall be signed or endorsed by such person or persons and in such manner as shall be determined from time to time by resolution of the Board of Directors. Section 5. Contracts, Etc. -- How Executed. The Board of Directors, except as in the By-laws or otherwise provided, may authorize any officer or officers, agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the corporation. Such authority may be general or confined to specific instances. Unless so authorized by the Board of Directors, no officer, agent or employee shall have any power or authority to bind the corporation by any contract or engagement, or to pledge its credit, or to render it liable for any purpose or to any amount. Section 6. Annual Report. The Board of Directors shall cause an annual report or statement to be sent to the shareholders of this corporation not later then 120 days after the close of the fiscal or calendar year in accordance with the provisions of Sections 3006 - 3010 of the Corporations Code of the State of California. ARTICLE V CERTIFICATES AND TRANSFER OF SHARES Section 1. Certificate for Shares. Certificates for shares shall be of such form and device as the Board of Directors may designate and shall state the name of the record holder of the shares represented thereby; its number; date of issuance; the number of shares for which it is issued; the par value, if any, or a statement that such shares are without par value; a statement of the rights, privileges, preferences and restrictions, if any; a statement as to the redemption or conversion, if any; a state- 13 ment of liens or restrictions upon transfer or voting, if any; if the shares be assessable or, if assessments are collectible by personal action, a plain statement of such facts. Every certificate for shares must be signed by the president or a vice president and the secretary or an assistant secretary or must be authenticated by facsimiles of the signatures of the president and secretary or by a facsimile of the signature of its president and the written signature of its secretary or an assistant secretary. Before it becomes effective every certificate for shares authenticated by a facsimile of a signature must be countersigned by a transfer agent or transfer clerk and must be registered by an incorporated bank or trust company, either domestic or foreign, as registrar of transfers. Section 2. Transfer on the Books. Upon surrender to the secretary or transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Section 3. Lost or Destroyed Certificates. Any person claiming a certificate of stock to be lost or destroyed shall make an affidavit or affirmation of that fact and advertise the same in such manner as the Board of Directors may require, and shall if the directors so require give the corporation a bond of indemnity, in form and with one or more sureties satisfactory to the Board, in at least double the value of the stock represented by said certificate, whereupon a new certificate may be issued in the same tenor and for the same number of shares as the one alleged to be lost or destroyed. Section 4. Transfer Agents and Registrars. The Board of Directors may appoint one or more transfer agents or transfer clerks, and one or more registrars, which shall be an incorporated bank or trust company -- either domestic of foreign, who shall be appointed at such times and places as the requirements of the corporation may necessitate and the Board of Directors may designate. Section 5. Closing Stock Transfer Books. The Board of Directors may close the transfer books in their discretion for a period not exceeding thirty days preceding any meeting, annual or special, of the shareholders, or the day appointed for the payment of a dividend. 14 CERTIFICATE OF SECRETARY I, the undersigned, do hereby certify: 1. That I am the duly elected and acting Secretary of SENTRY PARKING CORPORATION, a California corporation; 2. That the foregoing Bylaws, consisting of twenty (20) pages, are a true and correct copy of the duly adopted Bylaws of said corporation duly adopted by the Board of Director on March 25, 1977. IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the seal of said corporation this 25th day of March, 1977. /s/ Veldree Liesegang --------------------- VELDREE LIESEGANG, Secretary [SEAL] EX-10.1 8 REGISTRATION RIGHTS AGREEMENT 1 EXHIBIT 10.1 EXECUTION COPY APCOA, INC. $140,000,000 9 1/4% SENIOR SUBORDINATED NOTES DUE 2008 REGISTRATION RIGHTS AGREEMENT DATED AS OF MARCH 30, 1998 DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION FIRST CHICAGO CAPITAL MARKETS, INC. 2 This Registration Rights Agreement (this "Agreement") is made and entered into as of March 30, 1998, by and among APCOA, Inc., a Delaware corporation (the "Company"), Tower Parking, Inc., an Ohio corporation, Graelic, Inc., an Ohio corporation, APCOA Capital Corporation, a Delaware corporation, A-1 Auto Park, Inc., a Georgia corporation, Metropolitan Parking System, Inc., a Massachusetts corporation, Events Parking Co., Inc., a Massachusetts corporation, Standard Parking, L.P., a Delaware limited partnership, Standard Parking Corporation, an Illinois corporation, Standard Parking Corporation, IL, an Illinois corporation, Standard Parking Corporation, MW, an Illinois corporation, Standard Auto Park, Inc., an Illinois corporation, Standard/Wabash Parking Corporation, an Illinois corporation, Standard Parking of Canada, L.P., an Illinois limited partnership, Standard Parking I, L.L.C., a Delaware limited liability corporation and Standard Parking II, L.L.C., a Delaware limited liability corporation (each of the above, with the exception of the Company, a "Subsidiary Guarantor" and together, the "Subsidiary Guarantors") and Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") and First Chicago Capital Markets, Inc. ("First Chicago" and, together with DLJ, the "Initial Purchasers"), who have agreed to purchase the Company's 9 1/4% Senior Subordinated Notes due 2008 (the "Senior Subordinated Notes") pursuant to the Purchase Agreement (as defined below). This Agreement is made pursuant to the Purchase Agreement, dated March 25, 1998 (the "Purchase Agreement"), by and among the Company, the Subsidiary Guarantors and the Initial Purchasers. In order to induce the Initial Purchasers to purchase the Senior Subordinated Notes, the Company has agreed to provide the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the obligations of the Initial Purchasers set forth in the Purchase Agreement. The parties hereby agree as follows: 1. DEFINITIONS As used in this Agreement, the following capitalized terms shall have the following meanings: Act: The Securities Act of 1933, as amended. Business Day: Any day except a Saturday, Sunday or other day in the City of New York, or in the city of the corporate trust office of the Trustee, on which banks are authorized to close. Broker-Dealer: Any broker or dealer registered under the Exchange Act. Broker-Dealer Transfer Restricted Securities: New Senior Subordinated Notes that are acquired by a Broker-Dealer in the Exchange Offer in exchange for Senior Subordinated Notes that such Broker-Dealer acquired for its own account as a result of market-making activities or other trading activities (other than Senior Subordinated Notes acquired directly from the Company or any of its respective affiliates). Certificated Securities: As defined in the Indenture. 3 Closing Date: The date hereof. Commission: The Securities and Exchange Commission. Consummate: An Exchange Offer shall be deemed "Consummated" for purposes of this Agreement upon the occurrence of (a) the filing and effectiveness under the Act of the Exchange Offer Registration Statement relating to the New Senior Subordinated Notes to be issued in the Exchange Offer, (b) the maintenance of such Registration Statement continuously effective and the keeping of the Exchange Offer open for a period not less than the minimum period required pursuant to Section 3(b) hereof and (c) the delivery by the Company to the Registrar under the Indenture of New Senior Subordinated Notes in the same aggregate principal amount as the aggregate principal amount of Senior Subordinated Notes tendered by Holders thereof pursuant to the Exchange Offer. Damages Payment Date: With respect to the Transfer Restricted Securities, each Interest Payment Date. Effectiveness Target Date: As defined in Section 5. Exchange Act: The Securities Exchange Act of 1934, as amended. Exchange Offer: The registration by the Company under the Act of the New Senior Subordinated Notes pursuant to the Exchange Offer Registration Statement pursuant to which the Company shall offer the Holders of all outstanding Transfer Restricted Securities the opportunity to exchange all such outstanding Transfer Restricted Securities for New Senior Subordinated Notes in an aggregate principal amount equal to the aggregate principal amount of the Transfer Restricted Securities tendered in such exchange offer by such Holders. Exchange Offer Registration Statement: The Registration Statement relating to the Exchange Offer, including the related Prospectus. Exempt Resales: The transactions in which the Initial Purchasers propose to sell the Senior Subordinated Notes (i) to certain "qualified institutional buyers," as such term is defined in Rule 144A under the Act or (ii) outside the United States in reliance upon Regulation S under the Securities Act to non-U.S. persons. Global Note Holder: As defined in the Indenture. Holders: As defined in Section 2 hereof. Indemnified Holder: As defined in Section 8(a) hereof. Indenture: The Indenture, dated the Closing Date, among the Company, the Subsidiary Guarantors and State Street Bank and Trust Company, as trustee (the "Trustee"), pursuant to which the Notes are to be issued, as such Indenture is amended or supplemented from time to time in accordance with the terms thereof. 2 4 Interest Payment Date: As defined in the Indenture and the Notes. NASD: National Association of Securities Dealers, Inc. Offering Memorandum: As defined in the Purchase Agreement. Person: Any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity. Prospectus: The prospectus included in a Registration Statement at the time such Registration Statement is declared effective, as amended or supplemented by any prospectus supplement and by all other amendments thereto, including post-effective amendments, and all material incorporated by reference into such Prospectus. Record Holder: With respect to any Damages Payment Date, each Person who is a Holder of Notes on the record date with respect to the Interest Payment Date on which such Damages Payment Date shall occur. Registration Default: As defined in Section 5 hereof. Registration Statement: Any registration statement of the Company and the Subsidiary Guarantors relating to (a) an offering of New Senior Subordinated Notes pursuant to an Exchange Offer or (b) the registration for resale of Transfer Restricted Securities held by such holders pursuant to the Shelf Registration Statement, in each case, (i) which is filed pursuant to the provisions of this Agreement and (ii) including the Prospectus included therein, all amendments and supplements thereto (including post-effective amendments) and all exhibits and material incorporated by reference therein. Restricted Broker-Dealer: Any Broker-Dealer which holds Broker-Dealer Transfer Restricted Securities. Notes: The Senior Subordinated Notes and the New Senior Subordinated Notes. New Senior Subordinated Notes: The Company's 9 1/4% New Senior Subordinated Notes due 2008 to be issued pursuant to the Indenture (i) in the Exchange Offer or (ii) upon the request of any Holder of Senior Subordinated Notes covered by a Shelf Registration Statement, in exchange for such Senior Subordinated Notes. Shelf Registration Statement: As defined in Section 4 hereof. TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as in effect on the date of the Indenture. Transfer Restricted Securities: Each Note, until the earliest to occur of (a) the date on which such Note is exchanged in the Exchange Offer and entitled to be resold to the public by the Holder thereof without complying with the prospectus delivery requirements of the 3 5 Act, (b) the date on which such Note has been disposed of in accordance with a Shelf Registration Statement, (c) the date on which such Note is disposed of by a Broker-Dealer pursuant to the "Plan of Distribution" contemplated by the Exchange Offer Registration Statement (including delivery of the Prospectus contained therein) or (d) the date on which such Note is distributed to the public pursuant to Rule 144 under the Act. Underwritten Registration or Underwritten Offering: A registration in which securities of the Company are sold to an underwriter for reoffering to the public. 2. HOLDERS A Person is deemed to be a holder of Transfer Restricted Securities (each, a "Holder") whenever such Person owns Transfer Restricted Securities. 3. REGISTERED EXCHANGE OFFER (a) Unless the Exchange Offer shall not be permitted by applicable federal law (after the procedures set forth in Section 6(a)(i) below have been complied with), the Company and the Subsidiary Guarantors shall (i) cause to be filed with the Commission, on or prior to 30 days after the Closing Date, the Exchange Offer Registration Statement, (ii) use their respective best efforts to cause such Exchange Offer Registration Statement to become effective at the earliest possible time, but in no event later than 120 days after the Closing Date, (iii) in connection with the foregoing, (A) file all pre-effective amendments to such Exchange Offer Registration Statement as may be necessary in order to cause such Exchange Offer Registration Statement to become effective, (B) file, if applicable, a post-effective amendment to such Exchange Offer Registration Statement pursuant to Rule 430A under the Act and (C) cause all necessary filings, if any, in connection with the registration and qualification of the New Senior Subordinated Notes to be made under the Blue Sky laws of such jurisdictions as are necessary to permit Consummation of the Exchange Offer provided that in no event shall the Company be obligated to qualify to do business in any jurisdiction where it is not now so qualified, or take any action which would subject it to General Service of Process in any jurisdiction where it is not now so subject, and (iv) upon the effectiveness of such Exchange Offer Registration Statement, use its reasonable best efforts to commence and Consummate the Exchange Offer. The Exchange Offer shall be on the appropriate form permitting registration of the New Senior Subordinated Notes to be offered in exchange for the Senior Subordinated Notes that are Transfer Restricted Securities and to permit sales of Broker-Dealer Transfer Restricted Securities by Restricted Broker-Dealers as contemplated by Section 3(c) below. (b) The Company and the Subsidiary Guarantors shall use their respective best efforts to cause the Exchange Offer Registration Statement to be effective continuously, and shall keep the Exchange Offer open, for a period of not less than the minimum period required under applicable federal and state securities laws to Consummate the Exchange Offer; provided, however, that in no event shall such period be less than 20 Business Days. The Company and the Subsidiary Guarantors shall cause the Exchange Offer to comply with all applicable federal and state securities laws. No securities other than the Notes shall be included in the Exchange Offer Registration Statement. The Company and the Subsidiary Guarantors shall use their respective 4 6 best efforts to cause the Exchange Offer to be Consummated on the earliest practicable date after the Exchange Offer Registration Statement has become effective, but in no event later than 30 Business Days thereafter. (c) The Company shall include a "Plan of Distribution" section in the Prospectus contained in the Exchange Offer Registration Statement and indicate therein that any Restricted Broker-Dealer who holds Senior Subordinated Notes that are Transfer Restricted Securities and that were acquired for the account of such Broker-Dealer as a result of market-making activities or other trading activities, may exchange such Senior Subordinated Notes (other than Transfer Restricted Securities acquired directly from the Company or any affiliate of the Company) pursuant to the Exchange Offer; however, such Broker-Dealer may be deemed to be an "underwriter" within the meaning of the Act and must, therefore, deliver a prospectus meeting the requirements of the Act in connection with the initial sales of the New Senior Subordinated Notes received by such Broker-Dealer in the Exchange Offer, which prospectus delivery requirement may be satisfied by the delivery by such Broker-Dealer of the Prospectus contained in the Exchange Offer Registration Statement. Such "Plan of Distribution" section shall also contain all other information with respect to such sales of Broker-Dealer Transfer Restricted Securities by Restricted Broker-Dealers that the Commission may require in order to permit such sales pursuant thereto, but such "Plan of Distribution" shall not name any such Broker-Dealer or disclose the amount of Notes held by any such Broker-Dealer except to the extent required by the Commission. The Company and the Subsidiary Guarantors shall use their respective best efforts to keep the Exchange Offer Registration Statement continuously effective, supplemented and amended as required by the provisions of Section 6(c) below to the extent necessary to ensure that it is available for sales of Broker-Dealer Transfer Restricted Securities by Restricted Broker-Dealers, and to ensure that such Registration Statement conforms with the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of 120 days from the date on which the Exchange Offer is Consummated. The Company and the Subsidiary Guarantors shall provide sufficient copies of the latest version of such Prospectus to such Restricted Broker-Dealers promptly upon request, and in no event later than two days after such request, at any time during such 120-day period in order to facilitate such sales. 4. SHELF REGISTRATION (a) Shelf Registration. If (i) the Company is not required to file an Exchange Offer Registration Statement with respect to the New Senior Subordinated Notes because the Exchange Offer is not permitted by applicable law (after the procedures set forth in Section 6(a)(i) below have been complied with) or (ii) if any Holder of Transfer Restricted Securities shall notify the Company within 20 Business Days following the Consummation of the Exchange Offer that (A) such Holder is prohibited by law or Commission policy from participating in the Exchange Offer or (B) such Holder may not resell the New Senior Subordinated Notes acquired by it in the 5 7 Exchange Offer to the public without delivering a prospectus and the Prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales by such Holder or (C) such Holder is a Broker-Dealer and holds Senior Subordinated Notes acquired directly from the Company or one of its respective affiliates, then the Company and the Subsidiary Guarantors shall (x) cause to be filed on or prior to the earliest of (1) 45 days after the date on which the Company is notified by the Commission or otherwise determines that they are not required to file the Exchange Offer Registration Statement pursuant to clause (i) above and (2) 45 days after the date on which the Company receives the notice specified in clause (ii) above, a shelf registration statement pursuant to Rule 415 under the Act, (which may be an amendment to the Exchange Offer Registration Statement (in either event, the "Shelf Registration Statement")), relating to all Transfer Restricted Securities the Holders of which shall have provided the information required pursuant to Section 4(b) hereof, and (y) use their respective best efforts to cause such Shelf Registration Statement to be declared effective by the Commission at the earliest possible time, but in no event later than 120 days after the date on which the Company becomes obligated to file such Shelf Registration Statement. If, after the Company has filed an Exchange Offer Registration Statement which satisfies the requirements of Section 3(a) above, the Company is required to file and make effective a Shelf Registration Statement solely because the Exchange Offer shall not be permitted under applicable federal law, then the filing of the Exchange Offer Registration Statement shall be deemed to satisfy the requirements of clause (x) above. Such an event shall have no effect on the requirements of clause (y) above, or on the Effectiveness Target Date as defined in Section 5 below. The Company and the Subsidiary Guarantors shall use their respective best efforts to keep the Shelf Registration Statement discussed in this Section 4(a) continuously effective, supplemented and amended as required by and subject to the provisions of Sections 6(b) and (c) hereof to the extent necessary to ensure that it is available for sales of Transfer Restricted Securities by the Holders thereof entitled to the benefit of this Section 4(a), and to ensure that it conforms with the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of at least two years (as extended pursuant to Section 6(c)(i)) following the date on which such Shelf Registration Statement first becomes effective under the Act or such shorter period ending when all of the Transfer Restricted Securities available for sale thereunder have been sold pursuant thereto. (b) Provision by Holders of Certain Information in Connection with the Shelf Registration Statement. No Holder of Transfer Restricted Securities may include any of its Transfer Restricted Securities in any Shelf Registration Statement pursuant to this Agreement unless and until such Holder furnishes to the Company in writing, within 20 days after receipt of a request therefor, such information specified in Item 507 of Regulation S-K under the Act for use in connection with any Shelf Registration Statement or Prospectus or preliminary Prospectus included therein. No Holder of Transfer Restricted Securities shall be entitled to Liquidated Damages pursuant to Section 5 hereof unless and until such Holder has provided all such information. Each Holder as to which any Shelf Registration Statement is being effected agrees to furnish promptly to the Company all information required to be disclosed in order to make the information previously furnished to the Company by such Holder not materially misleading. 6 8 5. LIQUIDATED DAMAGES If (i) any Registration Statement required by this Agreement is not filed with the Commission on or prior to the date specified for such filing in this Agreement, (ii) any such Registration Statement has not been declared effective by the Commission on or prior to the date specified for such effectiveness in this Agreement (the "Effectiveness Target Date"), (iii) the Exchange Offer has not been Consummated within 30 Business Days after the Effectiveness Target Date with respect to the Exchange Offer Registration Statement or (iv) any Registration Statement required by this Agreement is filed and declared effective but shall thereafter cease to be effective or fail to be usable for its intended purpose without being succeeded immediately by a post-effective amendment to such Registration Statement that cures such failure and that is itself immediately declared effective (each such event referred to in clauses (i) through (iv), a "Registration Default"), the Company hereby agrees to pay to each Holder of Transfer Restricted Securities, for the first 90-day period immediately following the occurrence of such Registration Default, liquidated damages in an amount equal to $.05 per week per $1,000 principal amount of Notes constituting Transfer Restricted Securities held by such Holder for each week or portion thereof that the Registration Default continues. The amount of the liquidated damages payable to each Holder shall increase by an additional $.05 per week per $1,000 in principal amount of Transfer Restricted Securities with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of liquidated damages of $.50 per week per $1,000 principal amount of Transfer Restricted Securities held by such Holder. Notwithstanding anything to the contrary set forth herein, (1) upon filing of the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement), in the case of (i) above, (2) upon the effectiveness of the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement), in the case of (ii) above, (3) upon Consummation of the Exchange Offer, in the case of (iii) above, or (4) upon the filing of a post-effective amendment to the Registration Statement or an additional Registration Statement that causes the Exchange Offer Registration Statement (and/or, if applicable, the Shelf Registration Statement) to again be declared effective or made usable in the case of (iv) above, the liquidated damages payable with respect to the Transfer Restricted Securities as a result of such clause (i), (ii), (iii) or (iv), as applicable, shall cease. All accrued liquidated damages shall be paid to the Global Note Holder by wire transfer of immediately available funds or by federal funds check and to Holders of Certificated Securities by wire transfer to the accounts specified by them or by mailing checks to their registered addresses if no such accounts have been specified on each Damages Payment Date. Following the cure of all Registration Defaults relating to any particular Transfer Restricted Securities, the accrual of liquidated damages with respect to such Transfer Securities will cease. All obligations of the Company and the Subsidiary Guarantors set forth in the preceding paragraph that are outstanding with respect to any Transfer Restricted Security at the time such security ceases to be a Transfer Restricted Security shall survive until such time as all such obligations with respect to such security shall have been satisfied in full. 7 9 6. REGISTRATION PROCEDURES (a) Exchange Offer Registration Statement. In connection with the Exchange Offer, the Company and the Subsidiary Guarantors shall comply with all applicable provisions of Section 6(c) below, shall use their respective best efforts to effect such exchange and to permit the sale of Broker-Dealer Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof (which shall be in a manner consistent with the terms of this Agreement), and shall comply with all of the following provisions: (i) If, following the date hereof and prior to Consummation of the Exchange Offer, there has been published a change in Commission policy with respect to exchange offers such as the Exchange Offer, such that in the reasonable judgment of counsel to the Company there is a substantial question as to whether the Exchange Offer is permitted by applicable federal law or Commission policy, the Company and the Subsidiary Guarantors hereby agree to seek a no-action letter or other favorable decision from the Commission allowing the Company and the Subsidiary Guarantors to Consummate an Exchange Offer for such Senior Subordinated Notes. The Company and the Subsidiary Guarantors hereby agree to pursue the issuance of such a decision to the Commission staff level but shall not be required to take commercially unreasonable action to effect a change of Commission policy. In connection with the foregoing, the Company and the Subsidiary Guarantors hereby agree, however, but subject to the proviso set forth above, to take all such other actions as are reasonably requested by the Commission or otherwise required in connection with the issuance of such decision, including without limitation to (A) participate in telephonic conferences with the Commission, (B) deliver to the Commission staff an analysis prepared by counsel to the Company setting forth the legal bases, if any, upon which such counsel has concluded that such an Exchange Offer should be permitted and (C) diligently pursue a resolution (which need not be favorable) by the Commission staff of such submission. (ii) As a condition to its participation in the Exchange Offer pursuant to the terms of this Agreement, each Holder of Transfer Restricted Securities shall furnish, upon the request of the Company, prior to the Consummation of the Exchange Offer, a written representation to the Company and the Subsidiary Guarantors (which may be contained in the letter of transmittal contemplated by the Exchange Offer Registration Statement) to the effect that (A) it is not an affiliate of the Company, (B) it is not engaged in, and does not intend to engage in, and has no arrangement or understanding with any person to participate in, a distribution of the New Senior Subordinated Notes to be issued in the Exchange Offer and (C) it is acquiring the New Senior Subordinated Notes in its ordinary course of business. In addition, all such holders of Transfer Restricted Securities shall otherwise cooperate in the Company's preparation for the Exchange Offer. Each Holder hereby acknowledges and agrees that any Broker-Dealer and any such Holder using the Exchange Offer to participate in a distribution of the securities to be acquired in the Exchange Offer (1) could not under Commission policy as in effect on the date of this Agreement rely on the position of the Commission enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital Holdings Corporation (available 8 10 May 13, 1988), as interpreted in the Commission's letter to Shearman & Sterling dated July 2, 1993, and similar no-action letters (including, if applicable, any no-action letter obtained pursuant to clause (i) above), and (2) must comply with the registration and prospectus delivery requirements of the Act in connection with a secondary resale transaction and that such a secondary resale transaction must be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K if the resales are of New Senior Subordinated Notes obtained by such Holder in exchange for Senior Subordinated Notes acquired by such Holder directly from the Company or an affiliate thereof. (iii) To the extent required by the Commission, prior to effectiveness of the Exchange Offer Registration Statement, the Company and the Subsidiary Guarantors shall provide a supplemental letter to the Commission (A) stating that the Company and the Subsidiary Guarantors are registering the Exchange Offer in reliance on the position of the Commission enunciated in Exxon Capital Holdings Corporation (available May 13, 1988), Morgan Stanley and Co., Inc. (available June 5, 1991) and, if applicable, any no-action letter obtained pursuant to clause (i) above, (B) including a representation that neither the Company nor any Subsidiary Guarantor has entered into any arrangement or understanding with any Person to distribute the New Senior Subordinated Notes to be received in the Exchange Offer and that, to the best of the Company's and the Subsidiary Guarantors' information and belief, each Holder participating in the Exchange Offer is acquiring the New Senior Subordinated Notes in its ordinary course of business and has no arrangement or understanding with any Person to participate in the distribution of the New Senior Subordinated Notes received in the Exchange Offer and (C) any other undertaking or representation required by the Commission as set forth in any no-action letter obtained pursuant to clause (i) above. (b) Shelf Registration Statement. In connection with the Shelf Registration Statement the Company and the Subsidiary Guarantors shall comply with all the provisions of Section 6(c) below and shall use their respective best efforts to effect such registration to permit the sale of the Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof (as indicated in the information furnished to the Company pursuant to Section 4(b) hereof), and pursuant thereto the Company and the Subsidiary Guarantors will prepare and file with the Commission a Registration Statement relating to the registration on any appropriate form under the Act, which form shall be available for the sale of the Transfer Restricted Securities in accordance with the intended method or methods of distribution thereof within the time periods and otherwise in accordance with the provisions hereof. (c) General Provisions. In connection with any Registration Statement and any related Prospectus required by this Agreement to permit the sale or resale of Transfer Restricted Securities (including, without limitation, any Exchange Offer Registration Statement and the related Prospectus, to the extent that the same are required to be available to permit sales of Broker-Dealer Transfer Restricted Securities by Restricted Broker-Dealers), the Company and the Subsidiary Guarantors shall: 9 11 (i) use their respective best efforts to keep such Registration Statement continuously effective and provide all requisite financial statements for the period specified in Section 3 or 4 of this Agreement, as applicable. Upon the occurrence of any event that would cause any such Registration Statement or the Prospectus contained therein (A) to contain a material misstatement or omission or (B) not to be effective and usable for resale of Transfer Restricted Securities during the period required by this Agreement, the Company and the Subsidiary Guarantors shall file promptly an appropriate amendment to such Registration Statement, (1) in the case of clause (A), correcting any such misstatement or omission, and (2) in the case of either clause (A) or (B), use their respective best efforts to cause such amendment to be declared effective and such Registration Statement and the related Prospectus to become usable for their intended purpose(s) as soon as practicable thereafter. Notwithstanding the foregoing, at any time after Consummation of the Exchange Offer, the Company may allow the Shelf Registration Statement to cease to be effective and usable if (x) the Board of Directors of the Company determines in good faith that it is in the best interests of the Company not to disclose the existence of or facts surrounding any proposed or pending material corporate transaction involving the Company, and the Company notifies the Holders within two business days after the Board makes such determination, or (y) the Prospectus contained in the Shelf Registration Statement contains an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; (ii) prepare and file with the Commission such amendments any post-effective amendments to the Registration Statement as may be necessary to keep the Registration Statement effective for the applicable period set forth in Section 3 or 4 hereof, or such shorter period as will terminate when all Transfer Restricted Securities covered by such Registration Statement have been sold; cause the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Act, and to comply fully with Rules 424, 430A and 462 as applicable, under the Act in a timely manner; and comply with the provisions of the Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof set forth in such Registration Statement or supplement to the Prospectus; (iii) advise the underwriter(s), if any, and selling Holders promptly and, if requested by such Persons, confirm such advice in writing, (A) when the Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to any Registration Statement or any post-effective amendment thereto, when the same has become effective, (B) of any request by the Commission for amendments to the Registration Statement or amendments or supplements to the Prospectus or for additional information relating thereto, (C) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement under the Act or of the suspension by any state securities commission of the qualification of the Transfer Restricted Securities, as applicable, for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes, (D) of the existence of any 10 12 fact or the happening of any event that makes any statement of a material fact made in the Registration Statement, the Prospectus, any amendment or supplement thereto or any document incorporated by reference therein untrue, or that requires the making of any additions to or changes in the Registration Statement in order to make the statements therein not misleading, or that requires the making of any additions to or changes in the Prospectus in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, or any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from qualification of the Transfer Restricted Securities under state securities or Blue Sky laws, the Company and the Subsidiary Guarantors shall use their respective best efforts to obtain the withdrawal or lifting of such order at the earliest possible time; (iv) furnish to the Initial Purchasers, each selling Holder named in any Registration Statement or Prospectus and each of the underwriter(s) in connection with such sale, if any, before filing with the Commission, copies of any Registration Statement or any Prospectus included therein or any amendments or supplements to any such Registration Statement or Prospectus (including all documents incorporated by reference after the initial filing of such Registration Statement), which documents will be subject to the review and comment of such Holders and underwriter(s) in connection with such sale, if any, for a period of at least five Business Days, and the Company will not file any such Registration Statement or Prospectus or any amendment or supplement to any such Registration Statement or Prospectus (including all such documents incorporated by reference) if the selling Holders of the Transfer Restricted Securities covered by such Registration Statement or the underwriter(s) in connection with such sale shall not have had an opportunity to participate in the preparation thereof; (v) prior to the filing of any document that is to be incorporated by reference into a Registration Statement or Prospectus, provide copies of such document to the selling Holders and to the underwriter(s) in connection with such sale, if any, make the Company's and the Subsidiary Guarantors' representatives available for discussion of such document and other customary due diligence matters, and include such information in such document prior to the filing thereof as such selling Holders or underwriter(s), if any, reasonably may request; (vi) make available at reasonable times at the Company's principal place of business for inspection by the selling Holders of Transfer Restricted Securities, any managing underwriter participating in any disposition pursuant to such Registration Statement and any attorney or accountant retained by such selling Holders or any of such underwriter(s), who shall certify to the Company that they have a current intention to sell Transfer Restricted Securities pursuant to a Shelf Registration Statement, all pertinent financial and other pertinent information of the Company and each of the Subsidiary Guarantors, as reasonably requested, and cause the Company's and the Subsidiary Guarantors' officers, directors and employees to respond to such inquiries as shall be 11 13 reasonably necessary; in the reasonable judgment of counsel to such Holders, to conduct a reasonable investigation; provided, however, that each such party shall be required to maintain in confidence and not to disclose to any other person any information or records reasonably designated by the Company in writing as being confidential, until such time as (A) such information becomes a matter of public record (whether by virtue of its inclusion in such Registration Statement or otherwise), or (B) such person shall be required so to disclose such information pursuant to the subpoena or order of any court or other governmental agency or body having jurisdiction over the matter (subject to the requirements of such order, and only after such person shall have given the Company prompt prior written notice of such requirement), or (C) such information is required to be set forth in such Registration Statement or the Prospectus included therein or in an amendment or supplement to such Registration Statement or an amendment or supplement to such Prospectus in order that such Registration Statement, Prospectus, amendment or supplement, as the case may be, does not contain an untrue statement of a material fact or omit to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; (vii) if requested by any selling Holders or the underwriter(s), as applicable, in connection with such sale, if any, promptly include in any Registration Statement or Prospectus, pursuant to a supplement or post-effective amendment if necessary, such information that is required by the Act as such selling Holders and underwriter(s), if any, may reasonably request to have included therein, and make all required filings of such Prospectus supplement or post-effective amendment as soon as practicable after the Company is notified of the matters to be included in such Prospectus supplement or post-effective amendment; (viii) furnish to each selling Holder and each of the underwriter(s) in connection with such sale, if any, without charge, at least one copy of the Registration Statement, as first filed with the Commission, and of each amendment thereto, including all documents incorporated by reference therein and all exhibits (including exhibits incorporated therein by reference); (ix) deliver to each selling Holder and each of the underwriter(s), if any, without charge, as many copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto as such Persons reasonably may request; the Company and the Subsidiary Guarantors hereby consent to the use (in accordance with law) of the Prospectus and any amendment or supplement thereto by each of the selling Holders and each of the underwriter(s), if any, in connection with the offering and the sale of the Transfer Restricted Securities covered by the Prospectus or any amendment or supplement thereto. Notwithstanding the foregoing, at any time after Consummation of the Exchange Offer, the Company may allow the Shelf Registration Statement to cease to be effective and usable if (x) the Board of Directors of the Company determines in good faith that it is in the best interests of the Company not to disclose the existence of or facts surrounding any proposed or pending material corporate transaction involving the Company, and the Company notifies the Holders within two business days after the 12 14 Board makes such determination, or (y) the Prospectus contained in the Shelf Registration Statement contains an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; (x) and take all such other actions in connection therewith in order to expedite or facilitate the disposition of the Transfer Restricted Securities pursuant to any Registration Statement contemplated by this Agreement as may be reasonably requested by any Holder who holds at least 5% in aggregate principal amount of such class of Transfer Restricted Securities or underwriter in connection with any sale or resale pursuant to any Registration Statement contemplated by this Agreement, provided, that, the Company shall not be required to enter into any such agreement more than once with respect to all of the Transfer Restricted Securities, and in the case of a Shelf Registration Statement, may delay entering into such agreement if the Board of Directors of the Company determines in good faith that it is in the best interests of the Company not to disclose the existence of or facts surrounding any proposed or pending corporate transaction involving the Company; and in such connection, whether or not an underwriting agreement is entered into and whether or not the registration is an Underwritten Registration, the Company and the Subsidiary Guarantors shall: (A) furnish to each selling Holder who holds at least 5% in aggregate principal amount of such class of Transfer Restricted Securities and each underwriter, if any, in such substance and scope as they may request and as is customarily made in connection with an offering of debt securities pursuant to a Registration Statement, upon the effectiveness of the Shelf Registration Statement and to each Restricted Broker-Dealer upon Consummation of the Exchange Offer: (1) a certificate, dated the date of Consummation of the Exchange Offer or the date of effectiveness of the Shelf Registration Statement, as the case may be, signed on behalf of each of the Company and the Subsidiary Guarantors by (x) the President or any Vice President and (y) a principal financial or accounting officer of the Company and each of the Subsidiary Guarantors confirming, as of the date thereof, the matters set forth in paragraphs (a) through (c) of Section 9 of the Purchase Agreement and such other similar matters as the Holders, underwriter(s) and/or Restricted Broker-Dealers may reasonably request; (2) an opinion, dated the date of Consummation of the Exchange Offer or the date of effectiveness of the Shelf Registration Statement, as the case may be, of counsel for the Company and the Subsidiary Guarantors, covering matters customarily covered in opinions requested in Underwritten Offerings and dated the date of effectiveness of the Shelf Registration Statement or the date of Consummation of the Exchange Offer, as the case may be; and 13 15 (3) customary comfort letters, dated as of the date of effectiveness of the Shelf Registration Statement or the date of Consummation of the Exchange Offer, as the case may be, from the Company's independent accountants, in the customary form and covering matters of the type customarily covered in comfort letters to underwriters in connection with an offering of debt securities pursuant to a Registration Statement, and affirming the matters set forth in the comfort letters delivered pursuant to Section 9(f) of the Purchase Agreement, without exception; (B) set forth in full or incorporated by reference in the underwriting agreement, if any, in connection with any sale or resale pursuant to any Shelf Registration Statement the indemnification provisions and procedures of Section 8 hereof with respect to all parties to be indemnified pursuant to said Section; and (C) deliver such other documents and certificates as may be reasonably requested by the selling Holders, the underwriter(s), if any, and Restricted Broker-Dealers, if any, to evidence compliance with clause (A) above and with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company and the Subsidiary Guarantors pursuant to this clause (x). The above shall be done at each closing under such underwriting or similar agreement, as and to the extent required thereunder, and if at any time the representations and warranties of the Company and the Subsidiary Guarantors contemplated in (A)(1) above cease to be true and correct, the Company and the Subsidiary Guarantors shall so advise the underwriter(s), if any, selling Holders who hold at least 5% in aggregate principal amount of such class of Transfer Restricted Securities and each Restricted Broker-Dealer promptly and if requested by such Persons, shall confirm such advice in writing; (xi) prior to any public offering of Transfer Restricted Securities, cooperate with the selling Holders, the underwriter(s), if any, and their respective counsel in connection with the registration and qualification of the Transfer Restricted Securities under the securities or Blue Sky laws of such jurisdictions as the selling Holders or underwriter(s), if any, may reasonably request and do any and all other acts or things reasonably necessary or advisable to enable the disposition in such jurisdictions of the Transfer Restricted Securities covered by the applicable Registration Statement; provided, however, that neither the Company nor any Subsidiary Guarantor shall be required to register or qualify as a foreign corporation where it is not now so qualified or to take any action that would subject it to the service of process in suits or to taxation, other than as to matters and transactions relating to the Registration Statement, in any jurisdiction where it is not now so subject; 14 16 (xii) issue, upon the request of any Holder of Senior Subordinated Notes covered by any Shelf Registration Statement contemplated by this Agreement, New Senior Subordinated Notes, having an aggregate principal amount equal to the aggregate principal amount of Senior Subordinated Notes surrendered to the Company by such Holder in exchange therefor or being sold by such Holder; such New Senior Subordinated Notes to be registered in the name of such Holder or in the name of the purchaser(s) of such Notes, as the case may be; in return, the Senior Subordinated Notes held by such Holder shall be surrendered to the Company for cancellation; (xiii) in connection with any sale of Transfer Restricted Securities that will result in such securities no longer being Transfer Restricted Securities, cooperate with the selling Holders and the underwriter(s), if any, to facilitate the timely preparation and delivery of certificates representing Transfer Restricted Securities to be sold and not bearing any restrictive legends; and to enable such Transfer Restricted Securities to be in such denominations and registered in such names as such Holders or the underwriter(s), if any, may request at least two Business Days prior to such sale of Transfer Restricted Securities; (xiv) use their respective best efforts to cause the disposition of the Transfer Restricted Securities covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof or the underwriter(s), if any, to consummate the disposition of such Transfer Restricted Securities, subject to the proviso contained in clause (xi) above; (xv) subject to Section 6(c)(i), if any fact or event contemplated by Section 6(c)(iii)(D) above shall exist or have occurred, prepare a supplement or post-effective amendment to the Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of Transfer Restricted Securities, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (xvi) provide a CUSIP number for all Transfer Restricted Securities not later than the effective date of a Registration Statement covering such Transfer Restricted Securities and provide the Trustee under the Indenture with printed certificates for the Transfer Restricted Securities which are in a form eligible for deposit with the Depository Trust Company; (xvii) cooperate and assist in any filings required to be made with the NASD and in the performance of any due diligence investigation by any underwriter (including any "qualified independent underwriter") that is required to be retained in accordance with the rules and regulations of the NASD; 15 17 (xviii) otherwise use their respective best efforts to comply with all applicable rules and regulations of the Commission, and make generally available to its security holders with regard to any applicable Registration Statement, as soon as practicable, a consolidated earnings statement meeting the requirements of Rule 158 (which need not be audited) covering a twelve-month period (A) commencing at the end of any fiscal year in which Transfer Restricted Securities are sold to underwriters in a firm or best efforts underwritten offering or (B) if not sold to underwriters in such an offering, beginning with the first month of the Company's first fiscal quarter commencing after the effective date of the Registration Statement; (xix) cause the Indenture to be qualified under the TIA not later than the effective date of the first Registration Statement required by this Agreement and, in connection therewith, cooperate with the Trustee and the Holders of Notes to effect such changes to the Indenture as may be required for such Indenture to be so qualified in accordance with the terms of the TIA; and execute and use their respective best efforts to cause the Trustee to execute, all documents that may be required to effect such changes and all other forms and documents required to be filed with the Commission to enable such Indenture to be so qualified in a timely manner; and (xx) provide promptly to each Holder upon request each document filed with the Commission pursuant to the requirements of Section 13 or Section 15(d) of the Exchange Act. (d) Restrictions on Holders. Each Holder agrees by acquisition of a Transfer Restricted Security or Broker-Dealer Transfer Restricted Securities, as applicable, that, upon receipt of the notice referred to in Section 6(c)(i) or any notice from the Company of the existence of any fact of the kind described in Section 6(c)(iii)(D) hereof, such Holder will immediately discontinue disposition of Transfer Restricted Securities pursuant to the applicable Registration Statement until such Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 6(c)(xv) hereof, or until it is advised in writing by the Company that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus (the "Advice"). If so directed by the Company, each Holder will deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities that was current at the time of receipt of either such notice. In the event the Company shall give any such notice, the time period regarding the effectiveness of such Registration Statement set forth in Section 3 or 4 hereof, as applicable, shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to Section 6(c)(i) or Section 6(c)(iii)(D) hereof to and including the date when each selling Holder covered by such Registration Statement shall have received the copies of the supplemented or amended Prospectus contemplated by Section 6(c)(xv) hereof or shall have received the Advice. 16 18 The Company may require each Holder of Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities as to which any registration is being effected to furnish to the Company such information regarding such Holder and such Holder's intended method of distribution of the applicable Transfer Restricted Securities as the Company may from time to time reasonably request in writing, but only to the extent that such information is required in order to comply with the Act. Each such Holder agrees to notify the Company as promptly as practicable of (i) any inaccuracy or change in information previously furnished by such Holder to the Company, or (ii) the occurrence of any event, in either case, as a result of which any prospectus relating to such registration contains or would contain an untrue statement of a material fact regarding such Holder or such Holder's intended method of distribution of the applicable Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities or omits to state any material fact regarding such Holder or such Holder's intended method of distribution of the applicable Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities required to be stated therein or necessary to make the statements therein not misleading and promptly to furnish to the Company any additional information required to correct and update any previously furnished information or required so that such Prospectus shall not contain, with respect to such Holder or the distribution of the applicable Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. 7. REGISTRATION EXPENSES (a) All expenses incident to the Company's and the Subsidiary Guarantors' performance of or compliance with this Agreement will be borne by the Company, regardless of whether a Registration Statement becomes effective, including without limitation: (i) all registration and filing fees and expenses (including filings made by any Initial Purchasers or Holder with the NASD (and, if applicable, the fees and expenses of any "qualified independent underwriter") and its counsel that may be required by the rules and regulations of the NASD); (ii) all fees and expenses of compliance with federal securities and state Blue Sky or securities laws; (iii) all expenses of printing (including printing certificates for the New Senior Subordinated Notes to be issued in the Exchange Offer and printing of Prospectuses); (iv) all fees and disbursements of counsel for the Company, the Subsidiary Guarantors and, in accordance with Section 7(b) below, the Holders of Transfer Restricted Securities; (v) all messenger and delivery services and telephone expenses of the Company and the Subsidiary Guarantors; (vi) all application and filing fees in connection with listing the Notes on a national securities exchange or automated quotation system pursuant to the requirements hereof and (vii) all fees and disbursements of independent certified public accountants of the Company and the Subsidiary Guarantors (including the expenses of any special audit and comfort letters required by or incident to such performance). (b) The Company will, in any event, bear its and the Subsidiary Guarantors' internal expenses (including, without limitation, all salaries and expenses of any of their respective officers and employees performing legal or accounting duties), the expenses of any annual audit 17 19 and the fees and expenses of any Person, including special experts, retained by the Company or the Subsidiary Guarantors. (c) In connection with any Registration Statement required by this Agreement, as applicable, (including, without limitation, the Exchange Offer Registration Statement and the Shelf Registration Statement), the Company and the Subsidiary Guarantors will reimburse the Initial Purchasers and the Holders of Transfer Restricted Securities being tendered in the Exchange Offer and/or pursuant to the "Plan of Distribution" contained in the Exchange Offer Registration Statement or registered pursuant to the Shelf Registration Statement, as applicable, for the reasonable fees and disbursements of not more than one counsel, who shall be chosen by the Holders of a majority in principal amount of the Transfer Restricted Securities for whose benefit such Registration Statement is being prepared. 8. INDEMNIFICATION (a) The Company and each Subsidiary Guarantor agree, jointly and severally, to indemnify and hold harmless each Initial Purchaser, its directors, its officers and each person, if any, who controls such Initial Purchasers within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages, liabilities and judgments (including, without limitation, any legal or other expenses reasonably incurred in connection with investigating or defending any matter, including any action, that could give rise to any such losses, claims, damages, liabilities or judgments) caused by any untrue statement or alleged untrue statement of a material fact contained in the Offering Memorandum (or any amendment or supplement thereto), the Preliminary Offering Memorandum or any Rule 144A Information provided by the Company or any Subsidiary Guarantor to any holder or prospective purchaser of Senior Subordinated Notes pursuant to Section 5(n) of the Purchase Agreement or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, except insofar as such losses, claims, damages, liabilities or judgments are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information relating to the Initial Purchasers furnished in writing to the Company by such Initial Purchasers; provided, however, that the foregoing indemnity agreement with respect to any Preliminary Offering Memorandum shall not inure to the benefit of any Initial Purchasers who failed to deliver a Final Offering Memorandum (as then amended or supplemented, provided by the Company to the several Initial Purchasers in the requisite quantity and on a timely basis to permit proper delivery on or prior to the Closing Date) to the person asserting any losses, claims, damages and liabilities and judgments caused by any untrue statement or alleged untrue statement of a material fact contained in any Preliminary Offering Memorandum, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, if such material misstatement or omission or alleged material misstatement or omission was cured in the Final Offering Memorandum. (b) The Initial Purchasers agree to indemnify and hold harmless the Company and the Subsidiary Guarantors, and their respective directors and officers and each person, if any, who 18 20 controls (within the meaning of Section 15 of the Act or Section 20 of the Exchange Act) the Company or the Subsidiary Guarantors, to the same extent as the foregoing indemnity from the Company and the Subsidiary Guarantors to the Initial Purchasers but only with reference to information relating to the Initial Purchasers furnished in writing to the Company by the Initial Purchasers expressly for use in the Preliminary Offering Memorandum or the Offering Memorandum. (c) In case any action shall be commenced involving any person in respect of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the "INDEMNIFIED PARTY"), the indemnified party shall promptly notify the person against whom such indemnity may be sought (the "INDEMNIFYING PARTY") in writing and the indemnifying party shall assume the defense of such action, including the employment of counsel reasonably satisfactory to the indemnified party and the payment of all fees and expenses of such counsel, as incurred (except that in the case of any action in respect of which indemnity may be sought pursuant to both Sections 8(a) and 8(b), the Initial Purchasers shall not be required to assume the defense of such action pursuant to this Section 8(c), but may employ separate counsel and participate in the defense thereof, but the fees and expenses of such counsel, except as provided below, shall be at the expense of the Initial Purchasers). Any indemnified party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of the indemnified party unless (i) the employment of such counsel shall have been specifically authorized in writing by the indemnifying party, (ii) the indemnifying party shall have failed to assume the defense of such action or employ counsel reasonably satisfactory to the indemnified party or (iii) the named parties to any such action (including any impleaded parties) include both the indemnified party and the indemnifying party, and the indemnified party shall have been advised by such counsel that there may be one or more legal defenses available to it which are different from or additional to those available to the indemnifying party (in which case the indemnifying party shall not have the right to assume the defense of such action on behalf of the indemnified party). In any such case, the indemnifying party shall not, in connection with any one action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) for all indemnified parties and all such fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated in writing by Donaldson, Lufkin & Jenrette Securities Corporation, in the case of the parties indemnified pursuant to Section 8(a), and by the Company, in the case of parties indemnified pursuant to Section 8(b). The indemnifying party shall indemnify and hold harmless the indemnified party from and against any and all losses, claims, damages, liabilities and judgments by reason of any settlement of any action (i) effected with its written consent or (ii) effected without its written consent if the settlement is entered into more than thirty business days after the indemnifying party shall have received a request from the indemnified party for reimbursement for the fees and expenses of counsel (in any case where such fees and expenses are at the expense of the indemnifying party) and, prior to the date of such settlement, the indemnifying party shall have failed to comply with such reimbursement request. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement or compromise of, or consent to the entry of judgment with respect to, any pending or threatened action in respect of which the indemnified party is or could have been a 19 21 party and indemnity or contribution may be or could have been sought hereunder by the indemnified party, unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability on claims that are or could have been the subject matter of such action and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of the indemnified party. (d) To the extent the indemnification provided for in this Section 8 is unavailable to an indemnified party or insufficient in respect of any losses, claims, damages, liabilities or judgments referred to herein, then each indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities and judgments (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Subsidiary Guarantors, on the one hand, and the Initial Purchasers on the other hand from the offering of the Senior Subordinated Notes or (ii) if the allocation provided by clause 8(d)(i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause 8(d)(i) above but also the relative fault of the Company and the Subsidiary Guarantors, on the one hand, and the Initial Purchasers, on the other hand, in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or judgments, as well as any other relevant equitable considerations. The relative benefits received by the Company and the Subsidiary Guarantors, on the one hand and the Initial Purchasers, on the other hand, shall be deemed to be in the same proportion as the total net proceeds from the offering of the Senior Subordinated Notes (after underwriting discounts and commissions, but before deducting expenses) received by the Company, and the total discounts and commissions received by the Initial Purchasers bear to the total price to investors of the Senior Subordinated Notes, in each case as set forth in the table on the cover page of the Offering Memorandum. The relative fault of the Company and the Subsidiary Guarantors, on the one hand, and the Initial Purchasers, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Subsidiary Guarantors, on the one hand, or the Initial Purchasers, on the other hand, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Subsidiary Guarantors, and the Initial Purchasers agree that it would not be just and equitable if contribution pursuant to this Section 8(d) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities or judgments referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any matter, including any action, that could have given rise to such losses, claims, damages, liabilities or judgments. Notwithstanding the provisions of this Section 8, the Initial Purchasers shall not be required to contribute any amount in excess of the amount by which the total discounts and commissions received by such Initial Purchasers exceeds the amount of any damages which the Initial 20 22 Purchasers has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. (e) The remedies provided for in this Section 8 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity. 9. RULE 144A The Company and the Subsidiary Guarantors hereby agree with each Holder, for so long as any Transfer Restricted Securities remain outstanding and during any period in which the Company and the Subsidiary Guarantors are not subject to Section 13 or 15(d) of the Securities Exchange Act, to make available, upon request of any Holder of Transfer Restricted Securities, to any Holder or beneficial owner of Transfer Restricted Securities in connection with any sale thereof and any prospective purchaser of such Transfer Restricted Securities designated by such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the Act in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144A. 10. UNDERWRITTEN REGISTRATIONS No Holder may participate in any Underwritten Registration hereunder unless such Holder (a) agrees to sell such Holder's Transfer Restricted Securities on the basis provided in customary underwriting arrangements entered into in connection therewith and (b) completes and executes all reasonable questionnaires, powers of attorney, lock-up letters and other documents required under the terms of such underwriting arrangements. 11. SELECTION OF UNDERWRITERS For any Underwritten Offering of Notes, the investment banker or investment bankers and manager or managers for any Underwritten Offering of Notes, that will administer such offering will be selected by the Holders of a majority in aggregate principal amount of the Transfer Restricted Securities included in such offering provided, however, that such investment bankers and managers must be reasonably satisfactory to the Company. Such investment bankers and managers are referred to herein as the "underwriters." 12. MISCELLANEOUS (a) Remedies. The Company and the Subsidiary Guarantors agree that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by them of the provisions of this Agreement and hereby agree to waive the defense in any action for specific performance that a remedy at law would be adequate. (b) No Inconsistent Agreements. Neither the Company nor any Subsidiary Guarantor will, on or after the date of this Agreement, enter into any agreement with respect to its securities 21 23 that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. Except as disclosed in the Offering Memorandum, neither the Company nor any Subsidiary Guarantor has previously entered into any agreement granting any registration rights with respect to its securities to any Person. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Company's and the Subsidiary Guarantors' securities under any agreement in effect on the date hereof. (c) Adjustments Affecting the Notes. Neither the Company nor any Subsidiary Guarantor will take any action, or voluntarily permit any change to occur, with respect to the Notes that would materially and adversely affect the ability of the Holders to Consummate any Exchange Offer. (d) Amendments and Waivers. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to or departures from the provisions hereof may not be given unless (i) in the case of Section 5 hereof and this Section 12(d)(i), the Company has obtained the written consent of the Holders of all outstanding Transfer Restricted Securities and (ii) in the case of all other provisions hereof, the Company has obtained the written consent of Holders of a majority of the outstanding principal amount of Transfer Restricted Securities. Notwithstanding the foregoing, a waiver or consent to departure from the provisions hereof that relates exclusively to the rights of Holders whose securities are being tendered pursuant to the Exchange Offer and that does not affect directly or indirectly the rights of other Holders whose securities are not being tendered pursuant to such Exchange Offer may be given by the Holders of a majority of the outstanding principal amount of Transfer Restricted Securities subject to such Exchange Offer. (e) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail (registered or certified, return receipt requested), telex, telecopier, or air courier guaranteeing overnight delivery: (i) if to a Holder, at the address set forth on the records of the Registrar under the Indenture, with a copy to the Registrar under the Indenture; With a copy to: Latham & Watkins 885 Third Avenue New York, New York 10022 Telecopier No.: (212) 751-4864 Attention: Philip E. Coviello, Jr. 22 24 (ii) if to the Company or any Subsidiary Guarantor: APCOA, Inc. 800 Superior Avenue Cleveland, Ohio 44114 Telecopier No.: (216) 523-8080 Attention: Robert N. Sacks With a copy to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 Telecopier No.: (212) 403-2000 Attention: Adam O. Emmerich All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if telecopied; and on the next business day, if timely delivered to an air courier guaranteeing overnight delivery. Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee at the address specified in the Indenture. (f) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including without limitation and without the need for an express assignment, subsequent Holders of Transfer Restricted Securities; provided, however, that this Agreement shall not inure to the benefit of or be binding upon a successor or assign of a Holder unless and to the extent such successor or assign acquired Transfer Restricted Securities directly from such Holder at a time when such Holder could not transfer such Transfer Restricted Securities pursuant to a Shelf Registration Statement. Each Holder of Transfer Restricted Securities agrees to be bound by and comply with the terms and provisions of this Agreement. (g) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (h) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW 23 25 YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAW RULES. (j) Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. (k) Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted with respect to the Transfer Restricted Securities. This Agreement supersedes all prior agreements and understandings among the parties with respect to such subject matter. [SIGNATURE PAGE FOLLOWS] 24 26 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. APCOA, INC. By: /s/ Michael J. Celebrezze ----------------------------------------- Name: Michael J. Celebrezze Title: Senior Vice President, Chief Financial Officer, Treasurer TOWER PARKING, INC. By: /s/ Michael J. Celebrezze ----------------------------------------- Name: Michael J. Celebrezze Title: Vice President, Treasurer GRAELIC, INC. By: /s/ Michael J. Celebrezze ----------------------------------------- Name: Michael J. Celebrezze Title: Vice President, Treasurer APCOA CAPITAL CORPORATION By: /s/ Michael J. Celebrezze ----------------------------------------- Name: Michael J. Celebrezze Title: Vice President, Treasurer A-1 AUTO PARK, INC. By: /s/ Michael J. Celebrezze ----------------------------------------- Name: Michael J. Celebrezze Title: Vice President, Treasurer 27 METROPOLITAN PARKING SYSTEM, INC. By: /s/ Michael J. Celebrezze ----------------------------------------- Name: Michael J. Celebrezze Title: Vice President, Treasurer EVENTS PARKING COMPANY, INC. By: /s/ Michael J. Celebrezze ----------------------------------------- Name: Michael J. Celebrezze Title: Vice President, Treasurer 28 STANDARD PARKING, L.P. By: /s/ Myron C. Warshauer ----------------------------------------- Name: Myron C. Warshauer Title: President STANDARD PARKING CORPORATION By: /s/ Myron C. Warshauer ----------------------------------------- Name: Myron C. Warshauer Title: President STANDARD PARKING CORPORATION, IL By: /s/ Myron C. Warshauer ----------------------------------------- Name: Myron C. Warshauer Title: President STANDARD PARKING CORPORATION, MW By: /s/ Myron C. Warshauer ----------------------------------------- Name: Myron C. Warshauer Title: President STANDARD AUTO PARK, INC. By: /s/ Myron C. Warshauer ----------------------------------------- Name: Myron C. Warshauer Title: President 29 STANDARD/WABASH PARKING CORPORATION By: /s/ Myron C. Warshauer ----------------------------------------- Name: Myron C. Warshauer Title: President STANDARD PARKING OF CANADA, L.P. By: /s/ Myron C. Warshauer ----------------------------------------- Name: Myron C. Warshauer Title: President of Standard Parking Corporation, General Partner of Standard Parking of Canada, L.P. STANDARD PARKING I, L.L.C. By: /s/ Myron C. Warshauer ----------------------------------------- Name: Myron C. Warshauer Title: President of Standard Parking Corporation, Managing Member of Standard Parking I, L.L.C. STANDARD PARKING II, L.L.C. By: /s/ Myron C. Warshauer ----------------------------------------- Name: Myron C. Warshauer Title: President of Standard Parking Corporation, Managing Member of Standard Parking II, L.L.C. 30 The foregoing Registration Rights Agreement is hereby confirmed and accepted as of the date first above written. DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION By: /s/ Timothy White -------------------------------- Name: Timothy White Title: Vice President EX-10.3 9 STOCKHOLDER AGREEMENT 1 Exhibit 10.3 EXECUTION COPY ================================================================================ STOCKHOLDERS AGREEMENT by and among DOSHER PARTNERS, L.P. and SP ASSOCIATES and HOLBERG INDUSTRIES, INC. and AP HOLDINGS, INC. dated as of March 30, 1998 ================================================================================ 2 TABLE OF CONTENTS Page ---- ARTICLE I DEFINITIONS Section 1.1 Definitions................................................. 1 ARTICLE II CORPORATE GOVERNANCE Section 2.1 Composition of the Boards of Directors...................... 6 Section 2.2 Removal..................................................... 6 Section 2.3 Vacancies................................................... 7 Section 2.4 Termination of Rights and Obligations....................... 7 Section 2.5 Indemnification............................................. 7 ARTICLE III RESTRICTIONS ON TRANSFER Section 3.1 General..................................................... 7 Section 3.2 Legend on Shares............................................ 8 Section 3.3 Permitted Transferees....................................... 8 ARTICLE IV RIGHT OF FIRST OFFER; PREEMPTIVE RIGHTS Section 4.1 Right of First Offer........................................ 9 Section 4.2 Preemptive Rights........................................... 9 Section 4.3 Transactions with Affiliates................................ 11 ARTICLE V TAG-ALONG AND DRAG-ALONG RIGHTS Section 5.1 Tag-Along Right............................................. 11 Section 5.2 Drag-Along Right............................................ 12 ARTICLE VI PUT AND CALL RIGHTS Section 6.1 Put Rights and Call Rights.................................. 13 Section 6.2 Exercise of Rights.......................................... 13 -i- 3 Section 6.3 Certain Limitations......................................... 14 Section 6.4 Expiration of Obligations................................... 15 Section 6.5 Certain Additional Payments................................. 15 ARTICLE VII REGISTRATION RIGHTS Section 7.1 Incidental Registrations.................................... 16 Section 7.2 Holdback Agreements......................................... 17 Section 7.3 Registration Procedures..................................... 17 Section 7.4 Indemnification by the Company.............................. 18 Section 7.5 Indemnification by Participating Persons.................... 19 Section 7.6 Conduct of Indemnification Proceedings...................... 20 Section 7.7 Contribution................................................ 21 Section 7.8 Participation in Public Offering............................ 22 Section 7.9 Other Indemnification....................................... 22 ARTICLE VIII CERTAIN COVENANTS AND AGREEMENTS Section 8.1 Confidentiality............................................. 22 Section 8.2 Indirect Action; No Inconsistent Agreements................. 23 ARTICLE IX MISCELLANEOUS Section 9.1 Entire Agreement; Benefit................................... 23 Section 9.2 Interpretation; Absence of Presumption...................... 24 Section 9.3 Severability................................................ 24 Section 9.4 Assignability............................................... 24 Section 9.5 Notices..................................................... 24 Section 9.6 Headings; Definitions....................................... 26 Section 9.7 Counterparts................................................ 26 Section 9.8 Specific Enforcement........................................ 26 Section 9.9 Governing Law; Jurisdiction and Forum....................... 26 Section 9.10 Community Property States................................... 27 -ii- 4 EXHIBITS Exhibit A Affiliate Transactions 5 STOCKHOLDERS AGREEMENT This STOCKHOLDERS AGREEMENT, dated as of March 30, 1998 (this "Agreement"), by and among Holberg Industries, Inc., a Delaware corporation ("Holberg") and AP Holdings, Inc., a Delaware corporation ("AP Holdings"), and Dosher Partners, L.P., a Delaware limited partnership ("Dosher", and together with its Permitted Transferees, the "MW Parties"), and SP Associates, an Illinois general partnership ("SP Associates" and, together with Dosher, the "Standard Parties", and the Standard Parties together with Holberg and AP Holdings, the "Stockholders"), and APCOA, Inc., a Delaware corporation (the "Company"). W I T N E S S E T H : WHEREAS, pursuant to the Combination Agreement, dated as of January 15, 1998 (the "Combination Agreement"), by and among Myron C. Warshauer ("MW"), Stanley Warshauer, Steven A. Warshauer, Dosher, SP Parking Associates, an Illinois general partnership, and SP Associates (together, the "Standard Owners"), and the Company, the Company is as of the date hereof acquiring certain interests held by the Standard Owners in return for, among other things, the issuance of Shares to the Standard Parties; and WHEREAS, the parties hereto desire to enter into this Agreement to govern certain of their rights, duties and obligations after the consummation of the transactions contemplated by the Combination Agreement; NOW THEREFORE, in consideration of the premises and the representations, warranties, covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the parties hereto hereby agree as follows: ARTICLE I DEFINITIONS Section 1.1 Definitions. The following terms, as used herein, have the following meanings: "Affiliate" shall mean, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such Person. For the purpose of this definition, the term "control" (including, with correlative meanings, the terms "controlling", "controlled by" and "under common control with"), as applied to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities, by contract or otherwise. "Agreement" shall have the meaning set forth in the first paragraph hereof. 6 "AP Holdings" shall have the meaning set forth in the first paragraph hereof and, to the extent that AP Holdings shall have transferred any of its Shares to any Person, shall mean AP Holdings and such Person, taken together, and any right or action that may be taken at the election of AP Holdings may be taken at the election of AP Holdings and such Person, as the case may be. "Associates" shall have the meaning set forth in the definition of "Permitted Transferee." "Board" shall mean the board of directors of the Company. "Business Day" shall mean any day except a Saturday, Sunday or other day on which commercial banks in New York City are authorized by law to close. "Cause" shall have the meaning set forth in Section 2.2. "Call Right" shall have the meaning set forth in Section 6.1. "Closing Date" shall have the meaning set forth in the Combination Agreement. "Combination Agreement" shall have the meaning set forth in the recitals hereto. "Company" shall have the meaning set forth in the first paragraph hereof. "Confidential Information" shall have the meaning set forth in Section 8.1. "control" shall have the meaning set forth in the definition of Affiliate. "Control Transaction" shall mean a transfer in a bona fide transfer of Shares or of shares of AP Holdings by or Holberg or any Affiliate to any Person or group of Persons (other than to an Affiliate of Holberg or to any Standard Party or its Permitted Transferee) in which such Person obtains (i) the right to directly or indirectly elect a majority of the Board or (ii) a majority of the Fully Diluted Shares at such time. "CTC" shall have the meaning set forth in Section 9.9. "Dosher" shall have the meaning set forth in the first paragraph hereof. "Dosher First Offer" shall have the meaning set forth in Section 4.1. "Drag-Along Right" shall have the meaning set forth in Section 5.2. "Drag-Along Rights Notice" shall have the meaning set forth in Section 5.2. "Employment Agreement" shall have the meaning set forth in the Combination Agreement. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. 2 7 "First Offer Notice" shall have the meaning set forth in Section 4.1. "First Offer Period" shall mean the period beginning on the Closing Date and ending on the earlier of (i) the seventh anniversary of the Closing Date, (ii) such date as MW's employment under the Employment Agreement (as defined in the Combination Agreement) is terminated, other than by the Company without Cause or MW for Good Reason (in accordance with the terms of the Employment Agreement), and (iii) the consummation of an Initial Public Offering. "Fully Diluted" shall mean, without duplication, all outstanding Shares and all Shares issuable in respect of securities convertible into or exercisable or exchangeable for Shares, stock appreciation rights or options, warrants and other irrevocable rights to purchase or subscribe for Shares or securities convertible into or exercisable or exchangeable for Shares, and any Person shall be deemed to own such number of Shares as such Person has the right to acquire from any other Person (including the Company). "Good Reason" shall have the meaning set forth in the Employment Agreement. "Holberg" shall have the meaning set forth in the first paragraph hereof and, to the extent that Holberg shall have transferred any of its Shares to any Person, shall mean Holberg and such Person, taken together, and any right or action that may be taken at the election of Holberg may be taken at the election of Holberg and such Person, as the case may be, and shall also include, to the extent applicable, any Subsidiary of Holberg (including AP Holdings) that hold Shares. "Incidental Registration" shall have the meaning set forth in Section 7.1. "Indemnified Party" shall have the meaning set forth in Section 7.6. "Indemnifying Party" shall have the meaning set forth in Section 7.6. "Initial Public Offering" shall mean any bona fide sale of Shares (including in connection with a merger or other reorganization transaction) pursuant to an effective registration statement under the Securities Act (other than a registration statement on Form S-8 or any successor form), covering at least 20% of the Fully Diluted Shares and in which gross proceeds of at least $20 million are realized. "Issuance Notice" shall have the meaning set forth in Section 4.2. "Maintenance Shares" shall have the meaning set forth in Section 4.2. "Maximum Offering Size" shall have the meaning set forth in Section 7.1. "MW" shall have the meaning set forth in the recitals hereof. "MW Parties" shall have the meaning set forth in the first paragraph hereof. 3 8 "NASD" shall have the meaning set forth in the definition of "Registration Expenses". "Option Notice" shall have the meaning set forth in Section 6.2. "Option Shares" shall have the meaning set forth in Section 6.2. "Participating Stockholder" shall have the meaning set forth in Section 5.1. "Participation Notice" shall have the meaning set forth in Section 5.1. "Percentage Ownership" shall mean, with respect to any Stockholder or any group of Stockholders at any time, (i) the number of Fully Diluted Shares that such Stockholder or group of Stockholders owns at such time, divided by (ii) the total number of Fully Diluted Shares at such time. "Permitted Transferee" shall mean, (A) in the case of any natural person, the spouse and direct descendants of such Person and the heirs, executors, administrators, testamentary trustees, legatees or beneficiaries of such Person's estate upon death (collectively, "Associates"), (B) any trust, the beneficiaries of which, or any corporation, limited liability company or partnership, the stockholders, members or general or limited partners of which, consist solely of Standard Parties or their Associates (and only for so long as there are no other stockholders, members or partners), or (C) in the case of any Standard Party other than an MW Party, any other Standard Party or any Person that is today a direct or indirect owner of any Standard Party (as such Persons are listed on Schedule PT), in each case for so long as no change in control of such Person shall occur. "Person" shall mean an individual, corporation, partnership, association, trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "Preemptive Rights" shall have the meaning set forth in Section 4.2. "Price" shall have the meaning set forth in Section 6.2. "Put Right" shall have the meaning set forth in Section 6.1. "Registrable Shares" shall mean any Shares, until (i) a registration statement covering such Shares has been declared effective by the SEC and such securities have been disposed of pursuant to such effective registration statement, (ii) such Shares are sold under circumstances in which all of the applicable conditions of Rule 144 (or any similar provisions then in force) under the Securities Act are met or such Shares may be sold pursuant to Rule 144(k), or (iii) such shares may be sold without registration under the Securities Act and the Company has delivered a new certificate or other evidence of ownership for such Shares not bearing the legend required pursuant to this Agreement. 4 9 "Registration Expenses" shall mean (i) all registration and filing fees, (ii) fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of counsel in connection with blue sky qualifications of the securities registered), (iii) printing expenses, (iv) internal expenses of the Company (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), (v) reasonable fees and disbursements of counsel for the Company and customary fees and expenses for independent certified public accountants retained by the Company (including expenses relating to any comfort letters or costs associated with the delivery by independent certified public accountants of a comfort letter or comfort letters requested in connection therewith, (vi) the reasonable fees and expenses of any special experts retained by the Company in connection with such registration, (vii) fees and expenses in connection with any review of underwriting arrangements by the National Association of Shares Dealers, Inc. (the "NASD"), including fees and expenses of any "qualified independent underwriter," and (viii) fees and disbursements of underwriters customarily paid by issuers or sellers of securities, but shall not include any underwriting fees, discounts or commissions attributable to the sale of Registrable Shares. "Rule 144 or Rule 144A" shall mean Rule 144 and Rule 144A, respectively (or any successor provisions) under the Securities Act. "SEC" shall mean the Securities and Exchange Commission. "Securities Act" shall mean the Securities Act of 1933, as amended. "Shares" shall mean all shares of Common Stock, par value $1.00 per share, of the Company. "SP Associates" shall have the meaning set forth in the first paragraph hereof. "Standard Director" shall have the meaning set forth in Section 2.1. "Standard Parties" shall have the meaning set forth in the first paragraph hereof and, to the extent such parties shall have transferred any of their Shares to Permitted Transferees, shall mean the Standard Parties and the Permitted Transferees of the Standard Parties, taken together, and any right or action that may be taken at the election of the Standard Parties may be taken at the election of the Standard Parties and such Permitted Transferees, as the case may be. "Standard Owners" shall have the meaning set forth in the recitals hereto. "Stockholders" shall have the meaning set forth in the first paragraph hereof. "Subscription Notice" shall have the meaning set forth in Section 4.2. "Subscription Period" shall have the meaning set forth in Section 4.2. "Subsidiary" shall mean, with respect to any Person, any entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of 5 10 directors or other persons performing similar functions are at the time directly or indirectly owned by such Person. "Tag-Along Right" shall have the meaning set forth in Section 5.1. "Tag-Along Rights Notice" shall have the meaning set forth in Section 5.1. "transfer" shall have the meaning set forth in Section 3.1. "Underwritten Public Offering" shall mean an underwritten public offering of Registrable Shares of the Company pursuant to an effective registration statement under the Securities Act. ARTICLE II CORPORATE GOVERNANCE Section 2.1 Composition of the Boards of Directors. Subject to Section 2.4, and subject to the terms of the Employment Agreement as to MW's service as a director (which the parties hereto agree to respect and give effect to), one member of the Board (the "Standard Director") shall be designated by the Standard Parties (other than any MW Parties) and the other members shall be designated by Holberg. Each Stockholder entitled to vote for the election of directors to the Board agrees that it shall vote its Shares or execute written consents, as the case may be, and take all other necessary action (including causing the Company to call a special meeting of stockholders) in order to ensure that the composition of the Board is as set forth in this Section 2.1 and as contemplated by the Employment Agreement. Section 2.2 Removal. (a) Each Stockholder agrees that at any time that it is then entitled to vote or execute a written consent for the removal and/or replacement of any director of the Company, it shall not vote or execute a written consent for any of its Shares in favor of the removal and/or replacement of any individual who shall have been designated pursuant to Section 2.1, unless such removal and/or replacement shall be for Cause or the Person entitled to designate such director shall have requested such removal and/or replacement in writing. (b) For purposes of this Section 2.2, "Cause", with respect to a director, shall mean the (i) willful and continued failure to perform substantially his duties with the Company as a director, (ii) willful conduct which is or is reasonably likely to be significantly injurious to the Company monetarily or otherwise, (iii) abuse of any illegal drug or other controlled substance or habitual intoxication, (iv) conviction for, or guilty plea to, a crime involving moral turpitude, or (v) conviction for, or guilty plea to, a felony. Subject to Section 2.4, nothing contained in this Section 2.2 shall affect the right of any Stockholder to designate a member of the Board pursuant to Section 2.1. Section 2.3 Vacancies. (a) If, as a result of the death, disability, retirement, resignation, removal (with or without Cause) or otherwise there shall exist or occur any vacancy on the Board, then the Person entitled under Section 2.1 to designate or nominate such director 6 11 whose death, disability, retirement, resignation or removal resulted in such vacancy, may, subject to the provisions of Sections 2.1 and 2.4, designate another individual to fill such capacity and serve as a director of the Company. Each Stockholder agrees that if such Stockholder is then entitled to vote for the election of such designee as a director of the Company, it shall vote or execute a written consent for its Shares in order to ensure that such designee be elected to the Board. (b) The Board shall cause such other committees to be established as it may determine, and the Standard Director shall be a member of each such committee. Section 2.4 Termination of Rights and Obligations. The right of the Standard Parties to designate one member of the Board pursuant to this Article II, and all related obligations contained in this Article II, shall terminate on the earlier of (i) such date as an Initial Public Offering is consummated and (ii) such date as the Standard Parties and their Permitted Transferees (other than any MW Party or its Permitted Transferee) in the aggregate own 5% or less of the total Fully Diluted Shares as of such date. Section 2.5 Indemnification. The Company shall indemnify and hold harmless the Standard Director in accordance with the provisions of the Company's Certificate of Incorporation and By-Laws, copies of which are attached hereto, and which shall not be amended other than as may be required by law so as to limit the rights of the Standard Director without the consent of the Standard Director. ARTICLE III RESTRICTIONS ON TRANSFER Section 3.1 General. (a) Until the consummation of an Initial Public Offering, no Standard Party may, directly or indirectly, sell, assign, transfer, grant a participation or other interest in, pledge or otherwise dispose of ("transfer") any Shares (or solicit any offers to buy or otherwise acquire, or to take a pledge of, any Shares or any interest therein), except transfers permitted by this Agreement, and any other attempted transfer shall be null and void and of no effect for all purposes. (b) No Stockholder may transfer any Shares at any time except in compliance with applicable federal or state securities laws. Section 3.2 Legend on Shares. (a) In addition to any other legend that may be required, each certificate for Shares shall bear a legend in substantially the following form: "THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURI-TIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD EXCEPT IN COMPLIANCE THEREWITH. THIS SECURITY IS ALSO SUBJECT TO AND THE HOLDER OF THIS SECURITY HAS OBLIGATIONS UNDER THE STOCKHOLDERS AGREEMENT, DATED AS OF MARCH 30, 1998, COPIES OF WHICH MAY 7 12 BE OBTAINED UPON REQUEST FROM THE SECRETARY OF APCOA, INC." (b) If any Shares shall cease to be Registrable Shares, the Company shall, upon the written request of the holder thereof and such other documentation as may be reasonably requested, issue to such holder a new certificate evidencing such Shares without the first sentence of the legend required by Section 3.2(a) endorsed thereon. If any Shares cease to be subject to this Agreement, the Company shall, upon the written request of the holder thereof and such other documentation as may be reasonably requested, issue to such holder a new certificate evidencing such Shares without the second sentence of the legend required by Section 3.2(a) endorsed thereon. Section 3.3 Permitted Transferees. Notwithstanding anything in this Agreement to the contrary, any Standard Party may at any time transfer any or all of its Shares to one or more of its Permitted Transferees, and Holberg or AP Holdings may at any time transfer any or all of its Shares to one or more Persons (subject to Section 4.1), if (a) such Permitted Transferees or Persons shall have agreed in writing to be bound by the terms of this Agreement with respect to such Shares and (b) the transfer to such Permitted Transferees or Persons is not in violation of applicable federal or state securities laws. ARTICLE IV RIGHT OF FIRST OFFER; PREEMPTIVE RIGHTS Section 4.1 Right of First Offer. During the First Offer Period, Holberg and/or its Affiliates (including AP Holdings) shall not engage in a Control Transaction unless Holberg and/or its Affiliates shall first offer to Dosher the opportunity to acquire all, but not less than all, of Holberg's and/or its Affiliates' Shares by giving a written notice to Dosher to such effect (a "First Offer Notice"). If within 60 days following the delivery of such First Offer Notice, Dosher fails to deliver to Holberg a written offer to acquire all capital stock of the Company which is not subject to any conditions not customary for stock purchase agreements relating to acquisitions of businesses such as the Company and which shall be irrevocable for 150 days from delivery, and which shall specify the cash price and other material terms upon which Dosher is prepared to make such acquisition (an "Dosher First Offer") or Dosher delivers an Dosher First Offer to Holberg and such Dosher First Offer is not accepted by Holberg, Holberg may enter into a definitive agreement respecting a Control Transaction with another party without prior notice to Dosher for 150 days after the earlier of the expiration of such 60-day period or the delivery of the Dosher First Offer, provided that the terms of such definitive agreement shall be more favorable to Holberg than those offered in the Dosher First Offer and such transaction must be consummated within 180 days after entering into a definitive agreement. If no definitive agreement is entered into within such 150-day period or the transaction is not consummated within 180 days after entering into a definitive agreement, the provisions of this Section 4.1 shall apply again prior to Holberg and/or its Affiliates engaging in a Control Transaction. Each of Holberg, the Company and any other party to any intended transaction shall have the right, in its sole discretion, at all times prior to consummation of the intended transaction to abandon, rescind, annul, withdraw or 8 13 otherwise terminate such transaction, whereupon none of Holberg, the Company nor any other such party shall have any liability or obligation to any Person with respect thereto. Nothing herein shall be construed to obligate Holberg, the Company or Dosher to accept any offer or terms for, or to consummate, any Control Transaction or other transaction. Section 4.2 Preemptive Rights. (a) Except as provided in (d) below, until the consummation of an Initial Public Offering, the Company shall not issue or sell any Shares (or securities or other instruments or rights convertible into, or exercisable or exchangeable for or to subscribe for or purchase Shares) unless the provisions of this Section 4.2 shall have been complied with by the Company. Prior to any such proposed issuance or sale, the Company shall notify each Standard Party in writing (the "Issuance Notice") of the number of Shares (or securities or other instruments convertible into, or exercisable or exchangeable for Shares) proposed to be issued or sold, the proposed price and the other material terms of such proposed issuance or sale. During the period of 30 days following the date of such notice (the "Subscription Period"), each Standard Party shall have the right to deliver to the Company a notice (a "Subscription Notice") electing to purchase, at the proposed issuance price and on the same terms as the proposed issuance, an amount of Shares (or securities or other instruments convertible into, or exercisable or exchangeable for Shares) (the "Maintenance Shares") as is necessary for such Standard Party to maintain its Percentage Ownership as of immediately prior to such proposed issuance ("Preemptive Rights"). (b) Any Standard Party which does not deliver to the Company a duly completed Subscription Notice within 30 days after such Standard Party's receipt of the Issuance Notice shall be deemed to have waived its right to purchase all or any part of its Maintenance Shares. In any such case, the Company shall have 180 days following such deemed waiver in which to issue or sell the applicable Shares (or securities or other instruments convertible into, or exercisable or exchangeable for Shares) on terms not materially different from those contained in the Issuance Notice. Promptly after any issuance or sale pursuant to this Section 4.2(b), the Company shall notify the Standard Parties of the consummation thereof. If the Company does not complete the issuance or sale of Shares (or securities or other instruments convertible into, or exercisable or exchangeable for Shares) within the 180-day period specified in this Section 4.2(b), the Company may not issue or sell such Shares (or securities or other instruments convertible into, or exercisable or exchangeable for Shares) without repeating the procedures in this Section 4.2. (c) If the proposed issuance or sale of the Shares (or securities or other instruments or rights convertible into, or exercisable or exchangeable for or to subscribe for or purchase Shares) is consummated, each Standard Party delivering a Subscription Notice shall purchase from the Company, and the Company shall issue and sell to each such Standard Party, such Shares (or securities or other instruments or rights convertible into, or exercisable or exchangeable for or to subscribe for or purchase Shares) on such terms and at the price set forth in the Issuance Notice. The closing of such sale(s) shall occur, subject to the Company's receipt of necessary approvals, on the day of consummation of the issuance or sale of such Shares (or securities or other instruments or rights convertible into, or exercisable or exchangeable for or to subscribe for or purchase Shares) to Persons other than the Standard Parties. Any default in per- 9 14 formance by any Standard Party shall relieve the Company of its obligations under this Section 4.2 with respect to such Standard Party. (d) The Preemptive Rights set forth above shall not apply to (i) the issuance of Shares (or securities or other instruments or rights convertible into, or exercisable or exchangeable for or to subscribe for or purchase Shares) (x) upon exercise of any option, warrant, convertible or exchangeable security or other rights to purchase or subscribe for Shares or (y) to employees, officers, directors, consultants, contractor or similar persons of (A) the Company or any Subsidiary or (B) any Affiliate of the Company engaged in the parking business, (ii) securities issued pursuant to any stock split, stock dividend or other similar stock recapitalization, (iii) the issuance of Shares (or securities or other instruments or rights convertible into, or exercisable or exchangeable for or to subscribe for or purchase Shares) in connection with any public offering, (iv) the issuance of Shares (or securities or other instruments or rights convertible into, or exercisable or exchangeable for or to subscribe for or purchase Shares) in connection with an acquisition or financing (but not any such issued for cash to a Person not otherwise engaging in a related transaction), or (v) the issuance of Shares (or securities or other instruments or rights convertible into, or exercisable or exchangeable for or to subscribe for or purchase Shares) representing less than 4% of the Shares outstanding as of the date of issuance. The Company shall not be under any obligation to consummate any proposed issuance or sale of Shares (or securities or other instruments or rights convertible into, or exercisable or exchangeable for or to subscribe for or purchase Shares), regardless of whether it shall have delivered an Issuance Notice pursuant to this Section 4.2. (e) The Company shall have the right, in its sole discretion, at all times prior to consummation of any issuance or sale to abandon, rescind, annul, withdraw or otherwise terminate such transaction, whereupon all Preemptive Rights in respect of such transaction pursuant to this Article shall become null and void, and the Company shall have no liability or obligation to any Person with respect thereto. Nothing herein shall be construed to obligate the Company to accept any offer or terms for, or to consummate, any transaction. Section 4.3 Transactions with Affiliates. The Company shall not engage in any transaction with any Affiliate of the Company not a Subsidiary of the Company, other than pursuant to agreements and arrangements set forth on Exhibit A hereto and other than any transaction on terms no less favorable to the Company than would be available in a transaction with an independent third party on an arm's-length basis. ARTICLE V TAG-ALONG AND DRAG-ALONG RIGHTS Section 5.1 Tag-Along Right. Holberg and/or its Affiliates (including AP Holdings) shall not engage in (x) a Control Transaction or (y) a sale of Shares (other than through a Control Transaction or an Underwritten Public Offering and other than to any sale to an Affiliate of Holberg or to any Standard Party or its Permitted Transferee) representing at least 25% of the Shares outstanding at such time, unless it shall have offered each Standard Party a right (a "Tag-Along Right") to participate in such transaction by including in such transaction a number of such Stan- 10 15 dard Party's Shares as represents the same percentage of such Standard Party's Shares as the subject Shares of Holberg (including AP Holdings) represent of Holberg's (including AP Holdings) Shares, as follows: (a) Holberg shall deliver to each Standard Party a written notice (a "Tag-Along Rights Notice") of such transaction at least 35 days prior to consummating any such transaction setting forth all material details of the intended transaction. (b) Any Standard Party desiring to participate in such transaction (a "Participating Stockholder") must deliver to Holberg, within 20 days of receiving a Tag-Along Rights Notice, written notice (a "Participation Notice") of Participating Stockholder's desire to participate in such transaction. Any Standard Party which does not deliver to Holberg a Participation Notice with respect to such Standard Party within the applicable time period shall be deemed to have waived its right to participate in such transaction. In any such case, Holberg shall have 180 days following the expiration of such 20-day period in which to consummate the transaction on terms not materially more favorable to Holberg than those contained in the Tag-Along Rights Notice. Promptly after the consummation of any such transaction, Holberg shall notify the Standard Parties of the consummation thereof. If Holberg does not complete the transaction within the 180-day period specified in this Section 5.1(b), Holberg may not engage in such transaction without repeating the procedures in this Section 5.1. (c) Concurrently with the Tag-Along Rights Notice, Holberg shall provide each Participating Stockholder with such information and instructions as shall be necessary to enable such Participating Stockholder to participate in the transaction on substantially the same terms and conditions as Holberg, and each Participating Stockholder shall cooperate in such transaction by providing Holberg all materials, such as executed purchase and sale agreements and stock transfer documentation, as Holberg may reasonably request. (d) Any material default in performance by any Standard Party shall relieve Holberg of its obligations under this Section 5.1 with respect to such Standard Party. (e) Each of Holberg and any other party to any transaction shall have the right, in its sole discretion, at all times prior to consummation of the transaction to abandon, rescind, annul, withdraw or otherwise terminate such transaction, whereupon all Tag-Along Rights in respect of such transaction pursuant to this Article shall become null and void, and neither Holberg nor any other such party shall have any liability or obligation to any Participating Stockholder with respect thereto. If such transaction is not consummated, the provisions of this Section 5.1 shall apply again to subsequent proposed transactions. Nothing herein shall be construed to obligate Holberg to accept any offer or terms for, or to consummate, any Control Transaction or other transaction. Section 5.2 Drag-Along Right. In the event that Holberg engages in a Control Transaction, Holberg shall have the right (a "Drag-Along Right") to require each Standard Party to participate in such transaction by including in such transaction a number of such Standard Party's Shares as represents the same percentage of such Standard Party's Shares as the subject 11 16 Shares of Holberg (including AP Holdings) represent of Holberg's (including AP Holdings) Shares, as follows: (a) Holberg shall deliver to each Standard Party a written notice (a "Drag-Along Rights Notice") of Holberg's exercise of its Drag-Along Right in such transaction at least 30 days prior to consummating any such transaction setting forth all material details of such transaction. (b) Holberg shall provide each Standard Party with such information and instructions as shall be necessary to enable such Standard Party to participate in the intended transaction on substantially the same terms and conditions as Holberg, and each Standard Party shall cooperate in such transaction by providing Holberg all materials, such as executed purchase and sale agreements and stock transfer documentation, as Holberg may reasonably request. (c) Holberg shall have the right, in its sole discretion, at all times prior to consummation of the transaction to abandon, rescind, annul, withdraw or otherwise terminate such transaction, and neither Holberg shall have any liability or obligation to any Participating Stockholder with respect thereto. Nothing herein shall be construed to obligate Holberg to accept any offer or terms for, or to consummate, any Control Transaction or other transaction. ARTICLE VI PUT AND CALL RIGHTS Section 6.1 Put Rights and Call Rights. Upon and at any time following the third anniversary of the Closing (as defined in the Combination Agreement), at the Company's election, the Company shall have the right to purchase from any Standard Party and such Standard Party shall be obligated to sell (a "Call Right"), and, at any Standard Party's election, such Standard Party shall have the right to sell to the Company and the Company shall be obligated to purchase (a "Put Right"), any or all of the Shares held by such Standard Party, on the terms and conditions described in this Article VI below. Section 6.2 Exercise of Rights. (a) To exercise a Put Right or a Call Right, the exercising party shall deliver a written notice (the "Option Notice") to the Company or Standard Party, as applicable specifying the number of Shares to be put or called consistent with the provisions hereof (the "Option Shares"), the applicable aggregate Price (as of the date of the Option Notice) and the applicable date for the consummation of the put or call, provided that in no event shall any party be permitted to exercise a Put Right in anticipation of or in connection with an Initial Public Offering (or in any event during a 60-day period following such time as the Company shall have given notice that it anticipates effecting an Initial Public Offering). (b) For purposes of this Section, the "Price" of any Share, as of any date, shall be the quotient of (i) (I) the product of (A) 10.5 and (B) the earnings before interest expense and interest income, taxes, depreciation and amortization of the Company as reflected in the Company's consolidated financial statements prepared consistently in accordance with past practice for the most recent twelve-calendar-month period less (II) the amount of all consolidated debt 12 17 (including capital lease obligations, but excluding trade payables) and preferred stock and minority interests of the Company at the end of such twelve-calendar-month period plus (III) the amount of cash and cash equivalents of the Company as of the end of the twelve-month period described in (I) in excess of the amount of such cash and cash equivalents normally held by the Company (which it is agreed shall be the amount of cash recorded on the financial records of the Company on the last day of such 12-month period, adding back any outstanding check balances which remain as credits in the cash accounts on the financial records of the Company and subtracting the revenues of the Company for the final three business days of such 12-month period for locations that deposit and record cash into cash accounts on the financial records of the Company), plus (IV) the net cash proceeds which would be received by the Company as of the relevant date of determination in respect of the issuance of Shares issuable in respect of securities convertible into or exercisable or exchangeable for Shares, stock appreciation rights or options, warrants and other irrevocable rights to purchase or subscribe for Shares or securities convertible into or exercisable or exchangeable for Shares, if all such securities, rights, options, warrants were converted, exercised or exchanged as of such date, plus (V) the product of (A) the net operating loss of the Company for federal income tax purposes that, pursuant to the provisions of the Internal Revenue Code of 1986, as amended (or any successor federal tax statute) (the "Code"), is available for carryforward at the end of the twelve-month period described in (I) and (B) 28%, divided by the (ii) the number of Fully Diluted Shares as of such date. (c) The Option Notice shall be irrevocable. The closing of the purchase of the Option Shares shall take place at the principal offices of the Company on the 10th business day after the date of the Option Notice. At such Closing, the Company shall deliver to the selling Standard Party, against delivery of duly endorsed certificates representing the Option Shares, a certified check or checks or wire transfer (as specified by the selling Standard Party) in the amount of the applicable aggregate Price. Section 6.3 Certain Limitations. (a) Notwithstanding anything to the contrary contained in Section 6.2, the Company shall not be obligated to purchase Option Shares on the date set forth in Section 6.2(c) above if (i) such purchase would violate any covenants binding on the Company (including those contained in debt instruments and other than those solely in favor of Holberg or its Affiliate) or (ii) if, in the case of a Put Right, upon such purchase, the Company would have purchased Option Shares pursuant to Put Rights representing in any calendar year 5% or more of the Fully Diluted Shares outstanding at the time of such purchase (however, if the consummation of a Put Right in full would result in the Company purchasing more than such 5% in such period, the Company shall consummate such Put Right in part up to the 5% limitation). In the event that the Company does not consummate any purchase of Option Shares on any date because of either of the events described in clauses (i) or (ii) of the immediately preceding sentence, the Company (and the Standard Party owning the applicable Option Shares) shall nonetheless be obligated to consummate such purchase as promptly as practicable following such events no longer being applicable, and shall pay upon such purchase the Price (as of the date of the Option Notice) plus accumulated interest thereon at a rate equal to the lesser of (x) 13% per annum and (y) a rate per annum that is 250 basis points in excess of the rate on any subordinated financing that may be incurred to finance the transactions contemplated by the Combination Agreement (compounded on a quarterly basis) to the date of consummation of the purchase, pro- 13 18 vided that, notwithstanding the foregoing, in the event that MW is terminated as Chief Executive Officer of the Company without Cause (as defined in the Employment Agreement) and the Company is thereafter not obligated to purchase Option Shares held by any MW Party or its Permitted Transferee because of either of the events described in clauses (i) or (ii) of the immediately preceding sentence, Holberg shall nonetheless be obligated to consummate such purchase as promptly as practicable. The Company shall not exercise its Call Right if it cannot for any reason purchase the Shares on the date determined pursuant to Section 6.2(c). (b) Notwithstanding anything to the contrary contained in Section 6.2, no MW Party or its Permitted Transferee shall be permitted to exercise any Put Right, and the Company shall not be permitted to exercise any Call Right with respect to any Shares held by any MW Party or its Permitted Transferee, for so long as MW is the Chief Executive Officer of the Company. (c) Notwithstanding anything to the contrary contained in Section 6.2, the Company shall not be permitted to exercise any Call Right with respect to any Shares held by any MW Party or its Permitted Transferee unless the Company shall exercise Call Rights at such time with respect to Shares representing at least, in the aggregate, at the lesser of (i) all Shares held by such Persons and (ii) Shares representing at least 5% of the Shares outstanding at the date of the Option Notice with respect to such Shares. Section 6.4 Expiration of Obligations. The foregoing obligations contained in this Article VI (but not any outstanding payment obligations under this Article VI (which shall be paid in full in cash upon consummation of the Initial Public Offering) and the obligations contained in Section 6.5) shall terminate upon the consummation of an Initial Public Offering. Section 6.5 Certain Additional Payments. In the event that the Company purchases any Option Shares upon the exercise of any Call Right pursuant to Section 6.2 and, within 18 months following such purchase of Option Shares, the Company consummates an Initial Public Offering or Control Transaction, upon consummation of such Initial Public Offering or Control Transaction, the Company shall pay in cash to the Standard Parties selling such Option Shares the product of (A) the number of Option Shares and (B) the excess, if any, of (i) the per Share net proceeds received by the Company in such Initial Public Offering or Control Transaction over (ii) the Price per Option Share paid by the Company in such purchase, provided that the Company shall not be obligated to make any payment under this Section 6.5 with respect to any Option Shares purchased from any MW Party or its Permitted Transferee following the resignation of MW as Chief Executive Officer of the Company other than for Good Reason or his termination for Cause. ARTICLE VII REGISTRATION RIGHTS Section 7.1 Incidental Registrations. (a) If the Company proposes to register any Shares under the Securities Act for sale by Holberg and/or its Affiliates (other than the Company, but including AP Holdings) in an Underwritten Public Offering, it shall each such time, subject to 14 19 the provisions of Section 7.1(b), give prompt written notice at least 30 days prior to the anticipated filing date of the registration statement relating to such registration to each Standard Party, which notice shall set forth the rights of such Standard Party under this Section 7.1 and shall offer each Standard Party the opportunity to include in such registration statement such Registrable Shares as each such Standard Party may request (an "Incidental Registration"). Upon the written request of any such Standard Party made within 15 days after the receipt of notice from the Company (which request shall specify the number of Registrable Shares intended to be disposed of by such Standard Party), the Company shall use its reasonable efforts to effect the registration under the Securities Act of all Registrable Shares which the Company has been so requested to register by such Standard Party, to the extent requisite to permit the disposition of the Registrable Shares so to be registered, provided that (i) all such Standard Parties requesting to be included in the registration must sell their Registrable Shares to the underwriters selected by Holberg on the same terms and conditions as apply to Holberg, and (ii) if, at any time after giving written notice of its intention to register any securities pursuant to this Section 7.1(a) and prior to the effective date of the registration statement filed in connection with such registration, the Company or Holberg (as applicable) shall determine for any reason not to register or to delay registration of such Shares, the Company shall give written notice to all such Standard Parties and, thereupon, (A) in the case of a determination not to register, the Company shall be relieved of its obligation to register any Registrable Shares in connection with such registration and (B) in the case of a determination to delay such registration, the Company shall be permitted to delay registration of any Registrable Shares requested to be included in such Incidental Registration Statement for the same period as the delay in registering such other Shares. The Company shall pay all Registration Expenses in connection with each registration of Shares requested pursuant to this Section 7.1. (b) If the managing underwriter of such Underwritten Public Offering advises the Company that, in its view, the amount of Registrable Shares which the Company and/or Holberg and such Standard Parties intend to include in such registration exceeds the largest number of Registrable Shares which can be sold without having an adverse effect on such offering, including the price at which such Registrable Shares can be sold (the "Maximum Offering Size"), the Company shall include in such registration, up to the Maximum Offering Size, all Registrable Shares requested to be included in such registration by Holberg or any Standard Party pursuant to this Section 7.1 (allocated, if necessary for the offering not to exceed the Maximum Offering Size, pro rata among such entities on the basis of the relative number of Registrable Shares so requested to be included in such registration). Section 7.2 Holdback Agreements. Each Standard Party agrees not to effect any public sale or distribution, including any sale pursuant to Rule 144, or any successor provision, under the Securities Act, of any Registrable Shares, and not to effect any such public sale or distribution of any other Shares or of any security or right convertible into or exchangeable or exercisable for or to subscribe for or purchase any Shares (in each case, other than as part of such Underwritten Public Offering) during the 14 days (or such lesser period of time as the underwriters may agree to) prior to the effective date of such registration statement (except as part of such registration) or during the 180-day period after such effective date. 15 20 Section 7.3 Registration Procedures. Whenever any of the Standard Parties requests that any Registrable Shares be registered pursuant to Section 7.1 or 7.2, the Company shall, subject to the provisions of such Sections, use its reasonable efforts to effect the registration of such Registrable Shares in accordance with the intended method of disposition thereof as quickly as reasonably practicable, and in connection with any such request: (a) The Company shall as promptly as practicable prepare and file with the SEC a registration statement on any form for which the Company then qualifies or which counsel for the Company shall deem appropriate and which form shall be available for the sale of the Registrable Shares to be registered thereunder in accordance with the intended method of distribution thereof, and use its reasonable efforts to cause such filed registration statement to become effective. (b) The Company shall, if requested, prior to filing a registration statement or prospectus or any amendment or supplement thereto, furnish to each Person which is participating in a registration and each underwriter, if any, of the Registrable Shares covered by such registration statement copies of such registration statement as proposed to be filed, and thereafter the Company shall furnish to each such Person and underwriter, if any, such number of copies of such registration statement, each amendment and supplement thereto (in each case including all exhibits thereto and documents incorporated by reference therein), the prospectus included in such registration statement (including each preliminary prospectus and all amendments and supplements thereto) and such other documents as such Person or underwriter may reasonably request in order to facilitate the disposition of the Registrable Shares owned by such Person which are covered by such registration statement. (c) After the filing of the registration statement, the Company shall (i) cause the related prospectus to be supplemented by any required prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Securities Act, (ii) comply with the provisions of the Securities Act with respect to the disposition of all Registrable Shares covered by such registration statement during the applicable period in accordance with the intended methods of disposition by the sellers thereof set forth in such registration statement or supplement to such prospectus, and (iii) promptly notify each Person holding Registrable Shares covered by such registration statement of any stop order issued or threatened by the SEC and shall take all reasonable actions required to prevent the entry of such stop order or to remove it if entered. (d) The Company shall use its reasonable efforts to (i) register or qualify the Registrable Shares covered by such registration statement under such other securities or blue sky laws of such jurisdictions in the United States as any Person holding such Registrable Shares reasonably (in light of such Person's intended plan of distribution) requests, (ii) cause such Registrable Shares to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of the Company, and (iii) do any and all other acts and things that may be reasonably necessary or advisable to enable such Person to consummate the disposition of the Registrable Shares owned by such Person, provided that the Company shall not be required to (A) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this paragraph (d), (B) subject itself to 16 21 taxation in any such jurisdiction, or (C) consent to general service of process in any such jurisdiction. (e) The Company shall promptly notify each Person holding such Registrable Shares covered by such registration statement, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the occurrence of an event requiring the preparation of a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Shares, such prospectus shall not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading and promptly prepare and make available to each such Person and file with the SEC any such supplement or amendment. (f) The Company may require each such Person to promptly furnish in writing to the Company such information regarding the distribution of the Registrable Shares as the Company may from time to time reasonably request and such other information as may be legally required in connection with such registration. (g) Each such Person agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 7.3(e), such Person shall forthwith discontinue disposition of Registrable Shares pursuant to the registration statement covering such Registrable Shares until such Person receives the copies of the supplemented or amended prospectus contemplated by Section 7.3(e), and, if so directed by the Company, such Person shall deliver to the Company all copies, other than any permanent file copies then in such Person's possession, of the most recent prospectus covering such Registrable Shares at the time of receipt of such notice. Section 7.4 Indemnification by the Company. The Company agrees to indemnify and hold harmless each Person holding Registrable Shares covered by a registration statement, its officers, directors and agents, and each Person, if any, who controls such Person within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages and liabilities caused by any untrue statement or alleged untrue statement of a material fact contained in any registration statement or prospectus relating to the Registrable Shares (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto) or any preliminary prospectus, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages or liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission so made in reliance upon and in conformity with information furnished in writing to the Company by such Person or on such Person's behalf expressly for use therein, provided that with respect to any untrue statement or omission or alleged untrue statement or omission made in any preliminary prospectus, or in any prospectus, as the case may be, the indemnity agreement contained in this paragraph shall not apply to the extent that any such loss, claim, damage, liability or expense results from the fact that a current copy of the prospectus (or, in the case of a prospectus, the prospectus as amended or supplemented) was not sent or given to the Person asserting any such loss, claim, damage, liability or expense at or prior to the written con- 17 22 firmation of the sale of the Registrable Shares concerned to such Person if the Company had provided such prospectus and it was the responsibility of such Person to provide such Person with a current copy of the prospectus (or such amended or supplemented prospectus, as the case may be) and such current copy of the prospectus (or such amended or supplemented prospectus, as the case may be) would have cured the defect giving rise to such loss, claim, damage, liability or expense. The Company also agrees to indemnify any underwriters of the Registrable Shares, their officers and directors and each Person who controls such underwriters on substantially the same basis as that of the indemnification of the Person provided in this Section 7.4. Section 7.5 Indemnification by Participating Persons. (a) Subject to Section 7.5(b), each Person holding Registrable Shares included in any registration statement agrees, severally but not jointly, to indemnify and hold harmless the Company, its officers, directors and agents and each Person, if any, who controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the foregoing indemnity from the Company to such Person, but only (i) with respect to untrue statements or omissions, or alleged untrue statements or omissions in a registration statement (or any amendment thereto) or any prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with information furnished in writing by such Person or on such Person's behalf expressly for use in any registration statement or prospectus relating to the Registrable Shares, or any amendment or supplement thereto, or any preliminary prospectus, or (ii) to the extent that any loss, claim, damage, liability or expense results from the fact that a current copy of the prospectus (or, in the case of a prospectus, the prospectus as amended or supplemented) was not sent or given to the Person asserting any such loss, claim, damage, liability or expense at or prior to the written confirmation of the sale of the Registrable Shares concerned to such Person if it is determined that it was the responsibility of such Person to provide such Person with a current copy of the prospectus (or such amended or supplemented prospectus, as the case may be) and such current copy of the prospectus (or such amended or supplemented prospectus, as the case may be) would have cured the defect giving rise to such loss, claim, damage, liability or expense and reasonable quantities of such prospectus (or amendments or supplements thereto) had been timely provided to such Person by the Company. Subject to Section 7.5(b), each such Person also agrees to indemnify and hold harmless underwriters of the Registrable Shares, their officers and directors and each Person who controls such underwriters on substantially the same basis as that of the indemnification of the Company provided in this Section 7.5. As a condition to including Registrable Shares in any registration statement filed in accordance with this Article, the Company may require that it shall have received an undertaking reasonably satisfactory to it from any underwriter to indemnify and hold it harmless to the extent customarily provided by underwriters with respect to similar securities. (b) No Person shall be liable under Section 7.5(a) for any damage thereunder in excess of the net proceeds realized by such Person in the sale of the Registrable Shares of such Person. Section 7.6 Conduct of Indemnification Proceedings. In case any proceeding (including any governmental investigation) shall be instituted involving any Person in respect of which indemnity may be sought pursuant to this Article VII, such Person (an "Indemnified 18 23 Party") shall promptly notify the Person against whom such indemnity may be sought (the "Indemnifying Party") in writing and the Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to such Indemnified Party, and shall assume the payment of all fees and expenses, provided that the failure of any Indemnified Party to so notify the Indemnifying Party shall not relieve the Indemnifying Party of its obligations hereunder except to the extent that the Indemnifying Party is prejudiced by such failure to notify. In any such proceeding, any Indemnified Party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless (i) the Indemnifying Party and the Indemnified Party shall have mutually agreed to the retention of such counsel, or (ii) in the reasonable judgment of such Indemnified Party representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the Indemnifying Party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) at any time for all such Indemnified Parties, and that all such fees and expenses shall be reimbursed as they are incurred. In the case of any such separate firm for the Indemnified Parties, such firm shall be designated in writing by the Indemnified Parties. The Indemnifying Party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent, or if there be a final judgment for the plaintiff, the Indemnifying Party shall indemnify and hold harmless such Indemnified Parties from and against any and all losses, claims, damages, liabilities and expenses (to the extent stated above) by reason of such settlement or judgment. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Party from all liability arising out of such proceeding. Section 7.7 Contribution. (a) If the indemnification provided for in this Article VII is held by a court of competent jurisdiction to be unavailable to the Indemnified Parties in respect of any losses, claims, damages or liabilities referred to herein, then each such Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such losses, claims, damages or liabilities (i) as between the Company and the Persons holding Registrable Shares covered by a registration statement on the one hand and the underwriters on the other, in such proportion as is appropriate to reflect the relative benefits received by the Company and such Persons on the one hand and the underwriters on the other, from the offering of the Registrable Shares, or if such allocation is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits but also the relative fault of the Company and such Persons on the one hand and of such underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations and (ii) as between the Company on the one hand and each such Person on the other, in such proportion as is appropriate to reflect the relative fault of the Company and of each such Person in connection with such statements or omissions, as well as any other relevant equitable considerations. The relative benefits received by the Company and such Persons on the one hand and such underwriters on the other shall be deemed to be in the same proportion as the total proceeds 19 24 from the offering (net of underwriting discounts and commissions but before deducting expenses) received by the Company and such Persons bear to the total underwriting discounts and commissions received by such underwriters, in each case as set forth in the table on the cover page of the prospectus. The relative fault of the Company and such Persons on the one hand and of such underwriters on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company and such Persons or by such underwriters. The relative fault of the Company on the one hand and of each such Person on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by such party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. (b) The Company and the Persons agree that it would not be just and equitable if contribution pursuant to this Section 7.7 were determined by pro rata allocation (even if the underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an Indemnified Party as a result of the losses, claims, damages or liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 7.7, no underwriter shall be required to contribute any amount in excess of the amount by which the underwriting discount applicable to Registrable Shares purchased by such underwriter in such offering exceeds the amount of any damages which such underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission, and no Person shall be required to contribute any amount in excess of the amount by which the net proceeds realized on the sale of the Registrable Shares of such Person exceeds the amount of any damages which such Person has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. Each Person's obligation to contribute pursuant to this Section 7.7 is several in the proportion that the proceeds of the offering received by such Person bears to the total proceeds of the offering received by all such Persons and not joint. Section 7.8 Participation in Public Offering. No Person may participate in any Underwritten Public Offering hereunder unless such Person (a) agrees to sell such Person's securities on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably requested in connection with such Underwritten Public Offering. Section 7.9 Other Indemnification. Indemnification similar to that specified herein (with appropriate modifications) shall be given by the Company and each Stockholder participating therein with respect to any required registration or other qualification of securities 20 25 under any federal or state law or regulation or governmental authority other than the Securities Act. ARTICLE VIII CERTAIN COVENANTS AND AGREEMENTS Section 8.1 Confidentiality. (a) Each Stockholder hereby agrees that Confidential Information furnished and to be furnished to it was and shall be made available in connection with such Stockholder's investment in the Company. Each Stockholder agrees that it shall not use the Confidential Information in any way to the competitive disadvantage of the Company. Each Stockholder further acknowledges and agrees that it shall not disclose any Confidential Information to any Person, provided that Confidential Information may be disclosed (i) to such Stockholder's Representatives (as defined in the Combination Agreement) in the normal course of the performance of their duties as long as such Stockholder's Representatives are advised of the confidential nature of such information and agree to be bound by the provisions hereof, (ii) to the extent required by applicable law, rule or regulation (including complying with any oral or written questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process to which a Person is subject) provided that, in the event that such Stockholder is so required to disclose any Confidential Information, such Stockholder shall give the Company prompt notice of such request so that the Company may seek an appropriate protective order and if such Stockholder is nonetheless so compelled to disclose Confidential Information, such Stockholder may disclose such information without liability hereunder, (iii) to any Person to whom such Stockholder is contemplating a transfer of its Shares (provided that such transfer would not be in violation of the provisions of this Agreement and as long as such potential transferee is advised of the confidential nature of such information and agrees to be bound by a confidentiality agreement in form and substance satisfactory to the Company and consistent with the provisions hereof), or (iv) if the prior written consent of the Board shall have been obtained. Nothing contained herein shall prevent the use of Confidential Information in connection with the assertion or defense of any claim by or against the Company or any Stockholder. (b) "Confidential Information" shall mean any information concerning the Company, its financial condition, business, operations or prospects in the possession of or to be furnished to any Stockholder in its capacity as a stockholder or potential stockholder of the Company or by virtue of its present or former right to designate a director of the Company and shall also include the identity of the owners of equity interests in the Standard Parties, provided that the term "Confidential Information" does not include information which (i) becomes generally available to the public other than as a result of a disclosure by a Stockholder or its Representatives in violation of such Person's obligations, (ii) is or was available to such Stockholder on a nonconfidential basis prior to its disclosure to such Stockholder or its Representatives by the Company, or (iii) was or becomes available to such Stockholder on a non-confidential basis from a source other than the Company, provided that such source is or was (at the time of receipt of the relevant information) not, to the best of such Stockholder's knowledge, bound by a confidentiality agreement with (or other confidentiality obligation to) the Company or another Person. 21 26 Section 8.2 Indirect Action; No Inconsistent Agreements. Each party hereto agrees not to take, or cause or permit to be taken indirectly, any action which if taken, caused or permitted to be taken by such Person directly would constitute a violation of this Agreement. ARTICLE IX MISCELLANEOUS Section 9.1 Entire Agreement; Benefit. This Agreement (including agreements incorporated herein) contains the entire agreement between the parties hereto with respect to the subject matter hereof and there are no agreements, understandings, representations or warranties between the parties hereto other than those set forth or referred to herein. This Agreement is not intended to confer upon any Person not a party hereto (or their successors and assigns permitted hereby) any rights or remedies hereunder. Section 9.2 Interpretation; Absence of Presumption. (a) For the purposes hereof, (i) words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other gender as the context requires, (ii) the terms "hereof," "herein," and "herewith" and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement, and Article, Section and paragraph references are to the Articles, Sections and paragraphs to this Agreement unless otherwise specified, (iii) the word "including" and words of similar import when used in this Agreement shall mean "including, without limitation," unless the context otherwise requires or unless otherwise specified, (iv) the word "or" shall not be exclusive, and (v) provisions shall apply, when appropriate, to successive events and transactions. (b) This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting or causing any instrument to be drafted. Section 9.3 Severability. Any provision hereof which is invalid or unenforceable shall be ineffective to the extent of such invalidity or unenforceability, without affecting in any way the remaining provisions hereof. Section 9.4 Assignability. This Agreement and any rights or obligations contained herein shall not be assignable, provided that any Person acquiring Shares who is required by the terms of this Agreement to become a party hereto shall execute and deliver to the Company an agreement to be bound by this Agreement and shall thenceforth be a Stockholder for purposes of this Agreement, having such rights and obligations as are consistent with those rights and obligations applicable to the transferor of such Shares, except as otherwise provided in this Agreement. (a) Amendment; Waiver; Termination. This Agreement may not be modified or amended except by an instrument or instruments in writing signed by the party against whom enforcement of any such modification or amendment is sought. Either party hereto may, only by an instrument in writing, waive compliance by the other party hereto with any term or provision 22 27 hereof on the part of such other party hereto to be performed or complied with. The waiver by any party hereto of a breach of any term or provision hereof shall not be construed as a waiver of any subsequent breach. Section 9.5 Notices. All notices and other communications hereunder shall be sufficiently given for all purposes hereunder if in writing and delivered personally, sent by documented overnight delivery service or, to the extent receipt is confirmed, telecopy, telefax or other electronic transmission service to the appropriate address or number as set forth below. Notices to Holberg or AP Holdings or the Company shall be addressed to: Holberg Industries, Inc. 545 Steamboat Road Greenwich, Connecticut 06830 Attention: Chief Financial Officer Telecopy Number: (203) 661-5756 with a copy to: Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 Attention: Adam O. Emmerich, Esq. Telecopy Number: (212) 403-2000 or at such other address and to the attention of such other person as Holberg or AP Holdings or the Company may designate by written notice to the Standard Parties. Notices to the Standard Parties shall be addressed to: Dosher Partners, L.P., 200 East Randolph Drive, Suite 4800 Chicago, Illinois 60601 Attention: Myron C. Warshauer Telecopy Number: (312) 240-0191 with copies to: Standard Parking, L.P. 200 East Randolph Drive, Suite 4800 Chicago, Illinois 60601 Attention: Michael Wolf Telecopy Number: (312) 240-0191 and 23 28 SP Associates c/o JMB Realty Corp. 900 North Michigan Avenue, 19th Floor Chicago, Illinois 60611 Attention: Patrick J. Meara Telecopy Number: (312) 915-2310 and Mayer Brown & Platt 190 South LaSalle Street Chicago, Illinois 60603 Attention: Edward S. Best, Esq. Telecopy Number: (312) 701-7711 and Katten Muchin & Zavis 525 West Monroe Street, Suite 1600 Chicago, Illinois 60661 Attention: Howard S. Lanznar, Esq. Telecopy Number: (312) 902-1061 or at such other address and to the attention of such other person as the Standard Parties may designate by written notice to Holberg and AP Holdings and the Company. In addition, any Person who becomes an Stockholder shall provide its notices information to the Company, which shall promptly provide such information to each other Stockholder. Section 9.6 Headings; Definitions. The Section, Article and other headings contained in this Agreement are inserted for convenience of reference only and shall not affect the meaning or interpretation of this Agreement. All capitalized terms defined herein are equally applicable to both the singular and plural forms of such terms. Section 9.7 Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the parties hereto and delivered to the other parties hereto. Copies of executed counterparts transmitted by telecopy, telefax or other electronic transmission service shall be considered original executed counterparts for purposes of this Section, provided that receipt of copies of such counterparts is confirmed. Section 9.8 Specific Enforcement. Each party hereto acknowledges that remedies at law may be inadequate to protect the other party against any actual or threatened breach of this Agreement by the other parties and, without prejudice to any other rights and remedies otherwise available to any party, each party agrees to the granting of injunctive relief in any other party's favor without proof of actual damages. In the event of litigation relating to this Agree- 24 29 ment, if a court of competent jurisdiction determines that this Agreement has been breached by a party, then such party shall reimburse the other party for costs and expenses (including, but not limited to, reasonable legal fees and expenses) incurred in connection with all such litigation. Section 9.9 Governing Law; Jurisdiction and Forum. (a) This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without reference to the choice of law principles thereof. (b) The parties hereto agree that the appropriate and exclusive forum for any disputes between any of the parties hereto arising out of this Agreement or the transactions contemplated hereby shall be any state or federal court in the State of Delaware. The parties hereto further agree that no party hereto shall bring suit with respect to any disputes arising out of this Agreement or the transactions contemplated hereby, except as expressly set forth below for the execution or enforcement of judgment, in any court or jurisdiction other than the above specified court. The foregoing shall not limit the rights of any party hereto to obtain execution of judgment in any other jurisdiction. The parties hereto further agree, to the extent permitted by law, that a final and unappealable judgment against any of them in any action or proceeding contemplated above shall be conclusive and may be enforced in any other jurisdiction within or outside the United States by suit on the judgment, a certified or exemplified copy of which shall be conclusive evidence of the fact and amount of such judgment. (c) By the execution and delivery of this Agreement, each party hereto (i) irrevocably designates and appoints The Corporation Trust Company ("CTC") care of CT Corporation System at its offices in Wilmington, Delaware, as its authorized agent upon which process may be served in any action or proceeding arising out of or relating to this Agreement, (ii) submits to the personal jurisdiction of any state or federal court in the State of Delaware in any such action or proceeding, and (iii) agrees that service of process upon CTC shall be deemed in every respect effective service of process upon such person in any such action or proceeding. Each party hereto further agrees to take any and all actions, including the execution and filing of any and all such documents and instruments, as may be necessary to continue such designation and appointment of CTC in full force and effect so long as this Agreement shall be in effect. The foregoing shall not limit the rights of any party hereto to serve process in any other manner permitted by law. (d) To the extent that any party hereto has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, such person hereby irrevocably waives such immunity in respect of its obligations with respect to this Agreement. Section 9.10 Community Property States. Each Standard Party, if such Standard Party is a natural person, represents that (a) such Standard Party's spouse has duly executed the Consent of Spouse attached hereto, (b) such Consent of Spouse was delivered along with such Standard Party's signature page hereto and (c) such Consent of Spouse was duly authorized, 25 30 executed and delivered by such spouse and effectively binds such spouse to the terms set forth therein. 26 31 IN WITNESS WHEREOF, the parties hereto have caused this Stockholders Agreement to be duly executed as of the day and year first above written. DOSHER PARTNERS, L.P. By: /s/ Myron C. Warshauer ------------------------------------------ Name: Myron C. Warshauer Title: General Partner of Dosher Partners, L.P. SP ASSOCIATES By: SP MANAGERS, L.P. MANAGING PARTNER By: STANDARD MANAGERS, INC., GENERAL PARTNER By: /s/ Patrick Meara ------------------------------------------ Name: Patrick Meara Title: Vice President APCOA, INC. By: /s/ Michael J. Celebrezze ------------------------------------------ Name: Michael J. Celebrezze Title: Chief Financial Officer HOLBERG INDUSTRIES, INC. By: /s/ A. Petter 0stberg ------------------------------------------ Name: A. Petter 0stberg Title: Senior Vice President, Chief Financial Officer and Treasurer 27 32 AP HOLDINGS, INC. By: /s/ Michael J. Celebrezze ------------------------------------------ Name: Michael J. Celebrezze Title: Treasurer 28 33 Consent of Spouse The undersigned is the spouse of one of the Standard Parties and hereby acknowledges that he/she has read the attached Stockholders Agreement and knows its contents. The undersigned is aware that by its provisions, his/her spouse agrees to sell all of his/her Shares [and other securities], including his/her community property interest therein, if any, on the occurrence of certain events. The undersigned hereby consents to the sale, approves the provisions of the Stockholders Agreement, and agrees that those securities and his/her interest in them, if any, are subject to the provisions of the Stockholders Agreement and that he/she will take no action at any time to hinder operation of the Stockholders Agreement on those securities or his/her interest, if any, in them, and, to the extent required, will take any further actions necessary to effectuate the provisions of the Stockholders Agreement. -------------------------------- [Spouse] 29 34 Exhibit A AFFILIATE TRANSACTIONS The Company has certain agreements and arrangements under which it engages, and expects in the future to continue to engage, in transactions with Affiliates of the Company which are not Subsidiaries of the Company, as follows: o As set forth in the Offering Memorandum (the "Offering Memorandum") dated March 25, 1998 relating to $140,000,000 of the Company's 9 1/4 % Senior Subordinated Noted due 2008 (the "Notes"), a copy of which has been provided to each party to this Agreement and which is hereby incorporated herein by reference. o As permitted by the provisions of the Indenture (as defined in the Offering Memorandum) and the New Credit Facility (as defined in the Offering Memorandum), a copy of each of which has been provided to each party to this Agreement and which is hereby incorporated herein by reference. A-1 EX-10.8 10 EMPLOYMENT AGREEMENT: LAROCCO, JR. 1 Exhibit 10.8 EXECUTIVE TRANSITION EMPLOYMENT AGREEMENT THIS AGREEMENT is executed as of the 1st day of April, 1998 by and between APCOA, INC., a Delaware corporation with offices at 800 Superior Avenue, Cleveland, Ohio 44114 (the "Company"), and JAMES V. LaROCCO (the "Executive"). W I T N E S E T H: WHEREAS, the Company is engaged in the business of operating and managing open air parking lots and indoor garages and ramps for the purpose of parking motor vehicles on a leasehold, license, concession or management fee basis through the United States under agreement with municipalities, owners of properties, and/or otherwise (the "Business of the Company"); and WHEREAS, the Executive has been employed by the Company in a management capacity for several years and during the course of his employment, the Executive has become an experienced and valuable employee and is knowledgeable with respect to the Business of the Company, its trade secrets, customers, market areas, sources of supply and manner of doing business; and WHEREAS, the Company desires to continue to employ the Executive in a transition capacity and the Executive desires to continue to work for the Company in this capacity upon the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the premises hereto and the agreements and covenants hereinafter contained, the parties hereto, intending to be legally bound, mutually agree as follows: 1. Employment and Duties. The Company hereby employs the Executive, as a transition employee to serve as Executive Vice President Corporate Development of the Company (or under such title as the 2 President may hereafter assign to him), since Executive's previous position was eliminated as of April 1, 1998. The Executive hereby accepts employment upon the terms and conditions hereinafter set forth. The Executive shall be responsible for operations of the Company as set forth and prescribed by Company operating procedure and policy, corporate standards, and contractual guidelines. He shall report to the President or his designee and perform such duties as may be reasonably assigned to him by such officer. The Executive agrees to comply in all material respects with the Standards of Conduct set forth in Exhibit A hereof ("Standards of Conduct"). The Executive shall devote his entire time, attention and energies to the Business of the Company, and shall not, during the term of this Agreement, engage in any other business activities that will interfere with the Executive's employment pursuant to this Agreement. 2. Term. The term of this Agreement shall be for a period eighteen (18) months commencing on April 1, 1998 and ending on September 30, 1999. 3. Compensation and Other Benefits. For the services to be rendered by him pursuant to this Transition Employment Agreement, the Company agrees to provide the Executive, so long as he shall be employed by the Company, the following compensation and benefits: (a) Salary at the rate of not less than $190,000.00 per annum ("Base Salary"), payable not less often than monthly in equal installments at the end of each month. The Base Salary figure shall be reviewed annually and may be increased at the sole discretion of the President. Any such increase in the Base Salary shall be deemed for all purposes hereunder to be an amendment to this Agreement and this Agreement as so amended shall remain in effect until otherwise terminated as provided herein. 2 3 (b) Bonus for 1998 of $76,000.00 will be paid on or before April 15, 1999. Bonus for 1999 shall be paid on or before April 15, 2000, according to the Executive Bonus Plan set forth in Exhibit B hereof. (c) Group health and welfare coverages, other fringe benefits such as are enjoyed by senior executives of the Company generally, and such other emoluments and fringe benefits as shall be determined by the Company from time to time. (d) Four (4) weeks of vacation annually during which time the Executive's compensation will be paid in full and all other benefits under this Agreement shall continue to be provided to him. (e) The Company will furnish the Executive with an automobile, will provide appropriate insurance coverage for such automobile, and will reimburse the Executive for all gasoline and maintenance costs relating to such automobile. Any such reimbursement shall be conditioned upon the Executive presenting to the Company, in accordance with applicable Company policies and procedures, an itemized account concerning his use of the automobile and distinguishing between use in connection with the Business of the Company and otherwise. (f) The Company will reimburse the Executive for reasonable business expenses incurred by the Executive relating to the conduct of the Business of the Company. Any such expense reimbursement shall be conditioned upon the Executive presenting to the Company, in accordance with applicable Company policies and procedures, an itemized account of such expenses with supporting documents. Reimbursable expenses shall include reasonable and necessary expenses for entertainment, travel, meals and hotel accommodations. 3 4 (g) The Executive shall be provided with directors and officers liability insurance coverage to the same extent as the other Directors and/or senior officers of the Company, and shall be indemnified by the Company to the full extent permitted by law against liability claims arising out of his activities as an employee of the Company or a member of the Board. (h) The Company will continue to provide a Supplemental Pension Plan as described in Exhibit C. (i) The Company will provide Executive severance pay in the gross amount of $157,872.00 on April 10, 1998. (j) The Company shall pay Executive a severance bonus in the amount of $66,500.00 on September 30, 1998. (k) Phantom Equity and Stock Plans. During the 1998 calendar year, the Company shall adopt an equity incentive plan or program (the "Equity Plan") in which certain of the Company's key executives will be eligible to participate. During the Employment Period, the Executive shall be entitled to participate in the Equity Plan from and after the effective date thereof, in accordance with the terms and conditions of such plan. Benefits available to Executive under the terms of such Equity Plan shall be no less than the benefits available to peer executives. Furthermore, Executive shall participate in any stock awards or stock options ("stock plan") to the same extent and on the same terms as are available to peer executives. For purposes of this Agreement, the term "peer executives" shall refer to executive vice presidents of Company, which term shall not include executive vice presidents of any subsidiary companies or affiliates. 4 5 4. Termination of Agreement. (a) This Agreement shall terminate upon the death of the Executive. Upon the Executive's death, a beneficiary (the "Beneficiary") designated by the Executive as prescribed in Section 12 shall be entitled to receive: (i) the amount of the Executive's Base Salary through the date of his death; (ii) any accrued by unpaid amount under Section 3(b) and the amount determined under Section 3(b) hereof for the Company's fiscal year in which the Executive's death occurs as though the Executive had survived and continued to work for the Company pursuant to this Agreement through the end of such fiscal year, payable at the time prescribed in Exhibit B; and (iii) an aggregate amount equal to the sum of (A) the annual Base Salary at the time of the Executive's death, and (B) $9,600.00 (which represents the estimated annual value of the Executive's right to use of an automobile provided by the Company and related benefits described in Section 3(e) hereof), payable in twelve (12) equal monthly installments commencing on the first day of the month next following the Executive's death. In addition, for a period of twelve (12) months following the Executive's death, (a) the Company shall continue to provide the benefits under Section 3(c) to such persons who would have been entitled to such benefits had the Executive survived and continued to be employed by the Company hereunder for such twelve (12) month period. 5 6 (b) This Agreement shall terminate in the event of the Executive's termination of employment because of disability (as defined below). In such event, the Executive shall be entitled to receive: (i) the amount of the Executive's Base Salary through the date of his termination of employment; (ii) any accrued but unpaid amount under Section 3(b) and the amount determined under Section 3(b) hereof for the Company's fiscal year in which the Executive's disability occurs as though the Executive had continued to work for the Company pursuant to this Agreement through the end of such fiscal year, payable at the time prescribed in Exhibit B; and (iii) an aggregate amount equal to the sum of (A) the annual Base Salary at the time of the Executive's disability and (B) $9,600.00 (which represents the estimated annual value of the Executive's right to use of an automobile provided by the Company and related benefits described in Section 3(e) hereof), payable in twelve (12) equal monthly installments commencing on the first day of the month next following the Executive's termination of employment; provided, however, that such payments shall be reduced by any amounts payable to the Executive under any disability benefit program (whether or not insured) maintained by the Company. In addition, for a period of twelve (12) months following the Executive's termination of employment because of disability, the Company shall continue to provide the benefits under Section 3(c) to such persons (including the Executive) who would have been entitled to such benefits had the Executive continued to be employed by the Company for such twelve (12) month period. 6 7 For purposes of this Agreement, "disability" shall mean any physical or mental impairment or disability which prevents the Executive from performing his duties under this Agreement for a period of at least one hundred twenty (120) days and which is expected to be of permanent duration. A determination of whether the Executive is disabled shall be made by two licensed physicians, one appointed by the Board of Directors and one appointed by the Executive. In the event the two physicians are unable to agree with respect to whether the Executive is disabled, the determination of whether the Executive is disabled shall be made by a third duly licensed physician chosen by the two physicians previously appointed. In the event the Company discharges the Executive for Cause (as defined in subsection (e) below), the Executive shall be entitled to receive only his Base Salary through the date of his termination of employment and the Company will have no further obligation to Executive under this Agreement or otherwise. (d) In the event of the termination of this Agreement because of the Executive's voluntary termination of employment for some reason other than death or disability, the Executive shall be entitled to receive only his Base Salary through the date of his termination of employment and the Company will have no further obligations to Executive under this Agreement or otherwise. (e) "Cause" as used in this Agreement shall mean that either: (i) in the judgment of the Board of Directors of the Company, ascertained by majority vote, the Executive has materially failed for some reason other than illness, injury, or disability to perform his obligations hereunder; or (ii) the Executive has: (a) committed either any felony involving moral turpitude or any crime in the conduct of his official duties which is materially 7 8 adverse to the welfare of the Company; or (b) committed any material act of fraud against the Company, its parent or affiliates, or materially misused his position for his personal gain or that of any third party; or (c) taken any action (other than an error in judgment made in the ordinary course of his duties) materially adverse to the welfare of the Company, including, but not limited to, any violation of the Standards of Conduct attached hereto or any breach of the covenants and conditions contained in Sections 5 and 6 hereof. 5. Confidentiality and Disclosure of Information (a) The Executive, during his tenure as an officer and employee of the Company, has had and will have access to, and has gained and will gain knowledge with respect to the Company's trade secrets, private and secret processes, as they may exist from time to time, and confidential information concerning its financial statements and operations conducted by the Company, its sales and marketing activities and procedures, its bidding techniques, its design and construction techniques, its customer list of owners of parking facilities or credit and financial data concerning such customers or potential customers (in the aggregate referred to hereinafter as "Secret and Confidential Information"). The Executive acknowledges that such information constitutes a valuable, special and unique asset of the Company as to which the Company has the right to retain and hereby does retain all of its proprietary interests. However, access to and knowledge of such Secret and Confidential Information is essential to the performance of the Executive's services for the Company. In recognition of this fact, the Executive agrees that he will not, during or after his employment with the Company, disclose any of such Secret and Confidential Information to any person, firm, corporation, association or other entity for any -8- 9 reason or purposes whatsoever or make use of any such Secret and Confidential Information for his own purposes or those of another. The provisions contained in this subsection (a) shall also apply to information obtained by the Executive in the course of his employment by the Company with respect to the Company's subsidiary and affiliated companies. (b) The Executive shall promptly disclose, grant and assign to the Company for its sole use and benefit any and all inventions, improvements, technical information and suggestions relating to the Business of the Company (in the aggregate referred to as the "Creations") which the Executive has or may conceive, develop or acquire during his employment (whether or not during the usual working hours) together with all patent applications, letters patent, copyrights and reissues thereof that may, at any time, be granted for or upon any of the Creations. At all times during and after his employment, the Executive shall promptly execute any and all documents requested to vest title to any and all of the Creations in the Company and to enable it to obtain and maintain the entire right and title thereto throughout the world and render to the Company, at its expenses, any and all assistance required to protect its legal rights thereto. 6. Restrictive Covenant. (a) The Executive recognizes that the Company is relying on its extensive experience, knowledge, ability and contacts in the Business of the Company in entering into this Agreement. For this reason, the Executive covenants and agrees that during the period of his employment by the Company, and, if his Agreement terminates pursuant to either Section 4(b), or 4(c) with Cause, or 4(d) hereof, for a period of one year immediately following the termination of this Agreement he shall not have any direct or indirect ownership or other financial interest in, or in any manner become interested in (as principal, -9- 10 agent, consultant, advisor, officer, director, employee or otherwise), any business which competes with the Business of the Company in the geographic market in which the Company is then operating, or solicit business directly or indirectly on behalf of such competing business. Nothing herein shall preclude the Executive from being a member of or serving as an officer or director of any trade association or from owning, of record or beneficially, in the aggregate up to five percent (5%) of any issue of securities of a publicly traded company. (b) Notwithstanding anything to the contrary set forth in Section 13(b) hereof, any dispute between the parties with respect to the interpretation or enforceability of Section 6(a) hereof (Restrictive Covenant) as it applies to a termination for Cause under Section 4(c) hereof or any dispute with respect to any amount payable under Section 4(c)(iv) hereof which cannot be settled amicably by the parties hereto shall be settled by final and binding arbitration in Cleveland, Ohio in accordance with the rules of arbitration of the American Arbitration Association. 7. Remedies. It is recognized by the Executive that a special and confidential relationship exists between the Company and the Executive because of his knowledge, expertise and judgment and the dependency of the Company on his knowledge, expertise and judgment. The Executive agrees that the remedy at law for any breach or unthreatened breach of the covenants set forth in Sections 5 and 6 will be inadequate and that any breach or attempted breach would cause such immediate and permanent damage as would be irreparable and the exact amount of which would be impossible to ascertain. The Executive further agrees that in the event of any such breach or threatened breach by -10- 11 the Executive, in addition to any and all other legal and equitable remedies available, the Company may have any of such actions enjoined by any court authorized by law to such action. 8. Physical Examination. The Executive shall undergo an annual physical examination. The cost of such physical examination shall be borne by the Company. A written report of the results of such physical shall be submitted to the President of the Company. 9. Assignment. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of the Company. The performance of the Executive hereunder is personal and nonassignable. 10. Invalidity. (a) The territorial, time and other limitations contained in Sections 5 and 6 are reasonable and properly required for the adequate protection of the Business of the Company, and in the event that any one or more of such territorial, time or other limitation is found to be unreasonable or otherwise invalid in any jurisdiction, in whole or in part, the parties acknowledge and agree that such limitation shall remain and be valid in all other jurisdictions. (b) If any provision, term, clause or part thereof in this Agreement is invalid, it shall not affect the remainder of said provision, term or clause of this Agreement, but said remainder shall be binding and effective against both parties hereto. 11. Representations and Warranties of the Parties. (a) The Company represents and warrants to the Executive that (i) the Company is a corporation duly organized and validly existing and in good standing under the laws of -11- 12 the State of Delaware; and (ii) the Company has the power and authority to enter into and carry out this Agreement, and there exists no contractual or other restriction upon its so doing. (b) The Executive represents and warrants to the Company that there exists no contractual or other restriction upon his entering into and carrying out this Agreement. 12. Post-Mortem Payments; Designation of Beneficiary. In the event that, following the termination of the Executive's employment with the Company, the Executive is entitled to receive any payments pursuant to this Agreement and the Executive dies, such payments shall be made to the Executive's beneficiary designated hereunder. At any time after the execution of this Agreement, the Executive may prepare, execute, and file with the Secretary of the Company a copy of the Designation of Beneficiary form attached to this Agreement as Exhibit D. The Executive shall thereafter be free to amend, alter or change such form; provided, however, that any such amendment, alteration or change shall be made by filing a new Designation of Beneficiary form with the Secretary of the Company. In the event the Executive fails to designate a beneficiary, following the death of the Executive all payments of the amounts specified by this Agreement which would have been paid to the Executive's designated beneficiary pursuant to this Agreement shall instead be paid to the Executive's spouse, if any, if she survives the Executive or, if there is no spouse or she does not survive the Executive, to the Executive's estate. 13. Miscellaneous. (a) This Agreement, including its attachments, contains the entire agreement between the parties and incorporates and supersedes any and all prior discussions or agreements the parties may have had with respect to the terms of the Executive's -12- 13 employment with the Company. This Agreement may not be changed orally, but only by a writing signed by each of the parties. The terms or covenants of this Agreement may be waived only by a written instrument specifically referring to this Agreement and executed by the party waiving compliance. The failure of a party at any time, or from time to time, to require performance of any of the other party's obligations under this Agreement shall in no manner affect the waiving party's right to enforce any provisions of this Agreement at a subsequent time, and the waiver by any party of any right arising out of any breach by the other party shall not be construed as a waiver of any right arising out of any subsequent breach. (b) This Agreement has been executed in the State of Ohio and shall be governed and interpreted in accordance with the laws of the State of Ohio without regard to conflict of law provisions. Except as set forth in Section 6(b) hereof, any disputes between the parties which cannot be settled amicably shall be subject to the jurisdiction of the courts of Ohio. (c) Any notices required under this Agreement shall be in writing and effective when received by the other party. Notices to the Executive shall be addressed to him at his then current mailing address on file at the Company. Notices to the Company shall be addressed to the Secretary of the Company at the Company's headquarters. (d) The use of the feminine, masculine or neuter pronoun herein shall not be restrictive as to gender and shall be interpreted in all cases as the context may require. The use of the singular or plural herein shall not be restrictive as to number and shall be interpreted in all cases as the context may require. -13- 14 (e) The Company may withhold from any amounts payable to the Executive, the Executive's beneficiary designated hereunder, or any other person, all amounts necessary to satisfy the requirements of any state or federal statute including, without limitation, the requirements of the United States Internal Revenue Code. IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have executed this Agreement this 1 day of April, 1998. ATTEST: APCOA, INC. (the "Company") /s/ Carolyn R. Bodden BY: /s/ G. W. Stuelpe - ------------------------- ------------------------ CAROLYN R. BODDEN G. W. STUELPE President WITNESS: /s/ Cynthia R. LaRocco /s/ James V. LaRocco - ------------------------- ------------------------ CYNTHIA R. LaROCCO JAMES V. LaROCCO (the "Executive") -14- 15 EXHIBIT A GUIDELINES 1. Standards of Conduct and Business Ethics. The Board of Directors of Apcoa, Inc., a Delaware corporation (the "Company"), has adopted a corporate policy for itself and all other corporations, entities, or persons that, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company ("Affiliates") regarding Standards of Conduct and Business Ethics, in order to provide directors, officers and employees of the Company or its Affiliates with guidelines to assist them in fulfilling their responsibilities to the public, the stockholders and the Company. This policy is equally applicable to all of the foreign operations of the Company or its Affiliates except where modified by specific foreign laws and regulations. As no policy statement can cover the total range of daily activities, it is recognized that questions of compliance will arise. Such questions should be directed through normal communications procedures to the Company's General Counsel at Company Headquarters. Your attention is also specifically directed to the fact that disregard of sections of this policy could result in your dismissal as an employee as well as the imposition of civil and criminal penalties against the Company or its Affiliates and you personally. All personnel are requested to read this policy and conform to the principles stated therein. 2. Policy. It is the policy of the Company that the directors, officers and employees of the Company or its Affiliates shall conduct their activities so as to avoid loss or embarrassment to the Company or its Affiliates. Either by implication or in reality, the objective exercise of sound ethical business judgment should not be in any manner limited by any relationship, any activity or any practice. -15- 16 The Company recognizes and respects the individual's right to engage in outside activities. However, the Company reserves the right to determine when these activities create a conflict of interest. All conduct of the individual must conform to the best interests of the Company and its Affiliates. 3. Reciprocity. Because of the nature and variety of the business engaged in by the Company and its Affiliates, certain legal problems could arise with respect to purchases made by the Company or its Affiliates if such purchases are conditioned upon suppliers' purchasing products and/or services sold by the Company or its Affiliates. Conversely, similar legal problems could arise if customers were to condition their purchases from the Company or its Affiliates upon a reciprocal purchase of products or services from them. This practice, commonly referred to as "reciprocity," is prohibited by various federal and state laws. It is the policy of the Company that the Company and its Affiliates comply with all applicable federal, state and local laws. The guidelines set forth below have been designed to ensure full compliance with such laws. These guidelines apply to all personnel having purchase or sales responsibilities. The executives of the Company and its Affiliates should disseminate these guidelines to appropriate employees and agents and require adherence thereto. 4. Purchase/Sales Guidelines. The following guidelines with respect to purchases and sales made by the Company or its Affiliates apply to all employees and agents of the Company or its Affiliates: (a) No employee or agent of the Company or its Affiliates having purchasing responsibilities or duties shall purchase any products or services from, or enter into or adhere to any contract, agreement or the condition or understanding that purchases made by -16- 17 him on behalf of the Company or its Affiliates will be based or conditioned upon any sales to such supplier by the Company or its Affiliates. (b) No employee or agent of the Company or its Affiliates having sales responsibilities or duties shall on behalf of the Company or its Affiliates sell products or services to, or enter into or adhere to any contract, agreement or understanding with any actual or potential customer on the condition or understanding that any purchase by the Company or its Affiliates from such customer will be based or conditioned upon any sales of the Company or its Affiliates to such customer. (c) No employee or agent of the Company or its Affiliates shall issue to personnel with primary purchasing responsibility any lists, notices, or other data identifying customers and their purchases from the Company or its Affiliates or specifying or recommending that purchases be made by the Company or its Affiliates from any of such customers. (d) No employee or agent of the Company or its Affiliates shall issue to personnel with primary sales responsibilities any lists, notices or other data pertaining to purchases made by the Company or its Affiliates from particular suppliers. (e) No employee or agent of the Company or its Affiliates shall prepare or maintain statistical computations which compare purchases from suppliers who supply products or services to the Company or its Affiliates. (f) No employee or agent of the Company or its Affiliates shall: (i) Communicate to any actual or potential seller or supplier of the Company or its Affiliates that preference will be given to the purchase of such -17- 18 seller's products or services based upon sales by the Company or its Affiliates to such supplier. (ii) Compare or exchange statistical data with any such seller or supplier to facilitate any relationship of mutual purchases and sales between such seller or supplier and the Company or its Affiliates. (iii) Communicate to any such seller or supplier the fact that the Company or its Affiliates have made any purchases from such seller or supplier for the purpose of inducing a purchase by such seller or supplier. (iv) Direct or recommend that the Company or its Affiliates purchase products or services from any seller or supplier for the purpose of reciprocating purchases made by, or promoting sales to, such seller or supplier. (v) Agree with any seller or supplier that such seller or supplier will purchase products or services from the Company or its Affiliates in order to reciprocate purchases made by the Company or its Affiliates from such supplier. 5. Standards of Business Ethics. To determine if a specific interest creates a conflict with the interests of the Company or its Affiliates, or if a specific interest creates a conflict with interests of the Company or its Affiliates, or if a specific practice violates an ethical standard is more difficult without judging the immediate circumstances involved. Moral and legal standards are relative measurements of proper behavior. Therefore, the Company can only set forth specific examples that may limit an individual's ability ethically and/or legally to perform his or her duties for the Company or its Affiliates. Such examples include: (a) Having any position or interest in any other business enterprise operated for a profit which would or could reasonably be supposed to conflict with the proper -18- 19 performance of the employee's duties or responsibilities, or which might tend to restrict the employee's independence of judgment with respect to a transaction between the Company or its Affiliates and such other business enterprise. (b) Seeking to, accepting, offering or providing either directly or indirectly from or to any individual, partnership, association, corporation or other business entity or representative thereof, doing or seeking to do business with the Company or its Affiliates the following: loans (except with bank or other financial institutions), services, payments, vacation or pleasure trips, or any gifts to more than nominal value, or gifts of money in any amount. (c) Benefiting personally from any purchase of any goods or services of any nature by the Company or its Affiliates, or deriving personal gain from actions taken or associations made in any capacity as an employee of the Company or its Affiliates. (d) Directly or indirectly acquiring as an investment, any stock of any corporation engaged in the concession business or any business in competition or doing business with the Company or its Affiliates, with the exception of nominal stock-holdings in publicly held corporations. (e) Disclosing to a third party any information or data regarding the financial status, decisions or plans of the Company or its Affiliates which might be prejudicial to the interests of the Company or its Affiliates, without first obtaining proper authorization. (f) Misusing one's position with the Company or its Affiliates or knowledge of the affairs of the Company or its Affiliates for personal gain or benefit. (g) Acquiring securities or other property (such as real estate) which the Company or its Affiliates have a present or potential interest in acquiring. - 19 - 20 (h) Carrying on of the business of the Company or its Affiliates with a firm in which the employee or near relative of the employee has an appreciable ownership interest, without disclosing the relationship and obtaining Company approval. (i) Engaging in practices or procedures which violate any laws, rules or regulations applying to the conduct of the business of the Company or its Affiliates or licenses held by the Company or its Affiliates, including violation of any antitrust laws. (j) Contributing funds or property of the Company or its Affiliates for political contribution purposes, in violation of local, state or federal laws. (k) Using or permitting others to use the services of the employees of the Company or its Affiliates or materials or equipment of the Company or its Affiliates for personal use or gain. (l) Condoning or failing to report to appropriate Company authority the activities of any other officer or employee of the Company or its Affiliates which violate the principles set forth in this policy statement. (m) Any other and all business practices which are construed or accepted by the general business community as unethical or in violation of law. 6. Obligations of Directors, Officers and Employees. Employment by or association with the Company or its Affiliates carries with it the responsibility to be constantly aware of the importance of ethical conduct. The individual must disqualify himself from taking part, or exerting influence, in any transaction in which his own interests may conflict with the best interests of the Company or its Affiliates. Interests which might otherwise be questionable may be entirely proper if accompanied by a full advance disclosure which affords an opportunity for prior approval or disapproval. The -20- 21 obligation to make such disclosure rests upon the individual. All disclosures should be directed through normal communication procedures to the Company's General Counsel at Company Headquarters. Upon disclosure, the Company recognizes that there may be many borderline situations, and it does not intend to be unreasonable in considering these cases, giving recognition to the attendant circumstances. Should disclosure by an individual indicate the possibility of a conflict of interest, the individual will be given a reasonable time to remedy the situation. From time to time questions may arise with respect to this Company policy for which it is appropriate to consult with legal counsel. It is the responsibility of each officer and employee to recognize these situations and seek legal advice. Such advice may be obtained by contacting the Company's General Counsel at Company Headquarters. It is never a mistake to consult with counsel when in doubt with respect to the legality of a proposed course of action. 7. Compliance with Antitrust Laws. It is the policy of the Company to comply with all applicable federal and state antitrust laws, including trade regulation laws, and it is expected that all of the officers and employees of the Company or its Affiliates will likewise comply. The failure to comply with applicable antitrust laws may subject the Company or its Affiliates and/or the individuals involved to criminal and civil penalties, including substantial fines and imprisonment, treble damage liability, injunctions or other court orders adversely affecting the operation of the business of the Company or its Affiliates, and the high cost of defending an antitrust case. The Company's General Counsel at Company Headquarters coordinates the handling of the legal affairs of the Company or its Affiliates. His staff is always available for consultation with respect to compliance with the antitrust laws. In addition, special legal counsel will be furnished, if -21- 22 required. No officer or employee of the Company or its Affiliates is authorized to take any action which the Company's General Counsel has previously advised would constitute a violation of the antitrust laws. To the extent it is legally able to do so, the Company shall be prepared to accept and/or defend any individual who has acted in good faith upon the advice of the Company's General Counsel, but who nevertheless has become involved in antitrust proceedings in the course of his employment by the Company or its Affiliates. Any individual who has violated the antitrust laws or is convicted of doing so shall be subject to appropriate disciplinary action, including dismissal, if such individual acted without seeking the advice of the Company's General Counsel or acted contrary to his advice. (a) Rules to Follow. Many of the questions arising under the antitrust laws must be resolved in the context of a particular fact situation. However, there are a number of clearly established rules of conduct which must be observed by all officers and employees of the Company or its Affiliates in all circumstances in order to assure that the Company or its Affiliates and the individuals involved are in full compliance with the antitrust laws. Set out below are a number of these rules and several other guidelines with respect to the application of the antitrust laws to the activities of the Company or its Affiliates: (i) No officer or employee of the Company or its Affiliates shall enter into, or attempt to enter into, any understanding, agreement, plan or arrangement, whether formal or informal, written or oral, express or implied, with any competitor in regard to prices, discounts, terms or conditions of or refusing to -22- 23 deal with any actual or potential customers or suppliers of the Company or its Affiliates. (ii) No officer or employee of the Company or its Affiliates shall give to or accept from a competitor, in written or oral form, or discuss with a competitor, any information concerning prices, terms or conditions of sale, or other competitive information except where: (a) the information or discussion is relevant and necessary to a bona fide existing or prospective customer or supplier relationship between the Company or its Affiliates and such competitor or supplier, or (b) the Company's General Counsel advised in writing that such conduct or discussions would be proper because there would be no reasonable basis for asserting a violation of the antitrust laws. 8. Implementation Procedure. It is difficult to define all situations and circumstances with precision in a policy. If there are any questions at any time on present or future interpretations of this policy or the propriety of any conduct, employees of the Company or its Affiliates are requested to consult with the Company's General Counsel at Company Headquarters to make sure of the propriety of the action contemplated. In matters of antitrust and other specialized areas, the Company retains outside counsel who can be consulted as the need arises. The services of outside counsel may be obtained by making your request to the Company's General Counsel at Company Headquarters. -23- 24 EXHIBIT B EXECUTIVE BONUS PLAN JAMES V. LaROCCO No later than April 15 following the end of each calendar year during the term of this Executive Employment Agreement, the Executive shall be entitled to receive a bonus of up to 40% of the Base Salary paid to the Executive during such calendar year. Eligibility for bonus shall be based solely on the following criteria and up to the following percentages of Base Salary for each such criterion: 20% - Achievement of the Company's annual Financial Plan. This portion of the bonus shall be prorated based upon the percentage of achievement of the annual Financial Plan in the event the annual Financial Plan is not achieved in full. 10% - Achievement of specific management goal set by the President of the Company at the beginning of such year. 10% - At the sole discretion of the President of the Company. --- 40% Maximum Bonus -24- 25 EXHIBIT C SUPPLEMENTAL PENSION PLAN IN CONSIDERATION of the mutual promises contained herein, it is agreed by the Executive and the Company as follows: 1. The Executive may retire from active employment at any time after he reaches age 65. 2. Upon retirement, the Company shall provide the Executive with a retirement benefit of 240 equal consecutive monthly payments of $4,166.67. The first monthly payment shall be made on the first day of the month coinciding with or next following the date of the Executive's retirement. 3. In the event the Executive dies after commencement of payments under paragraph 2 hereof, but before he received the number of monthly installments set forth therein, the Company shall pay the remainder of said monthly installments to the Executive's designated beneficiary hereunder. For purposes of this provision, the executive's designated beneficiary hereunder is Cindi LaRocco. Executive shall have the right to change such beneficiary at anytime hereafter, either prior to or after retirement, by notifying the Company in writing of such change. 4. If the Executive shall die prior to age 65 while in the active employment of the Company, the Company shall pay the Executive's designated beneficiary an aggregate of Four Hundred Ninety One Thousand ($491,000.00) Dollars in 60 equal monthly installments of Eight Thousand One Hundred Eighty Three Dollars Thirty Three Cents ($8,183.33). The first installment shall be paid on the first day of the month following the month in which the Executive dies. 5. This Plan is part of a certain Executive Employment Agreement (the "Employment Agreement") dated July 1, 1995. Nothing herein shall prevent the Company from -25- 26 terminating the Employment Agreement for "cause," or the Executive from resigning in accordance with the terms thereof, and in either event this Plan shall be terminated and void in all respects and neither party shall have any further responsibility for satisfying any obligations that may have otherwise arisen hereunder. However, should the Executive's employment terminate prior to retirement for any reason, other than for "cause," resignation, disability or death, the Insurance Policy shall be transferred by the Company to the Executive within thirty days after such termination, and the full value of the Insurance Policy and its full cash surrender value shall become the sole property of the Executive to do with as he sees fit. In the event of the Executive's resignation which is not associated with termination for "cause" or for disability, the Company shall cancel the Insurance Policy and provide the Executive with the cash surrender value according to the following schedule: After five (5) full years' service = 25% After ten (10) full years' service = 50% After fifteen (15) full years' service = 75% After twenty (20) full years' service = 100% In the event of permanent disability the Company will continue to pay the premiums on the full value of the Insurance Policy for twelve months following the Executives' termination because of such disability in accordance with Section 4(b) of the Employment Agreement and after twelve months to transfer the full value of the Insurance Policy to the Executive within thirty days. The full value of the Insurance Policy and its full cash surrender value shall become the sole property of the Executive to do with as he sees fit, and the Company shall have no further responsibility to fulfill any terms of the Plan or to continue to pay premiums on the Insurance Policy after the transfer of the Insurance Policy has been completed. 6. For so long as Executive is receiving payments hereunder, Executive agrees that Sections 5, 6 and 7 of the Employment Agreement shall remain in full force and effect -26- 27 7. Nothing in this Plan shall prevent Executive from receiving, in addition to any amounts he may be entitled to under the Plan, any amounts which may be distributable to him at any time under any pension plan, profit sharing or other incentive compensation or similar plan of the Company now in effect or which may hereafter be adopted. 8. This Plan shall be binding upon the Executive, his heirs, executors, administrators and assigns, and on the Company, its successors and assigns. The rights of Executive hereunder shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge. 9. This Plan may be altered, changed, amended or terminated only by a writing signed by the party to be bound thereby. 10. This document has been executed in the State of Ohio and shall be interpreted in accordance with the laws of that State without regard to conflict of law provisions. 11. This document contains the entire agreement between the parties with respect to the subject matter hereof, supersedes any and all prior discussions or agreements the parties may have had with respect thereto (including any prior Supplemental Pension Plan). -27- 28 EXHIBIT D TO EXECUTIVE TRANSITION EMPLOYMENT AGREEMENT DESIGNATION OF BENEFICIARY Effective April 1, 1998, I, the undersigned, entered into an Executive Transition Employment Agreement with APCOA, INC. Pursuant to the terms of said Agreement, I have the right to designate a beneficiary to receive, in the event of my death, certain payments pursuant to said Agreement. I, therefore, exercise this right and designate Cindi LaRocco to receive any such payments if (s)he survives me, but if Cindi LaRocco does not survive me, I designate my Estate. Any and all previous designations of beneficiary made by me are hereby revoked, and I hereby reserve the right to revoke this designation of beneficiary. /s/ James V. LaRocco _____________________ JAMES V. LaROCCO Date: 4-1-1998 _________________ __________________________ Receipt of this Designation of Beneficiary form is acknowledged by the undersigned Secretary of APCOA, INC. APCOA, INC. By: /s/ _____________________________ Secretary Date: 4-1-1998 _________________ -28- EX-10.9 11 SEVERANCE AGREEMENT: VAN HORN 1 Exhibit 10.9 AGREEMENT THIS AGREEMENT, is made and entered into by and between APCOA, INC. ("Company") and Trevor R. Van Horn ("Employee") on the dates written below. WITNESSETH: WHEREAS, Employee has been employed by the Company, and such employment is terminated effective February 26, 1998; and WHEREAS, the Company and Employee wish to resolve all matters and issues between them arising from or relating to Employee's employment by the Company. NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, Employee and the Company hereby agree as follows: ARTICLE I CONSIDERATION Section 1.1. Severance. Upon the effective date of this Agreement as set forth in Section 3.3 following the execution and delivery of this Agreement and following the expiration of the consideration and revocation periods set forth in Section 2.4 herein, the Company shall, in consideration of his release and settlement of all claims, pay Employee, in accordance with the Company's regular payroll practices, thirty (30) weeks of severance pay at Employee's rate immediately preceding the termination, less applicable payroll taxes and withholdings beginning February 26, 1998 and through September 23, 1998. In the event Employee fails to execute this Agreement immediately following the expiration of the consideration period set forth herein and/or revokes this Agreement in accordance with its terms, no severance pay or any other monies payable hereunder shall be due and owing. Section 1.2. Vacation Pay. On April 30, 1998, the Company shall present a check to Employee, for nine (9) weeks vacation pay at his regular rate of pay, less applicable payroll taxes and withholdings. Section 1.3. Notification. Employee acknowledges that on February 26, 1998, he received a thirty (30) days notice from the Company and between that date and March 31, 1998 he received his regular pay on regular paydays. Section 1.4. Severance Retention Bonus. The Company shall pay Employee a bonus equal to 35% of Employee's base pay, less applicable payroll taxes and withholdings on April 30, 1998. 2 ARTICLE 1 - CONSIDERATION (Continued) Section 1.5. Pro Rata Bonus. The Company shall pay employee a pro rata (January, February and March, 1998) bonus of $12,285 on or before April 15, 1999. Section 1.6. Other Benefits. The Company shall provide and pay for COBRA coverage to Employee through February 26, 1999. Section 1.7. Company Car. The Company shall turn over title of the 1996 Buick to Employee on April 1, 1998, free and clear. Section 1.8. 401(k) Plan. The Company shall continue the 401(k) Plan through September 23, 1998. Section 1.9. Relocation. The Company shall pay $10,000 (net) to Employee toward relocation expenses with such payment due on April 30, 1998. Section 1.10. Desk Top Computer. The Company shall provide Employee with his current desk top computer on March 31, 1998, free and clear. Section 1.11. Home. The Company shall pay up to $15,000 to Employee to offset real estate commission and any loss on the sale of his home in Mentor, Ohio. ARTICLE II ------------ RELEASE OF CLAIMS Section 2.1. Employee's Release. In consideration of the promises and agreements set forth herein, Employee does hereby for himself and for his heirs, executors, successors and assigns, release and forever discharge the Company and all of the Company's related and affiliated entities and all of their respective directors, officers, employees, agents and all other persons, firms and corporations, both known and unknown, of and from any and all claims, demands, damages, actions or causes of action, suits, claims, charges, complaints, contracts, whether oral or written, express or implied and promises, at law or in equity, of whatsoever kind or nature, including but not limited to any alleged violation of any state or federal anti-discrimination statutes or regulations, including but not limited to the Americans with Disabilities Act of 1990, Age Discrimination in Employment Act of 1967, as amended, the Older Workers Benefit Protection Act, breach of any express or implied contract or promise, wrongful discharge, violation of public policy, contract or tort, all demands for attorney's fees, back pay, holiday pay, vacation pay, bonus, group insurance, any claims for reinstatement, all employee benefits and claims for money, out-of-pocket expenses, any claims for emotional distress, degradation, humiliation, failing to obtain employment at any other company of employer, that Employee might now have or Page 2 3 ARTICLE II - RELEASE OF CLAIMS (Continued) may subsequently have, whether known or unknown, suspected or unsuspected, by reason of any matter or thing, arising out of or in any way connected with, directly or indirectly any acts or omissions of the Company or any of its directors, officers, shareholders, employees and/or agents arising out of Employee's employment and resignation from employment which have occurred prior to and throughout the term of this Agreement, except those matters specifically set forth herein and except for 401(k) benefits which have vested on his behalf. Section 2.2. Company's Release. The Company, on behalf of itself, its successors and assigns, does hereby release Employee from any and all claims, demands, actions or causes of action, suits, claims, charges, complaints, contracts, whether oral or written, express or implied and promises at law or in equity of whatsoever kind or nature, which it may now have or subsequently have, whether known or unknown, suspected or unsuspected, by reason of any matter or thing arising out of or in any way connected with directly or indirectly, any actions or omissions of Employee arising out of Employee's employment by the Company, which have occurred prior to this Agreement, except those matters specifically set forth herein. Section 2.3. Covenant Not to Sue. Employee shall not directly or indirectly institute or initiate any proceedings, charges, claims and/or actions against the Company and/or its related or affiliated entities or their respective directors, officers, employees, agents or representatives arising out of or in any way connected with, directly or indirectly, any acts or omissions of the Company and/or its respective directors, officers, employees, agents or representatives which have occurred prior to and including the date hereof. Section 2.4. Employee's Rights. Employee acknowledges that he has been advised that he has the following specific rights: (a) to consult with an attorney with regard to the meaning and effect of this Agreement. (b) to consider the meaning and effect of this Agreement and the Release contained therein for a period of twenty one (21) days ("consideration period") following the presentation of this Agreement to him; and (c) to revoke this Agreement within seven (7) days ("revocation period") of execution of this Agreement. Page 3 4 ARTICLE II -- RELEASE OF CLAIMS (Continued) Section 2.5. Notice of Revocation. To be effective, any revocation by Employee must be delivered on or before the close of business on the seventh day following execution of this Agreement to: Mr. Michael J. Machi Senior Vice President, Administration APCOA, Inc. 1000 McDonald Investment Center 800 Superior Avenue Cleveland, Ohio 44114-2615 Section 2.6. Sufficiency of Consideration. Employee acknowledges that he is receiving consideration for his release of claims under the terms and conditions of this Agreement over and above what he is otherwise entitled to and that such is sufficient and adequate consideration for his release for any common law and/or statutory law claims he may have, if any. Section 2.7. Presentation of Agreement. Employee acknowledges that this Agreement was presented to him for his consideration on February 26, 1998, and that he was SPECIFICALLY ADVISED THAT HE SHOULD NOT EXECUTE THIS AGREEMENT UNTIL TWENTY-ONE (21) DAYS AFTER THE DATE SET FORTH IN THIS SECTION, AND EMPLOYEE ACKNOWLEDGES THAT HE MAY NOT EXECUTE THIS AGREEMENT UNTIL MARCH 19, 1998. Section 2.8. Confidentiality of Agreement. Employee and his heirs, executors, successors, assigns, agents, representatives, and attorneys and the Company shall hold the terms of this Agreement in strict confidence and shall not communicate, reveal, or disclose the terms of this Agreement to any other persons, except Employee's immediate family or as required by law. It is understood and agreed by Employee and the Company that any disclosure other than that authorized by this paragraph shall be deemed a material breach of this Agreement will subject the party or entity in breach to appropriate injunctive relief, compensatory and/or punitive damages, and possible civil contempt, as determined by a court of law. Section 2.9. Acknowledgements. Employee acknowledges that he has carefully read and fully understands all of the provisions of this Agreement, that he has not relied on any representations of the Company or any of its representatives, directors, officers, employees and/or agents to induce him to enter this Agreement, other than as specifically set forth herein and that he is fully competent to enter into this Agreement and has not been pressured, coerced or otherwise unduly influenced to enter into this Agreement and that he has voluntarily entered into this Agreement of his own free will. Page 4 5 ARTICLE III ADDITIONAL PROVISIONS Section 3.1. Entire Agreement. Except as provided above, this Agreement contains the entire agreement between the parties hereto and replaces any prior agreements, contracts and/or promises, whether written or oral, with respect to the subject matters included herein. This Agreement may not be changed orally, but only in writing, signed by each of the parties hereto. This Agreement and any disputes arising hereunder shall be governed by the laws of the State of Ohio. Section 3.2. Effective Date. This Agreement shall only become effective upon the delivery of this Agreement after execution by Employee following the expiration of the twenty-one (21) day consideration period and, if not sooner revoked in accordance with Sections 2.4 and 2.5, after the expiration of the seven (7) day revocation period. Section 3.3. Withdrawal If Not Timely Executed. If this Agreement is not executed by Employee by 5:00 o'clock p.m. EST March 19, 1998, it is withdrawn and of no further force and effect. IN WITNESS WHEREOF, Trevor R. Van Horn, and APCOA, Inc. have executed this Agreement effective as of the date of the Employee's execution of this Agreement written below by their respective signatures, all duly authorized in the premises. CAUTION TO TREVOR R. VAN HORN: READ BEFORE SIGNING, THIS DOCUMENT CONTAINS A RELEASE OF ALL YOUR RIGHTS TO AGE DISCRIMINATION CLAIMS AGAINST THE ABOVE-MENTIONED COMPANY AND PERSONS ARISING BEFORE THE EFFECTIVE DATE OF THIS AGREEMENT, INCLUDING, BUT NOT LIMITED TO, ANY AND ALL CLAIMS YOU MAY HAVE UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, 29 U.S.C. 621 ET SEQ. AS AMENDED. I, TREVOR R. VAN HORN, acknowledge receiving this Agreement on February 26, 1998; I recognize and understand that I may not execute this Agreement until twenty-one (21) calendar days have passed from the date I received this Agreement. That is, the first day I may execute this Agreement is March 19, 1998. Date of Van Horn's RECEIPT: /s/ Trevor R. Van Horn 3-31-98 - ------------------------------ ------------------------------ Trevor R. Van Horn WITNESS: - ------------------------------ Page 5 6 Having considered this Agreement for at least twenty-one (21) calendar days, I, TREVOR R. VAN HORN, hereby execute this Agreement; I agree and recognize that I have seven (7) calendar days from my execution of this Agreement to REVOKE this Agreement, should I so choose. I understand that if I execute this Agreement on March 19, 1998, the last day I may revoke this Agreement is March 26, 1998. Date of Van Horn's SIGNATURE: /s/ Trevor R. Van Horn 3-31-98 - ------------------------------- ---------------------------------- Trevor R. Van Horn WITNESS: - ------------------------------- DATE: 26 Feb 98 -------------------------- APCOA, Inc. By: /s/ Michael J. Machi ------------------------------- Michael J. Machi Sr. Vice President, Administration APCOA, Inc. WITNESS: /s/ Marian P. Fabec ---------------------------- Page 6 EX-10.10 12 EMPLOYMENT AGREEMENT: ANDERSON, JR. 1 Exhibit 10.10 EMPLOYMENT AGREEMENT AGREEMENT by and between APCOA, Inc., a Delaware corporation (the "Company"), and Herb Anderson (the "Executive"), dated as of the 14 day of May, 1998. WHEREAS, pursuant to that certain Combination Agreement (the "Transaction Agreement") dated as of January 15, 1998, by and among Myron C. Warshauer, Stanley Warshauer, Steven A. Warshauer, Dosher Partners, L.P., SP Parking Associates and the Company, the operations of the Company and Standard Parking, L.P. were combined (the "Transaction"); and WHEREAS, the Board of Directors of the Company (the "Board") has determined that it is in the best interests of the Company and its shareholders to ensure that the Company will continue to receive the benefit of the Executive's services after the Transaction, on the terms and conditions set forth below in this Agreement, and the Executive desires to serve the Company in accordance with such terms and conditions; NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS: 1. Employment Period. The Company shall employ the Executive, and the Executive shall serve the Company, on the terms and conditions set forth in this Agreement, for the period beginning on March 30, 1998 (the "Effective Date") and ending on the third anniversary thereof (the "Employment Period"); provided, however, that commencing on the third anniversary of the Effective Date and thereafter on each annual anniversary of such date (each annual anniversary thereof shall hereinafter be referred to as the "Renewal Date"), unless previously terminated, the Employment Period shall be automatically extended so as to terminate two years from the Renewal Date, unless 180 days prior to the Renewal Date the Company or the Executive shall terminate this Agreement by giving notice to the other party that the Employment Period shall not be so extended (a "Notice of Nonrenewal"). 2. Position and Duties. During the Employment Period, the Executive shall serve as Executive Vice President, Midwest Operations of the Company, with the duties, authority and responsibilities as are commensurate with such position and as are customarily associated with such position and shall perform such other duties as may be assigned to the Executive from time to time. During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive shall devote full attention and time during normal business hours to the business and affairs of the Company and, to the extent necessary to discharge the responsibilities assigned to the Executive under this Agreement, use the Executive's reasonable best efforts to carry out such responsibilities faithfully and efficiently. The Executive shall not, during the term of this Agreement, engage in any other business activities that will interfere with the Executive's employment pursuant to this Agreement. During the Employment Period, the Executive's services shall be performed primarily in Chicago, Illinois. 2 3. Compensation. (a) Base Salary. During the Employment Period, the Executive shall receive an annual base salary of $175,000 (the "Annual Base Salary"), payable in accordance with the Company's normal payroll practices for executives as in effect from time to time. Such Annual Base Salary shall be subject to review annually in accordance with the Company's review policies and practices for executives as in effect at the time of any such review. (b) Bonus. For each calendar year ending during the Employment Period, the Executive shall be eligible to receive an annual bonus (the "Annual Bonus"), based upon the terms and conditions of an annual bonus program to be established by the Company. Any such annual bonus program shall provide that the Executive's target bonus ("Target Annual Bonus") will be 40% of the Annual Base Salary, with the actual amount of the Annual Bonus determined in accordance with the terms of the annual bonus program. Notwithstanding the foregoing sentence, for the 1998 fiscal year, the Executive's Annual Bonus shall not be less than 40% of the Annual Base Salary. (c) Equity Plan. During the 1998 calendar year, the Company shall adopt an equity incentive plan or program (the "Equity Plan") in which certain of the Company's key executives will be eligible to participate. During the Employment Period, the Executive shall be entitled to participate in the Equity Plan from and after the effective date thereof, in accordance with the terms and conditions of such plan and on the same basis as peer executives. (d) Housing Differential Loan. Following the Effective Date and contingent upon the Executive's execution of a promissory note (substantially in the form attached hereto as Exhibit A), the Executive shall receive a $250,000 loan from the Company with a term of three years (the "Loan"), which shall bear interest at the Applicable Federal Rate compounded annually. The principal shall be disbursed to the Executive upon his submission of a written purchase offer for a residence in the vicinity of Chicago, Illinois. The principal amount of the Loan and the interest thereon shall be payable in cash on an annual basis in three equal installments, on each of the first, second and third anniversaries of the Effective Date of the Agreement (each such anniversary referred to herein as an "Annual Payment Date"); provided, however, that if the Executive remains in the continual employment of the Company as of each Annual Payment Date, one-third of the principal balance of the initial Loan and the accrued interest thereon (as of such Annual Payment Date) shall be forgiven by the Company, and such forgiven amount shall be treated as additional compensation to the Executive in the year of such forgiveness. Prior to the end of any calendar year in which the Company forgives a portion of the Loan, the Company shall make the Executive whole for the federal, state and local income tax consequences of such forgiveness. In the event the Executive's employment hereunder is terminated for Cause (as hereinafter defined) or the Executive terminates his employment without Good Reason (as hereinafter defined), the Executive shall be obligated to repay the remaining principal balance of the Loan and any accrued and unpaid interest thereon within thirty (30) days of the Date of Termination; provided, however, that if the Date of Termination does not coincide with an Annual Payment Date, the repayment of the principal balance of the Loan and the accrued 2 3 interest thereon for the year of termination shall be pro-rated in respect of the portion of such short-year that commences on the date of the Date of Termination and ends on the next following Annual Payment Date, and the portion of the pro-rated principal balance of the Loan and the interest thereon with respect to the period commencing on the Annual Payment Date prior to the Date of Termination and ending on the Date of Termination shall be forgiven, and the Company shall, prior to the end of the calendar year in which the Date of Termination occurs, make the Executive whole for any federal, state and local income tax consequences to the Executive with respect to such forgiven amount. In the event the Executive's employment hereunder is terminated by the Company for any reason other than for Cause, including a termination on account of death or Disability, or in the event the Executive terminates his employment for Good Reason, the remaining principal balance of the Loan and any accrued and unpaid interest thereon shall be forgiven, and prior to the end of the calendar year in which such forgiveness occurs, the Company shall make the Executive whole for any federal, state and local income tax consequences to the Executive with respect to such forgiven amount. (e) Other Benefits. In addition to the foregoing, during the Employment Period: (i) the Executive shall be entitled to participate in savings, retirement, and fringe benefit plans, practices, policies and programs of the Company as in effect from time to time, on the same terms and conditions as those applicable to peer executives; (ii) the Executive shall be entitled to four weeks of annual vacation, to be taken in accordance with the Company's vacation policy as in effect from time to time; (iii) the Executive shall be entitled to participate in an automobile program in accordance with the terms and conditions of the Company's automobile program as may be in effect from time to time; and (iv) the Executive and the Executive's family shall be eligible for participation in, and shall receive all benefits under medical, disability and other welfare benefit plans, practices, policies and programs provided by the Company, as in effect from time to time, on the same terms and conditions as those applicable to peer executives, provided, that the Executive's benefits under this Agreement shall be substantially similar in the aggregate to the benefits available to him and his family under the Executive Employment Agreement between the Company and the Executive, dated December 11, 1995. (f) The Company shall provide the Supplemental Pension Plan, as described in Exhibit C of the Executive Employment Agreement between the Company and the Executive, dated December 11, 1995, which Exhibit is attached to and incorporated herein. 4. Termination of Employment. (a) Death or Disability. In the event of the Executive's death during the Employment Period, the Executive's employment with the Company shall terminate automatically. The Company, in its discretion, shall have the right to terminate the Executive's employment because of the Executive's Disability during the Employment Period. For purposes of this Agreement, "Disability" shall mean the absence of the Executive from the Executive's duties with the Company on a full-time basis for 180 consecutive business days, or for periods aggregating 180 business days in any period of twelve months, as a result of incapacity due to mental or physical illness or injury which is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to the Executive or the Executive's legal representative. A termination of the Executive's employment by the Company for Disability shall be communicated to the Executive by written notice, and 3 4 shall be effective on the 30th day after receipt of such notice by the Executive (the "Disability Effective Date"), unless the Executive returns to full-time performance of the Executive's duties before the Disability Effective Date. (b) By the Company. In addition to termination for Disability, the Company may terminate the Executive's employment during the Employment Period for Cause or without Cause. For purposes of this Agreement, "Cause" means: (i) the continued and willful or deliberate failure of the Executive substantially to perform the Executive's duties under this Agreement (other than as a result of physical or mental illness or injury); or (ii) illegal conduct or gross misconduct by the Executive, in either case that is willful and results in material damage to the business or reputation of the Company or its affiliated companies; or (iii) the breach of a fiduciary duty owed to the Company or its affiliated companies, including, without limitation, a failure to comply with Section 6 hereof. Upon the occurrence of events constituting Cause as defined in subsection (i) of this paragraph (b), the Company shall give the Executive advance notice of any such termination for Cause and shall provide the Executive with a reasonable opportunity to cure. (c) By the Executive. The Executive may voluntarily terminate his employment by giving written notice thereof to the Company. The Executive may terminate his employment during the Employment Period for Good Reason. For purposes of this Agreement, "Good Reason" means: (i) a reduction in the Executive's Annual Base Salary; or (ii) any change in the Executive's duties and responsibilities that requires him to relocate his residence outside of the Chicago, Illinois vicinity. A termination of employment by the Executive for Good Reason shall be effectuated by giving the Company written notice ("Notice of Termination for Good Reason") of the termination, setting forth in reasonable detail the specific conduct of the Company that constitutes Good Reason and the specific provision(s) of this Agreement on which the Executive relies. A termination of employment by the Executive for Good Reason shall be effective on the date when the Notice of Termination for Good Reason is given, unless the notice sets forth a later date (which date shall in no event be later than thirty (30) days after the notice is given). (d) Date of Termination. The "Date of Termination" means the date of the Executive's death, the Disability Effective Date, the date on which the termination of the Executive's employment by the Company (for Cause or other than for Cause or Disability), as set forth in the notice from the Company, is effective, or the date on which the Executive gives the 4 5 Company notice of a termination of employment for Good Reason (unless otherwise stated in the Notice of Termination for Good Reason) or without Good Reason, as the case may be. 5. Obligations of the Company upon Termination. (a) By the Company Other Than for Cause or Disability; By the Executive for Good Reason. If, during the Employment Period, the Company terminates the Executive's employment, other than for Cause or Disability, but excluding any termination of employment at the end of the Employment Period (whether or not as a result of a Notice of Nonrenewal by the Company), or the Executive terminates employment for Good Reason, the Company shall, for the remainder of the Employment Period as in effect immediately before the Date of Termination, continue to pay the Executive the Annual Base Salary and the Annual Bonus through the end of the then-current Employment Period, as and when such amounts would be paid in accordance with Sections 3(a) and (b) above, provided that the amount of any Annual Bonus(es) so paid shall equal the Target Annual Bonus. The Company shall also continue to provide for the same period welfare benefits to the Executive and the Executive's family, at least as favorable as those that would have been provided to them under clause (e)(iv) of Section 3 of this Agreement if the Executive's employment had continued until the end of the Employment Period, provided, that during any period when the Executive is eligible to receive such benefits under another employer-provided plan, the benefits provided by the Company under this Section 5(a) may be made secondary to those provided under such other plan. The payments provided pursuant to this Section 5(a) are intended as liquidated damages for a termination of the Executive's employment by the Company other than for Cause or Disability, or by the Executive for Good Reason, and shall be the sole and exclusive remedy therefor. (b) Death. If the Executive's employment is terminated by reason of the Executive's death during the Employment Period, the Company shall make, within thirty (30) days after the Date of Termination, a lump-sum cash payment to the Executive's estate equal to the sum of (i) the Executive's Annual Base Salary through the end of the calendar month in which death occurs, (ii) any earned and unpaid Annual Bonus for any calendar year ended prior to the Date of Termination, (iii) any accrued but unpaid vacation pay and (iv) any other vested benefits to which the Executive is entitled, in each case to the extent not yet paid. (c) Disability. In the event the Executive's employment is terminated by reason of the Executive's Disability during the Employment Period in accordance with Section 4(a) hereof, the Company shall pay to the Executive or the Executive's legal representative, as applicable, (i) the Executive's Annual Base Salary for the duration of the Employment Period in effect immediately before the Date of Termination, provided that any such payments made to the Executive shall be reduced by the sum of the amounts, if any, payable to the Executive under any disability benefit plans of the Company or under the Social Security disability insurance program, (ii) any earned and unpaid Annual Bonus for any calendar year ended prior to the Date of Termination and (iii) any other vested benefits to which the Executive is entitled, in each case to the extent not yet paid. (d) Cause; Voluntary Termination. If the Executive's employment is terminated by the Company for Cause or the Executive voluntarily terminates his employment during the 5 6 Employment Period, the Company shall pay the Executive (i) the Annual Base Salary through the Date of Termination and (ii) any other vested benefits to which the Executive is entitled, in each case to the extent not yet paid, and the Company shall have no further obligations to the Executive under this Agreement. 6. Confidential Information; Noncompetition. (a) The Executive shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company or any of its affiliated companies and their respective businesses that the Executive obtains or obtained during the Executive's employment by the Company or any of its affiliated companies and their respective businesses and that is not public knowledge (other than as a result of the Executive's violation of this paragraph (a) of Section 6) ("Confidential Information"). The Executive shall not communicate, divulge or disseminate Confidential Information at any time during or after the Executive's employment with the Company, except with the prior written consent of the Company or as otherwise required by law or legal process. As used in this Agreement, the term "affiliated companies" shall include any company controlled by, controlling or under common control with the Company. (b) During the Noncompetition Period (as defined below), the Executive shall not, without the prior written consent of the Chief Executive Officer of the Company, engage in or become associated with a Competitive Activity. For purposes of this paragraph (b) of Section 6, the following terms shall have the following meanings: (i) the "Noncompetition Period" means the period during which the Executive is employed by the Company and the one-year period following the termination of the Executive's employment by the Company for any reason; (ii) a "Competitive Activity" means any business or other endeavor that engages in the operation and management of open air parking lots and indoor garages and ramps for the purpose of parking motor vehicles on a leasehold, license, concession or management fee basis in any county of any state in the United States in which the Company or any of its affiliated companies is then conducting, or is in the process of developing prospects to conduct, business; (iii) the Executive shall be considered to have become "associated with a Competitive Activity" if he becomes directly or indirectly involved as an owner, employee, officer, director, independent contractor, agent, partner, advisor, or in any other capacity calling for the rendition of the Executive's personal services, with any individual, partnership, corporation or other organization that is engaged in a Competitive Activity. Notwithstanding the foregoing, the Executive may make and retain investments during the Noncompetition Period in not more than five percent of the equity of any entity engaged in a Competitive Activity, if such equity is listed on a national securities exchange or regularly traded in an over-the-counter market. (c) In the event of a breach or threatened breach of this Section 6, the Executive agrees that the Company shall be entitled to injunctive relief in a court of appropriate jurisdiction to remedy any such breach or threatened breach, and the Executive acknowledges that damages would be inadequate and insufficient. (d) Any termination of the Executive's employment or of this Agreement shall have no effect on the continuing operation of this Section 6. 6 7 7. Successors. (a) This Agreement is personal to the Executive and, without the prior written consent of the Company, shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives. (b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. (c) The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would have been required to perform it if no such succession had taken place. As used in this Agreement, "Company" shall mean both the Company as defined above and any such successor that assumes and agrees to perform this Agreement, by operation of law or otherwise. 8. Miscellaneous. (a) This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified except by a written agreement executed by the parties hereto or their respective successors and legal representatives. (b) All notices and other communications under this Agreement shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Executive: If to the Company: APCOA, Inc. Attention: or to such other address as either party furnishes to the other in writing in accordance with this paragraph (b) of Section 8. Notices and communications shall be effective when actually received by the addressee. (c) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. If any provision of this Agreement shall be held invalid or unenforceable in part, the remaining portion of such provision, together with all other provisions of this Agreement, shall remain valid and enforceable and continue in full force and effect to the fullest extent consistent with law. (d) Notwithstanding any other provision of this Agreement, the Company may withhold from amounts payable under this Agreement all federal, state, local and foreign taxes that are required to be withheld by applicable laws or regulations. 7 8 (e) The Executive's or the Company's failure to insist upon strict compliance with any provision of, or to assert any right under, this Agreement shall not be deemed to be a waiver of such provision or right or of any other provision of or right under this Agreement. (f) The Executive and the Company acknowledge that this Agreement supersedes any other agreement, whether written or oral, between them concerning the subject matter hereof, including, but not limited to, the summary of Employment Terms and the Executive Employment Agreement dated as of December 11, 1995. (g) This Agreement may be executed in several counterparts, each of which shall be deemed an original, and said counterparts shall constitute but one and the same instrument. 8 9 IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and, pursuant to the authorization of its Board of Directors, the Company has caused this Agreement to be executed in its name on its behalf, all as of the day and year first above written. /s/ HERB ANDERSON ------------------------------- HERB ANDERSON APCOA, INC. /s/ G. WALTER STUEPLE, JR. ------------------------------- Name: G. Walter Stueple, Jr. Title: President 9 EX-12.1 13 STATEMENT RE COMPUTATION OF RATIOS 1 EXHIBIT 12.1 APCOA, INC. COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (AMOUNTS IN THOUSANDS, EXCEPT RATIO DATA)
THREE MONTHS PRO FORMA YEAR ENDED DECEMBER 31, ENDED MARCH 31, ------------------------ --------------------------------------------- ----------------- THREE MONTHS 1993 1994 1995 1996 1997 1997 1998 1997 1998 ------- ------- ------- ------ ------ ------ -------- --------- ------------ Income (loss) before income taxes, minority interest and extraordinary item............... $(4,037) $(2,880) $(2,273) $1,469 $2,320 $ (345) $(14,675) $(2,363) $(15,961) Fixed charges........ 2,966 3,129 4,216 4,261 4,611 1,074 1,277 24,687 6,137 ------- ------- ------- ------ ------ ------ -------- ------- -------- Earnings............. $(1,071) $ 249 $ 1,943 $5,730 $6,931 $ 729 $(13,398) $22,324 $ (9,824) ======= ======= ======= ====== ====== ====== ======== ======= ======== Interest expense..... $ 2,084 $ 2,437 $ 3,101 $3,409 $3,713 $ 869 $ 1,037 $14,225 $ 3,521 Amortization of deferred financing costs.............. 361 198 574 228 180 42 48 759 190 Interest portion of rent expense....... 521 494 541 624 718 163 192 9,703 2,426 ------- ------- ------- ------ ------ ------ -------- ------- -------- Fixed charges........ $ 2,966 $ 3,129 $ 4,216 $4,261 $4,611 $1,074 $ 1,277 $24,687 $ 6,137 ======= ======= ======= ====== ====== ====== ======== ======= ======== Ratio of earnings to fixed charges...... Note 1 Note 1 Note 1 1.3x 1.5x Note 1 Note 1 Note 1 Note 1 ======= ======= ======= ====== ====== ====== ======== ======= ========
- --------------- Note 1: Earnings were inadequate to cover fixed charges by $4,037, $2,880, $2,273, $345, $14,675, $2,363 and $15,961 for the years ended December 31, 1993, 1994 and 1995, the three months ended March 31, 1997 and 1998, the pro forma year ended December 31, 1997, and the pro forma three months ended March 31, 1998, respectively. EX-21.1 14 SUBSIDIARIES 1 Exhibit 21.1 Subsidiaries of APCOA/Standard Parking, Inc. Subsidiary Guarantors --------------------- Organized Percentage Name of Entity Under Laws of of Ownership - -------------- ------------- ------------ Tower Parking, Inc. Ohio 100 Graelic, Inc. Ohio 100 APCOA Capital Corporation Delaware 100 A-1 Auto Park, Inc. Georgia 100 Metropolitan Parking System, Inc. Massachusetts 100 Events Parking Company, Inc. Massachusetts 100 Standard Parking Corporation Illinois 100 Standard Parking Corporation IL Illinois 100 Standard Auto Park, Inc. Illinois 100 S & S Parking, Inc. California 100 Century Parking, Inc. California 100 Sentry Parking Corporation California 100 Non-Guarantor Subsidiaries -------------------------- Organized Percentage Name of Entity Under laws of of Ownership - -------------- ------------- ------------ APCOA Australia Pty Limited Australia 100 APCOA-Hawaii, Inc. Hawaii 100 APCOA Holdings Canada, Inc. Canada 100 APCOA Pacific Holdings Pty Limited Australia 100 APCOA Parking Development & Management Ltd. Canada 100 Atrium Parking, Inc. Delaware 100 Hawaii Parking Maintenance, Inc. Hawaii 100 SBR GP, Inc. Delaware 100 Steamboat Management, Inc. Delaware 100 Steamboat Properties, Inc. Delaware 100 A-M Elmira Parking Company Ohio 65 A-M Frontier Field Parking Company Ohio 50 A-M Monroe Parking Ohio 50 A-M New York Parking Company Ohio 50 APCOA-Common Street I Parking Company Ohio 60 APCOA-Etna Parking #1 Ohio 90 APCOA-Etna Parking #2 Ohio 80 APCOA-Etna Parking #3 Ohio 80 APCOA-Miami Parking Ohio 49 APCOA-Progressive Parking #1 Ohio 75 APCOA-Progressive Parking #2 Ohio 75 APCOA-R&G Parking Ohio 80 APCOA-RSN Shuttle Operation Ohio 70 APCOA-SRP Parking V Ohio 51 APCOA-SRP Parking XIII Ohio 51 APCOA-Wilford Parking Ohio 80 APCOA-Parking Venture 1 Ohio 99 APCOA-Atrium Parking Venture Ohio 99 APCOA Parking Venture III Ohio 99 APCOA-S.R.P. Parking XVII Ohio 51 APCOA-Progressive Parking II Ohio 70 APCOA-M&M Parking II Ohio 80 EX-23.1 15 CONSENT OF ERNST & YOUNG LLP 1 EXHIBIT 23.1 CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We consent to the references to our firm under the captions "Experts" and "Selected Historical Financial Data of APCOA" and to the use of our reports dated February 3, 1998, in Amendment No. 1 to the Registration Statement (Form S-4 No. 333-50437) and related Prospectus of APCOA/Standard Parking, Inc. for the registration of $140,000,000 of 9 1/4% Senior Subordinated Notes. Cleveland, Ohio ERNST & YOUNG LLP June 9, 1998 EX-23.2 16 CONSENT OF ALTSHULER, MELVOIN AND GLASSER LLP 1 EXHIBIT 23.2 CONSENT OF ALTSCHULER, MELVOIN AND GLASSER LLP, INDEPENDENT AUDITORS We consent to the references to our firm under the captions "Experts" and "Selected Historical Financial Data of Standard" and to the use of our reports dated February 3, 1998, in Amendment No. 1 to the Registration Statement (Form S-4 No. 333-50437) and related Prospectus of APCOA/Standard Parking, Inc. for the registration of $140,000,000 of 9 1/4% Senior Subordinated Notes. ALTSCHULER, MELVOIN AND GLASSER LLP Chicago, Illinois June 9, 1998 EX-27.1 17 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the Consolidated Financial Statements of the Company for each of the three years in the period ended December 31, 1997 and the three months ended March 31, 1997 and 1998 and is qualified in its entirety by reference to such financial statements. 0001059262 APCOA INC. YEAR YEAR YEAR 3-MOS 3-MOS DEC-31-1995 DEC-31-1996 DEC-31-1997 DEC-31-1997 DEC-31-1998 JAN-01-1995 JAN-01-1996 JAN-01-1997 JAN-01-1997 JAN-01-1998 DEC-31-1995 DEC-31-1996 DEC-31-1997 MAR-31-1997 MAR-31-1998 0 2,532,000 3,332,000 0 60,480,000 0 0 0 0 0 0 10,556,000 14,249,000 0 20,040,000 0 (315,000) (443,000) 0 (579,000) 0 0 0 0 0 0 14,116,000 18,254,000 0 81,536,000 0 56,582,000 55,715,000 0 65,521,000 0 (44,906,000) (43,375,000) 0 (43,214,000) 0 52,823,000 59,095,000 0 213,510,000 0 33,571,000 35,313,000 0 53,845,000 0 32,129,000 34,181,000 0 149,040,000 0 7,841,000 8,728,000 0 40,683,000 0 0 0 0 0 0 1,000 1,000 0 1,000 0 (23,232,000) (22,260,000) 0 (45,707,000) 0 52,823,000 59,095,000 0 213,510,000 141,540,000 135,752,000 115,676,000 27,019,000 28,804,000 141,540,000 135,752,000 115,676,000 27,019,000 28,804,000 120,215,000 113,501,000 92,818,000 22,547,000 23,576,000 120,215,000 113,501,000 92,818,000 22,547,000 23,576,000 20,893,000 17,905,000 17,295,000 4,050,000 19,015,000 0 0 0 0 0 3,101,000 3,409,000 3,713,000 869,000 1,037,000 (2,273,000) 1,469,000 2,320,000 (345,000) (14,675,000) 240,000 106,000 140,000 60,000 30,000 (3,117,000) 939,000 1,859,000 (443,000) (14,848,000) 0 0 0 0 0 0 0 0 0 (2,816,000) 0 0 0 0 0 (3,117,000) 939,000 1,859,000 (443,000) (17,664,000) 0 0 0 0 0 0 0 0 0 0
EX-99.1 18 LETTER OF TRANSMITTAL 1 LETTER OF TRANSMITTAL APCOA/STANDARD PARKING, INC. OFFER TO EXCHANGE ALL OUTSTANDING 9 1/4% SENIOR SUBORDINATED NOTES DUE 2008 FOR 9 1/4% NEW SENIOR SUBORDINATED NOTES DUE 2008 THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON , 1998, UNLESS THE OFFER IS EXTENDED STATE STREET BANK AND TRUST COMPANY (the "Exchange Agent") By Mail By Facsimile Transmission: By Hand or Overnight Courier: (registered or certified mail (617) 664-5395 recommended): State Street Bank and State Street Bank and Confirm by Telephone Trust Company Trust Company or for Information Call: Corporate Trust Department Corporate Trust Department (617) 664-5587 4th floor P.O. Box 778 Attn: Kellie Mullen Two International Place Boston, MA 02102-0078 Boston, MA 02110
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONES LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. The undersigned hereby acknowledges receipt of the Prospectus dated , 1998 (the "Prospectus") of APCOA/Standard Parking, Inc. (the "Company") and this Letter of Transmittal, which together constitute the Company's offer (the "Exchange Offer") to exchange $1,000 principal amount of its 9 1/4% New Senior Subordinated Notes due 2008 (the "New Notes"), which have been registered under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to a Registration Statement of which the Prospectus is a part, for each $1,000 principal amount of its outstanding 9 1/4% Senior Subordinated Notes due 2008 (the "Notes"), respectively. The term "Expiration Date" shall mean 12:00 midnight, New York City time, on , 1998, unless the Company, in its reasonable judgment, extends the Exchange Offer, in which case the term shall mean the latest date and time to which the Exchange Offer is extended. Capitalized terms used but not defined herein have the meaning given to them in the Prospectus. YOUR BANK OR BROKER CAN ASSIST YOU IN COMPLETING THIS FORM. THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED. QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT. List on the next page the Notes to which this Letter of Transmittal relates. If the space indicated is inadequate, the Certificate or Registration Numbers and Principal Amounts should be listed on a separately signed schedule affixed hereto. 2 - -------------------------------------------------------------------------------- DESCRIPTION OF SENIOR SUBORDINATED NOTES TENDERED HEREBY - --------------------------------------------------------------------------------------------------------------------------------- AGGREGATE PRINCIPAL NAME(S) AND ADDRESS(ES) OF CERTIFICATE AMOUNT PRINCIPAL REGISTERED OWNER(S) OR REGISTRATION REPRESENTED AMOUNT (PLEASE FILL IN) NUMBERS* BY NOTES TENDERED** - --------------------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------- TOTAL - ---------------------------------------------------------------------------------------------------------------------------------
* Need not be completed by Book-entry Holders. ** Unless otherwise indicated, the Holder will be deemed to have tendered the full aggregate principal amount represented by such Notes. All tenders must be in integral multiples of $1,000. - -------------------------------------------------------------------------------- This Letter of Transmittal is to be used (i) if certificates of Notes are to be forwarded herewith, (ii) if delivery of Notes is to be made by book-entry transfer to an account maintained by the Exchange Agent at The Depository Trust Company, (the "Depositary") pursuant to the procedures set forth in "The Exchange Offer -- Procedures for Tendering Notes" in the Prospectus or (iii) tender of the Notes is to be made according to the guaranteed delivery procedures described in the Prospectus under the caption "The Exchange Offer -- Guaranteed Delivery Procedures." See Instruction 2. Delivery of documents to a book-entry transfer facility does not constitute delivery to the Exchange Agent. The term "Holder" with respect to the Exchange Offer means any person in whose name Notes are registered on the books of the Company or any other person who has obtained a properly completed bond power from the registered holder. The undersigned has completed, executed and delivered this Letter of Transmittal to indicate the action the undersigned desires to take with respect to the Exchange Offer. Holders who wish to tender their Notes must complete this letter in its entirety. [ ] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE DEPOSITARY AND COMPLETE THE FOLLOWING: Name of Tendering Institution [ ] The Depository Trust Company Account Number Transaction Code Number Holders whose Notes are not immediately available or who cannot deliver their Notes and all other documents required hereby to the Exchange Agent on or prior to the Expiration Date must tender their Notes according to the guaranteed delivery procedure set forth in the Prospectus under the caption "The Exchange Offer -- Guaranteed Delivery Procedures." See Instruction 2. 3 [ ] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING: Name of Registered Holder(s) Name of Eligible Institution that Guaranteed Delivery If delivery by book-entry transfer: Account Number Transaction Code Number [ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO. Name Address 4 PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY Ladies and Gentlemen: Upon the terms and subject to the conditions of the Exchange Offer, the undersigned hereby tenders to the Company the principal amount of the Notes indicated above. Subject to, and effective upon, the acceptance for exchange of such Notes tendered hereby, the undersigned hereby exchanges, assigns and transfers to, or upon the order of, the Company all right, title and interest in and to such Notes as are being tendered hereby, including all rights to accrued and unpaid interest thereon as of the Expiration Date. The undersigned hereby irrevocably constitutes and appoints the Exchange Agent the true and lawful agent and attorney-in-fact of the undersigned (with full knowledge that said Exchange Agent acts as the agent of the Company in connection with the Exchange Offer) to cause the Notes to be assigned, transferred and exchanged. The undersigned represents and warrants that it has full power and authority to tender, exchange, assign and transfer the Notes and to acquire New Notes issuable upon the exchange of such tendered Notes, and that when the same are accepted for exchange, the Company will acquire good and unencumbered title to the tendered Notes, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim. The undersigned represents to the Company that (i) the New Notes acquired pursuant to the Exchange Offer are being obtained in the ordinary course of business of the person receiving such New Notes, whether or not such person is the undersigned, and (ii) neither the undersigned nor any such other person has an arrangement or understanding with any person to participate in the distribution of such New Notes. If the undersigned or the person receiving the New Notes covered hereby is a broker-dealer that is receiving the New Notes for its own account in exchange for Notes that were acquired as a result of market-making activities or other trading activities, the undersigned acknowledges that it or such other person will deliver a prospectus in connection with any resale of such New Notes; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. The undersigned and any such other person acknowledge that, if they are participating in the Exchange Offer for the purpose of distributing the New Notes, (i) they cannot rely on the position of the staff of the Securities and Exchange Commission enunciated in Exxon Capital Holdings Corporation (available April 13, 1989), Morgan Stanley & Co., Inc. (available June 5, 1991) or similar no-action letters and, in the absence of an exemption therefrom, must comply with the registration and prospectus delivery requirements of the Securities Act in connection with the resale transaction and (ii) failure to comply with such requirements in such instance could result in the undersigned or any such other person incurring liability under the Securities Act for which such persons are not indemnified by the Company. If the undersigned or the person receiving the New Notes covered by this letter is a broker-dealer that acquired Notes directly from the Company or an affiliate (as defined under Rule 405 of the Securities Act) of the Company, the undersigned represents to the Company that the undersigned understands and acknowledges that such New Notes may not be offered for resale, resold or otherwise transferred by the undersigned or such other person without registration under the Securities Act or an exemption therefrom. The undersigned also warrants that it will, upon request, execute and deliver any additional documents deemed by the Exchange Agent or the Company to be necessary or desirable to complete the exchange, assignment and transfer of tendered Notes or transfer ownership of such Notes on the account books maintained by a book-entry transfer facility. The undersigned further agrees that acceptance of any tendered Notes by the Company and the issuance of New Notes in exchange therefor shall constitute performance in full by the Company of its obligations under the Registration Rights Agreement and that the Company shall have no further obligations or liabilities thereunder for the registration of the Notes or the New Notes. The Exchange Offer is subject to certain conditions set forth in the Prospectus under the caption "The Exchange Offer -- Conditions." The undersigned recognizes that as a result of these conditions (which may be waived, in whole or in part, by the Company), as more particularly set forth in the Prospectus, the Company may not be required to exchange any of the Notes tendered hereby and, in such event, the Notes not exchanged will be returned to the undersigned at the address shown below the signature of the undersigned. All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned and every obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Tendered Notes may be withdrawn at any time prior to the Expiration Date. 5 Unless otherwise indicated in the box entitled "Special Registration Instructions" or the box entitled "Special Delivery Instruction" in this Letter of Transmittal, certificates for all New Notes delivered in exchange for tendered Notes, and any Notes delivered herewith but not exchanged, will be registered in the name of the undersigned and shall be delivered to the undersigned at the address shown below the signature of the undersigned. If a New Note is to be issued to a person other than the person(s) signing this Letter of Transmittal, or if the New Note is to be mailed to someone other than the person(s) signing this Letter of Transmittal or to the person(s) signing this Letter of Transmittal at an address different than the address shown on this Letter of Transmittal, the appropriate boxes of this Letter of Transmittal should be completed. If Notes are surrendered by Holder(s) that have completed either the box entitled "Special Registration Instructions" or the box entitled "Special Delivery Instructions" in this Letter of Transmittal, signature(s) on this Letter of Transmittal must be guaranteed by an Eligible Institution (defined in Instruction 4). 6 ------------------------------------------------------------ SPECIAL REGISTRATION INSTRUCTIONS To be completed ONLY if the New Notes are to be issued in the name of someone other than the undersigned. Name: ---------------------------------------------------- Address: -------------------------------------------------- ------------------------------------------------------------ Book-Entry Transfer Facility Account: ------------------------------------------------------------ Employer Identification or Social Security Number: ------------------------------------------------------------ (Please print or type) ============================================================ SPECIAL DELIVERY INSTRUCTIONS To be completed ONLY if the New Notes are to be sent to someone other than the undersigned, or to the undersigned at an address other than that shown under "Description of Notes Tendered Hereby." Name: ---------------------------------------------------- Address: -------------------------------------------------- ------------------------------------------------------------ (Please print or type) ------------------------------------------------------------ REGISTERED HOLDER(S) OF NOTES SIGN HERE (IN ADDITION, COMPLETE SUBSTITUTE FORM W-9 BELOW) X - -------------------------------------------------------------------------------- X - -------------------------------------------------------------------------------- (SIGNATURE(S) OF REGISTERED HOLDER(S)) Must be signed by registered holder(s) exactly as name(s) appear(s) on the Notes or on a security position listing as the owner of the Notes or by person(s) authorized to become registered holder(s) by properly completed bond powers transmitted herewith. If signature is by attorney-in-fact, trustee, executor, administrator, guardian, officer of a corporation or other person acting in a fiduciary capacity, please provide the following information. (PLEASE PRINT OR TYPE). Name and Capacity (full title): - -------------------------------------------------------------------------------- Address (including zip code): - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Area Code and Telephone Number: - -------------------------------------------------------------------------------- Taxpayer Identification or Social Security No.: - --------------------------------------------------------------------- Dated: - --------------------------------- SIGNATURE GUARANTEE (IF REQUIRED - SEE INSTRUCTION 4) Authorized Signature: ---------------------------------------------------------------- (SIGNATURE OF REPRESENTATIVE OF SIGNATURE GUARANTOR) Name and Title: - -------------------------------------------------------------------------------- Name of Plan: - -------------------------------------------------------------------------------- Area Code and Telephone Number: ----------------------------------------------------- (PLEASE PRINT OR TYPE) Dated: - --------------------------------- 7 PAYOR'S NAME: APCOA/STANDARD PARKING, INC. THIS SUBSTITUTE FORM W-9 MUST BE COMPLETED AND SIGNED Please provide your social security number or other taxpayer identification number on the following Substitute Form W-9 and certify therein that you are subject to backup withholding. - ------------------------------------------------------------------------------------------------------------- SUBSTITUTE Part 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT Social security FORM W-9 RIGHT AND CERTIFY BY SIGNING AND DATING BELOW number -------------------- OR -------------------- Employer identification number ----------------------------------------------------------------------- Part 2 -- Check the box if you are NOT subject to backup withholding Department of the Treasury under the provisions of Section 3406(A)(1)(C) of the Internal Revenue Internal Revenue Service Code because (1) you are exempt from backup withholding, (2) you have not been notified that you are subject to backup withholding as a result of failure to report all interest or dividends or (3) the Internal Revenue Service has notified you that you are no longer subject to backup withholding. [ ] ----------------------------------------------------------------------- PAYER'S REQUEST FOR TAXPAYER CERTIFICATION -- UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT THE IDENTIFICATION NUMBER (TIN) INFORMATION PROVIDED ON THIS FORM IS TRUE, CORRECT AND COMPLETE. SIGNATURE: ------------------------- DATE:--------------------- - -------------------------------------------------------------------------------------------------------------
SUBSTITUTE Part 1 -- PLEASE PROVID Social security FORM W-9 RIGHT AND CERTIFY BY SIGNING AND DATING BELOW number number -------------------- Employer OR identification numbe r -------------------- Employer identification number ----------------------------------------------------------------------- Department of the Treasury 3406(A)(1)(C) of the Internal Revenue Service Internal Revenue Code because (1) you are exempt from backup withholding, (2) you have not been notified that you are subject to backup withholding as a result of failure to report all interest or dividends or (3) the Internal Revenue Service has notified you that you are no longer ----------------------------------------------------------------------- PAYER'S REQUEST FOR TAXPAYER Part 3 -- IDENTIFICATION NUMBER (TIN) Awaiting TIN [ ] - -------------------------------------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY CASH PAYMENTS IN EXCESS OF $10.00 MADE TO YOU. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9. CERTIFICATE OF AWAITING TAX IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office, or (b) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number within 60 days, 31% of all reportable payments made to me thereafter will be withheld, until I provide a number. - -------------------------------------------------------- ----------------------------------------------------- Signature Date
8 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER 1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES. All physically delivered Notes or confirmation of any book-entry transfer to the Exchange Agent's account at a book-entry transfer facility of Notes tendered by book-entry transfer, as well as a properly completed and duly executed copy of this Letter of Transmittal or facsimile thereof, and any other documents required by this Letter of Transmittal, must be received by the Exchange Agent at any of its addresses set forth herein on or prior to the Expiration Date (as defined in the Prospectus). The method of delivery of this Letter of Transmittal, the Notes and any other required documents is at the election and risk of the Holder, and except as otherwise provided below, the delivery will be deemed made only when actually received by the Exchange Agent. If such delivery is by mail, it is suggested that registered mail with return receipt requested, properly insured, be used. No alternative, conditional, irregular or contingent tenders will be accepted. All tendering Holders, by execution of this Letter of Transmittal (or facsimile thereof), shall waive any right to receive notice of the acceptance of the Notes for exchange. Delivery to an address other than as set forth herein, or instructions via a facsimile number other than the ones set forth herein, will not constitute a valid delivery. 2. GUARANTEED DELIVERY PROCEDURES. Holders who wish to tender their Notes, but whose Notes are not immediately available and thus cannot deliver their Notes, the Letter of Transmittal or any other required documents to the Exchange Agent (or comply with the procedures for book-entry transfer) prior to the Expiration Date, may effect a tender if: (a) the tender is made through a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States or an "eligible guarantor institution" within the meaning of Rule 17Ad-15 under the Exchange Act (an "Eligible Institution"); (b) prior to the Expiration Date, the Exchange Agent receives from such Eligible Institution a properly completed and duly executed Notice of Guaranteed Delivery (by facsimile transmission, mail or hand delivery) setting forth the name and address of the Holder, the certificate number(s) of such Notes and the principal amount of Notes tendered, stating that the tender is being made thereby and guaranteeing that, within three New York Stock Exchange trading days after the Expiration Date, the Letter of Transmittal (or facsimile thereof), together with the Notes (or a confirmation of book-entry transfer of such Notes into the Exchange Agent's account at the Depositary) and any other documents required by the Letter of Transmittal, will be deposited by the Eligible Institution with the Exchange Agent; and (c) such properly completed and executed Letter of Transmittal (or facsimile thereof), as well as all tendered Notes in proper form for transfer (or a confirmation of book-entry transfer of such Notes into the Exchange Agent's account at the Depositary) and all other documents required by the Letter of Transmittal, are received by the Exchange Agent within three New York Stock Exchange trading days after the Expiration Date. Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be sent to Holders who wish to tender their Notes according to the guaranteed delivery procedures set forth above. Any Holder who wishes to tender Notes pursuant to the guaranteed delivery procedures described above must ensure that the Exchange Agent receives the Notice of Guaranteed Delivery relating to such Notes prior to the Expiration Date. Failure to complete the guaranteed delivery procedures outlined above will not, of itself, affect the validity or effect a revocation of any Letter of Transmittal form properly completed and executed by a Holder who attempted to use the guaranteed delivery procedures. 3. PARTIAL TENDERS; WITHDRAWALS. If less than the entire principal amount of Notes evidenced by a submitted certificate is tendered, the tendering Holder should fill in the principal amount tendered in the column entitled "Principal Amount Tendered" of the box entitled "Description of Notes Tendered Hereby." A newly issued Note for the principal amount of Notes submitted but not tendered will be sent to such Holder as soon as practicable after the Expiration Date. All Notes delivered to the Exchange Agent will be deemed to have been tendered in full unless otherwise indicated. 9 Notes tendered pursuant to the Exchange Offer may be withdrawn at any time prior to the Expiration Date, after which tenders of Notes are irrevocable. To be effective, a written, telegraphic or facsimile transmission notice of withdrawal must be timely received by the Exchange Agent. Any such notice of withdrawal must (i) specify the name of the person having deposited the Notes to be withdrawn (the "Depositor"), (ii) identify the Notes to be withdrawn (including the registration number(s) and principal amount of such Notes, or, in the case of Notes transferred by book-entry transfer, the name and number of the account at the Depositary to be credited), (iii) be signed by the Holder in the same manner as the original signature on this Letter of Transmittal (including any required signature guarantees) or be accompanied by documents of transfer sufficient to have the Trustee with respect to the Notes register the transfer of such Notes into the name of the person withdrawing the tender and (iv) specify the name in which any such notes are to be registered, if different from that of the Depositor. All questions as to the validity, form and eligibility (including time of receipt) of such notices will be determined by the Company, whose determination shall be final and binding on all parties. Any Notes so withdrawn will be deemed not to have been validly tendered for purposes of the Exchange Offer and no Exchange Notes will be issued with respect thereto unless the Notes so withdrawn are validly retendered. Any Notes which have been tendered but which are not accepted for exchange, will be returned to the Holder thereof without cost to such Holder as soon as practicable after withdrawal, rejection of tender or termination of Exchange Offer. 4. SIGNATURE ON THIS LETTER OF TRANSMITTAL; WRITTEN INSTRUMENTS AND ENDORSEMENTS; GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed by the registered Holder(s) of the Notes tendered hereby, the signature must correspond with the name(s) as written on the face of the certificates without alternation or enlargement or any change whatsoever. If this Letter of Transmittal is signed by a participant in the Depositary, the signature must correspond with the name as it appears on the security position listing as the owner of the Notes. If any of the Notes tendered hereby are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal. If a number of Notes registered in different names are tendered, it will be necessary to complete, sign and submit as many separate copies of this Letter of Transmittal as there are different registrations of Notes. Signatures on this Letter of Transmittal or a notice of withdrawal, as the case may be, must be guaranteed by an Eligible Institution unless the Notes tendered hereby are tendered (i) by a registered Holder who has not completed the box entitled "Special Registration Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or (ii) for the account of an Eligible Institution. If this Letter of Transmittal is signed by the registered Holder or Holders of Notes (which term, for the purposes described herein, shall include a participant in the Depositary whose name appears on a security listing as the owner of the Notes) listed and tendered hereby, no endorsements of the tendered Notes or separate written instruments of transfer or exchange are required. In any other case, the registered Holder (or acting Holder) must either properly endorse the Notes or transmit properly completed bond powers with this Letter of Transmittal (in either case, executed exactly as the name(s) of the registered Holder(s) appear(s) on the Notes, and, with respect to a participant in the Depositary whose name appears on a security position listing as the owner of Notes, exactly as the name of the participant appears on such security position listing), with the signature on the Notes or bond power guaranteed by an Eligible Institution (except where the Notes are tendered for the account of an Eligible Institution). If this Letter of Transmittal, any certificates or separate written instruments of transfer or exchange are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived by the Company, proper evidence satisfactory to the Company of their authority so to act must be submitted. 5. SPECIAL REGISTRATION AND DELIVERY INSTRUCTIONS. Tendering Holders should indicate, in the applicable box, the name and address (or account at the Depositary) in which the New Notes or substitute Notes for principal amounts not tendered or not accepted for exchange are to be issued (or deposited), if different from the names and addresses or accounts of the person signing this Letter of Transmittal. In the case of issuance in a different name, the employer identification number or social security number of the person named must also be indicated and the tendering Holder should complete the applicable box. If no instructions are given, the New Notes (and any Notes not tendered or not accepted) will be issued in the name of and sent to the acting Holder of the Notes or deposited at such Holder's account at the Depositary. 10 6. TRANSFER TAXES. The Company shall pay all transfer taxes, if any, applicable to the transfer and exchange of Notes to it or its order pursuant to the Exchange Offer. If a transfer tax is imposed for any other reason other than the transfer and exchange of Notes to the Company or its order pursuant to the Exchange Offer, the amount of any such transfer taxes (whether imposed on the registered Holder or any other person) will be payable by the tendering Holder. If satisfactory evidence of payment of such taxes or exception therefrom is not submitted herewith, the amount of such transfer taxes will be collected from the tendering Holder by the Exchange Agent. Except as provided in this Instruction 6, it will not be necessary for transfer stamps to be affixed to the Notes listed in this Letter of Transmittal. 7. WAIVER OF CONDITIONS. The Company reserves the right, in its reasonable judgment, to waive, in whole or in part, any of the conditions to the Exchange Offer set forth in the Prospectus. 8. MUTILATED, LOST, STOLEN OR DESTROYED NOTES. Any Holder whose Notes have been mutilated, lost, stolen or destroyed should contact the Exchange Agent at the address indicated above for further instructions. 9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to the procedure for tendering as well as requests for additional copies of the Prospectus and this Letter of Transmittal, may be directed to the Exchange Agent at the address and telephone number(s) set forth above. In addition, all questions relating to the Exchange Offer, as well as requests for assistance or additional copies of the Prospectus and this Letter of Transmittal, may be directed to APCOA/Standard Parking, Inc., 800 Superior Avenue, Cleveland, Ohio 44114-2601, telephone (216) 522-0700; Attention: Robert N. Sacks. 10. VALIDITY AND FORM. All questions as to the validity, form, eligibility (including time of receipt), acceptance of tendered Notes and withdrawal of tendered Notes will be determined by the Company in its sole discretion, which determination will be final and binding. The Company reserves the absolute right to reject any and all Notes not properly tendered or any Notes the Company's acceptance of which would, in the opinion of counsel for the Company, be unlawful. The Company also reserves the right, in its reasonable judgment, to waive any defects, irregularities or conditions of tender as to particular Notes. The Company's interpretation of the terms and conditions of the Exchange Offer (including the instructions in this Letter of Transmittal) will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Notes must be cured within such time as the Company shall determine. Although the Company intends to notify Holders of defects or irregularities with respect to tenders of Notes, neither the Company, the Exchange Agent nor any other person shall incur any liability for failure to give such notification. Tenders of Notes will not be deemed to have been made until such defects or irregularities have been cured or waived. Any Notes received by the Exchange Agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned by the Exchange Agent to the tendering Holder as soon as practicable following the Expiration Date. 11 IMPORTANT TAX INFORMATION Under federal income tax law, a Holder tendering Notes is required to provide the Exchange Agent with such Holder's correct TIN on Substitute Form W-9 above. If such Holder is an individual, the TIN is the Holder's social security number. The Certificate of Awaiting Taxpayer Identification Number should be completed if the tendering Holder has not been issued a TIN and has applied for a number or intends to apply for a number in the near future. If the Exchange Agent is not provided with the correct TIN, the Holder may be subject to a $50 penalty imposed by the Internal Revenue Service. In addition, payments that are made to such Holder with respect to tendered Notes may be subject to backup withholding. Certain Holders (including, among others, all domestic corporations and certain foreign individuals and foreign entities) are not subject to these backup withholding and reporting requirements. Such a Holder, who satisfies one or more of the conditions set forth in Part 2 of the Substitute Form W-9 should execute the certification following such Part 2. In order for a foreign Holder to qualify as an exempt recipient, that Holder must submit to the Exchange Agent a properly completed Internal Revenue Service Form W-9, signed under penalties of perjury, attesting to that Holder's exempt status. Such forms can be obtained from the Exchange Agent. If backup withholding applies, the Exchange Agent is required to withhold 31% of any amounts otherwise payable to the Holder. Backup withholding is not an additional tax. Rather, the tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service. PURPOSE OF SUBSTITUTE FORM W-9 To prevent backup withholding on payments that are made to a Holder with respect to Notes tendered for exchange, the Holder is required to notify the Exchange Agent of his or her correct TIN by completing the form herein certifying that the TIN provided on Substitute Form W-9 is correct (or that such Holder is awaiting a TIN) and that (i) each Holder is exempt, (ii) such Holder has not been notified by the Internal Revenue Service that he or she is subject to backup withholding as a result of failure to report all interest or dividends or (iii) the Internal Revenue Service has notified such Holder that he or she is no longer subject to backup withholding. WHAT NUMBER TO GIVE THE EXCHANGE AGENT Each Holder is required to give the Exchange Agent the social security number or employer identification number of the record Holder(s) of the Notes. If Notes are in more than one name or are not in the name of the actual Holder, consult the instructions on Internal Revenue Service Form W-9, which may be obtained from the Exchange Agent, for additional guidance on which number to report. CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER If the tendering Holder has not been issued a TIN and has applied for a number or intends to apply for a number in the near future, write "Applied For" in the space for the TIN or Substitute Form W-9, sign and date the form and the Certificate of Awaiting Taxpayer Identification Number and return them to the Exchange Agent. If such certificate is completed and the Exchange Agent is not provided with the TIN within 60 days, the Exchange Agent will withhold 31% of all payments made thereafter until a TIN is provided to the Exchange Agent. IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE THEREOF (TOGETHER WITH NOTES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS) OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE. EX-99.3 19 NOTICE OF GUARANTEED DELIVERY 1 NOTICE OF GUARANTEED DELIVERY FOR TENDER OF 9 1/4% SENIOR SUBORDINATED NOTES DUE 2008 (INCLUDING THOSE IN BOOK-ENTRY FORM) OF APCOA/STANDARD PARKING, INC. This form or one substantially equivalent hereto must be used to accept the Exchange Offer of APCOA/Standard Parking, Inc. (the "Company") made pursuant to the Prospectus, dated , 1998 (the "Prospectus"), if certificates for the outstanding 9 1/4% Senior Subordinated Notes Due 2008 of the Company (the "Notes") are not immediately available or if the procedure for book-entry transfer cannot be completed on a timely basis or time will not permit all required documents to reach the Exchange Agent prior to 12:00 midnight, New York time, on the Expiration Date of the Exchange Offer. Such form may be delivered or transmitted by telegram, telex, facsimile transmission, mail or hand delivery to State Street Bank and Trust Company (the "Exchange Agent") as set forth below. In addition, in order to utilize the guaranteed delivery procedure to tender Notes pursuant to the Exchange Offer, a completed, signed and dated Letter of Transmittal (or facsimile thereof) must also be received by the Exchange Agent prior to 12:00 midnight, New York City time, on the Expiration Date. Capitalized terms not defined herein are defined in the Prospectus. STATE STREET BANK AND TRUST COMPANY, EXCHANGE AGENT By Mail By Facsimile Transmission: By Hand or Overnight Courier: (registered or certified mail (617) 664-5395 recommended): State Street Bank and State Street Bank and Confirm by Telephone Trust Company Trust Company or for Information Call: Corporate Trust Department Corporate Trust Department (617) 664-5587 4th floor P.O. Box 778 Attn: Kellie Mullen Two International Place Boston, MA 02102-0078 Boston, MA 02110
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE, OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. 2 Ladies and Gentlemen: Upon the terms and conditions set forth in the Prospectus and the accompanying Letter of Transmittal, the undersigned hereby tenders to the Company the principal amount of Notes set forth below, pursuant to the guaranteed delivery procedure described in "The Exchange Offer -- Guaranteed Delivery Procedures" section of the Prospectus. Principal Amount of Notes Tendered:* $ ------------------------------------------------------------------------------- Certificate Nos. (if available): - -------------------------------------------------------------------------------- Total Principal Amount Represented by Certificate(s): $ ------------------------------------------------------------------------------- *Must be in denominations of principal amount of $1,000 and any integral multiple thereof. All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned and every obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. PLEASE SIGN HERE X - ------------------------------------------------------------ ------------------------------------ - ------------------------------------------------------------ ------------------------------------ Date Signature(s) of Owner(s) or Authorized Signatory
Area Code and Telephone Number: ----------------------------------------------------------------------------- Must be signed by the holder(s) of Notes as their name(s) appear(s) on certificates for Notes or on a security position listing, or by person(s) authorized to become registered holder(s) by endorsement and documents transmitted with this Notice of Guaranteed Delivery. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer or other person acting in a fiduciary or representative capacity, such person must set forth his or her full title below. If Notes will be delivered by book-entry transfer to The Depository Trust Company, provide account number.
Please print name(s) and address(es) Name(s): ------------------------------------------------------------ ------------------------------------------------------------ ------------------------------------------------------------ ------------------------------------------------------------ Capacity: ------------------------------------------------------------ ------------------------------------------------------------ Address(es): ------------------------------------------------------------ ------------------------------------------------------------ Account Number: ------------------------------------------------------------
3 GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, a financial institution (including most banks, savings and loan associations and brokerage houses) that is a participant in the Securities Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Program or the Stock Exchanges Medallion Program, hereby guarantees that the undersigned will deliver to the Exchange Agent the certificates representing the Notes being tendered hereby or confirmation of book-entry transfer of such Notes into the Exchange Agent's account at The Depository Trust Company, in proper form for transfer, together with any other documents required by the Letter of Transmittal within three New York Stock Exchange trading days after the Expiration Date. Name of Firm: AUTHORIZED SIGNATURE Address: Name: (Please Type or Print) Title: Zip Code Area Code and Date: Telephone Number:
NOTE: DO NOT SEND CERTIFICATES OF NOTES WITH THIS FORM. CERTIFICATES OF NOTES SHOULD BE SENT ONLY WITH A COPY OF THE PREVIOUSLY EXECUTED LETTER OF TRANSMITTAL. -----END PRIVACY-ENHANCED MESSAGE-----